Neovasc Inc. Reports Second Quarter 2009 Financial Results



    
     - Growing Traction in Specialty Tissue Business Producing Increased
                                 Revenues -
         - Neovasc Reducer(TM) Commercialization Process on Track -

    TSX Venture Exchange: NVC
    

    VANCOUVER, Aug. 19 /CNW/ - Neovasc Inc. (TSXV: NVC), today announced
financial results for the three and six months ended June 30, 2009.
    "During the second quarter we continued to make significant progress in
executing on our strategic initiatives adopted late last year," said Alexei
Marko, chief executive officer of Neovasc. "We are especially pleased at the
growing traction we are seeing in our tissue business, where our decision to
focus on our specialty products and services is beginning to bear fruit, with
increases in tissue sales already evident. We were pleased in the second
quarter to report significantly lower expenses compared to last year, at the
same time that we were able to advance the development of our innovative
Neovasc Reducer(TM) device."
    Mr. Marko continued, "While holding down costs we have also been able to
ramp up our business development activities, and the response to date is very
encouraging. On this note, we were delighted that LeMaitre Vascular, one of
our key strategic partners, cited our Peripatch product as an important
contributor to their second quarter sales growth."

    Financial Results

    Results for the three and six months ended June 30, 2009 follow. All
amounts are in Canadian dollars.

    Revenues

    Revenues increased 39% year-over-year from $433,061 for the quarter ended
June 30, 2008 to $600,324 for the quarter ended June 30, 2009. For the six
months ended June 30, 2009, revenues increased 10% to $955,808, up from
$866,546 for the six months ended June 30, 2008, primarily reflecting
increased revenues from consulting and contract manufacturing services in our
tissue products and services business. Sales of tissue and surgical products
and services for the three months ended June 30, 2009 were $596,787, compared
to $387,157 in the prior year quarter, an increase of 54%. Sales of tissue
products and services for the six months ended June 30, 2009 were $936,064, as
compared to sales of $740,406 for the same period of 2008, representing an
increase of 26%. These revenues include sales of Neovasc's Peripatch products,
as well as consulting services and contract manufacturing revenues for tissue
and surgical products. The company is continuing to develop additional
consulting services and contract manufacturing clients. Sales of Metricath(R)
catheter products for the six months ended June 30, 2009 were $19,744, an 84%
decrease over sales of $126,140 in the comparable period in 2008. The
termination of our direct sales force for Metricath products at the end of
2008, a strategic decision undertaken to enable the company to focus on its
most promising growth opportunities, contributed to this decrease in sales.

    Cost of Sales

    The cost of sales for the three and six months ended June 30, 2009 were
$277,265 and $427,025, respectively, as compared to $220,344 and $428,604 in
the comparable periods in 2008. The overall gross margin for the first half of
2009 rose to 55%, as compared to 51% in 2008. The improvement in gross margin
reflects the company's strategic shift to certain contract and specialty
tissue patch products with higher margins.

    Expenses

    Total expenses for the three and six months ended June 30, 2009 were
$1,687,389 and $3,617,883, respectively, as compared to $2,074,216 and
$3,983,750 for the same periods in 2008. Total expenses declined more than 18%
year-on-year for the three-month period and more than 9% for the six-month
period. Sales and marketing expenses declined 79% for the three months ended
June 30, 2009, from $785,491 in 2008 to $163,683 for the same period in 2009.
For the six months ended June 30, 2009, sales and marketing expenses were
$466,568, compared to $1,534,995 for the same period in 2008, a 70% decrease.
The company terminated its direct sales force for its catheter products in the
fourth quarter of 2008 and will continue to minimize sales and marketing costs
while it focuses on growing its business-to-business revenue streams. General
and administrative expenses for the three and six months ended June 30, 2009
were $659,004 and $1,409,833, respectively, as compared to $779,363 and
$1,317,648 for the comparable periods in 2008, a decrease of 15% for the
three-month period and an increase of 7% for the six-month period.
Substantially all of the increase in general and administrative expenses in
the six-month period reflects an increase in stock-based compensation charges.
Product development and clinical trial expenses were $864,702 and $1,741,482
respectively, for the three and six months ended June 30, 2009, as compared to
$414,958 and $1,036,703 for the same periods in 2008, representing increases
of 108% and 68% respectively. Product development expenditures to advance the
Neovasc Reducer CE mark regulatory submission and the final Metricath Gemini
PMA submission contributed to the increase.

