6-K 1 neovasc6k.htm FORM 6-K

 

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

 

For the month of    August    2015
Commission File Number        001-36458    

 

 

Neovasc Inc.

(Translation of registrant’s name into English)

 

Suite 2135 — 13700 Mayfield Place

Richmond, British Columbia, Canada, V6V 2E4

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

  Form 20-F        Form 40-F    X  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):          

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):           


 

 

 
 

 

DOCUMENTS INCLUDED AS PART OF THIS REPORT

 

 

Document    
     
1  

News Release – Neovasc Reports Results for the Second Quarter of 2015

     

 

 

This Report on Form 6-K is incorporated by reference into the Registration Statement on Form F-10 of the Registrant, which was originally filed with the Securities and Exchange Commission on April 17, 2014 (File No. 333-195360), and the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on June 24, 2014 (File No. 333-196986).

 

 
 

 

Document 1

 

Neovasc Reports Results for the Second Quarter of 2015

NASDAQ: NVCN
TSX: NVC

VANCOUVER, Aug. 6, 2015 /CNW/ - Neovasc Inc. ("Neovasc" or the "Company") (NASDAQ: NVCN) (TSX: NVC) today announced financial results for the quarter ended June 30, 2015.

"With steady activity in our tissue business, Reducer's European launch going well, and with additional successful Tiara implantations, the second quarter was constructive across all facets of our company," commented Neovasc CEO, Alexei Marko.  "We are taking steps to accelerate patient recruitment in the TIARA-I study and during the quarter we made crucial adjustments towards this objective. Specifically, we have made revisions to the trial protocol to enhance enrollment and have increased the number of participating sites.  We are now expecting to have eight centres recruiting patients by the end of Q3.  More importantly, we are adding a second valve size to the TIARA-I study, a 40mm Tiara to complement our existing 35mm device, significantly increasing the population of eligible patients.  We anticipate first use of the 40mm size in Q4 of this year. Development of the 45mm Tiara is also well underway to provide further treatment options to patients.  To date, the 35mm Tiara is performing very well, meeting our expectations and clearly demonstrating its potential to greatly improve the quality of life for patients suffering from severe mitral regurgitation through a minimally invasive, catheter-based valve replacement procedure."

"Our balance sheet remains very strong, with nearly $100 million in current assets at the end of the quarter," said Christopher Clark, CFO of Neovasc.  "We anticipate these funds to be more than sufficient to complete our ongoing clinical trials for Tiara and other regulatory initiatives we have for Reducer, as well as to support Reducer's European launch.  Of note, Reducer sales from our controlled and limited release in Europe, although modest, have been going very well, with excellent feedback from both physicians and our distributors."

Tiara Update
Tiara has been implanted in eight patients to date with encouraging results.  In seven of eight cases, Tiara was successfully implanted as intended, resulting in a stable and well-anchored prosthetic valve with complete resolution of the patient's Mitral Regurgitation (MR).  In one case the Tiara valve was malpositioned and required conversion to surgical valve replacement.  No significant transvalvular gradients, no left ventricular outflow tract (LVOT) obstruction, no paravalvular leaks or negative interactions with surrounding structures, including the aortic valve, have been observed.  Implantation of Tiara has been successfully undertaken in patients suffering from both degenerative MR and functional MR and in multiple patients with pre-existing prosthetic aortic valves.  Patients are continuing to thrive with significantly improved quality of life, with one patient nearing their 18-month post implant follow-up.

To date no mechanical failures of Tiara, including frame fractures or thrombus formation have been observed in clinical use, nor has any other issue been identified requiring significant modification of the current design beyond expansion of the available size matrix. 

All clinical use to date has been undertaken using the 35mm Tiara.  Neovasc anticipates the first clinical use of the 40mm Tiara in Q4 and the 45mm Tiara in early 2016.

A more detailed update of clinical results to date will be provided at the 27th Annual Transcatheter Cardiovascular Therapeutics (TCT) scientific symposium, the world's largest educational meeting specializing in interventional cardiovascular medicine, being held October 11-15 in San Francisco, CA.

