Ra Medical Systems, Inc. (RMED) Q1 2020 Results Conference Call May 13, 2020 4:30 PM ET

Company Participants

Jody Cain - LHA Investor Relations
Will McGuire - Chief Executive Officer
Andrew Jackson - Chief Financial Officer

Conference Call Participants

Matthew O'Brien - Piper Sandler
Anthony Vendetti - Maxim Group

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ra Medical Systems First Quarter 2020 Conference Call. As a reminder, this call is being recorded today, May 13, 2020. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions]

I’d now like to turn the call over to Jody Cain. Please go ahead.

Jody Cain

This is Jody Cain with LHA. Thank you for participating in today’s call. Joining me from Ra Medical are Will McGuire, Chief Executive Officer; and Andrew Jackson, Chief Financial Officer.

Earlier today, Ra Medical issued a news release announcing financial results for the first quarter of 2020. If you have not received this news release or you would like to be added to the Company’s e-mail distribution list, please contact LHA in Los Angeles at 310-691-7100 and speak with Kasha Chen. The news release is also available on the Investor Relations section of the Ra Medical’s website.

During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that statements made by management are not descriptions of historical facts regarding Ra Medical, they are forward-looking statements reflecting the beliefs and expectations of management as of May 13, 2020.

You should not place undue reliance on these forward-looking statements, because they involve known and unknown risks, uncertainties and other factors that are in some cases beyond the Company’s control and could materially affect actual results. In particular there are significant uncertainty about the duration, new contemplation in fact of COVID pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Ra Medical's operations, financial results and outlook is the best estimate based on the information for today's discussion.

For details about these risks, please see the earnings news release that accompanies this call and the Company’s SEC filings, including Ra Medical’s Annual Report on Form 10-K for the year-ended December 31, 2019 filed with the SEC on March 7, 2020, and as temporarily reported on form 10-Q for the period ended March 31, 2020 should be filed with the SEC. Ra Medical expressly disclaims any intent or obligation to update forward-looking statements except as required by law.

Today’s conference call remarks will include both GAAP and non-GAAP financial results. Ra Medical believes the non-GAAP financial results provide investors with useful supplemental information about the financial performance of the business, enables a comparison of financial results between periods, or certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating the business. These non-GAAP financial measures are presented solely for the informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliations between GAAP and non-GAAP financial measures can be found at the end of the financial results news release that was issued earlier today.

With that, I’d like to turn the call over to Will McGuire. Will?

Will McGuire

Thanks, Jody. Good afternoon everyone and thank you for joining us. I hope that you and your families are healthy and staying safe, as you navigate through this COVID pandemic. I am proud to have joined Ra Medical as CEO and Board of Director at the end of March, and I'm excited to have this opportunity to share our progress and our strategy going forward.

Before getting started, I'd like to welcome Joan Stafslien to our Board of Directors. Joan joined the Board in April and brings to Ra Medical more than 25 years of regulatory, legal and medical device industry experience having served as an executive at Nuvasive, CareFusion and Cardinal Health among other life science companies. So, welcome Joan.

There are many compelling reasons that attracted me to join Ra Medical, including our differentiated technology, the large and growing markets we serve, established pathways for reimbursement and relatively low cost of manufacturing versus competitors. I'm looking forward to leveraging my years of operating and executive experience in the medical device industry, many of those in the vascular space to lead Ra Medical through the challenges ahead and capitalize on the exciting opportunities. My experience includes serving as an officer at two companies focused on atherectomy.

First, I was Chief Operating Officer at Spectranetics, a publicly traded medical device company with laser-based atherectomy products for treating peripheral and coronary arterial disease that was later acquired by Phillips in 2017 for over 2 billion. I also served as President and Chief Executive Officer at Atheromed, a venture capital backed peripheral atherectomy company that was later acquired a Volcano Corporation.

Like many companies, we have been affected by the COVID-19 pandemic, but we were and continued to be proactive in preparing for it. Our guiding principle has been to protect the health and safety of our employees and customers while ensuring business continuity, as we manufacture and distribute products that save lives and limbs. We are grateful to all first responders and healthcare workers and are thankful to have been able to donate 46,000 disposable masks to hospitals in our local community in April.

Ra Medical has undergone quite a few changes during the past 12-months, and I'd like to make sure everyone understands the transformation as well as the past forward. First, let's start with the vascular business. Given the various DABRA product challenges previously disclosed, the Company made the appropriate decision to significantly downsize its commercial operations related to DABRA. We currently have five clinical specialists versus a sales force of 34 a year ago. We are supporting a significantly smaller group of core customers now as well with the focus being those sites who may participate in our atherectomy study.

