Ra Medical Systems, Inc. (NYSE:MDT) for $267 million in July 2005, and EP MedSystems, Inc., which was acquired by St. Jude Medical for $95.7 million in July 2008.
Catheter Precision has three product areas that it intends to pursue. Its lead product, named VIVO™ (an acronym for View Into Ventricular Onset), is an FDA-cleared and CE Mark product that utilizes non-invasive inputs to locate the origin of ventricular arrhythmias, and, through its use, the physician can identify patients for invasive catheter ablation, and with those patients, reduce the amount of time in the invasive procedure. Ventricular arrhythmias include ventricular tachyarrhythmias and premature ventricular arrhythmias, diseases which affect millions of patients that are not well treated today. While much past growth in the electrophysiology market has been for atrial fibrillation, Catheter Precision believes that ventricular arrhythmias represent a large growth area moving forward. It also intends to pursue a second generation of Amigo®, a robotic arm previously cleared by both FDA and CE, which serves as a catheter control device that can be remotely controlled outside of the procedure room. Catheter Precision has demonstrated that patient outcomes could potentially be enhanced by utilization of this device. Catheter Precision is working toward a third product release in the first half of 2023, which is a vessel closure device that would assist in the closure of the insertion site of the percutaneous catheter or other device used within the body. It is estimated that the worldwide market for this closure assist device is over one million procedures per year.
“After undertaking a comprehensive process with external advisors to explore and evaluate a range of strategic options, our board and management team believe this transaction with Catheter Precision is the best strategic alternative for Ra Medical and represents an opportunity to create substantial value for our stockholders,” said Will McGuire, Ra Medical CEO. “This business combination, if completed, will result in Ra Medical investors having an equity stake in a company that is focused on developing and commercializing novel technologies and solutions to improve the lives of patients with cardiac arrhythmias under the leadership of a world-class team with decades of medical device industry experience.”
“We look forward to welcoming Ra Medical stockholders to our combined company following the completion of the proposed merger transaction,” said Mr. Jenkins, Catheter Precision founder and CEO. “Catheter Precision is committed to producing cost-effective, user-friendly and technologically differentiated tools for use in percutaneous catheter procedures that physicians will embrace. Our VIVO non-invasive 3D imaging system enables physicians to identify the origin of arrhythmias pre-procedure, thereby streamlining workflow and reducing procedure time. We are also considering development opportunities for the Amigo remote catheter system, which incorporates the most modern technologies while remaining easy to learn and use, and we are looking forward to the launch of our vessel closure device, currently targeted for the first half of next year. We envision a significant opportunity afforded by this merger by providing access to the public capital markets.”
About the Transaction
The Merger is structured as a stock for stock reverse merger whereby all of Catheter Precision’s outstanding convertible promissory notes and equity interests are to be exchanged for shares of Ra Medical common stock and Catheter Precision options assumed by the Company. Catheter Precision stakeholders are expected to own approximately 80% of the combined company, and pre-merger Ra Medical equity holders are expected to own approximately 20% of the combined company, on a fully diluted basis calculated using the treasury stock method, subject to certain adjustments provided for in the Merger Agreement and further described in our Form 8-K filed today, including adjustment based on the amount of Ra Medical’s net cash at closing.
The boards of directors of both companies have approved the Definitive Merger Agreement. The merger is expected to close before the end of 2022, subject to satisfying certain closing conditions, including the receipt of shareholder approval by both companies. The Definitive Merger Agreement follows the signing by Ra Medical and Catheter Precision of a non-binding summary of proposed terms on June 18, 2022, which was publicly disclosed on July 22, 2022. Investors in Ra Medical are encouraged to review the Definitive Merger Agreement, which contains the definitive terms of the Merger.
The descriptions of the Merger, the Ra Medical Special Meeting of Stockholders, Catheter Precision, and the other transactions and matters contemplated thereby or referenced herein do not purport to be complete and are qualified in their entirety by reference to the Company’s Current Report on Form 8-K filed on the date hereof, the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2022, and any prior or subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed with the Securities and Exchange Commission (the “SEC”) from time to time and available on the SEC website. The Company also intends to file a proxy statement with the SEC.
Ladenburg Thalmann & Co. Inc. is acting as the exclusive financial advisor to Ra Medical in connection with the proposed Merger with Catheter Precision.
Management and Organization
The combined company will be led by David Jenkins as Executive Chair and Chief Executive Officer following the Merger. Will McGuire, the current CEO, and Brian Conn, the current interim CFO, have agreed to remain with the Company through the closing of the Merger.
