Sunshine Heart, Inc. (Nasdaq:SSH) today announced its financial
results and provided a corporate update for the fourth quarter and
full-year ended December 31, 2013.
Fourth Quarter Corporate Highlights:
- Eight sites in total activated in the C-Pulse® COUNTER HF™ U.S.
investigational pivotal study with a total of 24 additional sites
committed to participate, raising the total number to 32. This is
an increase of six additional centers committed sequentially in the
fourth quarter. As reported in January 2014, one additional patient
was enrolled for a total of three patients through year-end.
- Eight sites in total activated in the C-Pulse OPTIONS HF EU
post-market study. One additional implant was completed in the
fourth quarter, raising the total number to eight patients through
year-end as reported in January 2014.
- Eight implants completed in OPTIONS HF EU post market study
with zero re-hospitalizations due to worsening heart failure (also
U.S. COUNTER HF study primary endpoint), zero neurologic events,
zero bleeding events, zero clotting events, and zero deaths. Early
data has demonstrated meaningful improvement in both six-minute
hall walks and ejection fraction scores. Compliance rates are
currently at 99%, higher than those seen in the previous U.S.
feasibility study.
- Acute and 21-day pump chronic animal studies successfully
completed with fully-implantable C-Pulse device.
- Approvals received from U.S. and Canadian regulatory
authorities for our extended percutaneous interface lead designed
to address exit site infection issues. EU regulatory review is
complete and we are waiting for the certificate.
- 65 patents issued with 27 additional patents pending (seven in
the U.S.). Two new U.S. patents were issued in the fourth
quarter.
- Patient and physician awareness pilot campaigns developed and
set to launch the first quarter of 2014.
- Numerous clinical papers submitted for trade show presentation
and/or publication in 2014.
Fourth Quarter and Full Year Financial
Highlights:
- SG&A expense totaled $2.8 million in the fourth quarter and
$9.4 million for the full year period vs. $1.9 million and $6.9
million, respectively, in comparable periods of 2012.
- R&D expense totaled $4.2 million in the fourth quarter and
$13.5 million for the full year period vs. $2.2 million and $8.0
million, respectively, in comparable periods of 2012.
- R&D tax credit refund of $1.2 million for the full year
2013 vs. refunds of $0.8 million for the full year 2012.
- Loss per share of $(0.42) and $(1.71) in the fourth quarter and
full year period 2013, respectively, vs. loss per share of $(0.44)
and $(1.98) in comparable periods of 2012.
- Cash used in operations was $17.4 million for the full year
2013 vs. $13.1 million for the full year 2012.
- Cash and cash equivalents on hand at December 31, 2013 was
$54.1 million vs. $14.2 million at year-end 2012.
FINANCIALS
Our year-end 2013 results include reimbursement revenue of
$59,000 for the first implant of our C-Pulse System under our U.S.
COUNTER HF study. Although our C-Pulse System is not approved for
commercial sale in the U.S., the FDA has assigned the C-Pulse
System to a Category B designation, making it eligible for
reimbursement at certain U.S. sites during our clinical studies. As
such, we are able to invoice hospitals and clinics that are
eligible for reimbursement by Medicare, Medicaid or private
insurance companies. Product costs incurred for our clinical
studies are deemed to be development costs and, accordingly, are
expensed to research and development as incurred. Upon
commercialization, product costs will be capitalized in inventory
and recorded to cost of sales as the inventory is sold.
Operating expenses in the fourth quarter of 2013 totaled $7.0
million, compared to $4.1 million in the fourth quarter of 2012.
Operating expenses for the full year 2013 totaled $22.9 million,
compared to $14.9 million in 2012. Equity compensation expense
totaled $1.7 million and $3.8 million for the three months and year
ended December 31, 2013, respectively, as compared to $0.5 million
and $1.5 million, respectively, for the comparable periods of
2012.
Excluding equity compensation expense, non-GAAP operating
expenses totaled $5.3 million and $19.1 million for the fourth
quarter and year ended December 31, 2013, respectively, as compared
to $3.6 million and $13.3 million for the comparable periods of
2012. The increase over the prior year periods was primarily
attributable to increased clinical research and infrastructure
expenses related to the U.S. pivotal and EU post-market studies and
increased development expense associated with our fully-implantable
device.