The Company initiated a clinical study to obtain an FDA atherectomy indication for DABRA in late 2019. We enrolled the first patient in February 2020. Since that patient was enrolled, progress from the study has been slow with COVID-19 posing a significant challenge to enrollment given that most elective procedures have been canceled are postponed.

We recently cleared a second site to start enrolling patients and are engaging with several additional sites that are candidates to participate in the clinical study. As a reminder, we have approval to include up to 10 sites in the clinical study. The capital limitations and the COVID-19 pandemic both may continue to impact the speed of enrollment for the trial. We expect to have a clearer picture of these impacts by our next earnings call.

On the R&D front, we have multiple efforts underway to address identified DABRA limitations. First, we have prioritized the extension of the DABRA shelf life as the number one project for the engineering team. This is essential to all future products developed from this platform. The team is continuing to work through an analysis of the potential causes and is exploring multiple solutions to ensure our catheters will perform consistently over a longer time and not experience the calibration issues of the past.

We have also initiated a number of other engineering efforts that will allow us to better penetrate the atherectomy market. These projects include a braided over jacket to resist the kinking issues we've had in the past and allow better pushability and torque transmission and a rapid exchange platform to allow physicians to use DABRA with her guidewire of choice. More recently, we started exploring a larger 6 French catheter to facilitate treatment of larger vessels were commonly seen in above the knee cases.

We have substantially increased the engineering team since the beginning of the year with quality professionals. Since arriving, I have further acumen the team with various consulting resources in the areas of catheter and excimer laser design and development as well as program management. We believe we now have in place an engineering team capable of delivering quality products and product improvements in a consistent manner. I'll look forward to updating you on these efforts on future calls.

Before turning to the dermatology business, I would like to note that we saw a reduction in vascular cases starting in March related to COVID-19. Most physician offices stopped performing elective cases and focused only on life threatening or other central procedures. For us, that translates into the more severe Rutherford 4 and above cases continuing to be performed in many instances in order to prevent amputations.

Now a few words relative to the dermatology business, like most like most practices that involve a sizable number of elective cases, we need dermatology physician offices have been significantly impacted by COVID-19. As a result, we are seeing a reduction in do Pharos laser replacements and sales.

Looking forward, as we've moved past COVID-19, I think we have a compelling opportunity to grow our Pharos business. The business has not received significant commercial attention from the Company, as we focused on bringing the DABRA technology to market. Our focus in the next quarter will be to further evaluate the dermatology business opportunity and develop a capital efficient strategy to grow revenue in the U.S. and select U.S. markets.

Another big difference in the Company now versus 12 months ago is the intense focus on product quality and the amount of resources allocated to quality assurance. In the second half of 2019, Ra Medical initiated a comprehensive quality improvement plan to identify and remedy weaknesses in processes and procedures. The Company has made steady progress on this plan and intends to have all identified weaknesses addressed later this year.

As was previously disclosed, the Company received a Form 483 from the FDA with three observations following a for-cause site inspection in December, 2019. I am pleased to note that the FDA issued an Establishment Inspection Report or EIR in February of 2020 which closed the audit. Please note, we are very aware of the current economic environment and the need to be as capital efficient as possible.

While we continue to invest in our key strategic initiatives, we have continued with our spending reduction initiatives to adjust to the reduced level of procedures being performed at physician offices as well as the overall uncertainty going forward. Note that, we began implementing cost savings initiatives in Q3 of 2019 including a reduction in head count by 30%, before the beginning of this year in order to right size the Company. In fact, SG&A expenses have been reduced by approximately 50% over the past 12 months, as we have retrenched commercially and focused on key R&D projects and product quality initiatives.

Before turning the call over to Andrew, I will note one area of spend that has increased substantially over the past 12 months and that is legal fees. This isn't unfortunate but necessary as we deal with the issues uncovered during our audit committee investigation last year. I can't comment due to the ongoing nature of the various investigations other than to say that, we are cooperating with investigations and that I believe the Company has the appropriate strategy to navigate the legal issues facing us.

Now I will turn the call over to Andrew to discuss our financial results. Andrew?

Andrew Jackson

Thank you, Will. Before going [audio gap] I'd like to say few words about COVID-19. Our facility located in Carlsbad, California is currently operational. We have continued to manufacture DABRA catheters without interruption and our personnel are practicing social distancing and other safety measures. Employee travel is limited to essential travel only and many employees are working from home when feasible.

