via NewMediaWire -- Neovasc, Inc. ("Neovasc" or the "Company")
(NASDAQ, TSX: NVCN), today reported financial results for the
second quarter ended June 30, 2021.
Second Quarter Highlights
-
Generated revenue of approximately $633,000 in the quarter, up 123%
from the same period in 2020, and a sequential 40% increase from Q1
2021.
-
Streamlined strategic focus to pursue three value-creation
strategies around Reducer and Tiara TA, suspending Tiara TF
activity and reducing headcount by 40%. These moves are
expected to extend the Company’s cash runway into 2024.
-
Continued to execute a strategic focus of additional reimbursement
agreements, announcing in June that Reducer had been granted the
first national reimbursement from the National Health Service
England.
-
Continued to pursue clinical studies supporting Reducer:
-
Advanced preparations for COSIRA II, the pivotal US trial for
Reducer. The Company expects to file an Investigational
Device Exemption (IDE) Supplement with the FDA in the third
quarter.
-
Announced the first enrollment in the COSIMA trial in Germany,
studying Reducer as a treatment for microvascular angina.
“Neovasc enjoyed a strong second quarter
and continued to make good progress on its value creation
strategies. During the quarter we made a strategic decision
to streamline our focus on three value creation strategies, coupled
with a significant corporate headcount reduction, which is expected
to extend our cash runway for three years. We followed up on
these moves in July, adding a new VP of Clinical Affairs and a VP
of Regulatory Affairs, Global Angina Therapies to strengthen our
expertise in these important areas. We are placing a heavy
emphasis on expanding the market penetration of our CE-marked
Reducer device in Europe, working directly with hospitals,
cardiologists, and medical associations to raise awareness of the
Reducer’s safety, efficacy, and ease of use,” said Fred Colen,
President and Chief Executive Officer of Neovasc. Mr. Colen
continued, “Our team is also working diligently to expand
reimbursement for the Reducer device. Those efforts were
rewarded when Reducer was granted full reimbursement by the
National Health Service (NHS) England, and we look forward to
sharing news of more reimbursement decisions in the second half of
the year. In the United States, we continue to prepare for our
pivotal U.S. trial for Reducer and expect to file an IDE Supplement
in the third quarter. With respect to Tiara, we are working
with our notified body in Europe to understand all specific
requirements and leverage of work already performed, to pursue a CE
mark decision for the Tiara TA device under MDR. There is
much more work to do, but we are confident that we now have the
team in place and the financial security to successfully execute on
our value creation strategies.”
Financial results for the second quarter
ended June 30, 2021
Revenues increased 123% to approximately
$633,000 for the quarter ended June 30, 2021, compared to revenues
of approximately $284,000 for the same period in 2020.
The cost of goods sold for the three months
ended June 30, 2021, was approximately $109,000, compared to
$75,000 for the same period in 2020. The overall gross margin for
the quarter ended June 30, 2021, was 83%, compared to 74% gross
margin for the same period in 2020.
Total expenses for the quarter ended June 30,
2021, were $9.6 million compared to $8.9 million for the same
period in 2020, representing an increase of approximately $748,000
or 8%. The increase in total expenses can be substantially
explained by the following non-cash charges; a $1.0 million
increase in non-cash share-based payments and an approximate
$903,000 charge related to the decision to pause the development of
the Tiara TF device ($594,000 impairment charge due to fixed assets
obsolescence, and $309,000 charge for employee termination
expenses). This increase in non-cash charges was offset by a
$1.1 million decrease in cash-based employee expenses due to the
Company’s reductions in force in December 2020 and June 2021.
Operating losses and comprehensive losses for
the quarter ended June 30, 2021, were $9.1 million and $9.3
million, respectively, or $0.13 basic and diluted loss per share,
as compared with $8.7 million operating losses and $12.2 million
comprehensive losses, or $0.81 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: 13721306
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 (6 U.S.