Included in the full year results are income tax benefits from
the receipt of R&D tax credit refunds in Australia and
Minnesota totaling $1.2 million in 2013 and $0.8 million in the
comparable period of 2012.
Net loss in the fourth quarter and year ended December 31, 2013
was $7.1 million, or $0.42 per share; and $21.8 million, or $1.71
per share, respectively. This compares to losses of $4.1 million,
or $0.44 per share; and $14.1 million, or $1.98 per share in the
comparable periods in 2012. Excluding equity compensation expense,
fourth quarter and full year net non-GAAP losses totaled $5.4
million, or $0.32 per share; and $17.9 million, or $1.41 per share,
respectively. This compares to $3.6 million, or $0.39 per share;
and $12.5 million, or $1.77 per share, in the comparable periods of
2012.
Cash used in operating activities totaled $17.4 million for the
full year 2013 compared to $13.1 million for 2012, with the
increase driven primarily by higher clinical and research expenses.
We have received net proceeds of $57.6 million through the sale of
common shares in 2013 and $20.8 million in the previous year. The
Company ended 2013 with $54.1 million in cash and cash equivalents,
compared to $14.2 million at December 31, 2012.
In addition to financial results for the fourth quarter and year
ended December 31, 2013, Sunshine Heart also announced several
corporate updates with regard to the ongoing clinical studies for
C-Pulse and progress of internal product development.
CORPORATE UPDATE
As previously reported in January 2014, Sunshine Heart made
significant site progress within its C-Pulse COUNTER HF U.S.
pivotal study in 2013, finishing the year with three enrollments,
eight activated centers, and 24 additional centers committed to
participate. The Company is on track to reach its goal of 35
committed sites by the end of the first quarter 2014, with 32
committed as of March 11, 2014. At the end of 2013, the Company
initiated the following changes designed to increase study
awareness and enrollment:
-- Three therapy development specialists with clinical and sales
customer relationship experience were hired to provide direct
support to our U.S. centers;
-- Two additional representatives were hired in Germany to
provide additional site support as well as develop new centers for
the OPTIONS HF study;
-- A patient and physician pilot awareness campaign was
developed and set to launch after site IRB approval at 6 U.S.
centers. This will include the use of innovative web tools, TV,
radio, newspaper media, social media, etc.;
-- A U.S. COUNTER HF national investigator meeting occurred in
February 2014; and
-- A number of papers and presentations were submitted to
various societies and journals that cover the following topics:
- C-Pulse impact to the aorta
- European up-to-date results for the OPTIONS HF study
- C-Pulse mechanism of action
- C-Pulse impact on coronary artery blood flow
- largest single center experience with weaning of patients,
and
- resubmission of the pilot study manuscript (the Company expects
publication in a major cardiovascular journal in second quarter of
2014)
We expect all of these topics to be either presented or
published this year with many in the first half of 2014. As
announced in January 2014, further enrollment guidance will be
provided once a sufficient number of centers in the U.S.
demonstrate a steady rate of enrollment. Other studies in process
from LVAD companies have indicated longer than expected times to
gain IRB approval, which is similar to our experience. The Company
now estimates that the COUNTER HF study will conclude in the first
half of 2016, which is approximately when we now expect our current
capital to be exhausted. As this is an events-based designed study,
any increase in the number of expected events could potentially
reduce the number of patients needed.
Regarding the OPTIONS HF study, there will be a physician
presentation at the upcoming ISHLT meeting in San Diego, taking
place April 10 through 13, which will feature updated results from
this study. The Company continues to focus on the markets in
Germany, Italy and the U.K., with future expansion into Austria and
Switzerland once the centers have approval to move forward in 2014.
We expect Austria and Switzerland to be ready by the end of the
second quarter. Results of the OPTIONS HF study are expected by the
end of the second quarter of 2015.
With regard to reimbursement for the C-Pulse System, the Company
continues to receive feedback from sites with qualifying LVAD
programs that they have received regional CMS reimbursement
approval for the C-Pulse System under established LVAD codes.
Currently there are eight centers that have received regional CMS
confirmation. To date, we are not aware of any centers that have
been denied. In addition, the Agency for Healthcare Research and
Quality, which spotlights emerging technologies in healthcare,
included Sunshine Heart's C-Pulse System in the January 2014
Horizon Scan.
