Edwards Lifesciences’ CardiAQ Valve wants to add $23m to Neovasc’s $70m trade theft loss

Edwards Lifesciences (NYSE:EW) subsidiary CardiAQ Valve Technologies wants a federal judge in Massachusetts to add 33%, or more than $23 million, to the $70 million trade theft verdict lodged against Neovasc (NSDQ:NVCN) earlier this year.

A federal jury in Massachusetts found in May 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.) Later in May, a Bay State federal judge tossed a claim alleging that Neovasc violated Massachusetts laws against unfair competition and unfair or deceptive practices, ruling that most of the wrongdoing took place in Canada, not Massachusetts as required by the statute.

Last week CardiAQ Valve asked Judge Allison Burroughs of the U.S. District Court for Massachusetts to tack on another $23.3 million to the original verdict.

“The court should not condition enhancement on whether CardiAQ is ultimately overcompensated or undercompensated depending on how the market develops. Today, Neovasc is a willful misappropriator. Thus, it should be punished now despite the fact that as the market develops years from now, even more evidence may demonstrate that the $70 million verdict undercompensated CardiAQ for a fully-paid-up compulsory license. As the willful misappropriator, Neovasc should pay the penalty now,” CardiAQ Valve argued, according to court documents.

The Edwards unit, which is seeking an injunction that would halt Neovasc’s Tiara program for 18 months, also wants Burroughs to bar Neovasc from asserting some of its patent claims, which CardiAQ Valve claimed are the product of early conceptual work on the part of CardiAQ Valve co-founder, president & COO Brent Ratz (now an R&D VP for Edwards’ TMVR program) and co-founder Dr. Arshad Quadri – the “AQ” in CardiAQ.

“In addition to seeking to suspend the Tiara program, CardiAQ also seeks a separate provision that enjoins Neovasc from prosecuting certain patent claims,” CardiAQ Valve claimed. “Because the jury found that Neovasc misappropriated [a trade secret], the court should enter this portion of the injunction regardless of its decision concerning inventorship.”

Although Neovasc has already set aside $70 million to cover any losses in the case (a move that prompted investors to pare 20% from its share price last month), CardiAQ Valve wants Burroughs to enjoin Neovasc in the event that it can’t pay up. The most likely scenario is that Neovasc, which reported assets of $44.5 million as of June 30, just won’t have the scratch, but it’s also remotely possible that a jury will overturn some or all of the trade secret theft and breach of contract charges, CardiAQ Valve said.

“In each situation, Neovasc would be liable for breach of the [nod-disclosure agreement], trade secret misappropriation, or both, but would not pay any damages. Moreover, the NDA specifically states that ‘money damages would not be [a] sufficient remedy’ and that CardiAQ ‘shall be entitled to equitable relief’ in the event of any breach,” according to the documents. “In each of these scenarios, CardiAQ would be undercompensated for Neovasc’s breach and misappropriation, and Neovasc’s arguments that the damages awarded compensate for a post-judgment license would be entirely unsupported.”

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