patients have been treated under Compassionate Use) 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)
|
June 30,2021 |
December 31, 2020 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
|
$ 63,294,878 |
$ 12,935,860 |
Accounts receivable |
|
1,213,450 |
987,057 |
Finance lease receivable |
|
93,466 |
95,849 |
Inventory |
|
1,387,718 |
839,472 |
Research and development supplies |
|
11,852 |
167,378 |
Prepaid expenses and other assets |
|
969,740 |
705,471 |
Total current assets |
|
66,971,104 |
15,731,087 |
|
|
|
|
Non-current assets |
|
|
|
Restricted cash |
|
483,714 |
470,460 |
Right-of-use asset |
|
643,445 |
830,551 |
Finance lease receivable |
|
- |
42,841 |
Property and equipment |
|
215,024 |
803,280 |
Deferred loss on 2021 derivative warrant
liabilities |
|
12,705,147 |
- |
Total non-current assets |
|
14,047,330 |
2,147,132 |
|
|
|
|
Total assets |
|
$ 81,018,434 |
$ 17,878,219 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
|
$ 6,422,130 |
$ 7,243,500 |
Lease liabilities |
|
290,957 |
342,910 |
2019 Convertible notes |
|
38,633 |
38,633 |
2020 Convertible notes, warrants and derivative
warrant liabilities |
|
37,839 |
37,525 |
Total current liabilities |
|
6,789,559 |
7,662,568 |
|
|
|
|
Non-current Liabilities |
|
|
|
Lease liabilities |
|
426,699 |
596,881 |
2019 Convertible notes |
|
6,544,895 |
6,156,724 |
2020 Convertible notes, warrants and derivative
warrant liabilities |
|
2,077,415 |
1,484,529 |
2021 Derivative warrant liabilities |
|
1,745,600 |
- |
Total non-current liabilities |
|
10,794,609 |
8,238,134 |
|
|
|
|
Total liabilities |
|
$ 17,584,168 |
$ 15,900,702 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
$ 439,679,546 |
$ 369,775,383 |
Contributed surplus |
|
38,783,708 |
35,045,056 |
Accumulated other comprehensive loss |
|
(8,601,354) |
(7,615,717) |
Deficit |
|
(406,427,634) |
(395,227,205) |
Total
equity |
|
$ 63,434,266 |
$ 1,977,517 |
|
|
|
|
Total
liabilities and equity |
|
$ 81,018,434 |
$ 17,878,219 |
NEOVASC INC.
Condensed Interim Consolidated Statements of Loss and
Comprehensive Loss
For the three and six months ended
June 30, 2021 and 2020(Expressed in U.S. dollars)
(Unaudited)
|
|
For the three months endedJune 30 |
For the six months endedJune 30 |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
|
REVENUE |
|
$ 633,068 |
$ 284,047 |
$ 1,084,862 |
$ 816,942 |
COST OF GOODS SOLD |
|
109,106 |
74,669 |
181,499 |
199,232 |
GROSS PROFIT |
|
523,962 |
209,378 |
903,363 |
617,710 |
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
Selling expenses |
|
832,812 |
452,514 |
1,470,791 |
1,006,043 |
General and administrative expenses |
|
5,042,804 |
3,825,510 |
10,335,373 |
6,313,012 |
Product development and clinical trials expenses |
|
3,740,887 |
4,589,724 |
8,362,315 |
9,113,130 |
|
|
9,616,503 |
8,867,748 |
20,168,479 |
16,432,185 |
|
|
|
|
|
|
OPERATING LOSS |
|
(9,092,541) |
(8,658,370) |
(19,265,116) |
(15,814,475) |
|
|
|
|
|
|
OTHER INCOME/(EXPENSE) |
|
|
|
|
|
Interest and other income |
|
39,733 |
24,981 |
49,753 |
58,650 |
Interest and other expense |
|
(278,154) |
(566,886) |
(318,563) |
(537,550) |
Gain/(loss) on foreign exchange |
|
15,057 |
(125,002) |
(20,238) |
(125,653) |
Unrealized gain on warrants, derivative liability warrants and
convertible notes |
|
2,809,340 |
369,849 |
15,259,393 |
3,502,831 |
Realized gain/(loss) on exercise or conversion of warrants,
derivative liability warrants and convertible notes |
|
219,307 |
(835,880) |
(1,895,344) |
(979,630) |
Amortization of deferred loss |
|
(2,761,152) |
(135,082) |
(5,026,442) |
(135,082) |
|
|
44,131 |
(1,268,020) |
8,048,559 |
1,783,566 |
LOSS BEFORE TAX |
|
(9,048,410) |
(9,926,390) |
(11,216,557) |
(14,030,909) |
|
|
|
|
|
|
Tax refund/(expense) |
|
15,396 |
1,075 |
16,128 |
(5,997) |
LOSS FOR THE PERIOD |
|
$ (9,033,014) |
$ (9,925,315) |
$ (11,200,429) |
$ (14,036,906) |
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
|
|
|
Fair market value changes in convertible notes due to changes in
own credit risk |
|
(280,051) |
(2,309,141) |
(985,637) |
(870,956) |
LOSS AND OTHER COMPREHENSIVE LOSS FOR THE PERIOD |
|
$ (9,313,065) |
$ (12,234,456) |
$ (12,186,066) |
$ (14,907,862) |
|
|
|
|
|
|
LOSS PER SHARE |
|
|
|
|
|
Basic and diluted loss per share |
|
$
(0.13) |
$
(0.81) |
$
(0.19) |
$
(1.21) |
InvestorsMike CavanaughWestwicke/ICR Phone:
+1.617.877.9641Mike.Cavanaugh@westwicke.com
MediaSean LeousWestwicke/ICR Phone:
+1.646.677.1839Sean.Leous@icrinc.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, expectations as to
the future growth of the Company, the expansion of reimbursement
for the Reducer, the continued preparation for the US trial of the
Reducer, the expectation to file an IDE Supplement in the third
quarter, the pursual of a CE mark decision for the Tiara TA device
under MDR 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 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 six months ended June 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.
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