After nearly two decades developing excimer lasers to treat both dermatological conditions and peripheral artery disease, Ra Medical is now pursuing a “divide and conquer” strategy with the sale of its skin care business.
The California-based devicemaker inked a deal with Strata Skin Sciences, which will offer up approximately $3.7 million in cash for Ra Medical’s Pharos line, including its FDA-cleared dermatology laser and client roster of more than 400 dermatology practices across the U.S.
The Pharos excimer laser emits a highly controlled beam of ultraviolet light to remove skin tissue affected by conditions such as psoriasis, vitiligo, atopic dermatitis and leukoderma. The laser has been cleared for these uses since 2007.
The Pharos device will join Strata’s own XTRAC excimer laser, which was also cleared by the FDA more than a decade ago to treat psoriasis and vitiligo. Strata will offer up the XTRAC laser to Pharos customers whose contracts have expired, with Strata CEO Robert Moccia estimating that the acquisition will expand his company’s customer base by more than 40%, therefore boosting its service contract revenue as well.
After shedding its skin care business—and using the proceeds from that sale—Ra Medical will focus on developing its other excimer laser, which treats peripheral artery disease. In these patients, narrowed arteries reduce the amount of blood able to flow to the limbs, causing leg pain, numbness and more.
The DABRA line of lasers and catheters has been cleared in the U.S. to treat blockages caused by a form of peripheral artery disease that affects the legs. Ra Medical has also received CE mark clearance in Europe to use the laser system to remove those blockages in a process known as atherectomy—a clearance the company is now hoping for the FDA to replicate.
Strata is now all-in on its DABRA lineup, CEO Will McGuire said in a statement. The deal will deliver cash to help wrap up its clinical study for an atherectomy approval in the U.S.
News of the sale came alongside Ra Medical’s latest earnings report. For the first half of the year, the company registered $2.1 million in net revenues, a slight drop from the $2.3 million it brought in during the same period in 2020.
Ra Medical reported a net loss of $12.5 million for the first six months of 2021. That was an improvement over 2020, though, when it registered a $17.8 million net loss.
No doubt contributing to that loss was the $2.5 million settlement Ra Medical agreed to pay the U.S. Department of Justice earlier this year after an investigation into allegedly false claims the company made about the DABRA laser while seeking FDA clearance.
In addition to the initial payment of $2.5 million, Ra Medical’s fine will grow based on its annual revenues. This year, for example, if sales exceed $10 million, it’ll have to pay an additional $500,000, with the add-on amounts increasing each year through 2024.