NASDAQ, TSX: NVCN
Recent Highlights
- The U.S. Food and Drug Administration (the "FDA") granted
Breakthrough Device designation to the Neovasc Reducer™ (the
"Reducer") for the treatment of refractory angina
- Reducer implanted in 100th patient in Germany
- 5-Year anniversary of Tiara™ (the "Tiara") patient celebrated
as the longest surviving transcatheter mitral valve replacement in
the world
- Tiara featured in update presentation at the CRT 2019
meeting
- Reducer implant "Live Case" at the CRT meeting in Washington, DC
- Peer-reviewed article on Tiara cases published in Circulation:
Cardiovascular Interventions
- Closed public offerings of common shares for gross proceeds of
$10 million
- Resolved previously-disclosed litigation matter through a
settlement agreement with Micro Interventional Devices, Inc. and
Endovalve Inc. (together, "MID")
- German Court of Appeals decision
dismissing Edwards Lifesciences CardiAQ LLC's ("CardiAQ") claims
against Neovasc regarding ownership rights for the Tiara in
Germany
VANCOUVER, March 21, 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 fourth quarter and fiscal year
ended December 31, 2018.
"After achieving a steady flow of positive operational and
development milestones throughout 2018, we have entered 2019 with
significant momentum in the business which is driving increased
awareness among cardiologists for both the Tiara and Reducer," said
Fred Colen, President and Chief
Executive Officer of Neovasc.
Mr. Colen continued, "Our sales and marketing team continues to
make steady progress ramping up sales for the Reducer through our
partners and distributors across the EU and Middle East and through direct sales
activities in Germany. The
clinical data that we have generated for the Reducer as a treatment
for chronic refractory angina continues to build support among some
of the leading cardiologists around the world. As a result, we have
already generated a number of peer reviewed articles and
presentations at medical conferences in 2019 that are putting us in
front of an ever larger number of cardiologists and other treating
physicians. This new data is going further in showcasing patients'
responses to the Reducer, by utilizing new technologies to measure
its performance, including dipyridamole stress perfusion cardiac
magnetic resonance."
"While still in clinical trials, the Tiara truly is a leading
edge, ground-breaking device that is expected to be able to treat
more patients with a larger amount of co-existing conditions. Our
clinical data continues to support our efforts to further develop
the Tiara as we look to bring it to market. The positive momentum
we built up in 2018 for patient enrollment through the addition of
several new clinical sites will support the ongoing TIARA-II study
in 2019. We recently received regulatory approval in Germany and the UK to proceed with the second
phase of the study," concluded Mr. Colen.
The Tiara Mitral Valve
As of March 19, 2019, a total of 71 patients have been
treated with Tiara, including 22 patients that have been treated
under compassionate use, 23 patients in the TIARA-I clinical study
and 26 patients in the TIARA-II clinical study
("TIARA-II"). The Tiara has been successfully implanted in
both functional and degenerative mitral regurgitation patients, as
well as in patients with pre‑existing prosthetic aortic valves and
mitral surgical annuloplasty rings. 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 ongoing TIARA-I study is expected to complete enrolment with
30 patients by the third quarter of 2019.
The TIARA-II study has completed the Phase 1 requirements as
required by the bi-phasic study design in both Germany and the United Kingdom. In addition, the Company has
received approval to proceed with Phase 2 of the TIARA-II study for
its Tiara, which follows the Clinical Events Committee's
adjudication of adverse events, Data and Safety Monitoring Board
review of the data, and Governmental regulatory and ethics
committee review of the interim clinical report provided for 20
implanted subjects. This approval will allow the TIARA-II study to
proceed in these geographies with no restrictions. Neovasc has 16
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 believes that it is on track to submit the Tiara for CE
Mark approval in approximately 2020, pending the outcome of the
TIARA-I and TIARA-II studies.
