ViewRay looks to sell MRI-guided radiotherapy tech in wake of bankruptcy filing

Once the subject of a $1.2 billion market cap, ViewRay is now scrambling to stay afloat.

The company has grabbed hold of a life preserver in the form of a voluntary Chapter 11 bankruptcy filing. According to an announcement this week, while under the protections of the bankruptcy filing, ViewRay plans to pursue a sale of its business that could potentially see it shed all of its current assets.

As operations wind down, ViewRay will rely on $6 million in financing it has received from debtor-in-possession MidCap Financial Services, as well as its own cash reserves, which totaled around $81 million as of the end of the first quarter, per a recent earnings report—quite a drop from the $142.5 million it had on hand just three months prior.

ViewRay also said that it would lay off an unspecified number of employees as the sale process continues. That “additional reduction in force” comes shortly after the company announced in the first-quarter earnings report that it would lay off 11% of its employees, who numbered 295 as of the end of 2022, according to the year’s annual report (PDF).

Meanwhile, the company reported that over the weekend, shortly before filing the bankruptcy paperwork, two board members had resigned from their posts and CEO Scott Drake had been replaced at the helm by Paul Ziegler, formerly the company’s chief commercial officer. Drake will maintain his role as a member of the board.

The initial round of layoffs was part of a plan to reduce ViewRay’s annual costs by between $19 million and $23 million. In 2022, though the company easily bested the previous year’s $52 million in revenues with a $79 million haul, its expenses also grew, leading to a net loss of $107 million, only a slight improvement over 2021’s $110 million loss.

The losses continued to deepen as this year kicked off. In the first-quarter earnings missive, ViewRay reported a net loss of nearly $29 million, situating the company further in the red than where it was the year before, when the first quarter’s loss stood at $25.8 million.

The struggling finances—along with ViewRay’s disclosure ahead of the first-quarter results that it had tapped Goldman Sachs to help it explore potential cost-saving moves, including a sale, merger or business combination—spooked shareholders. That April announcement sent the stock, which had already been slipping but was hanging on above the $3 threshold, down to about $1.30 within the week.

The release of the first-quarter earnings report in May proceeded to send the stock below $1, and it hasn’t recovered since. After hovering between $0.30 and $0.40 for much of the summer—prompting a late June delisting warning (PDF) from the Nasdaq—ViewRay’s stock is now trading for just a few pennies per share in the wake of the bankruptcy filing.

Amid the tumult, ViewRay also said in this week’s announcement that it will continue supporting current users of its flagship MRIdian system even as it prepares to sell off the business.

The FDA-cleared MRIdian combines high-definition MRI with a linear accelerator to help doctors track the movement of cancer cells in real time during radiation therapy sessions. The imaging tech also helps the system direct more radiation toward a specified tumor, reducing the effects of the treatment on surrounding tissue.

“Despite the operating challenges, MRIdian has facilitated real societal value and remains critically important for a broad population of cancer patients, including those who were previously considered untreatable,” Ziegler, the newly appointed CEO, said in the announcement.