via NewMediaWire --Neovasc, Inc.("Neovasc" or the "Company")
(NASDAQ, TSX: NVCN) today reported financial results for the
third quarter ended September 30, 2021.
Third Quarter Highlights
-
Strong progress against all three value creation strategies.
-
Generated record revenue of approximately $703,000 in the quarter,
up 12% from the same period in 2020.
-
Advanced strategic focus to obtain additional reimbursement for the
Neovasc Reducer in multiple EU countries and the United
States.
-
Continued preparations for COSIRA II US trial for Reducer, and
received FDA approval for the Investigational Device Exemption
(“IDE”) for the trial in September.
-
Experienced a reduction in expenditures and cash burn from
cost-cutting decisions in the first half of the year, extending the
expected cash runway into 2024.
“Neovasc continued to make good
progress with its value creation strategies during the third
quarter. The first of these three strategic initiatives is to
expand the use of Reducer in Europe, which we did as we generated
record revenues during the quarter. Additionally, we
continue to have productive dialogue with payers in multiple
countries, including the United Kingdom, France, Germany and the
United States, to secure reimbursement status for the Reducer. We
believe that this novel device’s efficacy will ultimately be widely
recognized by the medical industry,” said Fred Colen, President and
Chief Executive Officer of Neovasc. “We recently
received FDA approval for the IDE for the COSIRA-II pivotal trial
and expect to enroll the first patients in late 2021. With respect
to Tiara TA, we continue to work with our notified body in Europe
to pursue the CE mark for the Tiara TA device and expect to have a
decision in late 2022. We recognize that there is much more work to
do, but we are confident that we have the team in place and that we
are steadily advancing our value creation strategies.”
Progress on COSIRA-II Clinical
Study
Neovasc’s key initiative for the remainder of
this year is to advance toward the first patient enrollment in its
new US IDE clinical study, COSIRA-II, with the aim of supporting a
future PMA submission to the FDA. The Company remains on track to
enroll the first patient in the trial in Q4 of 2021. It is engaged
with several top clinical trial sites and continues to progress on
site qualifications, contracting, and Institutional Review Board
(“IRB”) approvals. Earlier this month, Neovasc received its first
IRB approval for the Trial from WCG IRB (formerly Western IRB), the
largest independent review board in the United States, with over
3,000 partner hospitals. The Company is also working on a potential
path towards US reimbursement for coverage and device payment by
CMS during the COSIRA II clinical trial. This is a complex
undertaking, and the outcome is not certain at all, but we have
initiated our request.
Mechanism of action
research
Recently, European physicians demonstrated a
very meaningful improvement in the absolute coronary blood flow
into the heart muscle upon implantation of the Reducer in two
consecutive patients. This is the first time this procedure could
be demonstrated in humans using the most advanced diagnostic tools
and leading science. The physicians, both world-renowned experts in
coronary physiology, were emphatic about the positive results. For
the first time, the physicians were able to demonstrate, in real
time, that implantation of the coronary sinus Reducer resulted in
an immediate increase in blood flow to the heart muscle.
Nasdaq $1 minimum bid price
breach
Neovasc is currently in breach of Nasdaq’s $1
minimum bid price rule and has been granted an initial grace period
to cure this breach. The Company can cure this breach by
closing 10 consecutive trading days above $1, before November 22,
2021. However, it remains unlikely that the Company can achieve
this in the time remaining. Neovasc believes that according to the
Nasdaq rules and guidelines it could be eligible for a second
180-day grace period until May 21, 2022, providing the Company with
additional time to cure the breach. The Company will make an
application for a second grace period in the coming weeks, but
Nasdaq will only be able to decide on eligibility for this
additional grace period on or after the last day of the initial
grace period, on November 22, 2021.
In addition, since the Company’s shareholders
equity remains greater than $2.5 million, satisfying the
shareholders equity requirement, the Nasdaq $35 million market
capitalization requirement is not applicable for Neovasc.
Cost-reduction program
“We are pleased to note that our third quarter
results demonstrate the benefits of the difficult cost cutting
decisions we made in the first half of 2021, as Neovasc experienced
significant expense reduction in the quarter and helped extend our
projected cash runway into mid-2024,” Chris Clark, Neovasc’s Chief
Financial Officer, commented. “We now have the financial security
to continue our work for years not months, and that includes
conducting the upcoming pivotal COSIRA II trial.”
Financial results for the third quarter
ended September 30, 2021
Revenues increased by 12% to $703,420 for the
three months ended September 30, 2021, compared to revenues of
$626,418 for the same period in 2020.
The cost of goods sold for the three months
ended September 30, 2021 was $164,843 compared to $150,503 for the
same period in 2020. The overall gross margin for the three months
ended September 30, 2021 was 77%, compared to 76% gross margin for
the same period in 2020.
Total expenses for the three months ended
September 30, 2021 were $7,263,253 compared to $10,644,367 for
2020, representing a decrease of $3,381,114 or 32%.