Immediately following the closing of the Merger, the combined company’s board of directors will consist of five directors, with David Jenkins joining the board of directors as the Executive Chair and a to-be-determined current director of Ra Medical resigning at the closing of the Merger.
Conditions of the Merger Agreement
The Company cannot provide any assurance that it will effect the Merger with Catheter Precision or, even if it is able to consummate such a Merger, that the intended benefits of the Merger will be fully realized. The Merger is also subject to specified conditions precedent that must be satisfied or waived, including certain conditions precedent that are subject to the approval or consent of third parties including, among others, (a) Catheter Precision shall have delivered the PPM/Joint Information Statement (as defined in the Definitive Merger Agreement) to Catheter Precision securityholders, (b) no law or order prevents the closing of the Merger and the related transactions, (c) conditions relating to the HHS Confirmation (as defined in the Definitive Merger Agreement) and other litigation matters shall be satisfied or waived, (d) the Company furnishing Net Cash greater than $8,000,000, (e) the entry into the Executive Chairman Agreement (as defined in the Definitive Merger Agreement) pursuant to which David Jenkins shall be appointed to the board of directors of the Company and shall be paid an annual salary of $300,000, (f) the last closing sale price of the Company’s Common Stock prior to 4:00 p.m. (New York City time) on the last Trading Day (as defined in the Definitive Merger Agreement) prior to the Closing is equal to or greater than $0.09, and the average of the last closing sale price of the Company’s Common Stock prior to 4:00 p.m. (New York City time) on each of the five (5) consecutive full Trading Days prior to the Closing is equal to or greater than $0.09, in each case as adjusted for the Reverse Stock Split (as defined in the Definitive Merger Agreement), (g) other than the letter dated August 31, 2022 from the NYSE American LLC, the Company shall not have received correspondence from the NYSE American or the staff thereof relating to the delisting, or maintenance of listing, of the Company’s Common Stock on the NYSE American, and Catheter Precision shall have received assurance in form and substance satisfactory to Catheter Precision that the transactions contemplated by the Definitive Merger Agreement will not cause the Company to be delisted from the NYSE American, (h) Catheter Precision shall have entered into a Debt Settlement Agreement with each of the holders of Catheter Precision Notes, (i) lock-up agreements have been entered into by and among the Company, Catheter Precision, and certain persons who are directors, officers and/or significant stockholders of either Parent or the Company, (j) the Company shall have sublet or terminated the lease with respect to its corporate headquarters and manufacturing facility, (k) Catheter Precision and the Company shall have received the approval from their respective stockholders necessary to approve the Merger and the transactions contemplated by the Definitive Merger Agreement, (l) that the Company has entered into release agreements with certain of its officers and employees relating to existing change of control and severance agreements, and (m) each of the representations and warranties of the Company and Catheter Precision set forth in the Definitive Merger Agreement shall have been true as of the date of the Definitive Merger Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date), in each case, except where the failure to be true and correct, individually or in the aggregate, has not had, and is not reasonably likely to have a Parent Material Adverse Effect (as defined in the Definitive Merger Agreement) with respect to Parent, or a Material Adverse Effect (as defined in the Definitive Merger Agreement) with respect to Catheter Precision. The Company cannot assure that all conditions precedent will be satisfied or waived, that it will receive any of the required third-party consents or approvals or that it will be able to satisfy or waive all the conditions precedent to consummate the Merger. If the conditions precedent are not satisfied or waived in a timely manner or at all, the Merger may not occur or may be delayed, and the Company may lose some or all of the intended benefits of the proposed Merger with Catheter Precision. In addition, the parties have the right to waive or modify certain key closing conditions of the Merger Agreement, including the minimum stock price condition, and these conditions should not be interpreted as representations or covenants by either or both of the parties.
The Definitive Merger Agreement also contains certain customary termination rights, including, (a) the right of the parties to terminate the Definitive Merger Agreement by mutual written consent, (b) the right of either party to terminate the Definitive Merger Agreement if the Merger has not occurred by December 31, 2022, (c) the right of either party to terminate the Definitive Merger Agreement due to a material breach by the other party of any of its representations, warranties or covenants which would result in the closing conditions not being satisfied, subject to certain conditions, (d) the right of Catheter Precision to terminate the Definitive Merger Agreement if any of the closing conditions are not capable of being satisfied, and (e) the right of either party to terminate the Definitive Merger Agreement if a court of competent jurisdiction or other governmental body issues a final and non-appealable order, decree or ruling, or has taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger and related transactions.