Earlier this month, a presentation highlighting recent Tiara
data was made to the world's leading cardiologists attending the
2019 Cardiovascular Research Technologies (CRT) meeting in
Washington, DC. The presentation
provided an overview of the data from the 70 patients that had been
treated to date with the Tiara mitral valve replacement device. In
addition, the presentation included select Tiara patient cases,
including similar data that was recently published in the November
issue of Cardiovascular Interventions on cases of
transcatheter mitral valve replacement using the Tiara valve in
patients with previous aortic valve replacement. These patients
were considered extremely high-risk due to their severe mitral
regurgitation and previous surgical aortic valve prosthesis. The
article describes great short-term outcomes. Procedural success
rate was 100% with no death or major complications and, immediately
following implantation, the patients' mitral regurgitation was
eliminated.
The REDUCER-I post-market observational study continues to
enroll patients across Europe at
20 active centers. Enrollment has now reached 195 of 400.
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 patient's angina,
therefore improving patient's quality of life following Reducer
implantation.
A patient implanted with a Tiara recently celebrated her fifth
anniversary since undergoing the procedure. The Company
believes that this patient is the longest surviving transcatheter
mitral valve replacement therapy recipient in the world. At
the time of the procedure, the female patient was 60 years old and
a high-risk candidate for surgery with severe MR. The Tiara valve
was used to replace the patient's diseased native mitral valve.
Upon implantation the patient experienced immediate elimination of
the MR without paravalvular leak, as well as an immediate increase
in stroke volume and decrease in pulmonary pressure. At her
two-month follow-up, the patient demonstrated a marked improvement
in symptoms compared to baseline, with a NYHA Functional Class II
(mild) compared to a NYHA Class IV (severe) prior to the Tiara
implantation. As of the five-year anniversary of undergoing
the Tiara implantation, this patient continues to report excellent
prosthetic valve function, and is currently a NYHA Class I/II with
significant improvement in quality of life.
Update on Intellectual Property for Tiara in Germany
The Higher Regional Court in
Munich, Germany, on appeal by
Neovasc, has dismissed the case in full, brought by CardiAQ against
Neovasc in Germany. In dismissing
the remainder of CardiAQ's case, the German court now found that
CardiAQ had not contributed to the invention of the Tiara and found
Neovasc to be the rightful inventor and owner of all rights to the
disputed Tiara European patent application.
The Transfemoral Trans-septal ("TF/TS") Tiara
system
Neovasc's R&D team has made significant progress
with the development of the TF/TS Tiara system concept over the
past few quarters. The development program is based on a leading
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 TF/TS full development program will officially kick
off at the end of next week, with the goal of initiating a small
clinical feasibility study with the TF/TS program just before the
end of 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
In 2018, revenue increased by 55% compared
to 2017. The sales growth is mostly attributable to the sales and
marketing efforts in Germany,
where the Reducer received the NUB 1 status in Germany at the end of January 2018. Building off of this current
momentum, the Company is implementing a broader commercialization
and therapy development approach for the Reducer in the EU and
Middle East. To support this
expanded strategy, Neovasc plans to continue expanding its direct
sales force in Germany. The
Company has also experienced increased demand from other European
countries, where it sells via distributors. Neovasc plans to build
off of this momentum as well as initiate sales in additional
European countries through new distribution agreements in 2019.
Supporting the future growth in Germany, the Reducer NUB 1 status was renewed
in 2019 for an additional year period. There was an almost 50%
increase in the number of German hospitals that applied for the
Reducer NUB 1 status, increasing from 107 German hospitals last
year to 159 German hospitals this year. These hospitals are able to
negotiate reimbursement coverage for the Neovasc Reducer therapy
under the German health insurance system.
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. As an
example, in December 2018, the
Journal of the American College of Cardiology: Cardiovascular
Interventions ("JACC") published new, peer reviewed data describing
the long-term clinical and anatomical follow-up of patients with
severe angina pectoris treated with the Reducer 12 years prior. The
article, which is entitled: "First-in-Human Use of Coronary Sinus
Reducer in Patients With Refractory Angina", describes data from
seven patients that had chronic refractory angina and evidence of
reversible myocardial ischemia and were electively implanted with
the Reducer in 2005. At 12 years, all seven patients reported
sustained improvement of angina class compared with baseline
status. As a result, the authors conclude that treatment with the
Reducer in patients with chronic refractory angina presents a
reasonable, safe, and durable option for symptomatic relief and
improved quality of life.
