Hello, and welcome to the Ra Medical Systems third quarter 2021 financial results conference call. All participants are now in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note, today's event is being recorded. I now would like to turn the conference over to Jody Cain. Please go ahead.
This is Jody Cain with LHA. Thank you for participating in today's call. Joining me from Ra Medical are Will McGuire, Chief Executive Officer, and Andrew Jackson, Chief Financial Officer. Earlier today, Ra Medical issued a news release announcing financial results for the third quarter of 2021. If you've not received this news release, or if you'd like to be added to the company's email distribution list, please contact LHA at 310-691-7100 and speak with Daniel Shurtleff. You can also sign up for email alert and access the news release in the investor relations section of the Ra Medical website at ir.ramed.com. During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
To the extent these statements made by management are not descriptions of historical facts regarding Ra Medical, they are forward-looking statements reflecting the beliefs and expectations of management as of November 15, 2021. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the company's control and could materially affect actual results. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time, and the impact of COVID-19 on Ra Medical's operations, financial results, and outlook is the best estimate based on information for today's discussion.
For details about these risks, please see the news release that accompanies this call and the company's SEC filings, including Ra Medical's annual report on Form 10-K for the year ended December 31, 2020, and Form 10-Q for the period ended September 30, 2021, which was filed with the SEC earlier today. Ra Medical expressly disclaims any intent or obligation to update forward-looking statements except as required by law. Today's conference call remarks will include both GAAP and non-GAAP financial results. Ra Medical believes the non-GAAP financial results provide investors with useful supplemental information about the financial performance of the business, enable the comparison of financial results between periods for certain items that may vary independently of business performance, and allow for greater transparency with respect to key metrics used by management in operating the business.
These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliation between GAAP and non-GAAP financial measures can be found at the end of the financial results news release that was issued earlier today. With that, I'd like to turn the call over to Will McGuire. Will?
Thanks, Jody. Good afternoon, everyone, and thank you for joining us. I'm pleased to have this opportunity to update you on our progress in developing a competitive vascular product portfolio targeting the large and growing market for medical devices to treat peripheral artery disease, or PAD. I'll start with our pivotal clinical study that's underway and is designed to obtain an FDA atherectomy indication. As a reminder, the study is approved for up to 10 clinical sites and 100 subjects. Seven sites are currently cleared to enroll subjects. This is an increase of three sites since our last quarterly conference call in mid-August. These seven sites include the reactivation of one site following relocation and the opening of two new clinical sites in Michigan and Florida, both of which are led by highly regarded interventional cardiologists.
1 of the 7 sites has reached the maximum number of patients allowed for enrollment in our study, and the remaining 6 sites are actively screening subjects. We have enrolled an additional 15 subjects in the study since mid-August, bringing total enrollment to date to 85 subjects. I continue to be pleased with the pace of enrollment and appreciate the work of our clinical team in to navigate continued challenges due to COVID-19. Next, I would like to provide an update on our engineering initiatives for next generation DABRA catheters. We have generated accelerated aging and real-time aging data for various catheter configurations that we believe support the achievement of a 6-month shelf life for our next gen catheters and are planning to generate additional data to support a shelf life of at least 12 months. Our team made good progress on our catheter development projects last quarter.
As you will recall, in Q2, we achieved design freeze on our next-gen catheter that incorporates a braided over jacket to facilitate deliverability and make the catheter more robust when navigating tortuous anatomy. I continue to expect we will complete all engineering work and file for regulatory clearance with the FDA for this next-gen DABRA catheter in the first quarter of 2022. The engineering team is also proceeding with the development of an improved DABRA catheter that is compatible with standard 0.014 interventional guide wires. This project leverages the work of the previously described next-gen DABRA catheter with the added guidewire compatibility design goal. In response to physician feedback from the workshop we held with interventional physicians in June, our engineering team is making a few design changes to further increase robustness and deliverability.
We intend to conduct another hands-on workshop with interventional physicians later this year to confirm our design changes have achieved the desired performance improvements. The timing of this project, as well as other projects to a lesser extent, has been impacted by supply chain delays and the availability of key resources due to a tight labor market. We now believe that the overall design work for the guidewire-compatible catheter will be completed in the first quarter of 2022 rather than by the end of 2021. Before leaving R&D, I want to update you on two additional initiatives we discussed on our last quarterly call. First, we continue to execute on the laser development front with various upgrades to the DABRA system, and we anticipate completing design work for a new CPU over the next few months.
