ViewRay, Inc. VRAY recently reached a couple of collaborative agreements with two medical device majors, namely Elekta AB and Medtronic plc. (MDT) in the field of MR-guided radiation therapy.
With Elekta, an equipment and software provider for cancer and brain disorders, ViewRay signed a non-binding memorandum of understanding to advance in the field of MR-linac technology. This will likely improve MR-linac’s application as a radiation therapy with better precision, medical outcomes and operational efficiency.
Per this deal, both companies expect to work on clinical studies for exploring the impact of MR-guided therapy in oncology and coordinate on expanding its potential into other areas that could benefit from the technology.
The companies are also exploring initiatives, such as the formation of a cooperative group and working on healthcare policy.
Under the financial terms of this contract, Elekta will invest capital of up to a 9.9% minority interest in ViewRay. However, this is subject to conditions stated in a commitment pact that includes the condition of consummation of an equity capital raise of minimum $75 million. Elekta's investment in ViewRay is contingent on an aggregate cap of $36 million.
With Medtonic, ViewRay entered into a clinical collaboration through a non-binding memorandum of understanding. According to ViewRay, the partnership aims at exploring the clinical benefits of the MRIdian MR-guided radiation therapy system. Alike the Elektra alliance, Medtronic is also committed to invest in a minority stake in ViewRay, pending the approvals described in a commitment agreement.
The combined investments from Elekta and Medtronic are based upon the collaboration of an equity capital raise of at least $75 million.
Market Prospects
Going by a MarketsandMarkets report, the global Magnetic Resonance Imaging systems market is of late growing immensely on the back of an increasing geriatric population. This market was valued at $5.59 billion in 2017 and is projected to see a CAGR of 3.9% to $7.09 billion by 2023.
Looking at this growth trajectory, we believe, ViewRay’s double collaborations with the MedTech majors will be well-timed and strategic.
Share Price Performance
Shares of ViewRay have rallied 21.9% in a month’s time, outperforming the industry’s 4.7% growth.
Zacks Rank and Key Picks
ViewRay currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, National Vision Holdings, Inc EYE and NuVasive, Inc NUVA.
Haemonetics has a Zacks Rank #1 (Strong Buy) and a projected long-term earnings growth rate of 13.5%.
National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NuVasive’s long-term earnings growth rate is estimated at 10.9%. It currently carries a Zacks Rank of 2.
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