Due to our reduced commercial footprints and volume, we are not currently experiencing any shortages in supplies that would impact our ability to manufacture products sufficient to meet current customer demand and to support our atherectomy indication trial. In the near-term, we expect that our revenue will be adversely impacted.

And as Will mentioned, enrollment in our atherectomy indication trial has been slower than previously anticipated, as patients elect to postpone voluntary treatments and physician's offices are either closed or operating at a reduced capacity and prioritizing patients with more advanced disease states that do not always fits the enrollment criteria for atherectomy indication trial.

We all expect that physician offices will continue to preserve cash and run with lean inventories at least in the short-term. In addition, some customers are requesting more flexible payment terms on a temporary basis. However, the full extent to which COVID-19 impacts our business will depend on future developments which are highly uncertain and cannot be predicted including new information that may emerge concerning the severity of COVID-19 and the actions to contain it or treat us impact among others.

Turning now to all financial results, net revenue for the first quarter of 2020 was 1.4 million and consisted of product sales of 0.6 million, and service and other revenue of 0.8 million. This compares with the net revenue of 1.7 million for the first quarter of 2019, which consisted of product sales of 0.9 million and service and other revenue of 0.8 million. Revenue from the vascular segment for the first quarter of 2020 was 0.1 million compared with 0.5 million for the prior year period. Revenue from the dermatology segments was 1.3 million for the first quarters of 2020 and 2019.

Gross profit margin for the first quarter of 2020 was negative 15% compared with a negative limit that stands for the first quarter of 2019. SG&A expenses for the first quarter of 2020 were 6.3 million compared with 13.2 million for the prior year period. SG&A expenses for the first quarter of 2020 and 2019 include a stock based compensation of 0.9 million and 6.3 million respectively. SG&A expenses for the first quarter of 2020 included an increase of 1.4 million compared with the first quarter of 2019 and legal expenses and accrued estimated costs related to the securities litigation and government investigations.

R&D expenses for the first quarter of 2020 were 1.3 million compared with 1.5 compared to the prior year period. R&D expenses in the first quarters of 2020 and 2019 included a stock based compensation of 0.1 million and 0.9 million respectively. R&D expenses for the first quarter of 2020 included an increase of 0.6 million in personnel costs, clinical study and consulting expenses compared to the first quarter of 2019 in order to better understand the inconsistency in our DABRA catheter performance, expand our efforts on the next generation of products and on our clinical study.

The GAAP net loss for the first quarter of 2020 was 7.7 million or $0.56 per share. This compares with the GAAP net loss for the prior year quarter of 14.7 million or $1.16 per share. Adjusted EBITDA for the first quarter of 2020 was negative 6.2 million compared with a negative 6.8 million for the prior year period. The reconciliation table of GAAP net loss to non-GAAP EBITDA is included in today's press release.

We reported cash, cash equivalents and short-term investments as of March 31, 2020 of 23.4 million. We use 7.0 million in cash to fund operating activities for the first quarter of 2020, which includes 1.2 million for legal expenses related to the securities, litigation and government investigations. This company has an 8.9 million use for the first quarter of 2019 to fund operating activities.

We expect our revenues and gross margin to be negatively impacted in the short-term by our reduced sales force as we continue efforts to remedy the inconsistencies in our DABRA capita performance and due to physician office closures and reduced procedural use of our products as a result of the COVID-19 pandemic.

Last week, we announced that we had secured a $2 million loan through a commercial vendor under the Paycheck Protection Program. Under the terms of the program, a portion or all of the loan may be forgiven, if the proceeds are used for payroll costs, rent, utilities, and other prescribed expenses.

With that, I'd like to turn the call back over to Will.

Will McGuire

Thank you, Andrew. So in closing, I'm excited to be on Board and part of the team. We understand our engineering challenges and we have plans and resources to address them. We are committed to a commercial re-launch with an improved DABRA platform and are focused on our mission of saving lives and limbs. With the competitive advantages of DABRA, we believe we have an opportunity ahead of us to penetrate the large and growing peripheral vascular disease market and to build long-term shareholder value.

With these comments, I'd like to open the call for questions. Operator.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question will come from the line of Matthew O'Brien, Piper Sandler.

