Neovasc Posts Financial Results For 2016

- March 24th, 2017

Neovasc (TSX:NVCN) announced their financial results for 2016 and their fourth quarter.

Neovasc (TSX:NVCN) announced their financial results for 2016 and their fourth quarter.
As quoted in the press release:

“While the ongoing litigation continued to dominate the Company’s narrative in 2016, we expect to know the outcome of our U.S. appeal later this year, bringing closure to this chapter in the Company’s development,” commented Neovasc CEO, Alexei Marko.  “The evidence stemming from the 26 cases of the Tiara’s use and the hundreds of commercial cases with Reducer underscore for us that we remain on a path to advancing the standard of care for mitral regurgitation and refractory angina and improving the quality of life for patients suffering from these devastating diseases.”
The Company’s proprietary product for treating mitral valve disease, Tiara™, continues to perform well and has now been used to treat 26 patients under both early feasibility and compassionate use cases across North America and Europe.  Implantation is completed through a short trans-apical procedure and typically results in complete resolution of the patient’s mitral regurgitation without significant residual leaks or obstruction of the ventricular outflow tract.  The 30-day survival rate for the first 24 patients (those treated more than 30 days ago) is 21 of 24 or 88% and there has been no 30-day mortality observed in any of the last 15 patients.  One patient is now over three years post implant.  The Company expects to begin enrolling patients in the coming weeks into its European CE Mark trial, with initial cases in Italy.
Sales of the Neovasc Reducer™ (“Reducer”), the Company’s innovative device to treat refractory angina, grew 91% year over year in 2016.  There has been steady growth in the adoption of the product as implanting physicians see many of their patients who were refractory to other angina treatments returning with significant improvement in symptoms following implantation with Reducer.
Results for the quarters ended December 31, 2016 and 2015
Revenues
Revenues for the quarter ended December 31, 2016 were $2,761,122 compared to $2,224,046 for the same period in 2015.  Reducer revenues increased by 47% to $282,515 for the quarter ended December 31, 2016 compared to $192,013, for the same period in 2015.  Contract manufacturing and consulting services revenues were slightly increased in comparison to the same period in 2015.  Due to a recent agreement with Boston Scientific Corporation (“Boston Scientific”) the Company expects a decline in revenue in the coming periods.  This is consistent with the Company’s strategy to focus its business towards development and commercialization of its own products, the Reducer and the Tiara.
In December 2016, the Company entered into an agreement for Boston Scientific to acquire the Company’s advanced biologic tissue capabilities and certain manufacturing assets and make a 15% equity investment in Neovasc, for a total of $75 million in cash.  Under the terms of the approximate $68 million asset purchase agreement the Company has been granted a license to the purchased trade secrets and know-how and access to the sold facilities to allow it to continue its tissue and valve assembly activities for its remaining customers, and continue its own tissue-related programs, including advancing the Tiara through its clinical and regulatory pathways.
Cost of Goods Sold
The cost of goods sold for the quarter ended December 31, 2016 was $2,052,969, compared to $1,942,140 for the same period in 2015.  The gross margin for the quarter ended December 31, 2016 was 26%, compared to 13% for the same period in 2015.  In 2015, the Company issued a credit note to a single customer, which reduced margins from 23% to 13% for the fourth quarter of 2015.
Expenses
Total expenses for the quarter ended December 31, 2016 were $7,437,156, compared to $8,352,093 for the same period in 2015, representing a decrease of 11%.  The decrease results from a $1,037,249 decrease in general and administrative expenses offset by a $273,035 increase in clinical trial and product development expenses for the Company’s two new product development programs.
Selling expenses were $141,733 for the quarter ended December 31, 2016, compared to $292,456 for the same period in 2015, representing a decrease of 52%, due to lower sales consulting, less travel and lower stock compensation costs in 2016.  General and administrative expenses were $2,461,433 for the quarter ended December 31, 2016, compared to $3,498,682 for the same period in 2015, representing a decrease of 30%, due to a decrease in litigation expenses of $537,872 and a $296,782 decrease in share-based payments.  Product development and clinical trials expenses were $4,833,990 for the quarter ended December 31, 2016, compared to $4,560,955 for the same period in 2015 representing an increase of 6% due to an increased investment in the Tiara development program.
Losses
The net profit for the quarter ended December 31, 2016 was $37,213,791, or $0.54 basic earnings and $0.47 fully diluted earnings per share, compared with a loss of $7,383,608, or $0.11 basic and diluted loss per share for the same period in 2015.

Click here to read the full press release.

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