via NewMediaWire -- Neovasc Inc. (“Neovasc” or the “Company”)
(NASDAQ, TSX: NVCN) today announced that the Company has
implemented a series of strategic initiatives focused on enhancing
current shareholder value, minimizing dilution, extending its cash
runway well into 2024, focusing investments on near term value
drivers, and more deeply reviewing the Company’s core business
activities.
Neovasc Reducer™
The Company is focused on expanding reimbursement
and increasing revenues in international markets for the Neovasc
Reducer™ (“Reducer”). In addition to our direct sales force in
Germany, the Company operates through a series of distributors in
most of the major European countries including, among others, the
U.K., Italy, Spain, Austria and Switzerland. The company intends to
hire a direct sales force in France if it is able to gain adequate
reimbursement for Reducer in the future.
As previously announced, the Company has had
productive sprint discussions with the U.S. Food and Drug
Administration (“FDA”) as it prepares to initiate COSIRA II, the
pivotal U.S. trial for Reducer. In our sprint discussion on May 26,
2021, the FDA was generally pleased with the proposed changes to
the study, as well as with the two proposed imaging sub-studies,
although reserved final judgement pending a more detailed review of
our complete submission. The Company is in the final stages of
developing the protocols and considering important decisions
regarding awarding contracts to key outside suppliers. An
Investigational Device Exemption (“IDE”) supplement will
subsequently be filed with FDA, likely during the summer months and
the Company continues to work towards a first patient enrollment
near the end of 2021. The study will be an approximately
380-patient, randomized, double-blind, multicenter (US and Canada),
sham-controlled trial, designed to test whether Reducer therapy
improves exercise tolerance testing time, along with other
secondary endpoints, in patients suffering from refractory angina
despite medical treatment. The principal investigators of the trial
are Gregg Stone, M.D., Icahn School of Medicine at Mount
Sinai, New York, and Timothy Henry, M.D., The Carl and Edyth
Lindner Center for Research and Education, Christ Hospital,
Cincinnati.
Tiara™
The Company has also had productive discussions with its
notified body in Europe as it pursues CE Mark approval for the
Tiara TA transcatheter mitral valve replacement system. As
previously announced, the Company is working towards meeting the
requirements of the European Medical Device Regulation (“MDR”) for
approval of Tiara TA. Given the additional laboratory testing
required to reach a regulatory decision on Tiara TA and the new
European regulations, the Company now expects to receive a decision
during the second half of 2022. The Company remains pleased with
the clinical outcomes of the Tiara TA device and looks forward to
future dissemination of the results of the Tiara TA clinical trial
program at scientific meetings. The Tiara TA program has potential
to be the second mitral valve replacement device approved in
Europe, and with the right distribution partner, we believe it
could be a competitive device in the European market, if approved.
With good clinical performance data, progress towards reducing the
development risk and, in our view, an underserved market, we have
decided to continue our efforts on the Tiara TA regulatory path
towards a potential CE mark, assuming a reasonable transition to
MDR for all review work already completed and no further enrollment
of patients required in the Tiara II clinical study.
Additionally, the Company has made the difficult decision to
pause all activities related to the Tiara TF transfemoral mitral
valve replacement program. Given the additional time and
substantial investment required to develop the Tiara TF program to
approval and the related research and development, clinical,
regulatory and manufacturing costs, the Company believes focusing
its efforts on core Reducer and Tiara TA activities is warranted.
This comes despite the fact that we continue to believe we have
developed a promising new Tiara TF platform concept with a next
generation Tiara mitral valve, which might also be utilized in a
future TA platform. The Company also believes that the
opportunities for partnering the Tiara TF program have been pushed
out further in the development cycle. While in the past, mitral
valve replacement programs have been acquired after small, early
feasibility studies, a series of high-profile failures and overall
delays in the mitral valve replacement sector have highlighted the
technical and clinical trial enrollment challenges for competitive
programs. Today, potential acquirers are more cautious and they are
expecting programs to be approved or near approval before showing
potential interest in acquiring a new mitral valve technology.
Given this change in environment, the limited cash on hand, the
overall market capitalization of the Company, and the substantial
time and cost of taking the Tiara TF program to approval, the
Company believes that pausing the Tiara TF program is the correct
course of action.