In January 2019, JACC also
published a peer reviewed article on the use of dipyridamole stress
perfusion cardiac magnetic resonance ("CMR") to assess the
performance of the Reducer titled, "Coronary Sinus Reducer
Implantation to Reduce the Ischemic Burden in Refractory Angina."
With stress perfusion CMR emerging as the non-invasive gold
standard for the assessment of ischemia, the article discusses how
the use of a reliable, non-operator-dependent imaging tool, such as
stress perfusion CMR, which will allow for greater insights into
the potential impact of the Reducer on the ischemic burden of
patients with refractory angina with coronary artery disease.
Earlier this month, an implant procedure from Italy using the Reducer was featured in a
"Live Case" broadcast at the Annual CRT Meeting in Washington, DC. The successful live procedure
was followed by strong interest from the CRT audience, which asked
questions regarding the procedure and curiosity about the Reducer's
mechanism of action.
In regards to the U.S. regulatory status, in December, we filed
a comprehensive Q-Sub submission to FDA with all available Reducer
Clinical evidence, requesting a Sprint FDA discussion meeting. This
was followed up by a meeting with the FDA on January 30, 2019, during which the Neovasc team,
together with two top U.S. cardiologists, proposed moving forward
with a PMA submission using the available Neovasc clinical
evidence, including the COSIRA study, which was a prospective,
multicenter, randomized, double-blind, sham controlled study
assessing the safety and efficacy of the Reducer in 104 patients in
the EU and Canada, the REDUCER-I
study, a multi-center, multi-country, three-arm observational post
market study with 186 patients enrolled, as well as supportive
safety and efficacy data from a number of peer-reviewed
journals.
The FDA review team has since followed up from this meeting and
recommended that, despite "Breakthrough Device Designation", we
collect additional pre-market blinded data prior to PMA submission.
While we respect their current recommendation, we will continue to
have discussions with the FDA and their senior management in an
attempt to bring this promising refractory angina device therapy,
which has been available to patients in Europe since 2015 with demonstrated quality of
life improvement and great safety profile, to U.S. patients as soon
as possible.
Results for the years ended December
31, 2018 and 2017
Revenues
Revenues decreased 68% to $1,749,133 for the year ended December 31, 2018, compared to revenues of
$5,389,014 for the same period in
2017. In December 2017, the Company
closed its contract manufacturing and consulting services business
and is now focused on the commercialization of its own product, the
Reducer.
Sales of the Reducer for the year ended December 31, 2018 were $1,749,133 compared to $1,128,126 for the same period in 2017,
representing an increase of 55%. The Company is encouraged by the
progress this year, but recognizes that future revenues may be
unstable before the Reducer becomes widely adopted. The continued
success of the commercialization of the Reducer will be dependent
on the amount of internal resources allocated to the product,
obtaining appropriate reimbursement codes in various territories
and correctly managing the referrals process.
Cost of Goods Sold
The cost of goods sold for the year
ended December 31, 2018 was
$366,258 compared to $3,477,821 for the same period in 2017. The
overall gross margin for the year ended December 31, 2018 was 79%, compared to 35% gross
margin for the same period in 2017. The gross margin now
reflects the gross margin on the Reducer product only, whereas the
comparable period included contract manufacturing and consulting
services.
Expenses
Total expenses for the year ended
December 31, 2018 were $33,852,958 compared to $34,060,101 for 2017, representing a decrease of
$207,143 or 1%. The decrease in total
expenses for the year ended December 31,
2018 compared to 2017 can be substantially explained by a
$1,428,235 decrease in product
development and clinical trial expenses as we continue to preserve
cash resources offset by a $754,153
increase in general and administrative expenses and a $466,939 increase in selling expenses.
