The news release, Neovasc Announces First Quarter 2019 Financial
Results, published at 4:00 p.m. ET on
May 9, 2019 inadvertently included a
statement that the Company had announced a financing. No such
announcement has been made. While the Company is always considering
ways to improve its capital position on terms that the Company
believes are favorable, there can be no assurance that any
financing will be completed. Any financing would be subject to the
parties involved agreeing to terms, receipt of any required
consents, customary closing conditions and regulatory approvals.
Set out below is the corrected press release in its entirety.
Neovasc Announces First Quarter 2019 Financial Results
NASDAQ, TSX: NVCN
Recent Highlights
- Announced the 1,000th recipient of a Neovasc
ReducerTM ("Reducer") implant
- Company sponsored Reducer Symposium attended by over 100
attendees at the 85th Annual Conference of the German Society of
Cardiology ("DGK")
- Completed the conceptual work for the TF/TS TiaraTM
("Tiara") system; planning to initiate a small clinical feasibility
study by end of 2020
- Resolved the last active litigation matter involving the
Company
VANCOUVER, May 9, 2019 /PRNewswire/ - Neovasc, Inc.
("Neovasc" or the "Company") (NASDAQ, TSX: NVCN), a leader in the
development of minimally invasive transcatheter mitral valve
replacement technologies and in the development of minimally
invasive devices for the treatment of refractory angina, today
reported financial results for the first quarter ended March 31, 2019.
"As our Tiara and Reducer programs continue to build momentum in
2019, the data collected for these two innovative technologies have
gained ever increasing attention among the medical community,
including at several international cardiology conferences and a
number of peer reviewed journals," said Fred Colen, President and Chief Executive
Officer of Neovasc. "We recently announced the 1,000th
recipient of a Reducer implant. This is a significant milestone for
the Reducer program, which we were able to achieve due to the
support of leading cardiologists from across the globe. The impact
of their support was on display recently at a symposium we
coordinated at the annual conference for DGK, which drew in more
than 100 attendees and had several key opinion leaders discussing
real-world Reducer cases, as well as various clinical data that has
been collected for the Reducer. We believe that the Reducer is well
on its way to being considered leading therapy for refractory
angina."
"We have actively defended our IP in the EU and the U.S., and
recently cleared all previously outstanding litigation claims. This
includes the German Appeals court decision to overturn the lower
court's decision, and as a result grant Neovasc the full and
exclusive patent rights for one of our basic Tiara patents in
Europe." concluded Mr. Colen.
The Tiara Mitral Valve
As of May 9, 2019, 73 patients have been treated with
Tiara, including 24 patients in the TIARA-I Early Feasibility
Clinical Study, 27 patients in the TIARA-II CE Mark Clinical Study
and 22 patients under compassionate use cases. Neovasc believes
that early results have been encouraging. The 30-day survival rate
for the 70 patients treated with the Tiara (i.e. those treated more
than 30 days ago) is 89% with one patient now over five years post
implant. The Tiara has successfully treated both functional and
degenerative Mitral Regurgitation patients, as well as patients
with pre-existing prosthetic aortic valves and mitral surgical
annuloplasty rings.
The Company received approval in Germany and the United Kingdom to proceed with Phase 2 of the
TIARA-II study for its Tiara. Neovasc has 18 active TIARA-II
clinical study sites across Germany, Italy, Israel, Spain, and the UK with additional sites being
activated in Germany and
The Netherlands. This will bring
the total number of clinical sites in the TIARA-II study to 20
sites, which is the maximum approved number of sites overall. The
Company continues to conduct pre-/post-implant analysis to review
the overall screening criteria. Additional field clinical
engineering support has also been established in Europe to provide patient screening and case
support. The Company believes that it is on track to submit the
Tiara for CE Mark approval in late 2020, pending the outcome of the
TIARA-I and TIARA-II studies.
