Ra Medical Systems (NYSE:RMED) said yesterday that an internal investigation found failures surrounding its Dabra laser catheters among other shortcomings.
The Carlsbad, Calif.-based company announced the investigation in August after allegations were raised by an employee and additional issues were uncovered over time. In the same announcement, the company ousted CEO, co-president & CTO Dean Irwin without cause.
Ra Medical found that the Dabra catheter frequently failed to calibrate and occasionally overheated, causing a risk of injury to physicians and patients. The probe also discovered that the company did not explicitly reference Dabra’s inconsistencies, or other catheter failures, when explaining its sales for 4Q 2018 and 1Q 2019, causing confusion.
In September, Ra Medical began a voluntary Dabra recall due to the calibration problem but, according to the company’s probe, failed to document the call-back as a recall. The probe also found that Ra Medical sales staff were instructed to market the Dabra device off-label, for use in atherectomy procedures, and to encourage doctors to use atherectomy codes to seek reimbursement.
Ra Medical also failed to report at least two adverse events to the FDA within statutory deadlines, according to the investigation, which also turned up evidence of potentially improper payments to doctors. The company failed to sufficiently document the payments, and in once case involving three physicians couldn’t adequately account for some $300,000 in payments “which could be perceived as an improper attempt to obtain business or to gain special advantage.”
The investigation also found that “determinations to direct potentially valuable benefits and opportunities to doctors were informed in part by sales prospects” and that complaints about regulatory or compliance issues, “because they implicated executive officers,” were not brought to the board or audit committee as required.
Ra Medical said it hired a new VP for quality, regulatory & clinical matters and conducting audits of its quality systems, along with the voluntary recall of Dabra catheters in September. The company added that physician customers continue to successfully use the Dabra system and a changed shelf life could see a reduction in calibration failures.
The company is also pursuing expanded indications for Dabra to include atherectomy. Ra Medical submitted an investigational device exemption that was approved in July, but intends to submit updates to that IDE because of the shelf life change and plans to enroll the first patient in 1Q 2020.
Meanwhile, Ra Medical voluntarily contacted the SEC and plans to cooperate with the agency and U.S. Justice Dept. as inquiries and investigations into improper marketing of the Dabra devices may continue.
Shares of RMED were down -1.3% at $1.49 per share in early-morning trading today.
In a separate filing, the company said it parted ways with co-funder and VP Melissa Burstein effective today.
