Microcap companies enjoy macro attention of meeting attendees (Iradimed, Viewray)

By Larry Haimovitch

Medical Device Daily Contributing Writer

March, 2016

DANA POINT, California — The 28th annual Roth Capital Partners (Newport Beach, California) conference was held here last week. The turnout was tremendous with over 4000 attendees and 550 presenting companies.

Roth Capital, which bills itself as “a leader in small and microcap markets,” is one of the few investment banking firms that focuses on small and emerging companies.

Two intriguing med-tech companies, both fairly recent public entities presented were Iradimed Corp. (IRMD; Winter Springs, Florida) and Viewray Inc. (VRAY; Oakwood Village, Ohio).

Iradimed, which went public in July 2014, is a unique medical device company, as it is currently the only player in its market niche. According to the company’s recently filed 10-K report, “we are the only known provider of non-magnetic intravenous (IV) infusion pump systems that are specifically designed to be safe for use during MRI procedures.”

The company’s founder and CEO Roger Susi is a pioneer in the MRI compatible medical device industry. He invented the first MRI compatible patient monitoring system in 1986 and the first non-magnetic MRI safe infusion system in 2004.

Iradimed’s intravenous infusion delivery system was the first of its kind to largely eliminate many of the dangers and problems present during MRI procedures.  Standard infusion pumps contain magnetic and electronic components that can create radio frequency interference. They are dangerous to operate in the presence of the powerful MRI magnet; its patented MRidium MRI compatible IV infusion pump system safely and predictably delivers anesthesia and other IV fluids during various MRI procedures.

Iradimed has enjoyed robust revenue growth in the past several years with a 42% CAGR from 2012 to 2015. This culminated in fiscal (calendar) year 2015, when revenues soared over 100% from the prior year, reaching more than $31 million. This stellar performance was buoyed by a return to full commercial sales following a four month hiatus in U. S. shipments that resulted from an FDA warning letter in September 2014 and working down the sizable backlog of unfilled orders that resulted from the FDA issues. In addition, its only competitor Medrad (a division of Bayer Radiology, Whippany, New Jersey) removed its competing pump from the market in mid-2015 due to its own ongoing regulatory issues.  Thus, Iradimed totally owns the MRI-compatible IV pump market, which is virtually unheard of in any medical device market.

In its presentation here, the company said it is targeting a CAGR growth of 30-35% in the next few years. The drivers of this projected rapid growth are: (1) further penetration in the MRI compatible IV infusion pump business. The company believes that the current available market is less than 20% penetrated; (2) expansion of its sales force; (3) introduction in 4Q-16 of its MRI compatible, multi-parameter patient monitor, which will compete head to head against Susi’s former company InVivo: (4) the increasing trend to intraoperative MRI-guided procedures, notably neurosurgical and otolaryngological, should have a significant impact on the long term demand for MRI compatible infusion pumps.

This new product is designed to safely deliver therapy and monitor all of the required basic vital sign parameters, e.g., electrocardiography, pulse oximetry, non- invasive blood pressure, capnography, and temperature. Susi described this new offering as a “pardaigm shift,” in that it will be much lighter and smaller than Invivo’s mature current product. Its device is designed to have a monitoring/remote station, with wireless communication capability outside of the scanner room (in the control room).

In an MDD interview, Susi said “our biggest challenge is adding high quality sales reps, as we implement a sales strategy to further exploit a vastly underpenetrated market.” IRMD, which is direct only in the U.S., exited 2015 with 14 reps and hopes to increase that number to 21 this year.

Regarding the new patient monitoring product, Susi told MDD that “we believe we can quickly gain market share as well as grow the market considerably.” While the initial sales of this new product will be modest in 2016, Susi said its 2017 contribution could be substantial. He added that the increasing number of sales rep should positively impact their sales and marketing efforts.

Iradimed’s patient monitoring market entry was significantly improved with the withdrawal from market of the Medrad Veris MR Vital Signs Patient Monitor, effective at the end of 2014. Medrad had held a 25% market share prior to its exit from the market.

Viewray, which completed a reverse merger initial public offering in 3Q-2015 raising over $29 million, has pioneered the next generation of cancer therapy. It has developed and is now marketing the first and only MRI-guided radiation therapy system that images and treats cancer patients simultaneously. Its device, tradenamed MRIdian, integrates MRI technology, radiation delivery and proprietary software to locate, target and track the position and shape of soft-tissue tumors while radiation is delivered. These capabilities allow MRIdian to more accurately deliver radiation to the tumor and to also lower radiation to healthy tissue.

Its key competitive advantage is that its system provides continuous soft tissue imaging during treatment. Clinicians can see the target, monitor the radiation dose, and adapt to changes in the patient’s anatomy—all in real time. Conversely, other radiotherapy technologies can only image before or after the treatment. Thus, clinicians cannot see exactly where the therapy target is located inside a patient’s body. Moreover, the motion of internal soft tissues can cause a tumor and nearby organs to be in different positions when the treatment actually occurs.

CEO Chris Raanes, a veteran of the radiotherapy and radiosurgery field, described his company’s technology as “see what you treat as you treat.”

The company has begun to gather early clinical data, with abdomen and breast studies showing the benefits of seeing the tumor, adapting the therapy to match daily soft tissue anatomy and tracking or “seeing as you treat.” The breast study is noteworthy Raanes said  “because we reduced an six week treatment down to one week, with good cosmesis and no skin burns.”

The relative paucity of clinical data reflects the fact that the first commercial system was installed just over two years ago. This site is at Siteman Cancer Center at Barnes-Jewish Hospital and Washington University School of Medicine (St. Louis, Missouri.) There are currently four systems treating patients while several more are now being installed. As of the last reported information (September 30, 2015,) the company has a backlog of 14 signed orders, totaling $78 million.

In addition to clinical benefits of improved targeting and reducing the course of treatment significantly, Raanes cited several clear-cut economic benefits as well: (1) hospitals and physicians are paid more when anatomical changes necessitate a revised treatment plan; (2) hospitals and free standing clinics can treat more patients per year; (3) payors pay less per patient, with potentially better outcomes.

Last week, Viewray announced a significant technological breakthrough - the development of the MRIdian linear accelerator (linac). It includes human imaging testing, delivery of radiation beams in a magnetic field using a linear accelerator, and modification of the treatment planning system to incorporate linear accelerator technology.

Raanes described this development as a “huge deal” for Viewray, adding that “it will broaden our market opportunity considerably.”  He further noted that by eliminating the need for radioactive cobalt in a MRIdian system, hospitals will have a lower regulatory burden because they will not have to deal with the Nuclear Regulatory Commission and other regulatory bodies.

He cited other key benefits of the technology, which include a larger addressable market and should accelerate its sales cycle and the backlog conversion time. Raanes also believes this new product will enhance the company’s gross margins.

Importantly, the linac has been designed so that its commercially available cobalt-based MRIdian systems can be modified to incorporate the MRIdian linac technology. Viewray is now preparing both its CE Mark and 510(k) applications for submission sometime this year.

2012 Roth Capital Conference

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