Q4 2020 Neovasc Inc Earnings Call
[music].
Greetings and welcome to the Neovasc, Inc, fourth quarter and year end 2020 earnings call.
At this time all participants are in a listen only mode.
Question and answer session will follow the form of presentation.
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce Mike Cavanaugh, managing director at Westwood. Thank you you may begin.
Thank you.
Good afternoon, and thank you for joining us today earlier today Neovasc, Inc.
The financial results for the quarter and fiscal year ended December 31 2020.
Or at least is currently available on the investors section of the company's website at Www Dot Neovasc dot com slash investors.
Poland, President and Chief Executive Officer, and Chris Clark, Chief Financial Officer will host this afternoon's call.
Before we get started I'd like to remind everyone that management will be making statements. During this call that include forward looking statements within the meaning of the applicable securities laws, which are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of $19 95, and Canadian Securities laws.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination of historical operating trends expectations regarding coverage decisions pricing and enrollment matters and our future financial expectations on.
The results are based upon current estimates of various assumptions.
Words, such as expect outlook will should continue strategy potential intend try believe plan and similar words are express floor expressions are meant to identify forward looking statements. These statements involve material risks and uncertainties that could cause actual results to differ materially.
Really from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on the statements.
More information on risks and uncertainties related to these forward looking statements. Please refer to the cautionary statements regarding forward looking statements and risk factors sections.
Of Neovasc annual information report on form 40 F and the discussion that Neovasc M D N a.
Share available on Edgar and SEDAR.
The information provided on this conference call speaks only to the live broadcast today March 11, 2020, Neovasc disclaims any intention or obligation except as required by law to update or revise any information or forward looking statements, whether because of new information future events or otherwise.
I will now turn the call over to Fred.
Thank you, Mike and good afternoon, everyone.
Overall, we are pleased with the progress we made in 2020, despite the serious challenges posed by the Covid pandemic and a setback around FDA approval of the reduce or in October.
We all know that patients are experiencing serious barriers to visiting their health care providers and undergoing surgical procedures.
Nevertheless, reducer implants recovered sharply from the pandemic related low lows of the first half of the year in the third quarter, but were impacted again in Q4.
Overall generating approximately $2 million on revenue.
While we have much greater aspirations for reducer. We believe this is a testament to reduce those underlying demand and potential to help people with refractory angina, who often suffer serious quality of life issues and have nowhere else to turn.
As we have said before refractory angina is a difficult disease that has a need of battle solutions and we continue to firmly believe that we do so as a major part of the solution.
We also continue on to the important work of strengthening the corporate capital structure with multiple transactions throughout the year.
We took steps to retire convertible debt and to raise cash for the balance sheet through direct placements to institutional investors.
We capped the year and fourth quarter with a $6 1 million raise which gave us operating capital through the end of May 2021, and brought our total gross proceeds raised during the year through debt and equity to $45 $2 million.
Although it occurred after the close of the year I think it is important to discuss the $72 million raise we completed in February of this year.
For the first time since May 2016, Neovasc can fund operations, including ongoing trials for tiara and reducer for over two years without the necessity of assessing the capital markets.
We believe that this may turn out to be significant transaction in the life of the company. It has allowed us to mitigate risks related to for the near term dilution and the overall solvency of the company and has given us the opportunity to allow battle of decision, making around resource allocation.
And partnership opportunities.
We believe that the U S market opportunity for reducer remains significant and we intend to pursue an IDE study for reducer wisdom of objective of obtaining FDA approval for the device.
We look forward to working with FDA, and our investigators and hope to finalize the trial design and begin enrollment this year.
We will of course update you as these plants emerge.
Turning to Europe, where do we do as the has been used safely and effectively for over nine years. We continue our efforts to expand the commercial footprint into new countries and to pursue additional reimbursement.
We have made significant progress in several major European markets, including France, the UK and other countries as we work towards obtaining sufficient reimbursement in those markets.
A positive reimbursement decision in France, if it happens may enable us to build the direct sales force in France, as well as with it in Germany.
In December we announced the first reduce the implants in France, the second largest market in the European Union and we are optimistic that we will continue to expand the use of the unique device.
Turning to our tiara mitral valve replacement device, we are advancing our regulatory submission for the chair of Ta trends apical mitral valve replacement system targeting of European CE Mark decision under the medical device directive.
<unk> of ask is an ongoing collaborative discussions and ongoing submission of data with our notified body and we are targeting an approval decision for tier of Ta in the first half of the year.
We are also exploring possible partnership opportunities in Europe, India event that we received approval for the chair of Ta there.
The next key initiative to watch will be activity, leading up to a first human implant and the regulatory interactions for the next generation Cherokee F device.