The operating losses and comprehensive losses
for the three months ended September 30, 2021 were $6,724,676 and
$6,915,962, respectively, or $0.11 basic and diluted loss per
share, as compared with $10,168,452 operating losses and
$10,392,921, comprehensive loss, or $0.51 basic and diluted loss
per share, for the same period in 2020.
Conference Call and Webcast
information
Neovasc will be hosting a conference call and
audio webcast today at 4:30 pm ET to discuss these results.
Domestic: 1-877-407-9208International:
1-201-493-6784Reference ID
Code: 13723809
Parties wishing to access the call via webcast
should use the link in the Investors section of the Neovasc website
at https://www.neovasc.com/investors/. A replay of
the webcast will be available in the Investors sections of the
website approximately 30 minutes after the conclusion of the
call.
About Neovasc Inc.
Neovasc is a specialty medical device company that
develops, manufactures and markets products for the rapidly growing
cardiovascular marketplace. The Company is a leader in the
development of minimally invasive transcatheter mitral valve
replacement technologies, and minimally invasive devices for the
treatment of refractory angina. Its products include the Neovasc
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 Tiara™, for the
transcatheter treatment of mitral valve disease, which is currently
under clinical investigation in the United States, Canada, Israel
and Europe. For more information,
visit: www.neovasc.com.
NEOVASC INC.
Condensed Interim Consolidated
Statements of Financial Position
(Expressed in U.S.
dollars)
(Unaudited)
|
September 30,2021 |
December 31,2020 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
|
$
55,827,026 |
$
12,935,860 |
Accounts receivable |
|
1,787,257 |
987,057 |
Finance lease receivable |
|
68,815 |
95,849 |
Inventory |
|
1,601,815 |
839,472 |
Research and development supplies |
|
20,934 |
167,378 |
Prepaid expenses and other assets |
|
912,160 |
705,471 |
Total current assets |
|
60,218,007 |
15,731,087 |
|
|
|
|
Non-current assets |
|
|
|
Restricted cash |
|
484,010 |
470,460 |
Right-of-use asset |
|
549,892 |
830,551 |
Finance lease receivable |
|
- |
42,841 |
Property and equipment |
|
190,272 |
803,280 |
Deferred loss on 2021 derivative warrant
liabilities |
|
10,730,698 |
- |
Total non-current assets |
|
11,954,872 |
2,147,132 |
|
|
|
|
Total assets |
|
$
72,172,879 |
$
17,878,219 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
|
$
4,812,486 |
$
7,243,500 |
Lease liabilities |
|
282,051 |
342,910 |
2019 Convertible notes |
|
154,531 |
38,633 |
2020 Convertible notes, warrants and derivative
warrant liabilities |
|
145,688 |
37,525 |
Total current liabilities |
|
5,394,756 |
7,662,568 |
|
|
|
|
Non-current Liabilities |
|
|
|
Lease liabilities |
|
349,676 |
596,881 |
2019 Convertible notes |
|
6,410,532 |
6,156,724 |
2020 Convertible notes, warrants and
derivative warrant liabilities |
|
1,694,237 |
1,484,529 |
2021 Derivative warrant liabilities |
|
722,293 |
- |
Total non-current liabilities |
|
9,176,738 |
8,238,134 |
|
|
|
|
Total liabilities |
|
$
14,571,494 |
$
15,900,702 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
$
439,685,360 |
$
369,775,383 |
Contributed surplus |
|
39,860,975 |
35,045,056 |
Accumulated other comprehensive loss |
|
(7,981,719) |
(7,615,717) |
Deficit |
|
(413,963,231) |
(395,227,205) |
Total equity |
|
$
57,601,385 |
$
1,977,517 |
|
|
|
|
Total
liabilities and equity |
|
$
72,172,879 |
$
17,878,219 |
NEOVASC INC.