The Transfemoral Trans-septal ("TF/TS") Tiara
system
Neovasc's R&D team completed TF/TS Tiara system
conceptual work at the end of the first quarter of 2019. The
development program is based on a concept that allows for a very
controlled and predictable implantation procedure similar to our
Tiara transapical program. Through numerous evaluations within in
vitro test methods, including system trackability, deployment
accuracy, and hydrodynamic assessment, as well as four small acute
animal trials, the team has narrowed down to two concepts that are
showing strong potential. The Company is initiating a small
clinical feasibility study with the TF/TS program, which is on
track to begin in late 2020.
As a future option, the Company is also developing the concept
of full retrievability, up to the final point of valve release by
the delivery system, for the Tiara system.
The Reducer
Reducer revenue increased 72% to
$585,793 for the three months ended
March 31, 2019, compared to the same
period in 2018, making it the highest quarterly revenue ever for
the Reducer. Building on this current sales momentum for the
Reducer, the Company recently implemented a broader
commercialization and therapy development approach in the EU and
Middle East. To support this
expanded strategy, Neovasc plans to continue expanding its direct
sales force in Germany to four
sales reps from one. The Company has also experienced increased
demand from other European countries, where it sells via
distributors. Neovasc is seeking to grow Reducer revenue by
about 50% in 2019 over actual revenue reported for 2018.
Global recognition for the Reducer continues to increase
throughout the cardiology community as a result of the growing data
portfolio on the device that has been published in peer reviewed
articles and in presentations at medical conferences. In
March 2019, the Company reported the
Reducer was featured in a "live case" broadcast to more than 3000
participants at the Cardiovascular Research Technologies (CRT)
meeting in Washington D.C. The successful live case was
performed by Dr Giannini at Maria Cecilia Hospital in Cotignola,
Italy.
The REDUCER-I post-market observational study has enrolled 199
of 400 patients across Europe at
21 active centers. Data from this study, the COSIRA study, as
well as published data from several physician-initiated studies
continues to reflect the very positive safety profile and
improvements in a patient's refractory angina, therefore improving
the patient's quality of life following Reducer implantation.
Results for the three month periods ended March 31, 2019 and 2018
Revenues
Revenues increased 72% to $585,793 for the three months ended March 31, 2019, compared to revenues of
$339,922 for the same period in 2018
as the Company continues its commercialization strategies.
Cost of Goods Sold
The cost of goods sold for the
three months ended March 31, 2019 was
$143,994 compared to $87,393 for the same period in 2018. The overall
gross margin for the three months ended March 31, 2019 was 75%, compared to 74% gross
margin for the same period in 2018.
Expenses
Total expenses for the three months ended
March 31, 2019 were $7,289,127 compared to $6,755,420 for 2018, representing an increase of
$533,707 or 8%. The increase in
total expenses for the three months ended March 31, 2019 compared to 2018 can be
substantially explained by a $915,919
increase in non-cash stock based compensation charges, a
$54,244 increase in non-cash
deprecation and a $127,095 non-cash
charge for accretion on collaboration, license and settlement
agreements provision, offset by a $576,364 decrease in employee termination
expenses as the Company completed a reduction in staff in the first
quarter of 2018. Other expenses increased by $12,813 as the Company continues to preserve
capital where possible while still advancing the commercialization
and development of its products.
Selling expenses for the three months ended March 31, 2019 were $368,233, compared to $286,938 for 2018, representing an increase of
$81,295 or 28%. The increase in
selling expenses for the three months ended March 31, 2019 compared to 2018 reflects an
increase in costs incurred for commercialization activities related
to the Reducer. The Company continues to minimize its selling
expenses as the cash resources of the Company are still
limited.
General and administrative expenses for the three months ended
March 31, 2019 were $2,680,931, compared to $2,469,091 for 2018, representing an increase of
$211,840 or 9%. The increase in
general and administrative expenses for the three months ended
March 31, 2019 compared to 2018 can
be substantially explained by a $516,933 increase in non-cash stock based
compensation charges and a $127,095
non-cash charge for accretion on collaboration, license and
settlement agreements provision, offset by $576,364 decrease in employee termination
expenses as the Company completed a reduction in staff in the first
quarter of 2018.