“Our business is at an important inflection point as we expand
our commercial activities with Reducer and initiate the COSIRA II
U.S. IDE study,” commented Fred Colen, President and Chief
Executive Officer of Neovasc. “As we have evaluated the market
potential for Reducer and Tiara, it has become increasingly clear
that Reducer and Tiara TA represent the best near-term
opportunities for value creation for Neovasc. Pausing a program is
never easy, however making these difficult decisions will enable
Neovasc to focus our efforts on nearer term core opportunities and
prioritize our deployment of capital to reflect the strategic
shift.”
Staff and program expense reductions
These strategic actions will result in the Company reducing the
size of its workforce through targeted headcount reductions and
related project expenses. The Company will reduce its headcount by
over 40% and pause all activity on the Tiara TF program. As a
result of the changes, the Company now expects to book estimated
total pre-tax GAAP charges of approximately $700,000 due to
fixed asset write-offs and certain other exit charges. The vast
majority of these charges will be recorded during the second
quarter of 2021. The decision is expected to be accretive to
earnings, saving over $20 million in expenses over the next two and
a half years, even before we were to initiate an expensive and
lengthy Tiara TF FDA Pre-Market Approval clinical study. We believe
the changes will extend our cash runway from approximately 18
months to well over three years.
All figures reported above with respect to the second quarter of
2021 are estimates and are unaudited and subject to change and
adjustment as the Company prepares its consolidated financial
statements for the second quarter 2021. Accordingly, investors are
cautioned not to place undue reliance on the foregoing information.
The financial estimates provided in this news release constitute
"forward-looking information" and "forward-looking statements"
within the meaning of applicable Canadian and U.S. securities laws,
are based on several assumptions and are subject to a number of
risks and uncertainties. Actual results may differ materially. See
"Forward-looking Statement Disclaimer".
Capital Structure
Our aim is to curtail our expenses and limit further dilution of
the Company’s share capital. Our issued and outstanding share count
is approximately 67.5 million and our fully diluted share count is
approximately 111.9 million shares. Included within the fully
diluted share count are approximately 32.3 million warrants, which
if exercised, would generate useful cash for the Company, but this
has not been considered in our strategic analysis.
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 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.
Investors
Mike Cavanaugh
Westwicke/ICR
Phone: +1.646.877.9641
Mike.Cavanaugh@westwicke.com
Media
Sean Leous
Westwicke/ICR
Phone: +1.646.866.4012
Sean.Leous@westwicke.com
Forward-Looking Statement
Disclaimer
Certain 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, the
future results of the Company’s strategic initiatives enhancing
current shareholder value, minimizing dilution, extending the cash
runaway well into 2024 and creating near term value drivers, plans
to file an IDE supplement with the FDA for the Reducer during the
summer months and a first patient enrollment towards the end of
2021, the details of the planned COSIRA II trial, the Company’s
pursuit of CE Mark approval for the Tiara TA transcatheter mitral
valve replacement system, the Company’s expectations to receive a
decision on the Tiara TA from the notified body in Europe well into
2022, the Tiara TA program’s potential to be the second mitral
valve replacement device approved in Europe, the Company’s belief
that the Tiara TA could be a competitive device in Europe if
approved and with the right distribution partner, the Company’s
view that Europe is an underserved marked for the Tiara TA, the
Company’s belief that focusing its efforts on core Reducer and
Tiara TA activities is warranted, the Company’s belief that it has
developed a promising new Tiara TF platform concept with a next
generation Tiara mitral valve which might also be utilized in a
future TA platform, the Company’s belief that opportunities for
partnering the Tiara TF program have been pushed out further in the
development cycle, the Company’s belief that pausing the Tiara TF
program is right course of action, pausing the Tiara TF program
will enable the Company to focus its efforts on nearer term core
opportunities and prioritize deployment of capital, the Company’s
reduction of its headcount by over 40% and the pausing of all
activity on the Tiara TF program, the Company’s belief that staff
and program expense reductions will extend its cash runway from
approximately 18 months to well over three years, the exercise of
the outstanding 30M warrants would generate useful cash for the
Company and the growing cardiovascular marketplace. 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 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. 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 months ended March 31, 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.
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