Second, we continue to build upon our work showing the DABRA laser system can be utilized to create shockwaves of sufficient magnitude to fracture calcium in arteries. This type of procedure is commonly referred to as intravascular lithotripsy. Fracturing calcium in coronary or peripheral arteries can make the arteries less rigid, thus making subsequent procedures easier and/or safer to perform. We have fabricated a prototype system and intend to conduct a preclinical study in the next few months to confirm our initial benchtop results. Although it's still very early, I continue to be quite excited about this application, given the potential to create significant shareholder value. Next, as announced in August, we completed the divestiture of our dermatology business during the third quarter. That transaction provided immediate cash proceeds to further our initiatives in the large and growing vascular market.
Andrew will provide further details on the divestiture in a moment. Lastly, I would like to thank everyone at Ra Medical for their hard work and dedication. In addition to making real progress on our engineering projects and supporting enrollment in our pivotal clinical study, the team also executed the divestiture of our dermatology business and continued building more robust quality and compliance systems to support our future growth plans. Now, I will turn the call over to Andrew to discuss our financial results. Andrew?
Thank you, Will. As Will just noted, we completed the divestiture of the dermatology business in August. The transaction provided us with net cash proceeds of approximately $3.5 million. We reported Q3 2021 and historical operating results and related assets and liabilities of the dermatology business as discontinued operations in our financial statements. Unless otherwise noted, the financial results I'll discuss today relate to continuing operations. In addition to the proceeds from selling the dermatology business during the third quarter, we further bolstered our cash position by raising approximately $4.4 million in net proceeds from our at-the-market facility. We exited the third quarter of 2021 with cash and cash equivalents of approximately $20.6 million. As a reminder, in late 2020, we paused commercial shipments of catheters and are only supplying catheters to support our atherectomy clinical study.
We do, however, recognize revenue on products used in the clinical study. Net revenue for the third quarter of 2021 consisted of product sales of $5,000. This compares with net revenue for the third quarter of 2020 of $68,000, which consisted of product sales of $66,000 and service and other revenue of $2,000. Gross loss was $0.2 million for the third quarter of 2021, compared with $0.5 million for the third quarter of 2020. SG&A expenses for the third quarter of 2021 were $4.2 million versus $4.7 million for the prior year period. SG&A expenses for the third quarters of 2021 and 2020 included stock-based compensation expense of $0.1 million and $0.8 million, respectively.
SG&A expenses for the third quarters of 2021 and 2020 included legal expense of $1.5 million and $0.6 million, respectively. The increase in legal expenses is primarily due to amounts accrued relating to the class action lawsuit. R&D expenses for the third quarter of 2021 were $2.9 million, compared with $2.3 million for the prior year period. The 2021 quarter reflects an increase of $0.7 million in personnel, supplies, and consulting expenses related to work with our next-generation catheters, including increased shelf life and improved deliverability, and also progress with the atherectomy clinical study. R&D expenses for the third quarters of 2021 and 2020 included stock-based compensation expense of $30,000 and $0.1 million, respectively.
The GAAP loss from continuing operations for the third quarter of 2021 was $7.4 million, or $1.15 per share on 6.4 million weighted average shares outstanding. This compares with the GAAP net loss from continuing operations for the prior year quarter of $7.5 million, or $3.15 per share on 2.4 million weighted average shares outstanding. Net income from discontinued operations for the third quarter of 2021 was $3.1 million, or $0.48 per share on 6.4 million weighted average shares outstanding.
This compares with a net loss from discontinued operations for the third quarter of 2020 of $0.3 million or $0.11 per share on 2.4 million weighted average shares outstanding. Net income from discontinued operations in the third quarter of 2021 included a gain on sale of the dermatology business of $3.5 million. Adjusted EBITDA for the third quarter of 2021 was -$6.9 million, compared with -$6.1 million for the prior year period. A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA is included in today's press release. We used $7.2 million in cash to fund operating activities for both continuing and discontinued operations during the third quarter of 2021.
This compares with $6.0 million used to fund operating activities for both continuing and discontinued operations during the third quarter of 2020. The increase was primarily due to higher spending in R&D and compliance. With that, I'd like to open up the call for questions. Operator?
Yes, thank you. As a reminder, if you wish to register a question for today's Q&A session, you will need to press star then the number one on your telephone. If your question has been answered and you wish to withdraw your polling request, you may do so by pressing star then two. If you're using a speakerphone, please cover your handset before entering your request.