Matthew O'Brien

Good afternoon. Thanks for taking the questions and Will congratulations on the new role. I guess just, you're welcome. Just for starters, there's a lot of stuff going on at the Company right now, but how do we think about in a more normalized environment where the Company goes from here, you've got a really good vascular product, it's a good business model, especially, for docs, I'm sure they're looking for to make money as quickly as possible coming out of this. So as we get into Q3, Q4 where the real focus of the business is, is it on the derm side or the vascular side? A little bit of both. I mean, how do we think about where the Company goes from here on the top line?

Will McGuire

Yes. So, this is Will. I'll take that. Yes, right now our focus or our number one focus is on the vascular side with our short-term priority being to extend the shelf life of the catheters. After that we would, we would follow up with the product enhancements such as a braided over jacket, the rapid exchange option, and then I said in the prepared remarks, the 6 French size, but really a larger size or larger sized catheters. The atherectomy study is also a priority. We've started that. Our ability to move forward is somewhat dependent on COVID-19 and some of the centers and restrictions lifting. But clearly, it's a priority for us to move forward with that study and to get an atherectomy indication.

Once those things are done and behind us are as we were getting near completion that would start to look at rebuilding our vascular sales force and re-launching the product line at some point in the future. On the derm side of the business, we're working through that strategy right now. We know it's a big opportunity with a current market approaching $40 million, it's only about 15% penetrated. There's 6,000 potential customers out there but really need to work through the strategy and articulate that more and better, during the next call, but also understand COVID-19 and the continuing impact of that, as we move into the second half of the year and does it really allow us to move forward with a gold strategy or not.

Matthew O'Brien

Okay. So just to be clear, it seems like for the time being, a little focus on the vascular business, probably a little bit more so on the DABRA side until you get the manufacturing in place and everything else, maybe on the clinical side on the basket thing, okay.

Will McGuire

Yes, you have to be clear, if you're talking about focus from a revenue or case generation. Then the focus on the vascular side right now from the sales team or really, it's a clinical team, the clinical specialist team out there. It's going to be supporting the atherectomy study and working towards getting an atherectomy indication. We don't think it's necessarily a great use of our time or resources to try to drive revenue right now with the current product. And so, we're going to focus on internally on the engineering, on the clinical study, and then on supporting the clinical study cases as they occur in the field.

Matthew O'Brien

Okay. So, that's helpful. Will it would be the best case scenario? Or maybe even base case scenario for when you're in a position to start pushing the vascular business a little bit more?

Will McGuire

It's a little hard to say right now, maybe I could just run through some of the things that need to happen first and how we're thinking about those. So, the first one from an engineering side, the most important is again, extending shelf life. I expect that we'll understand the shelf life issue later this year and have a plan in place before the end of the year to address the shelf life. After that, our number two priority is to work on the version of a DABRA catheter with a braided over jacket and this is so that we can improve the pushability and talkability and allow the physicians to use the catheter in more challenging situations. After that, the parties become the raft exchange platform and then larger catheters.

Overall, our philosophy is going to be to focus on the highest priority projects first kind of drive those to completion, not necessarily have a dozen or 15 projects working that we can't complete anything on time. But all of that being said, Matt, I would expect that, we complete the engineering work and obtain an FDA clearance on the braided over jacket and on the rapid exchange platforms sometime in 2021, as we get a little further out here. I'll be able to articulate a better, more accurate date for you. And on the atherectomy side, atherectomy study side, barring any additional prolonged shutdowns of elective cases by COVID-19, we think we'd expect to complete enrollment in the study sometime in the first half of 2021.

Again, we'll be able to better updates all of these initiatives and give you more definitive after another 90 days. I hope that helps.

Matthew O'Brien

Okay. That's very helpful. Last one for me and maybe this is for Andrew, but just on the capital side of things, $23 million-ish exiting the quarter. What are the plans now as far as burn rate goes for the remainder of the year and then for capital, the ability to acquire capital going forward?

Andrew Jackson

Yes. Thanks for the question, Matt. So, we're very pleased with the cost cutting initiatives that we implemented starting in Q3 last year. If you look at our cash burn from operations of Q1 2019, it was $8.9 million. Cash burn from operations, this last quarter was $7 million, which included $1.2 million extra in legal fees versus this time last year, related to some of the investigations. If you remove that $1.2 million, that's $5.8 million cash burn this last quarter, which is a $3.1 million reduction from the same quarter last year or 34%. So, we think we've taken a significant amount of expenses out of the Company. With that said, we do have an S-1 on file, the exact amount and the timing of the raise I cannot speak to, but we are planning on doing that.

Operator

[Operator instructions] Our next question is going to come from the line of Anthony Vendetti, Maxim Group.

