Neovasc shares down on Q1 miss, plans 1-for-100 reverse split

Shares in Neovasc (NSDQ:NVCN) have fallen today after the medical device maker missed Wall Street expectations and posted growing losses in its first quarter earnings release, alongside plans for a 1-for-100 reverse split.

The Vancouver-based company posted losses of $55.5 million, or 38¢ per share, on sales of $339,922 for the three months ended March 31, seeing losses grow nearly 600% while sales shrunk 77.1% compared with the same period during the previous year.

Losses-per-share were significantly off from the 3¢ consensus on The Street, where analysts expected to see sales of $870,000, which the company did not meet.

“Despite a challenging period for our shareholders, we are encouraged by our improved financial position through the receipt of $12.3 million in proceeds from investor-initiated exercises of Series C warrants that were issued during our November 2017 public offering. This additional capital provides us with increased runway to support our clinical and operating activities into early 2019 at our current cash burn rate, including achieving further clinical milestones for Tiara and increasing commercial sales of Reducer in Europe. We continue to see steady enrollment progress in our Tiara I and II studies, with 34 patients implanted with Tiara to-date in these trials, compared to 21 patients at the end of 2017. The initial development of the transfemoral, trans-septal version of Tiara is on track, and we are pleased to report that we completed our first, small animal feasibility study with a first set of prototypes and that for the first time in the history of Tiara, we have been able to access the heart trans-septally, to pass through the mitral valve annulus from the right side of the heart and deploy a Tiara mitral valve. We are pleased to have had several scientific articles published which presented data on Reducer, including an editorial in the Journal of the American College of Cardiology publication, Vol. 11, No. 8, 2018 by Dr. Wijns and Dr. Behan: “New Treatment Options for the “No Option” Patient with Refractory Angina.” We are excited to have additional Reducer data included in these peer-reviewed publications, including U.S. publications, to help drive greater industry awareness of the Reducer,” CEO Fred Colen said in a press release.

Shares in Neovasc have fallen 18.3% so far today, at 4¢ as of 3:47 p.m. EDT.

Neovasc warned that it may be facing an end due to a lack of funding. In the report report, the company said that it would “require significant additional funding” to continue operating, and that “given the current nature of the company’s capital structure, there can be no assurance that such financing will be available on favorable terms, or at all.”

During its earnings conference call, Neovasc also said it is planning to initiate a share consolidation program this summer to regain compliance with the NASDAQ minimum bid requirement, and urged all shareholders to vote in favor of the split.

“Further to this we wish to remind everybody of our annual and special general meeting on June 4, 2018. At this meeting we will seek shareholder approval to carry out a share consolidation of up to a one to 100 reserve split. We have considered the options and believe that the reverse split is the only choice to avoid being delisted from the NASDAQ capital market on the basis of our share price. We must regain compliance with the $1 minimum bid requirement of the NASDAQ before July 2, 2018 or seek an extension. We strongly urge all shareholders to vote in favor of our proposal to execute a reverse split of the stock. As a reminder, a reverse split does not have an effect on your relative holding in the company. As the number of shares your hold and the price of the stock will be adjusted in proportion to each other and to all other holders,” CFO Chris Clark said during an earnings conference call, according to Seeking Alpha.

Last month, Neovasc said it raised more than $7 million in a warrants offering.

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