Product development and clinical trial expenses for the three
months ended March 31, 2019 were
$4,239,963 compared to $3,999,391 for 2018, representing an increase of
$240,572 or 6%. The increase in
product development and clinical trial expenses for the three
months ended March 31, 2019 can be
substantially explained by the increase of $374,399 in non-cash stock based compensation
charges.
The Company's expenses are subject to inflation and cost
increases. The Company has not seen a material increase in the
price of any of the components used in the manufacture of its
products and services.
Other Income and Loss
The other loss for the three
months ended March 31, 2019 was
$1,804,417 compared to other loss of
$49,324,003 for 2018, a decrease of
$47,519,586. The decrease in
the other loss can be substantially explained by the accounting
treatment of the November 2017 public
offering and concurrent private placement (the "2017
Financings").
Losses
The losses and comprehensive losses for the
three months ended March 31, 2019
were $8,615,375 and $7,918,822, respectively, or $0.21 basic and diluted loss per share, as
compared with losses and comprehensive losses of $55,880,548 and $55,466,915, respectively, or $0.38 basic and diluted loss per share, for the
same period in 2018. The decrease in the comprehensive loss
incurred for the three months ended March
31, 2019 compared to the same period in 2018 can be
substantially explained by a decrease in other losses, due to the
accounting treatment of the 2017 Financings.
Discussion of Liquidity and Capital Resources
Neovasc
finances its operations and capital expenditures with cash
generated from operations and through equity and debt
financings. As at March 31,
2019 the Company had cash and cash equivalents of
$12,115,455 compared to cash and cash
equivalents of $9,242,809 as at
December 31, 2018.
The Company's independent registered public accounting firm has
included a "going concern" emphasis of matter paragraph in its
report on our audited consolidated financial statements as at and
for the years ended December 31,
2018, 2017 and 2016. The Company will require significant
additional financing in order to continue to operate its
business. Given the current nature of the Company's capital
structure, there can be no assurance that such financing will be
available on favorable terms, or at all.
As of March 31, 2019, the Company
is in a positive working capital position of $8,493,278, with current assets of $13,768,048 and current liabilities of
$5,274,770. The Company will
require additional working capital in order to continue to operate
its business and there can be no assurance that such additional
working capital will be available on favorable terms, or at
all.
Cash used in operating activities for the three months ended
March 31, 2019 was $6,266,823, compared to $5,245,425 for the same period in 2018. For
the three months ended March 31,
2019, operating activities were $5,454,385, compared to $5,909,597 for the same period in 2018, a
decrease of $455,212 as the Company
continues to preserve capital where possible while still advancing
the commercialization and development of its products. Net
cash outflow from the net change in non-cash working capital items
for the three months ended March 31,
2019 was $883,938, compared to
net cash inflow of $691,591 in the
same period in 2018. The increase in net cash outflow can be
attributed to the payment of amounts due on collaboration, license
and settlement agreements as the Company made its first payment to
Endovalve.
Net cash applied to investing activities for the three months
ended March 31, 2019 was $53,662 compared to net cash applied to investing
activities of $17,162 for the same
period in 2017, primarily due to the increase in expenditure on
property, plant and equipment.
During the three months ended March 31,
2019, the Company received net proceeds of $1,200,400 from the exercise of Series C Warrants
and net proceeds of $8,118,030 from
the completion of two $5 million
underwritten public offerings in February and March.
Outstanding Share Data
As of May 9, 2019, the Company had 67,475,883 Common
Shares issued and outstanding. The following securities are
convertible into Common Shares: 9,333,632 stock options with a
weighted average exercise price of $2.90, 1,444,444 Broker Warrants with an exercise
price of $0.5625 and $8,890,000 principal amount of senior secured
convertible notes issued pursuant to the 2017 Financings (the
"Notes"), which Notes could convert into 19,755,556 Common Shares
(not taking into account the alternate conversion price or
anti-dilution mechanisms). Our fully diluted share capital as of
the same date is 98,009,515. Our fully diluted share capital,
adjusted on the assumption that all of the outstanding Notes are
converted using the alternate conversion price at the closing price
on May 8, 2019, is 98,597,906.