In the EU, the Company was notified that it had received a
Status 4, which allows the Company to negotiate directly with
insurance companies for reimbursement. We remain intent on securing
a Status 1 rating. After additional review from reimbursement
consultants in Germany, the best course of action remains in
applying for an NUB again in 2015. Given that the Company's 2014
guidance did not include revenue from EU reimbursement, the recent
decision will have no bearing on the Company's 2014 operating plan.
We plan to apply again in October of this year with the goal of
receiving an NUB in February of 2015. Similar to the U.S., steps
have also been taken to have direct representation in Europe to
provide clinical support for the OPTIONS HF study and any support
for commercial purposes. In December, the Company filled a business
development position to help further develop sites in Germany and
added an additional field clinical support person. We plan to hire
additional personnel in the first quarter of 2014 to address Italy
and the U.K.
Sunshine Heart continues to expect current cash to fund the
enrollment of both the OPTIONS HF and COUNTER HF studies, given the
higher level of funds raised than initially targeted in the last
U.S. public financing.
We reported last quarter that five of the initial 20 patients in
our U.S. feasibility study have been weaned by participating
physicians in the study. We are pleased to note again, that none of
the patients weaned thus far have been reconnected due to worsening
heart failure and have remained off certain pre-operative drugs
that were previously needed for their heart failure condition.
Sunshine Heart continues to instruct centers that it does not plan
to allow patients to be weaned in its ongoing studies as doing so
could impact the primary endpoint of the respective studies.
In conjunction with its ongoing clinical studies, Sunshine Heart
continues to make steady progress within its internal R&D.
Following the approval of an enhanced driver and longer
percutaneous drive line in the U.S., all future patients will be
implanted with these new technologies. As expected, the Company
also received approval for the new driver in the EU in the fourth
quarter of 2013. The updated driver is intended to improve
physician ease of use, reduce nuisance alarms, and improve signal
clarity, ultimately enhancing overall device reliability. With
regard to the fully-implantable C-Pulse system, both acute and
chronic animal studies have been successfully completed as of
year-end 2013 with a second chronic animal initiated in the first
quarter of 2014.
QUARTERLY CONFERENCE CALL
The Company will host a conference call and webcast at 9:00 a.m.
Eastern time today to discuss its financial results and provide an
update on its ongoing clinical studies.
To access the live webcast, please visit the Investors page of
the Sunshine Heart website at http://ir.sunshineheart.com.
Alternatively, you may access the live conference call by dialing
(877) 303-9826 (U.S.) or (224) 357-2194 (international) and using
conference ID 3021959. An audio archive of the webcast will be
available following the call at http://ir.sunshineheart.com.
SUNSHINE HEART,
INC. |
Condensed Consolidated
Statements of Operations and Comprehensive Loss |
(In thousands, except per share
amounts) |
|
|
Three months
ended |
Year
ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Net sales |
$ -- |
$ -- |
$ 59 |
$ -- |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling, general and administrative |
2,814 |
1,862 |
9,426 |
6,866 |
Research and development |
4,181 |
2,248 |
13,504 |
8,003 |
Total operating expenses |
6,995 |
4,110 |
22,930 |
14,869 |
Loss from operations |
(6,995) |
(4,110) |
(22,871) |
(14,869) |
Other income (expense), net |
(109) |
3 |
(100) |
33 |
Loss before income taxes |
(7,104) |
(4,107) |
(22,971) |
(14,836) |
Income tax benefit |
-- |
41 |
1,213 |
771 |
Net loss |
$ (7,104) |
$ (4,066) |
$ (21,758) |
$ (14,065) |
|
|
|
|
|
Basic and diluted loss per
share |
$ (0.42) |
$ (0.44) |
$ (1.71) |
$ (1.98) |
|
|
|
|
|
Weighted average shares outstanding – basic
and diluted |
16,831 |
9,275 |
12,723 |
7,099 |
|
|
|
|
|
Total Comprehensive
loss |
$ (6,992) |
$ (4,067) |
$ (21,736) |
$ (14,012) |
|