As we have discussed earlier, we are making a few design modifications to the TF delivery system based on feedback from our executive steering Committee.
We believe the slight delay will be worthwhile given the potential device improvements from the modifications.
We are targeting the first in human implant of the chair of T. F. In the second half of 2021.
The company is encouraged by the positive feedback it has received on the device.
Most notably physicians are supportive of the systems of low profile control delivery and unique D shaped implant design that set it apart from competitive offerings and development.
We continue to believe in the potential of share of T. F to expand the size of the market and to be more broadly applicable than competitive systems under development and our own tons apical chair of system.
Okay.
While 2020 was a challenging year for almost everyone. We are proud of the way Neovasc weathered the storm and its now financially stronger than it has been in years.
Furthermore, we hope to report multiple milestones in 2021, as we continue to develop our devices, including a CE Mark decision for tier of Ta a first in human implant of share of T. F. A potential new U S. IDE trial for the reducer and a growing commercial.
Print and reimbursement strategy, allowing for expansion into new we do so markets.
We want to thank our investors for their continued support of Neovasc I will now turn the call over to Chris for a review of our financial results.
Thank you Frank.
The volume is likely aware.
The restrictions on elective procedures, which included reduced the implants was implemented by the hospitals health authorities and governments on.
Of a substantial portion of all our major markets due to COVID-19.
The schools reducer implantation to significantly slow beginning in March 2020.
Beginning in June 2020, we saw a return of inbounds from several of our international markets with a strong rebound in Germany, Italy and other select markets.
Although the experienced the second reduction on the Julian.
Julian the second wave of COVID-19 Lockdowns.
As a result.
The decrease of 6%.
The $196 million per the year ended December 31st 2020 compared to revenues.
The <unk> zero $9 million from the same pool within 2019.
The cost of goods sold for the year ended December 31st 2020.
$446000 compared to $458000 per the same day within 2019.
The overall gross margins for the year ended December 31, 2024, 7% to 70%.
Compared to 78% from the same period in 2019.
The company continues to focus on Germany.
Company sales that you gave the direct margins.
Total departmental expenses for the year ended December 31st 2020.
The $36 7 million.
Compared to $31 $7 million from the same period in 2019.
Representing an increase of $5 million from.
The 16%.
The increase in total <unk> expenses for the year ended December 31st 2020.
Compared to the same period in 2019.
It can be substantially explained by the.
The $2 $5 million increase in legal costs related to the 'twenty 'twenty financings as we completed five different transactions.
The $1 $7 million increase of noncash share based payments.
And the $1 $1 million increase in employee related expenses due to an increase in head count including C. A R.
The increase on the vacation accrual of direct impact of COVID-19 delayed vacations.
Part of the development of clinical trial expenses for the year ended December 31st 2020, with $24 million compared to $20.0 million for 2019.
Presenting an increase of claims of $90000 from 2%.
We continue to focus on expense on the clinical goes into.
The commercial Paul close to maximize value for certainty on our products.
The operating loss of comprehensive loss for the year on December 30, <unk> 2020 with.
The $35 $2 million from $32 million respectively.
Our $1 72, basic and diluted loss per share as compared with $30.0 million and $33 6 million or $5.40 per basic and diluted loss per share for the same period in 2019.
Neovasc finances operations and capital expenditures with cash generated from operations on through equity and debt financing the.
The company had approximately $12 $9 million in cap from cash equivalents on December 31, 2020.
And approximately $72 million as of today's date.
Finally, subsequent to the February 2021 financing.
The company had approximately 67 million common stock outstanding and the fully.
Fully diluted share count of approximately 106 million shares.
As mentioned by Craig.
Right now on a strong position financially.
We're actively engaged in potential partnership opportunities and expect the bill.
Critical value creation of events before needing more capital.
We look forward to updating the mall people positive updates in 2020 of them and be on right.
Thank you Chris and thank you all for listening to our opening remarks Neovasc is finally after almost five years on a new foundational footing.
We have achieved the transformation of this company to a now more typically funded startup company with a clean balance sheet.
This is primarily due to the strength of our two products, which I'm convinced we will transform the lives of millions of patients to come.
But it is also due to the Neovasc team a loyal dedicated and very hard working group of individuals across the globe in Canada, The U S and Europe.
Nothing scared them or us and we continue to moving forward undisturbed by the huge turbulence around us.
Finally, it is due to a large group of dedicated long of investors.
And at the fastest who completely support our never give up mantra and who are always there to support the company.
Once again, we want to thank you all for your dedication and your continued trust and support I would like to now open the call up for questions.
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Thank you bye bye.
Okay.