Selling expenses for the year ended December 31, 2018 were $1,353,165, compared to $886,226 for 2017, representing an increase of
$466,939, or 53%. The increase in
selling expenses for the year ended December
31, 2018 compared to 2017 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 year ended
December 31, 2018 were $16,438,936, compared to $15,684,783 for 2017, representing an increase of
$754,153 or 5%. The increase in
general and administrative expenses for the year ended December 31, 2018 compared to 2017 can be
substantially explained by a $1,067,205 increase in stock based compensation
and a $2,379,790 charge for
collaboration and settlement expenses and a $2,749,968 charge for settlement expenses and a
$1,441,125 increase in other expenses
including a substantial increase in legal expenses as we renewed
the base shelf prospectus, filed XBRL for the first time and filed
our annual report on the more demanding Form 20-F, as compared to
the Form 40-F filed in 2017 offset by a decrease in expenses
related to the November 2017
underwritten public offering and concurrent private placement
(together, the "2017 Financings") of $5,447,182 and a decrease in litigation expenses
of $1,870,225.
Product development and clinical trial expenses for the year
ended December 31, 2018 were
$16,060,857 compared to $17,489,092 for 2017, representing a decrease of
$1,428,235 or 8%. The decrease in
product development and clinical trial expenses for the year ended
December 31, 2018 was the result of a
$918,016 decrease in employee
expenses and a $330,906 decrease in
share-based payments due to a restructuring of the Company in early
2017 and a $120,999 decrease in other
expenses, as the Company continues to control costs.
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 year
ended December 31, 2018 was
$75,465,692 compared to other income
of $9,724,615 for 2017, an adverse
change of $85,190,307. The
increase in the other loss can be substantially explained by the
accounting treatment of the 2017 Financings resulting in a
$83,092,712 adverse change (charges
of $75,712,610 in the year compared
to other income of $7,380,102 in the
prior year) and a $2,901,783 adverse
change in foreign exchange losses and gains compared to the prior
year.
Losses
The losses and comprehensive losses for the
year ended December 31, 2018 were
$108,042,868 and $109,052,460, respectively, or $7.63 basic and diluted loss per share, as
compared with losses and comprehensive losses of $22,908,721 and $24,859,117, respectively, or $28.10 basic and diluted loss per share, for the
same period in 2017.
The $84,193,343 increase in the
comprehensive loss incurred for the year ended December 31, 2018 compared to the same period in
2017 can be substantially explained by a $85,190,307 increase in other losses (the
accounting treatment of the 2017 Financings resulting in an
increase in charges of $83,092,711 in
the year) and a $321,175 increase in
operating losses ($754,153 increase
in general and administrative expenses and a $1,428,235 reduction in product development and
clinical trials expenses as the Company continues to control
costs).
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 December 31, 2018 the Company
had cash and cash equivalents of $9,242,809 compared to cash and cash equivalents
of $17,507,157 as at December 31, 2017. During the first quarter
of 2019, the Company completed two underwritten public offerings
(together, the "2019 Financings") for aggregate gross proceeds of
$10 million, each at a price to the
public of $0.45 per Common Share, for
an aggregate total of 22,222,222 common shares. The first financing
closed on February 28, 2019 and the
second closed on March 15, 2019.
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 at December 31, 218, The
Company is in a positive working capital position of $2,464,167, with current assets of $10,739,930 and current liabilities of
$8,275,763. 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 twelve months ended
December 31, 2018 was $22,794,748, compared to $138,613,946 for the same period in 2017.
For the twelve months ended December 31,
2018, operating activities were $23,924,650, compared to $26,403,093 for the same period in 2017, and a
decrease of $2,478,443. Net
cash provided from the net change in non-cash working capital items
for the twelve months ended December 31,
2018 was $1,124,891, compared
to a net cash outflow of $112,067,771
in the same period in 2017. The increase in net cash outflow
can be attributed to the payment of the damages provision in
relation in the Company's primary U.S. litigation with CardiAQ in
2017.
Net cash received from investing activities for the twelve
months ended December 31, 2018 was
$713,752 compared to net cash applied
to investing activities of $69,496,853 for the same period in 2017,
primarily due the release of cash held in escrow to settle damages
and interest awards in the Company's primary U.S. litigation with
CardiAQ in 2017.
Outstanding Share Data
On March
12, 2019, the Company announced that it had entered into
Exchange Agreements with the holders of all of its outstanding
Series A common share purchase warrants (the "Series A Warrants")
and Series E common share purchase warrants (the "Series E
Warrants") issued pursuant to the 2017 Financings, pursuant to
which the Company issued an aggregate of approximately 496,239
Common Shares for the surrender and cancellation of all of the
Series A Warrants and Series E Warrants outstanding, on the basis
of 0.0085 of a Common Share for each Series A Warrant or Series E
Warrant (the "Exchange"). Following completion of the Exchange,
there are no longer any warrants remaining outstanding from the
2017 Financings.
As at March 19, 2019, the Company
had 61,985,116 common voting shares issued and outstanding.
