Neovasc shares tumble on Q2 release with $70m set aside to cover loss to Edwards’ CardiAQ Valve

Neovasc (NSDQ:NVCN) shares have plummeted nearly 20% after saying it set aside $70 million to cover a loss in an ongoing patent battle with Edwards Lifesciences (NYSE:EW) subsidiary CardiAQ Valve Technologies in its 2nd quarter earnings release.

The company said that both parties are pursuing post-trial motions, including an injunction from CardiAQ that would require Neovasc to cease Tiara operations for 18 months.

Neovasc said it expects a hearing to be held on the motions “sometime in the near future,” and that following the order one or both companies could pursue appeals through the U.S. Court of Appeals for the Federal Circuit.

The Vancouver-based company “intends to vigorously defend itself in the litigation with CardiAQ and so the outcome of these matters,” including whether it will be required to pay the $70 million, which it said is “not currently determinable.”

Neovasc reported inflated losses of $83.6 million, or $1.25 per share, on sales of $1.7 million for the 3 months ended June 30. That’s more than a 1000% growth in losses compared to the $6.8 million it lost last year during the same quarter, with sales shrinking 41.6% comparatively.

Shares have plummeted today after the release, down 18.9% to trade at 61¢ as of 11:49 a.m. EDT.

“Activities to increase the rate of enrollment of patients in the Tiara clinical program, including adding new centres, introducing the 40 mm Tiara and refining inclusion criteria are resulting in an increased number of implantations. There have now been 19 patients treated with Tiara and we continue to be encouraged by the early results from these cases. In addition, the commercial launch of Reducer in select European countries and elsewhere continues to build momentum, with the second quarter being our sixth consecutive quarter of strong sales growth,” CEO Alexei Marko said in prepared remarks.

In May, Neovasc won a round in its patent battle with Cardiaq Valve that’s already got it on the hook for some $70 million in damages.

A federal jury in Massachusetts found earlier this month that Neovasc stole trade secrets and breached a non-disclosure agreement with CardiAQ in developing the Tiara transcatheter mitral valve replacement. Edwards inherited the lawsuit when it acquired CardiAQ Valve for $400 million in August 2014.

A Bay State federal judge tossed a claim alleging that Neovasc violated Massachusetts laws against unfair competition and unfair or deceptive practices. Judge Allison Burroughs ruled May 27 that because most of the wrongdoing took place in Canada, not Massachusetts as required by the statute.

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