For description of the terms of the Notes issued pursuant to the
2017 Financings, see the form of Note previously filed on SEDAR and
with the SEC on Form 6-K. For a description of the risks associated
with the Notes issued pursuant to the 2017 Financings, the amount
of such securities exercised or converted to date, the dilution to
date caused by such exercises and conversions, and the potential
dilution in the future due to such exercises and conversions, see
the Company's Annual Report on Form 20-F and Management's
Discussion and Analysis for the three months ended March 31, 2019, which are available on SEDAR at
www.sedar.com and as filed or furnished with the SEC at
www.sec.gov.
The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards, as
issued by the International Accounting Standards Board.
Neovasc's Management's Discussion and Analysis and Condensed
Interim Consolidated Financial Statements and related notes for the
three months ended March 31, 2019 are
posted on the Company's website at www.neovasc.com and were filed
on SEDAR and with the SEC. In addition to the summary contained
herein, readers are encouraged to review the full disclosure in
these documents.
Conference Call and Webcast information
Neovasc will
be hosting a conference call today at 4:30
pm ET to discuss these results. To participate in the
conference call, please dial 877-407-9208 (domestic) or
201-493-6784 (international) and use passcode 13689510#.
A link to the live and archived audio webcast of the conference
call will also be available on the Presentations and Events page of
the Investors section of Neovasc's website at www.neovasc.com until
August 9, 2019.
About Neovasc Inc.
Neovasc is a specialty medical
device company that develops, manufactures and markets products for
the rapidly growing cardiovascular marketplace. Its products
include the Reducer, for the treatment of refractory angina, which
is not currently commercially available in the United States and has been commercially
available in Europe since 2015,
and the Tiara, for the transcatheter treatment of mitral valve
disease, which is currently under clinical investigation in
the United States, Canada and Europe. For more information, visit:
www.neovasc.com.
Forward Looking Statements
This news release contains
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws regarding the plan to initiate a small clinical
feasibility study by the end of 2020 for the TF/TS Tiara system,
increasing attention among the medical community regarding the
Company' products, beliefs as to the Reducer being considered a
leading therapy for refractory angina, beliefs as to the early
results of the TIARA-II CE Mark Clinical Study being encouraging,
beliefs as to the Company being on track to submit the Tiara for CE
Mark approval in late 2020, plans to develop the full
retrievability of the Tiara, plans to continue expanding the
Company's direct sales force in Germany to four reps, global recognition for
the Reducer continuing to increase throughout the cardiology
community, the Company continuing to minimize its selling expenses,
and the growing of the cardiovascular marketplace. Words and
phrases such as "believes", "may", "expects", "can", "could",
"scheduled", "plans" and "will", and similar words or expressions,
are intended to identify these forward-looking statements.
Forward-looking statements are based on estimates and assumptions
made by the Company in light of its experience and its perception
of historical trends, current conditions and expected future
developments, as well as other factors that the Company believes
are appropriate in the circumstances. Many factors and assumptions
could cause the Company's actual results, performance or
achievements to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
the substantial doubt about the Company's ability to continue as a
going concern; risks relating to the Notes issued pursuant to the
2017 Financings, resulting in significant dilution to the Company's
shareholders; risks relating to the Company's need for significant
additional future capital and the Company's ability to raise
additional funding; risks relating to cashless exercise and
adjustment provisions in the Notes issued pursuant to the 2017
Financings, which could make it more difficult and expensive for
the Company to raise additional capital in the future and result in
further dilution to investors; risks relating to the sale of a
significant number of common shares of the Company; risks relating
to the conversion of Notes issued pursuant to the 2017 Financings,
which may encourage short sales by third parties; risks relating to
the possibility that the Company's common shares may be delisted
from the Nasdaq Capital Market or the Toronto Stock Exchange, which
could affect their market price and liquidity; risks relating to
the Company's conclusion that it did not have effective internal
control over financial reporting as at December 31, 2018; risks relating to the
Company's common share price being volatile; risks relating to the