Revenues

Revenues decreased 18% year-over-year to $3,599,834 for the three months ended June 30, 2015, compared to revenues of $4,404,515 for the same period in 2014. Revenues decreased 22% year-over-year to $6,460,480 for the six months ended June 30, 2015, compared to revenues of $8,240,650 for the same period in 2014.  The Company started its sales of Reducer product in the first quarter of 2015 as it initiates its focused commercialization of the product in Europe.  The Company also ceased its production of surgical patches in June 2015.  The Company anticipates that as the traditional revenues from the tissue business decline, revenue from the Reducer will compensate.

Reducer sales for the three months ended June 30, 2015 were $165,528, compared to $nil for the same period in 2014.  Reducer sales for the six months ended June 30, 2015 were $215,668, compared to $nil for the same period in 2014.  These sales should be categorized as stocking orders as newly qualified distributors took receipt of their initial order of product.  The Company anticipates that Reducer sales will gradually grow in 2015, initially with stocking orders from additional distributors in other countries and then later in the year, with repeat orders. 

Cost of Goods Sold

The cost of goods sold for the three and six months ended June 30, 2015 was $2,232,359 and $4,227,608, respectively, compared to $3,066,924 and $4,981,446 for the same periods in 2014.  The overall gross margin for the three and six months ended June 30, 2015 was 38% and 35%, respectively, compared to 30% and 40% gross margin for the same periods in 2014. Gross margin improved in Q2 2015 due to an increase in raw material yields and the sales of low margin products is discontinued.  The Company anticipates the improvement in gross margin will continue in 2015 as the revenue mix shifts to higher margin products.

Expenses

Total expenses for the three and six months ended June 30, 2015 were $9,764,899 and $17,064,889, respectively, compared to $7,782,507 and $10,132,078 for the same periods in 2014, representing an increase of $1,982,392 or 25%, and $6,932,811 or 68%, respectively.  The increase in total expenses for the three months ended June 30, 2015 compared to the same period in 2014 reflects a $2,231,766 increase in general and administrative expenses and a $2,367,102 increase in product development and clinical trial expenses to advance the Tiara and Reducer development programs, and offset by $2,738,571 decrease in share-based payment.  The increase in total expenses for the six months ended June 30, 2015 compared to the same period in 2014 reflects a $3,269,281 increase in general and administrative expenses and a $4,861,408 increase in product development and clinical trial expenses to advance the Tiara and Reducer development programs, and offset by $1,442,205 decrease in share-based payment.

Selling expenses for the three and six months ended June 30, 2015 were $154,302 and $307,985, respectively, compared to $24,413 and $44,328 for the same periods in 2014, representing an increase of $129,889, or 532%, and $263,657 or 595%.  The increase in selling expenses for the three and six months ended June 30, 2015 compared to the same periods in 2014 reflects costs incurred for Reducer commercialization activities in the first six months of 2015.  The Company anticipates a significant increase in selling expenses in 2015 as it initiates a focused commercialization of the Reducer in select countries in Europe.

General and administrative expenses for the three and six months ended June 30, 2015 were $4,347,076 and $7,234,486, respectively, compared to $4,644,387 and $5,740,841 for the same periods in 2014, representing a decrease of $297,311, or 6% and an increase of $1,493,645, or 26%, respectively.   The decrease in general and administrative expenses for the three months ended June 30, 2015 compared to the same period in 2014 can be substantially explained by a $2,529,077 decrease in share-based payments, and offset by a $2,231,766 increase in other expenses. The $2,231,766 increase includes, but is not limited to, approximately $2,000,000 related to litigation expenses, approximately $235,000 related to the rent of new administration office, insurance, and information system expenses and approximately $370,000 related to an increase in general and administrative staff and an increase in compensation to the board, and senior management. The increase in general and administrative expenses for the six months ended June 30, 2015 compared to the same period in 2014 can be substantially explained by a $3,269,281 increase in other expenses, and offset by $1,775,636 decrease in share-based payment. The $3,269,281 increase includes, but is not limited to, approximately $2,500,000 related to litigation expenses, approximately $400,000 related to the rent of new administration office, insurance, and information system expenses and approximately $460,000 related to an increase in general and administrative staff and an increase in compensation to the board, and senior management.