Further, the following securities are convertible into Common
Shares: 3,682,469 stock options with a weighted average price of
$7.70, 1,444,444 warrants issued to
the underwriters in connection with the 2019 Financings, and the
$10,825,000 aggregate principle
amount senior secured convertible notes (the "Notes") remaining
outstanding, which could convert into 24,055,555 Common Shares (not
taking into account the alternate conversion price mechanism in the
Notes). The Company's fully diluted share capital as of
March 19, 2019 is 91,167,604. The
Company's fully diluted share capital, adjusted on the assumption
that all the outstanding Notes are exercised using the alternate
conversion price at the closing price on March 19, 2019 is 94,869,863.
For description of the terms of the securities issued pursuant
to the 2017 Financings, see the forms of warrants and note
previously filed on SEDAR and with the SEC on Form 6-K and the
prospectus supplement previously filed on SEDAR and with the SEC.
For a description of the risks associated with the securities
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, which will be available
on SEDAR at www.sedar.com and as filed 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 2018 Annual Report on Form 20-F, Management's
Discussion and Analysis and Consolidated Financial Statements and
related notes are posted on the Company's website at
www.neovasc.com and will be 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 13687733#.
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
June 21, 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 Company's strategy and expectations
regarding delivering on future milestones for both product
platforms, beliefs as to the ability to increase enrollment for our
TIARA-II study in Europe, plans to
finalize the trans-septal Tiara system design concept during Q1,
2019, future reimbursement negotiations with German health
insurance companies for the Reducer, the Company's discussions with
the FDA regarding the Reducer, the Company's ability to obtain
financing in the future, the Company's fully diluted share capital
and the growth of the cardiovascular marketplace. Words and phrases
such as "believes", "may", "expects", "can", "could", "scheduled"
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 Management's Discussion and
Analysis for the year ended December 31,
2018 (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.
Consolidated
Statements of Financial Position
As at December 31,
(Expressed in U.S.
dollars)
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2018
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2017
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2016
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ASSETS
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Current
assets
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Cash and cash
equivalents
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$
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9,242,809
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$
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17,507,157
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$
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22,954,571
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Cash held in
escrow
|
|
|
-
|
-
|
70,000,000
|
Accounts
receivable
|
|
|
647,143
|
1,334,923
|
3,117,474
|
Inventory
|
|
|
258,742
|
398,556
|
196,723
|
Prepaid expenses and
other assets
|
|
|
591,236
|
802,366
|
505,340
|
Total current
assets
|
|
|
10,739,930
|
20,043,002
|
96,774,108
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Restricted
cash
|
|
|
439,736
|
478,260
|
449,760
|
Property, plant and
equipment
|
|
|
813,628
|