Condensed Consolidated
Balance Sheets |
(In thousands, except share
amounts) |
|
|
|
|
December 31,
2013 |
December 31,
2012 |
|
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 54,136 |
$ 14,224 |
Accounts receivable |
59 |
-- |
Other current assets |
448 |
333 |
Total current assets |
54,643 |
14,557 |
Property, plant and equipment,
net |
587 |
479 |
TOTAL ASSETS |
$ 55,230 |
$ 15,036 |
|
|
|
Current liabilities |
|
|
Accounts payable |
$ 2,188 |
$ 1,156 |
Accrued salaries, wages, and other
compensation |
1,315 |
931 |
Total current
liabilities |
3,503 |
2,087 |
Total liabilities |
3,503 |
2,087 |
|
|
|
Commitments and contingencies |
-- |
-- |
|
|
|
Stockholders' equity |
|
|
Series A junior participating preferred stock
as of December 31, 2013 and December 31, 2012, par value $0.0001
per share; authorized 30,000 shares |
-- |
-- |
Preferred stock as of December 31, 2013 and
December 31, 2012, par value $0.0001 per share; authorized
39,970,000 shares |
-- |
-- |
Common stock as of December 31, 2013 and
December 31, 2012, par value $0.0001 per share; authorized
100,000,000 shares: issued and outstanding 16,825,284 and 9,282,724
shares, respectively |
2 |
1 |
Additional paid‑in capital |
151,530 |
91,017 |
Accumulated other comprehensive income: |
|
|
Foreign currency translation adjustment |
1,207 |
1,185 |
Accumulated deficit |
(101,012) |
(79,254) |
Total stockholders'
equity |
51,727 |
12,949 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 55,230 |
$ 15,036 |
|
Condensed Consolidated
Statements of Cash Flows |
(In thousands) |
|
|
Year ended
December 31, |
|
2013 |
2012 |
Net loss |
$ (21,758) |
$ (14,065) |
Adjustments to reconcile net
loss to cash flows used in operating activities: |
|
|
Depreciation |
185 |
138 |
Abandonment of fixed
assets |
-- |
63 |
Stock based compensation
expense, net |
2,953 |
1,248 |
Amortization of warrants for
service agreements |
239 |
280 |
Changes in assets and liabilities |
|
|
Accounts receivable |
(59) |
-- |
Other current assets |
(22) |
13 |
Accounts payable and accrued
expenses |
1,100 |
(760) |
Net cash used in
operations |
(17,362) |
(13,083) |
Cash flows used in investing activities: |
|
|
Purchases of property and
equipment |
(293) |
(158) |
Net cash used in investing
activities |
(293) |
(158) |
Cash flows provided by financing
activities: |
|
|
Net proceeds from the sale of
common stock |
57,566 |
20,837 |
Net cash provided by financing
activities |
57,566 |
20,837 |
Effect of exchange rate changes on cash |
1 |
65 |
Net increase in cash and cash
equivalents |
39,912 |
7,661 |
Cash and cash equivalents - beginning
of period |
14,224 |
6,563 |
CASH AND CASH EQUIVALENTS - END OF
PERIOD |
$ 54,136 |
$ 14,224 |
USE OF NON-GAAP MEASURES
Management uses non-GAAP measures to establish operational goals
and cash flows, and believes that non-GAAP measures may assist
investors in analyzing the underlying trends in the Company's
business over time. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or as superior to,
financial reporting measures prepared in accordance with GAAP. In
this press release, the Company has reported non-GAAP measures of
operating expenses, net loss and loss per share excluding equity
compensation expense, which exclude equity expenses related to
stock options, service warrants, restricted stock units and common
stock awards, and reconcile to GAAP operating expense, GAAP net
loss and GAAP loss per share as follows:
SUNSHINE HEART,
INC. |
Reconciliation of
non-GAAP amounts to GAAP |
(Unaudited) |
(In thousands, except per share
amounts) |
|
|
Three months
ended December 31, |
Year ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
GAAP operating expenses |
$ 6,995 |
$ 4,110 |
$ 22,930 |
$ 14,869 |
Equity compensation costs |
(1,706) |
(461) |
(3,843) |
(1,528) |
Non-GAAP operating expenses |
$ 5,289 |
$ 3,649 |
$ 19,087 |
$ 13,341 |
|
|
|
|
|
GAAP net loss |
$ (7,104) |
$ (4,066) |
$ (21,758) |
$ (14,065) |
Equity compensation costs |
1,706 |
461 |
3,843 |
1,528 |
Non-GAAP net loss |
$ (5,398) |
$ (3,605) |
$ (17,915) |
$ (12,537) |
|
|
|
|
|
GAAP Basic and diluted loss per share |
$ (0.42) |
$ (0.44) |
$ (1.71) |
$ (1.98) |
Non-GAAP Basic and diluted loss per
share |
$ (0.32) |
$ (0.39) |
$ (1.41) |
$ (1.77) |
|
|
|
|
|
