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January 7, 2025
Brian Webster
Chief Executive Officer
Kestra Medical Technologies, Ltd.
3933 Lake Washington Blvd NE, Suite 200
Kirkland, WA 98033
Re: Kestra Medical Technologies, Ltd.
Amendment No. 2 to Draft Registration Statement on Form S-1
Submitted December 11, 2024
CIK 0001877184
Dear Brian Webster:
We have reviewed your amended draft registration statement and have the
following
comments.
Please respond to this letter by providing the requested information and
either
submitting an amended draft registration statement or publicly filing your
registration
statement on EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing the information you provide in response to this letter
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Amendment No. 2 to Draft Registration Statement on Form S-1
Prospectus Summary
Our Market Opportunity, page 4
1. We note your disclosure here and elsewhere that "[you] estimate there
are
approximately 1.8 million indicated patients with low LVEF in select
international
markets, representing an approximately $14 billion total annual market
opportunity
outside the U.S." Please revise to explain how you estimated that there
are
approximately 1.8 million low LVEF indicated patients in select
international
markets, disclose these select international markets, and discuss the
assumptions
underlying the total annual market opportunity outside the U.S. Please
also revise to
clarify, if true, that you do not currently have any regulatory
approvals to
January 7, 2025
Page 2
commercialize your products outside of the U.S. We also note your
statement on page
2: "In the U.S., we estimate that approximately 850,000 cardiac patients
each year
may be eligible for WCD therapy, representing a $10 billion annual
addressable
market based on current Medicare reimbursement rates and our average WCD
wear
prescription lengths." Please revise to clarify why your addressable
market in the U.S.
is based on patients eligible for WCD therapy whereas your addressable
international
market is based on patients with low LVEF. Define the criteria you are
using for
determining a patient is eligible for WCD therapy and clarify whether
all patients with
low LVEF would be eligible for WCD therapy.
If we do not obtain international regulatory registrations, clearances,
certifications or
approvals for our products, we will be unable..., page 71
2. We note your disclosure that "[you] are currently pursuing a CE Mark for
[y]our
ASSURE WCD, which is the regulatory approval required to market medical
devices
in Europe." Please disclose whether you have submitted an application
for the CE
Mark.
Use of Proceeds, page 90
3. We note that you intend to use the net proceeds from the offering to
"finance the
continued commercialization of [y]our ASSURE WCD, the further build out
of [y]our
sales and marketing infrastructure, future clinical trials and [y]our
continued product
development and research and development activities, as well as for
working capital
and general corporate purposes." Please revise to elaborate further on
each of these
uses.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Revenue, page 100
4. Please expand your disclosure to clearly describe the extent to which
the sales
variance was impacted by each causal factor. See Item 303(b)(2)(iii) of
Regulation S-
K.
Results of Operations, page 101
5. We note your disclosure that "[t]he increase in gross margin was
primarily due to
growth in [y]our revenue due to the increased number of patients using
[y]our product
and improved collection efforts, as well as savings generated from
volume purchases
of reusable and disposable components and continued focus on
manufacturing process
improvements within cost of revenues." Please revise to discuss these
improved
collection efforts and manufacturing process improvements.
Critical Accounting Policies, page 105
6. Given the significance of your medical rental equipment asset on page
F-16, please
provide a policy disclosure that clearly explains the material risks
that impact the
valuation of this asset. Specifically, disclose whether a physical
inventory count is
performed, the frequency thereof, and whether such counts have ever
resulted in any
material adjustments to your financial statements. Given the risk factor
on page 30,
please describe the extent to which these assets have historically been
written-off
January 7, 2025
Page 3
when the corresponding rental agreement is terminated -- the materiality
of such
losses is not clear. Also, please disclose why the estimated useful
lives of these assets
range from 1.5 to 7 years.
Business
Our Growth Strategies, page 117
7. We note your disclosure that "[you] are expanding [y]our commercial
organization,
currently comprised of approximately 130 team members, including
regional sales
leaders, territory managers, associate sales representatives, and
clinical care
specialists" and "in the future, [you] intend to strategically
commercialize in select
international countries" and "anticipate Western Europe to be [y]our
initial focus due
to favorable market dynamics." Please revise to further discuss your
plans to expand
internationally, including the timing for any such expansion.
8. Please disclose when the ASSURE wearable ECG was commercially launched
and
note the markets where it is currently being prescribed.
Our Clinical Results and Studies, page 127
9. Please revise to disclose the eligibility criteria for the subjects, and
the mean age and
gender breakdown of patients participating in the ACE-DETECT and ACE-
CONVERT studies. Please also revise to provide additional detail
regarding the ACE-
PAS study, including whether there were any restrictions on patient
eligibility, the
gender breakdown of the patients, and how the false alarm rate and
median daily
usage figures were calculated.
Intellectual Property, page 134
10. We note your disclosure that "[you] have rights to 220 issued U.S. and
foreign patents
and 137 pending published and unpublished U.S. and foreign patent
applications."
Please disclose the jurisdiction of your foreign patents.
Underwriting
Reserved Shares, page 201
11. Please revise to disclose the process that prospective participants will
follow to
participate in the reserved shares program, the manner in which you will
communicate
with prospective participants about the program, when and how you will
determine
the allocation for the program, whether such allocation will change
depending on the
interest level of potential participants, and any other material
features of the program.
Disclose whether such shares will be subject to the lock-up agreement.
We note the
shares will be offered to "certain individuals associated with [you],"
including "team
members and business associates." Revise to identify with more
specificity the
category of persons eligible to participate in the program.
Exhibits
12. Please revise to file the Director Agreement with Ms. Ladone and the
agreement
with Ms. Mishan, mentioned on page 160, as exhibits pursuant to Item
601(b)(10) of
Regulation S-K.
January 7, 2025
Page 4
General
13. We note your disclosure regarding the WCD market and your competitive
position in
the market, including:
"In our top 50 hospitals, we believe we have successfully captured
approximately
45% of the currently available prescriptions;"
"In one study, patients with an LVEF of 30% or less were two times
more likely
to suffer from SCA compared to patients with an LVEF of more than
40%.
Another study showed that the absolute risk of SCA is highest during
the early
period following a cardiac event, especially within the first 30
days;"
"As a result of these features, only 6% of our patients experience a
false alarm,
compared to 46% for the competitor s device;"
"This rapid payor coverage adoption reflects payors desire for a
second choice to
the competitor product, our solution addressing an unmet need with a
female-
specific garment and the overall patient compliance benefits of the
ASSURE
WCD;"
"The LifeVest WCD only comes in one style, intended to fit both
genders, which
has been reported to cause significant discomfort, especially for
women given
many must wear a bra over the garment;"
"Commonly cited reasons for patients or providers failing to use the
competitor
device include high false alarm frequency, poor wearability and
patient
discomfort, a unisex-only garment, low utility data and limited
connectivity with
patients;" and
"We estimate that there are approximately 2,700 hospitals in the
U.S. that actively
prescribe WCDs as of November 30, 2024. We further estimate that
approximately 80% of U.S. WCD prescription volume is generated by
approximately 30% of these hospitals."
Please revise to provide support for these statements and the other
various statements
that you make regarding your competitive position and the
competitiveness of your
products.
Please contact Al Pavot at 202-551-3738 or Terence O'Brien at
202-551-3355 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Juan Grana at 202-551-6034 or Margaret Sawicki at 202-551-7153 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Industrial
Applications and
Services
cc: Sophia Hudson, P.C.