1,685,181
|
1,585,635
|
Total non-current
assets
|
|
|
1,253,364
|
2,163,441
|
2,035,395
|
|
|
|
|
|
|
Total
assets
|
|
$
|
11,993,294
|
$
|
22,206,443
|
$
|
98,809,503
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
6,852,539
|
$
|
1,844,955
|
$
|
2,490,943
|
Damages
provision
|
|
|
-
|
-
|
111,781,096
|
Convertible
Note
|
|
|
1,423,224
|
4,261,597
|
-
|
Derivative liability
from financing
|
|
|
-
|
19,997,345
|
-
|
Total current
liabilities
|
|
|
8,275,763
|
26,103,897
|
114,272,039
|
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
|
Convertible
Note
|
|
|
13,194,112
|
15,745,962
|
-
|
Derivative liability
from financing
|
|
|
190,303
|
16,831,685
|
-
|
Total non-current
liabilities
|
|
|
13,384,415
|
32,577,647
|
-
|
|
|
|
|
|
|
Total
liabilities
|
|
$
|
21,660,178
|
$
|
58,681,544
|
$
|
114,272,039
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share
capital
|
|
$
|
304,460,533
|
$
|
171,803,816
|
$
|
168,712,673
|
Contributed
surplus
|
|
|
26,260,806
|
23,056,846
|
22,301,437
|
Accumulated other
comprehensive loss
|
|
|
(7,653,028)
|
(6,643,436)
|
(4,693,040)
|
Deficit
|
|
|
(332,735,195)
|
(224,692,327)
|
(201,783,606)
|
Total
equity
|
|
|
(9,666,884)
|
(36,475,101)
|
(15,462,536)
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
11,993,294
|
$
|
22,206,443
|
$
|
98,809,503
|
NEOVASC
INC. Consolidated Statements of Loss and Comprehensive
Loss
For years ended December 31,
(Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
2018
|
2017
|
2016
|
REVENUE
|
|
|
|
|
Reducer
|
|
$
|
1,749,133
|
$
|
1,128,126
|
$
|
1,004,948
|
Contract
manufacturing and consulting services
|
|
-
|
4,260,888
|
8,507,848
|
|
|
1,749,133
|
5,389,014
|
9,512,796
|
|
|
|
|
|
COST OF GOODS
SOLD
|
|
366,258
|
3,477,821
|
7,091,761
|
GROSS
PROFIT
|
|
1,382,875
|
1,911,193
|
2,421,035
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
Selling
expenses
|
|
1,353,165
|
886,226
|
696,638
|
General and
administrative expenses
|
|
16,438,936
|
15,684,783
|
19,182,787
|
Product development
and clinical trials expenses
|
|
16,060,857
|
17,489,092
|
19,364,503
|
|
|
33,852,958
|
34,060,101
|
39,243,928
|
|
|
|
|
|
OPERATING
LOSS
|
|
(32,470,083)
|
(32,148,908)
|
(36,822,893)
|
|
|
|
|
|
OTHER
(EXPENSE)/INCOME
|
|
|
|
|
Interest
income
|
|
183,065
|
355,806
|
177,761
|
Gain on sale of
assets
|
|
238,907
|
-
|
65,095,733
|
Damages
provision
|
|
-
|
(738,021)
|
(111,781,096)
|
(Loss)/gain on
foreign exchange
|
|
(175,054)
|
2,726,728
|
(273,746)
|
Unrealized
(loss)/gain on derivative liability and convertible note
|
|
(814,827)
|
10,732,089
|
-
|
Realized loss on
exercise of warrants and convertible note
|
|
(28,003,594)
|
-
|
-
|
Amortization of
deferred loss
|
|
(46,894,189)
|
(3,351,987)
|
-
|
Unrealized gain on
damages provision
|
|
-
|
-
|
(2,690,129)
|
|
|
(75,465,692)
|
9,724,615
|
(49,471,477)
|
LOSS BEFORE
TAX
|
|
(107,935,775)
|
(22,424,293)
|
(86,294,370)
|
|
|
|
|
|
Tax
expense
|
|
(107,093)
|
(484,428)
|
(200,523)
|
LOSS FOR THE
YEAR
|
|
$
|
(108,042,868)
|
$
|
(22,908,721)
|
$
|
(86,494,893)
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME FOR THE YEAR
|
|
|
|
|
Exchange difference
on translation other than for damages
provision
|
|
-
|
(1,950,396)
|
1,406,842
|
Fair market value
changes in convertible note due to changes in
own credit risk
|
|
(1,009,592)
|
-
|
2,690,129
|
|
|
(1,009,592)
|
(1,950,396)
|
4,096,971
|
LOSS AND OTHER
COMPREHENSIVE LOSS FOR THE YEAR
|
|
$
|
(109,052,460)
|
$
|
(24,859,117)
|
$
|
(82,397,922)
|
|
|
|
|
|
LOSS PER
SHARE
|
|
|
|
|
Basic and diluted
loss per share
|
|
$
|
(7.63)
|
$
|
(0.28)
|
$
|
(1.28)
|
View original
content:http://www.prnewswire.com/news-releases/neovasc-announces-fourth-quarter-and-fiscal-year-2018-financial-results-300816735.html
SOURCE Neovasc Inc.