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VRAY Readies For MRIdian-Linac Launch With $26M Raise

By Anita Dushyanth, PhD


In order to help support its operations in 2017, ViewRay (NASDAQ:VRAY) announced (on January 18, 2017) that it had obtained gross proceeds of approximately $26 million through a private placement (closed on January 18, 2017) from the sale of 8.6 million shares of common stock and warrants.  The warrants have an exercise price of $3.17/share and are exercisable after six months and expire seven years from the date of issuance.

ViewRay exited the third quarter of 2016 with close to $15 million in cash.  During the first three quarters in 2016, the company burned cash (operating plus investing) of ~$35 million, which equates to an average of about $12 million per quarter.  The current cash position, which (pro forma for the recent raise) we estimate to be about $23  - $28 million, is expected to be used primarily to support the ongoing commercialization of the MRIdian-Linac as well as towards the firm’s ongoing R&D and business operations.

In September 2016, ViewRay received CE Mark for MRIdian-Linac in the EU.  The German Research Foundation (DFG) has purchased a MRIdian Linac to treat patients at the University Clinic Heidelberg, largest medical center in Germany and especially renowned for the treatment of cancer.  This federal institution will be the first, and currently the only one, to use the MRIdian Linac in a clinical setting within Europe.

In September 2016, ViewRay’s MRIdian system’s clinical experience was highlighted by several leading cancer centers at the Annual Meeting of the American Society for Radiation Oncology (ASTRO).  MRIdian users from leading cancer centers globally that are at the forefront of research in cancer treatment, including Washington University and Siteman Cancer Center at Barnes-Jewish Hospital (Washington University), University of California, Los Angeles Health System and Jonsson Comprehensive Cancer Center (UCLA), The University of Wisconsin Carbone Cancer Center (University of Wisconsin), VU University Medical Center (VUmc), Amsterdam, National Cancer Center (NCC) in Tokyo, Japan and Seoul National University Hospital, Seoul, South Korea, are an indicator of the demand that exists for MRI-guided radiation therapy.

The FDA 510(k) application for the MRIdian-Linac system was submitted in August 2016.  Assuming the approval comes through before end of Q1 2017 without any hiccups, the systems could be rolled out during 1H 2017.  The impending approval on the newer MRIdian-Linac systems has resulted in substantially limited demand of ViewRay’s MRIdian-Cobalt systems as customers await the newer system.  The firm’s inventory has a backlog of 22 signed orders (as of third quarter 2016) which translates to a total value of ~$125 million.  The firm’s CEO Chris Raanes stated on the Q3 conference call (November 14, 2016) that while the company is in a transition period awaiting approval for its MRIdian-Linac system, customers that imperatively need such systems opt for the legacy system instead of waiting to invest in the newer system.  As such, there is little risk of losing revenue as the customers are flexible and about 85% of those are willing to wait for the new system to be launched.  Pending approval, with the new system, the firm could potentially climb to the top of the mushrooming Linac market and consolidate its position there with competitive pricing.


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