Product development and clinical trial expenses for the three and six months ended June 30, 2015 were $5,263,521 and $9,522,418, respectively, compared to $3,113,707 and $4,346,909 for the same periods in 2014, representing an increase of $2,149,814, or 69% and $5,175,509, or 119%.  The increase in product development and clinical trial expenses for the three months ended June 30, 2015 was due to a $781,454 increase in cash–based employee expenses as the Company hired additional staff to advance product development and a $1,585,648 increase in other expenses as the Company invested in its two major new product initiatives, offset by a $217,288 decrease in share-based payment. The increase in product development and clinical trial expenses for the six months ended June 30, 2015 was due to $314,101 increase in share-based payment, a $1,471,654 increase in cash–based employee expenses as the Company hired additional staff to advance product development and a $3,389,754 increase in other expenses as the Company invested in its two major new product initiatives.

The Company's expenses are subject to inflation and cost increases.  Salaries and wages have increased on average by 6% in the six months ended June 30, 2015 compared to the same period in 2014.  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

The other income for the three months ended June 30, 2015 was $94,008, compared to other expense of $26,995 for the same period in 2014. The other income for the six months ended June 30, 2015 was $370,758, compared to other income of $20,891 for the same period in 2014.  The Company's investments in high interest savings accounts and guaranteed investment certificates generated $432,665 interest in the six months ended June 30, 2015.

Losses

The losses for the three and six months ended June 30, 2015 were $8,303,416 and $14,461,259, or $0.12 and $0.23 basic and diluted loss per share, as compared with a loss of $6,471,911 and $6,851,983, or $0.12 and $0.13 basic and diluted loss per share for the same periods in 2014.  The $1,831,505 increase in the loss incurred for the three months ended June 30, 2015 compared to the same period in 2014 can be substantially explained by $2,231,766 increase in general and administrative expenses, $2,367,102 increase in product development and clinical trial expenses, and offset by a $2,681,543 decrease in share-based payment.  The $7,609,276 increase in the loss incurred for the six months ended June 30, 2015 compared to the same period in 2014 can be substantially explained by $1,026,332 decrease in gross profit, $3,269,281 increase in general and administrative expenses, $4,861,408 increase in product development and clinical trial expenses, and offset by $1,363,552 decrease in share-based payment. In the first six months of 2015 and 2014 certain directors, officers and employees of Neovasc were granted options under the Company's established remuneration and incentive plans. However, the number of options granted in the first six months of 2015 was much less than the grant in the same period of 2014, and therefore resulted in a lower non-cash charge to the income statement in 2015.

Discussion Of Liquidity And Capital Resources

Neovasc finances its operations and capital expenditures with cash generated from operations, lines of credit, and equity financings.  At June 30, 2015, the Company had cash and cash equivalents of $85,654,914 compared to cash and cash equivalents of $6,025,013 at December 31, 2014, as well as $8,097,717 invested in short term investments falling due within one year.

Cash used in operating activities for the three and six months ended June 30, 2015, was $6,350,560 and $10,642,896, respectively, compared to $1,389,041 and $2,162,205 for the same periods in 2014.  For the three months ended June 30, 2015, operating expenses were $7,055,360, compared to $2,389,329 for the same period in 2014, as more expenses were incurred in general and administrative and research and development and clinical trials activities.  Working capital items generated cash of $484,055, compared to working capital items generated cash of $964,246 for the same period in 2014, as accounts receivable and inventory generated less cash associated with revenue decrease. For the six months ended June 30, 2015, operating expenses were $11,731,376, compared to $2,528,635 for the same period in 2014, as more expenses were incurred in general and administrative and research and development and clinical trials activities.  Working capital items generated cash of $818,275, compared to working capital items generated cash of $330,257 for the same period in 2014, as accounts receivable generated more cash due to the increase in interest receivables for our investments in GICs, inventory absorbed less cash associated with decease of revenue, and prepaid expenses and other assets increased with the payment of deposits for our leased office space and the payment of our clinical trial insurance and director & officer's insurance in advance rather than on a monthly basis.

Outstanding Share Data

As at August 6, 2015, the Company had 66,552,347 common shares issued and outstanding.  The fully diluted share capital of the Company at August 6, 2015 is 74,459,960.