Weighted average shares outstanding – basic
and diluted |
16,831 |
9,275 |
12,723 |
7,099 |
About the C-Pulse® Heart Assist System
The C-Pulse Heart Assist System, or C-Pulse System, an
investigational device in the United States, Canada and countries
that do not recognize the CE mark approval, utilizes the scientific
principles of intra-aortic balloon counterpulsation applied in an
extra-aortic approach to assist the left ventricle by reducing the
workload required to pump blood throughout the body, while
increasing blood flow to the coronary arteries. Combined, these
potential benefits may help sustain the patient's current condition
or, in some cases, reverse the heart failure process, thereby
potentially preventing the need for later-stage heart failure
devices, such as left ventricular assist devices (LVADs),
artificial hearts or transplants. It may also provide relief from
the symptoms of Class III and ambulatory Class IV heart failure and
improve quality of life and cardiac function. Based on the results
from our feasibility study, we also believe that some patients
treated with our C-Pulse System will be able to stop using the
device due to sustained improvement in their condition as a result
of the therapy. Caution: Investigational device, limited by Federal
(or United States) Law to Investigational use. About
Sunshine® Heart
Sunshine Heart, Inc. (Nasdaq:SSH) is an early-stage medical
device company focused on developing, manufacturing and
commercializing the C-Pulse System for treatment of Class III and
ambulatory Class IV heart failure. Sunshine Heart has completed an
approved U.S. Food and Drug Administration (FDA) feasibility
clinical study of the C-Pulse System and presented the results in
November 2011. In March 2012, the FDA notified the Company that it
could move forward with an investigational device exemption (IDE)
application. Sunshine Heart received unconditional approval from
the FDA in November 2012 to initiate its pivotal study. In July
2012, Sunshine Heart received CE Mark approval for its C-Pulse
System in Europe. Sunshine Heart is a Delaware corporation
headquartered in Minneapolis with wholly owned subsidiaries in
Australia and Ireland. The Company has been listed on the NASDAQ
Capital Market since February 2012.
Forward-Looking Statements
Certain statements in this release are forward-looking
statements that are based on management's beliefs, assumptions,
expectations, and information currently available to management.
All statements that address future operating performance, events or
developments that we expect or anticipate will occur in the future
are forward-looking statements, including, without limitation, our
expectations with respect to future clinical study activities and
results including patient enrollment in studies. These
forward-looking statements are subject to numerous risks and
uncertainties, including, without limitation, the possibility that
our clinical studies do not meet their enrollment goals, meet their
endpoints or otherwise fail, that regulatory authorities do not
accept our application or approve the marketing of the C-Pulse
System, the possibility that we may be unable to raise the funds
necessary for the development and commercialization of our
products, that we may not be able to commercialize our products
successfully in the EU and the other risk factors described under
the caption "Risk Factors" and elsewhere in our filings with the
SEC. You should not place undue reliance on forward-looking
statements because they speak only as of the date when made and may
turn out to be inaccurate. We do not assume any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. We may
not actually achieve the plans, projections or expectations
disclosed in forward-looking statements, and actual results,
developments or events could differ materially from those disclosed
in the forward-looking statements.
CONTACT: For further information, please contact:
Investor:
Laura Forman
Blueprint Life Science Group
T: +1-415-375-3340
Jeff Mathiesen
Chief Financial Officer
Sunshine Heart, Inc.
T: +1-952-345-4200
Media:
David Schull
Russo Partners
T: +1-212-845-4271
Andreas Marathis
Russo Partners
T: +1-212-845-4235
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