influence of significant shareholders of the Company over the
Company's business operations and share price; risks relating to
the Company's significant indebtedness, and its effect on the
Company's financial condition; risks relating to claims by third
parties alleging infringement of their intellectual property
rights; risks relating to lawsuits that the Company is subject to,
which could divert the Company's resources and result in the
payment of significant damages and other remedies; the Company's
ability to establish, maintain and defend intellectual property
rights in the Company's products; risks relating to results from
clinical trials of the Company's products, which may be unfavorable
or perceived as unfavorable; the Company's history of losses and
significant accumulated deficit; risks associated with product
liability claims, insurance and recalls; risks relating to use of
the Company's products in unapproved circumstances, which could
expose the Company to liabilities; risks relating to competition in
the medical device industry, including the risk that one or more of
the Company's competitors may develop more effective or more
affordable products; risks relating to the Company's ability to
achieve or maintain expected levels of market acceptance for the
Company's products, as well as the Company's ability to
successfully build its in-house sales capabilities or secure
third-party marketing or distribution partners; the Company's
ability to convince public payors and hospitals to include the
Company's products on their approved products lists; risks relating
to new legislation, new regulatory requirements and the efforts of
governmental and third-party payors to contain or reduce the costs
of healthcare; risks relating to increased regulation, enforcement
and inspections of participants in the medical device industry,
including frequent government investigations into marketing and
other business practices; risks associated with the extensive
regulation of the Company's products and trials by governmental
authorities, as well as the cost and time delays associated
therewith; risks associated with post-market regulation of the
Company's products; health and safety risks associated with the
Company's products and industry; risks associated with the
Company's manufacturing operations, including the regulation of the
Company's manufacturing processes by governmental authorities and
the availability of two critical components of the Reducer; risk of
animal disease associated with the use of the Company's products;
risks relating to the manufacturing capacity of third-party
manufacturers for the Company's products, including risks of supply
interruptions impacting the Company's ability to manufacture its
own products; risks relating to the Company's dependence on limited
products for substantially all of the Company's current revenues;
risks relating to the Company's exposure to adverse movements in
foreign currency exchange rates; risks relating to the possibility
that the Company could lose its foreign private issuer status under
U.S. federal securities laws; risks relating to breaches of
anti-bribery laws by the Company's employees or agents; risks
associated with future changes in financial accounting standards
and new accounting pronouncements; risks relating to the Company's
dependence upon key personnel to achieve its business objectives;
the Company's ability to maintain strong relationships with
physicians; risks relating to the sufficiency of the Company's
management systems and resources in periods of significant growth;
risks associated with consolidation in the health care industry,
including the downward pressure on product pricing and the growing
need to be selected by larger customers in order to make sales to
their members or participants; risks relating to the Company's
ability to successfully identify and complete corporate
transactions on favorable terms or achieve anticipated synergies
relating to any acquisitions or alliances; risks relating to the
Company's ability to successfully enter into fundamental
transactions as defined in the Notes issued pursuant to the 2017
Financings; anti-takeover provisions in the Company's constating
documents which could discourage a third party from making a
takeover bid beneficial to the Company's shareholders; and risks
relating to conflicts of interests among the Company's officers and
directors as a result of their involvement with other issuers.
These risk factors and others relating to the Company are discussed
in greater detail in the "Risk Factors" section of the Company's
Annual Report on Form 20-F and in the Management's Discussion and
Analysis for the three months ended March
31, 2019 (copies of which may be obtained at www.sedar.com
or www.sec.gov). The Company has no intention and undertakes no
obligation to update or revise any forward-looking statements
beyond required periodic filings with securities regulators,
whether as a result of new information, future events or otherwise,
except as required by law.