Anthony Vendetti

As you come on Board, a lot of experience in the vascular space. Are there other key roles I noticed in the press release? Obviously, you've added engineering and it sounds like you're making quality assurance a high priority, but are there other key positions that you feel you need to fill at this point and then any other additions to the Board?

Will McGuire

At this point, I don't think we have any key positions certainly on the senior team and really within the ranks that we're looking to fill. One area that is a kind of a pet peeve of mine is program management or project management and making sure that we have good process and methodology in place there and we have brought in some outside resources, some consulting help there to help us and to kind of implement a new methodology that I've had success with in the past. Other than that we reached out to the people I know in the field basically only to supplement the team.

So, I know folks obviously with laser atherectomy experience as well as catheter experience and we're just trying to supplement the current team to get over some of the current hurdles or obstacles that we faced. But all-in-all, I think we've got the right team in place. We've made great progress on the engineering front and really good progress over the past six to nine months on the quality assurance front as well. But then from a Board perspective at this point, I don't think we have any active search going on for an additional board member. We feel pretty good with our current board and where we're at.

Anthony Vendetti

Okay. And then just on the operational side, you mentioned that because shelf life for the catheter has been an issue and I know that's been working hard to improve that, we're up to two months. You said maybe later this year, you expect to have a plan in place to improve that. From your perspective and I know you've just been here a short time, what do you think is a holding back improving the shelf life in a more expeditious way? Is there anything that you see as an impediment? Or is it just making sure you've worked through issues that just need to be worked through and there's nothing that's -- that's any it's sort of holding it up in any major break?

Will McGuire

That's a good question and a pertinent one because again shelf life is critical to everything we're doing. We know we need longer shelf life to have commercially viable products. So, it is a priority. I would say the things that have been done to kind of expedite the work on shelf life include the hiring of Chris Folk as a VP of Engineering earlier this year. We've also made a good bit of significant hires to the engineering team.

So, right now we basically have more horsepower going after the problem and I think we're approaching it now to your point, very methodically. We're looking at multiple things that could be an issue for us. And we're looking at mitigations on all of these potential causes of the shelf life issues have experienced. It's not something right now where I think, I don't see an issue with us resolving it. It just takes time and it takes a good research and good basic research to make sure we get to the root cause and then put a fix in place that actually addresses the root cause.

And so, when I say we'll have a plan in place, what I'm talking about there is, first thing, we're going to do is make sure we completely understand it and test it, that we know the cause of our issues and then we'll put a plan in place to mitigate it and fix it. But that looks like yet we don't know. We're not going to speculate about that, but I feel confident that the team will get there.

Anthony Vendetti

Okay. And then just lastly on the dermatology space, scenario that I followed and then following for 15 years and there are obviously a number of companies that are going to be significantly impacted in terms of their ability to sell capital equipment in this space. And I'm just wondering, how you're looking at it, right now it's particularly here in the U.S.? Is that something that you're reevaluating or you have a plan in place to ride through this pandemic here and then look at international opportunities as other countries begin to open? Or is this just, you know right now a process that you're still working for?

Will McGuire

Well, I mean we are going to spend the time to work through what our strategy looks like for the derm space, and the COVID-19 pandemic certainly has an influence on the, at least the year term strategy, maybe not the longer term strategy. But as far as looking at the opportunities, we are looking into us at opportunities to grow the business and increase laser placements in the US and any strategy going forward. I can't imagine that not being part of it, but at the same time we are looking at opportunities in markets outside of the U.S. So we're pretty active there and starting to evaluate various markets including a distributor partners.

I'm just not ready to talk about our focus there yet, but I can say that that work was happening before I got here. It will continue and it would be a part of the overall strategy. So it's be one where we're looking both at domestic opportunities as well as outside the U.S. opportunities. And some of those outside of the U.S. opportunities could be pretty attractive, if we're able to identify the appropriate distributor partner because we can do the upfront initial training on the laser servicing laser and things like that. And then in many cases, the distributor partner can take it and run with it and have a business there. And it's not a typically a technology that would require us to stay really close to the customers for a long period of time.

Anthony Vendetti

Okay. And then just one last question on the atherectomy trial, I mentioned you signed up a second site. Obviously, during this pandemic, it's going to be difficult to sign a number of sites. I guess as you -- and you can sign up to 10, but as you look at it, what is your best case, worst case scenario in terms of being able to sign up enough of get enough size and enough patients to get the trial completed?

