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VANCOUVER and MINNEAPOLIS – 
(“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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