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

Neovasc's 2015 Second Quarter Financial Statements and Notes and its Management's Discussion and Analysis (MD&A) will be posted on the Company's website at www.neovasc.com and will be filed on SEDAR and EDGAR. In addition to the summary contained herein, readers are encouraged to review the full disclosure in Neovasc's Financial Statements for the three months ending June 30, 2015 and Management's Discussion and Analysis.

NEOVASC INC.
Condensed Interim Consolidated Statements of Financial Position (Unaudited)
(Expressed in Canadian dollars)
   
 

June 30,

2015

December 31,

2014

 
    (Audited)  
ASSETS      
  Current assets      
    Cash and cash equivalents $ 85,654,914 $ 6,025,013  
    Investments 8,097,717 11,999,999  
    Accounts receivable 1,712,552 1,790,971  
    Inventory 501,979 475,975  
    Prepaid expenses and other assets 486,862 259,261  
  Total current assets 96,454,024 20,551,219  
       
  Non-current assets      
    Property, plant and equipment 4,388,394 3,078,041  
  Total non-current assets 4,388,394 3,078,041  
       
Total assets $ 100,842,418 $ 23,629,260  
       
LIABILITIES AND EQUITY      
  Liabilities      
  Current liabilities      
    Accounts payable and accrued liabilities $ 3,347,208 $ 2,513,072  
    Current portion of long-term debt - 44,591  
  Total current liabilities 3,347,208 2,557,663  
       
  Non-current liabilities      
    Long-term debt - 157,628  
  Total non-current liabilities - 157,628  
       
  Total liabilities 3,347,208 2,715,291  
       
  Equity      
    Share capital 188,635,715 99,169,635  
    Contributed surplus 20,475,855 18,899,435  
    Deficit (111,616,360) (97,155,101)  
  Total equity 97,495,210 20,913,969  
       
Total liabilities and equity $ 100,842,418 $ 23,629,260  

 

NEOVASC INC.
Condensed Interim Consolidated Statements of Comprehensive Loss (Unaudited)
For the three and six months ended June 30,
(Expressed in Canadian dollars)
 
 

Three months ended

June 30,

Six months ended

June 30,

  2015 2014 2015 2014
         
REVENUE        
Reducer $ 165,528 $ - $ 215,668 $ -
Product sales 147,685 798,921 424,973 1,493,919
Contract manufacturing 1,195,544 721,225 1,895,013 906,941
Consulting services 2,091,077 2,884,369 3,924,826 5,839,790
  3,599,834 4,404,515 6,460,480 8,240,650
         
COST OF GOODS SOLD 2,232,359 3,066,924 4,227,608 4,981,446
GROSS PROFIT 1,367,475 1,337,591 2,232,872 3,259,204
         
EXPENSES        
Selling expenses 154,302 24,413 307,985 44,328
General and administrative expenses 4,347,076 4,644,387 7,234,486 5,740,841
Product development and clinical trials expenses 5,263,521 3,113,707 9,522,418 4,346,909
  9,764,899 7,782,507 17,064,889 10,132,078
         
OPERATING LOSS (8,397,424) (6,444,916) (14,832,017) (6,872,874)
         
OTHER INCOME/(EXPENSE)        
Interest income 309,251 71,066 432,665 75,938
Interest expense (1,522) (1,995) (3,135) (4,012)
Loss on investment (39,949) - (39,949) -
Loss on foreign exchange (173,772) (96,066) (18,823) (51,035)
  94,008 (26,995) 370,758 20,891
         
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (8,303,416) $ (6,471,911) $ (14,461,259) $ (6,851,983)
         
LOSS PER SHARE        
Basic and diluted loss per share $ (0.12) $ (0.12) $ (0.23) $ (0.13)
                 
                 
NEOVASC INC.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
For the three and six months ended June 30,
(Expressed in Canadian dollars)
 
 
 

Three months ended

June 30,

Six months ended

June 30,

  2015 2014 2015 2014
         
OPERATING ACTIVITIES        
Loss for the year $ (8,303,416) $ (6,471,911) $ (14,461,259) $ (6,851,983)
Adjustments for:        
  Depreciation 131,699 85,973 252,375 164,633
  Share-based payments 1,384,137 4,065,680 2,867,089 4,230,641
  Loss on investments 39,949 - 39,949 -
  Interest income (309,251) (71,066) (432,665) (75,938)
  Interest expense 1,522 1,995 3,135 4,012
  (7,055,360) (2,389,329) (11,731,376) (2,528,635)
         