Will McGuire

Yes. I think, actually I think we're still making pretty good progress in the pipeline, if you will as far as moving forward and qualifying additional sites. So, we have two that are qualified and ready to go as we said in the remarks. We probably have another three sites, three or four sites that are at various stages of the qualification process. And I think, we'll be able to keep moving those forward when they can actually enroll their first patient would probably be more dependent on what's happening with COVID-19, but we are optimistic we've been able to move forward with some of these sites.

And I just saw, I forget where it's at here. I just saw an article today where there's 24 states that are considering resuming, elective surgeries, at least in part. So hopefully, we're going to see some movement on the elective surgeries, which would allow the enrollment to kind of get kick-started again. The other thing I would say is that there's a couple of things that'll be key to us, right. One is getting the sites up and running as you said. Another is then what is the actual enrollment rate per site and the assumptions around that.

One thing that we've mentioned in the prepared remarks I think is important, maybe we mentioned was we've got approval from the FDA now to enroll another class of other patients. So, in this case, we'll be enrolling patients with more severe disease and now there's probably a larger group of patients. Even during COVID-19 that would be a potential for us to enroll in the trial. And even outside of the COVID-19 scenario, we think our success now will be greater because of the wider range of patients.

The original protocol allowed us to enroll Class 2 through 4 Rutherford, and the change we're talking about here is adding Class 5 Rutherford. So, we think that will help us. Again, we need to get past some of the initial lockdowns here and start enrolling and get some experience. And once we get that experience, I can provide you a much better timeline and prediction for when we would have an indication. I hope that helps.

Anthony Vendetti

Yes, that's good. We'll just a couple other quick follow ups. You mentioned in addition to longer shelf life, a braided catheter, but you also mentioned a thicker catheter. Can you talk about the need to do that or line extensions what exactly...

Will McGuire

Yes. So, we talked about a larger catheter, and specifically what we're talking about is larger diameter catheters and that would just allow us to debulk more plaque in the arteries. If you look at where a product is used now, it definitely is used both above-the-knee and below-the-knee to address CPOs and to create a channel.

As we move forward and get an atherectomy indication, we'll probably do more and more cases where our primary, not only are we creating a channel, but we're going into actually debulk and perform atherectomy. About 80% of atherectomy cases are above-the-knee right now in larger vessels.

So, we would need to start adding line extensions, if you will to the current catheter that would be larger diameter catheters that would allow us to go into these larger vessels and remove more plaque and so get a bit of a better result in the larger vessels. So, it's just a natural extension for us that we would need to do to allow us to capture a larger percentage of effort in cases out there.

Anthony Vendetti

Okay, and then this is the, I promise the last question. It's obviously there's a number of things that you're looking to fix. Can you just talk about if you have a priority list what are your first priorities?

Will McGuire

Sure. Yes, that's a good question. I think that's a very important question as well because we do have a host of things that we would like to do. But in order to get things done, we need to have very strict priorities that are known throughout the Company. So, number one and let's just stay with vascular business now. Number one is extending the shelf life, that's key to have a commercially viable product and that will impact all of our DABRA products. The number two priority is to complete the work on this braided over jacket. Again, that allows the physician then to do more challenging cases. They can push the catheter more. They can fork it more. And we just get higher utilization in the accounts because they can do more with the catheter.

And then after that, the priorities would be a rapid exchange platform that's so that the physicians can use the catheter in a traditional manner over a guidewire. The vast majority 95% -- 99% of the cases of physician will use a guidewire. It's kind of the safety blanket. And so, we would then have a platform in which they could use their guidewire choice, if you will to do the case. And then also I said the 6 French but larger sizes so that we could start treating a wider variety of vessels. But I think first, again it's shelf life, it's the over jacket. It's probably then getting a version that works over at guidewire and then from there we take the platform, and we start extending it into larger sizes to treat a larger number of vessels.

Operator

Thank you. And that is all the allotted time we have for questions and answers. I'll turn the call back over to you for closing comments.

Will McGuire

Well, thanks again for your questions today. I trust I conveyed my enthusiasm about the prospects for Ra Medical. It's really driven by our differentiated DABRA technology as well as some of the growth opportunities we talked about for the Pharos product. I want to thank everyone at Ra Medical for the warm welcome and for the continued hard work and dedication.

Look forward to providing an update on our next quarterly call. So, once again, thanks for joining today, and we very much appreciate your support.

Operator

Once again, we'd like to thank you for your participation in today's Ra Medical first quarter 2020 earnings release conference call. You may now disconnect.