NEOVASC
INC.
|
Consolidated
Statements of Financial Position
|
As at March
31,
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
March
31,
2019
|
December
31,
2018
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
12,115,455
|
$
9,242,809
|
Accounts
receivable
|
|
|
720,022
|
647,143
|
Inventory
|
|
|
467,266
|
258,742
|
Prepaid expenses and
other assets
|
|
|
465,305
|
591,236
|
Total current
assets
|
|
|
13,768,048
|
10,739,930
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Restricted
cash
|
|
|
449,084
|
439,736
|
Right-of-use
asset
|
|
|
1,081,399
|
-
|
Property, plant and
equipment
|
|
|
793,105
|
813,628
|
Total non-current
assets
|
|
|
2,323,588
|
1,253,364
|
|
|
|
|
|
Total
assets
|
|
$
|
16,091,636
|
$
11,993,294
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
4,144,908
|
$
4,610,560
|
Lease
liabilities
|
|
|
403,191
|
-
|
Convertible
Note
|
|
|
726,671
|
1,423,224
|
Total current
liabilities
|
|
|
5,274,770
|
6,033,784
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
Accrued
liabilities
|
|
|
2,335,756
|
2,241,979
|
Lease
liabilities
|
|
|
759,797
|
-
|
Convertible
Note
|
|
|
10,526,999
|
13,194,112
|
Derivative warrant
liability from financing
|
|
|
-
|
190,303
|
Total non-current
liabilities
|
|
|
13,622,552
|
15,626,394
|
|
|
|
|
|
Total
liabilities
|
|
$
|
18,897,322
|
$
21,660,178
|
|
|
|
|
|
Equity
|
|
|
|
|
Share
capital
|
|
$
|
317,888,794
|
$
304,460,533
|
Contributed
surplus
|
|
|
27,612,565
|
26,260,806
|
Accumulated other
comprehensive loss
|
|
|
(6,956,475)
|
(7,653,028)
|
Deficit
|
|
|
(341,350,570)
|
(332,735,195)
|
Total
equity
|
|
|
(2,805,686)
|
(9,666,884)
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
16,091,636
|
$
11,993,294
|
NEOVASC
INC.
|
Consolidated
Statements of Loss and Comprehensive Loss
|
For years ended March
31,
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
2019
|
2018
|
|
|
|
|
REVENUE
|
|
$
|
585,793
|
$
|
339,922
|
COST OF GOODS
SOLD
|
|
(143,994)
|
(87,393)
|
GROSS
PROFIT
|
|
441,799
|
252,529
|
|
|
|
|
EXPENSES
|
|
|
|
Selling
expenses
|
|
368,233
|
286,938
|
General and
administrative expenses
|
|
2,680,931
|
2,469,091
|
Product development
and clinical trials expenses
|
|
4,239,963
|
3,999,391
|
|
|
7,289,127
|
6,755,420
|
|
|
|
|
OPERATING
LOSS
|
|
(6,847,328)
|
(6,502,891)
|
|
|
|
|
OTHER
(EXPENSE)/INCOME
|
|
|
|
Interest
income
|
|
3,709
|
26,036
|
Impairment on
right-of-use asset
|
|
(260,616)
|
-
|
Gain/(loss) on
foreign exchange
|
|
20,518
|
(72,563)
|
Unrealized loss on
derivative liability and convertible note
|
|
(781,621)
|
(4,337,049)
|
Realized loss on
exercise of warrants and convertible note
|
|
(786,407)
|
(17,557,693)
|
Amortization of
deferred loss
|
|
-
|
(27,382,735)
|
|
|
(1,804,417)
|
(48,324,003)
|
LOSS BEFORE
TAX
|
|
(8,651,745)
|
(55,826,894)
|
|
|
|
|
Tax
recovery/(expense)
|
|
36,370
|
(53,654)
|
LOSS FOR THE
PERIOD
|
|
$
|
(8,615,375)
|
$
|
(55,880,548)
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME FOR THE PERIOD
|
|
|
|
Fair market value
changes in convertible note due to changes in own credit
risk
|
|
696,553
|
413,633
|
|
|
696,553
|
413,633
|
LOSS AND OTHER
COMPREHENSIVE LOSS FOR THE PERIOD
|
|
$
|
(7,918,822)
|
$
|
(55,466,915)
|
|
|
|
|
LOSS PER
SHARE
|
|
|
|
Basic and diluted
loss per share
|
|
$
|
(0.21)
|
$
|
(0.38)
|
View original
content:http://www.prnewswire.com/news-releases/neovasc-announces-first-quarter-2019-financial-results-300847858.html
SOURCE Neovasc Inc.