Net change in non-cash working capital items:        
  Accounts receivable 207,811 425,909 237,744 (15,614)
  Inventory 24,169 179,052 (26,004) (350,229)
  Prepaid expenses and other assets (118,159) (101,719) (227,601) (115,413)
  Accounts payable and accrued liabilities 370,234 585,690 834,136 695,213
  Customer deposits - (124,686) - 116,300
  484,055 964,246 818,275 330,257
         
Interest paid and received:        
  Interest received 222,267 38,037 273,340 40,185
  Interest paid (1,522) (1,995) (3,315) (4,012)
  220,745 36,042 270,205 36,173
         
  (6,350,560) (1,389,041) (10,642,896) (2,162,205)
         
INVESTING ACTIVITES        
  (Increase)/decrease in investments (1,097,717) - 3,902,282 (9,999,999)
  Loss on investments (39,949) - (39,949) -
  Purchase of property, plant and equipment (1,072,590) (251,141) (1,562,728) (317,003)
  (2,210,256) (251,141) 2,299,605 (10,317,002)
         
FINANCING ACTIVITIES        
  Repayment of long-term debt (191,547) (10,291) (202,219) (20,558)
 

Proceeds from share issue pursuant to an underwritten

public offering, net of share issue costs of $6,236,783

 

-

 

-

 

87,083,471

 

24,645,349

  Proceeds from exercise of options 21,310 115,218 1,091,940 138,778
  (170,237) 104,927 87,973,192 24,763,569
         
NET CHANGE IN CASH AND CASH EQUIVALENTS (8,731,053) (1,535,255) 79,629,901 12,284,362
         
CASH AND CASH EQUIVALENTS        
Beginning of the period 94,385,967 17,223,089 6,025,013 3,403,472
End of the period $ 85,654,914 $ 15,687,834 $ 85,654,914 $ 15,687,834
           
           
Cash $ 2,693,131 $ 1,149,180 $ 2,693,131 $ 1,149,180  
Cashable high interest savings accounts 22,540,486 9,538,654 22,540,486 9,538,654  
Cashable guaranteed investment certificates 60,421,297 5,000,000 60,421,297 5,000,000  
  $ 85,654,914 $ 15,687,834 $ 85,654,914 $ 15,687,834  
                   
                   

About Neovasc Inc. 

Neovasc is a specialty medical device company that develops, manufactures and markets products for the rapidly growing cardiovascular marketplace.  Its products in development include the Tiara™, for the transcatheter treatment of mitral valve disease and the Neovasc Reducer™ for the treatment of refractory angina. The Company also sells a line of advanced biological tissue products that are used as key components in third-party medical products including transcatheter heart valves. For more information, visit: www.neovasc.com.

Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continues," "anticipates", "estimates," "expects," and "will" and words of similar import, constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian and U.S. securities laws. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; the potential benefits of the Neovasc Reducer™ and Tiara™; and the Company's ability to develop and commercialize each product; the Company's receipt of any required local and institutional approvals, European enrollment and the success of applications in Europe; our anticipated use of proceeds from any financings, a history of losses and lack of and uncertainty of revenues, receipt of regulatory approval of product candidates, ability to properly integrate newly acquired businesses, technology changes; competition; changes in business strategy or development plans; the ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in the Company's filings with Canadian and U.S. securities regulators. No assurances can be given as to the future results, approvals or achievements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update any forward-looking statements except as otherwise required by applicable law.

SOURCE Neovasc Inc.

 

%CIK: 0001399708

For further information: Investor Relations, Neovasc Inc., Chris Clark, 604 248-4138, cclark@neovasc.com

CO: Neovasc Inc.

CNW 07:00e 06-AUG-15

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

  Neovasc Inc.
  (Registrant)
   
Date:                  August 6, 2015               By:    /s/ Chris Clark
  Name:    Chris Clark
  Title: Chief Financial Officer