Condensed Interim Consolidated Statements
of Loss and Comprehensive Loss
For the three and nine
months ended September 30, 2021 and 2020(Expressed in U.S. dollars)
(Unaudited)
|
|
For the three months endedSeptember 30 |
For the nine months endedSeptember 30 |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
REVENUE |
$
703,420 |
$
626,418 |
$ 1,788,282 |
$ 1,443,360 |
COST OF GOODS SOLD |
164,843 |
150,503 |
346,342 |
349,735 |
GROSS PROFIT |
538,577 |
475,915 |
1,441,940 |
1,093,625 |
|
|
|
|
|
EXPENSES |
|
|
|
|
Selling expenses |
786,366 |
498,671 |
2,257,157 |
1,504,714 |
General and administrative expenses |
2,999,003 |
4,642,979 |
13,334,376 |
10,955,991 |
Product development and clinical trials expenses |
3,477,884 |
5,502,717 |
11,840,199 |
14,615,847 |
|
7,263,253 |
10,644,367 |
27,431,732 |
27,076,552 |
|
|
|
|
|
OPERATING LOSS |
(6,724,676) |
(10,168,452) |
(25,989,792) |
(25,982,927) |
|
|
|
|
|
OTHER INCOME/(EXPENSE) |
|
|
|
|
Interest and other income |
507,775 |
495,628 |
557,529 |
554,278 |
Interest and other expense |
(33,551) |
(191,989) |
(352,114) |
(729,539) |
Loss on foreign exchange |
(8,162) |
(65,983) |
(28,400) |
(191,636) |
Unrealized gain on warrants, derivative liability warrants and
convertible notes |
1,738,258 |
730,242 |
16,997,651 |
4,233,073 |
Realized (loss)/gain on exercise or conversion of warrants,
derivative liability warrants and convertible notes |
(223,747) |
1,567,127 |
(2,119,091) |
|
587,497 |
Amortization of deferred loss |
(2,791,494) |
(2,601,250) |
(7,817,937) |
(2,736,332) |
|
(810,921) |
(66,225) |
7,237,638 |
1,717,341 |
LOSS BEFORE TAX |
(7,535,597) |
(10,234,677) |
(18,752,154) |
(24,265,586) |
|
|
|
|
|
Tax refund/(expense) |
- |
- |
16,128 |
(5,997) |
LOSS FOR THE PERIOD |
$
(7,535,597) |
$ (10,234,677) |
$ (18,736,026) |
$ (24,271,583) |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE
PERIOD |
|
|
|
|
Fair market value changes in convertible notes due to changes in
own credit risk |
619,635 |
(158,244) |
(366,002) |
(1,029,200) |
LOSS AND OTHER COMPREHENSIVE LOSS FOR THE
PERIOD |
$
(6,915,962) |
$ (10,392,921) |
$ (19,102,028) |
$ (25,300,783) |
|
|
|
|
|
LOSS PER SHARE |
|
|
|
|
Basic and diluted loss per share |
$
(0.11) |
$
(0.51) |
$
(0.31) |
$
(1.69) |
Investors
Mike CavanaughICR Westwicke Phone:
+1.617.877.9641Mike.Cavanaugh@westwicke.com
MediaSean LeousICR
Westwicke Phone: +1.646.677.1839Sean.Leous@icrinc.com
Forward-Looking Statement
DisclaimerCertain statements in this news release contain
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws that may not be based on historical fact. When used
herein, the words "expect", "anticipate", "estimate", "may",
"will", "should", "intend," "believe", and similar expressions, are
intended to identify forward-looking statements. Forward-looking
statements may involve, but are not limited to, expectations as to
thefuture growth of the Company, the Company making good progress
with its value creation strategies, the expansion of the use of the
Reducer in Europe, securing reimbursement status for the Reducer,
taking the recently received FDA approval for the Investigational
Device Exemption for the COSIRA-II pivotal trial and enrolling
patients in late 2021 and the perusal of a CE mark decision for the
Tiara TA. 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 doubt about the Company's
ability to continue as a going concern; risks related to the recent
COVID-19 coronavirus outbreak or other health epidemics, which
could significantly impact the Company's operations, sales or
ability to raise capital or enroll patients in clinical trials and
complete certain Tiara development milestones on the Company's
expected schedule; risks relating to the Company's need for
significant additional future capital and the Company's ability to
raise additional funding; risks relating to the sale of a
significant number of Common Shares; risks relating to the
possibility that the Company's common shares (the "Common Shares")
may be delisted from the Nasdaq or the TSX, which could affect
their market price and liquidity; risks relating to the Company's
conclusion that it did have effective internal control over
financial reporting as of December 31, 2020 but not at December 31,
2019 and 2018; risks relating to the Common Share price being
volatile; risks relating to the possibility that the Common Shares
may be delisted from the Nasdaq or the TSX, which could affect
their market price and liquidity; risks relating to the Company's
significant indebtedness, and its effect on the Company's financial
condition; 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; risks relating
to claims by third-parties alleging infringement of their
intellectual property rights; risks relating to 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
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; risks relating to 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 relating to the extensive regulation of the
Company's products and trials by governmental authorities, as well
as the cost and time delays associated therewith; risks relating to
post-market regulation of the Company's products; risks relating to
health and safety concerns associated with the Company's products
and industry; risks relating to 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; risks relating to the
possibility 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 the possibility that the Company could be treated
as a "passive foreign investment company"; risks relating to
breaches of anti-bribery laws by the Company's employees or agents;
risks relating to 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;
risks relating to 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 relating to 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
conflicts of interests among the Company's officers and directors
as a result of their involvement with other issuers; and risks
relating to antitakeover provisions in the Company's constating
documents which could discourage a third-party from making a
takeover bid beneficial to the Company's shareholders. These risk
factors and others relating to the Company are discussed in greater
detail in the "Risk Factors" section of the Company's Annual
Information Form and in the Management's Discussion and Analysis
for the three and nine months ended September 30, 2021 (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.
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.
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