Before answering questions, I want to mention that earlier today, a stipulation of settlement that resolved the claims asserted in the securities class action was filed with the court. The settlement provides for a payment to the plaintiff class of $10 million. We expect that Ra Medical will pay approximately $1 million towards the settlement, the amount remaining on our self-insured retention deductible, and our insurers will pay the remaining balance. The proposed settlement requires both preliminary and final approval by the court. I also want to mention that we will be presenting at the H.C. Wainwright BioConnect conference, and we'll be holding in-person investor meetings during the JP Morgan Healthcare Conference in San Francisco, with both events taking place January 10-13, 2022.
We invite you to view the webcast of our BioConnect presentation, which will be posted to our corporate website beginning January tenth, and to contact LHA to arrange an in-person meeting with us.
Okay. Actually, we have a question on the phone now, and that comes from Vernon Bernardino with H.C. Wainwright.
Hi, guys. Thanks for taking the question, and congrats on the progress, and congrats on the successful divestiture of Pharos. I just wanna ask you a few questions as far as the lithotripsy program. You know, next steps would be to complete prototype systems. What kind of timeframe would that entail as far as getting prototypes developed?
Hi, Vernon. This is Will. Hey, thanks for the question.
Hey, Will.
Yeah, we're completing some prototypes right now. I've actually seen one in the lab here at Ra Medical, and I'm not sure if we'll have several prototypes or just how many for the next study. We do have one prototype completed now. The next step for us is to do some preclinical work, so we'll actually test a couple of prototype systems in a preclinical setting and see if we get the same results that we've gotten in our benchtop settings, which is that we can fracture calcium either in coronary or peripheral arteries. Hopefully that should happen here very soon. I expect that to happen actually before the end of the year, and then we can provide an update early next year or during our next call.
What kind of preclinical models, what kind of work is entailed to test the prototypes? You know, is it you know pig or is it a rabbit or what kind of preclinical systems or models are used to or do you intend to test the prototypes in?
Yeah. You know, what we're looking for is basically arteries that have calcium in them. In this case, it'll probably be excised arteries that are calcified. Sometimes it can be difficult in some of the animal models to have calcium. Those will probably be excised arteries with confirmed calcium to actually test how we perform in that setting.
Once you have the prototype and you start conducting the clinical studies, it should be relatively quickly.
Yeah, I think in the next, probably in the next few months. What that would do is kind of. We think, you know, we have a pretty high confidence we'll be successful, but we do want to conduct that work. If successful, kind of our next step would be to plan what comes next from a development standpoint and really start plotting the path there. We're not getting ahead of ourselves. We wanna first have this preclinical work done, show the kind of success that we expect to, and then start putting our plans together to move this project forward.
That would be something, again, that we could talk about early next year, certainly at our next call, kind of how the work went and then what our plans are going forward and what you should expect from us in 2022.
Last question from me, and I appreciate you taking all these questions. You know, with you know, hundreds of thousands of PAD procedures and such a large coronary market that you could address, that is the people with calcified vessels, what is the current treatment for these people?
I mean, if you look at both the peripheral and the coronary markets, current treatment for calcified vessels would be either another atherectomy product. CSI has built a nice business treating calcified vessels both in the periphery as well as in the coronary. There is a company which has also really built a business on lithotripsy. They're fairly early on, but they are treating both peripheral and coronary arteries. It's a different system than what we have. It really is more of a system where you have a balloon and you inflate a balloon, and then you have some emitters that create the shock waves. That company is called Shockwave Medical.
If you take a look at them, you can see that there's a large market out there and pretty big expectations regarding their future revenue because they have a market cap of around $7 billion. A big market, plenty of room for other technologies and we think we have something that could be very competitive in that marketplace. Early on for us, again, we're quite encouraged and look forward to moving this project forward.
Thank you. I appreciate those insights. It'll help me to take a look at the market more closely. I appreciate that.
Sure. Thanks for your questions.
Thank you. At this time, I would like to return the floor to Will McGuire for any closing comments.
Thank you again for joining us this afternoon and for your interest in Ra Medical. I believe focusing our resources on the large, growing PAD market with our advanced excimer laser-based technology puts us on a path to building shareholder value. As always, we are committed to our mission of saving lives and limbs. Have a nice afternoon.
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.