    Net Losses

    The consolidated net loss for the three and six months ended June 30,
2009 was $1,330,451 and $3,076,691, or $0.05 and $0.14 basic loss per share,
as compared to a net loss of $1,915,673 and $3,657,248, or $0.34 and $0.66
basic loss per share for the comparable periods in 2008. The decrease in net
loss year-on-year reflects the company's increased revenues and decreased
losses.

    Liquidity and Capital Resources

    The company finances its operations and capital expenditures with cash
generated from operations, lines of credit, long-term debt and equity
financings. At June 30, 2009, the company had cash and cash equivalents of
$1,340,471, as compared to cash and cash equivalents of $2,498,439 at December
31, 2008. In addition, at June 30, 2009, the company had restricted cash
related to a security on long-term debt of $50,000 included in long-term
assets. At June 30, 2009, the company had working capital of $1,168,101, as
compared to working capital of $2,123,519 at December 31, 2008. The decrease
in working capital during the six months ended June 30, 2009 was predominantly
due to a decline in cash and an increase in accounts receivable and in
accounts payable associated with the growth in operations from the expansion
of our tissue business and the development of the Neovasc Reducer. Cash used
in operations was $1,593,864 and $3,108,346 for the three and six months ended
June 30, 2009 respectively, as compared to $1,527,982 and $3,327,793 for the
same periods of 2008. The decrease in cash usage for the six months ended June
30, 2009 as compared to the same period of 2008 is primarily the result of the
company's decrease in marketing expenses in 2009. The company made minimum
equipment purchases in both periods and investing activities were minimal. Net
cash provided from financing activities was $1,962,399 and $1,958,923 for the
three and six months ended June 30, 2009, compared to cash used of $9,920 and
$16,418 in the same periods in 2008. On April 23, 2009, the company completed
a non-brokered private placement of 9,523,810 units at the price of $0.21 per
unit for aggregate gross proceeds of $2,000,000. Each unit consisted of one
common share of Neovasc stock and one-half of one common share purchase
warrant of Neovasc stock. Each whole warrant entitles the holder to purchase
one common share of Neovasc stock at the exercise price of $0.30 per share for
a period of one year after the closing date of the offering. Share issue costs
were $20,314.



    
    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Balance Sheets

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      June 30,   December 31,
                                                         2009           2008
    -------------------------------------------------------------------------

    ASSETS

    CURRENT
      Cash and cash equivalents                  $  1,340,471   $  2,498,439
      Accounts receivable                             441,783        470,200
      Inventory                                       526,150        341,564
      Prepaid expenses and other assets                58,520         52,356
    -------------------------------------------------------------------------
                                                    2,366,924      3,362,559
    RESTRICTED CASH AND CASH EQUIVALENTS               50,000         50,000
    RETIREMENT ASSETS                                   8,320          8,320
    PROPERTY AND EQUIPMENT                          1,344,730      1,399,644
    -------------------------------------------------------------------------
                                                 $  3,769,974   $  4,820,523
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities   $  1,159,173   $  1,218,405
      Current portion of long-term debt                39,650         20,635
    -------------------------------------------------------------------------
                                                    1,198,823      1,239,040
    LONG-TERM DEBT                                    377,279        418,612
    RETIREMENT LIABILITIES                              8,964          8,964
    -------------------------------------------------------------------------
                                                    1,585,066      1,666,616
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    Share capital                                  60,588,307     58,607,066
    Contributed surplus                             4,563,255      4,436,804
    Deficit                                       (62,966,654)   (59,889,963)
    -------------------------------------------------------------------------
                                                    2,184,908      3,153,907
    -------------------------------------------------------------------------
                                                 $  3,769,974   $  4,820,523
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Statements of Operations, Comprehensive Loss and Deficit
    For the three and six months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                      Three months ended June 30   Six months ended June 30
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    SALES
      Product sales   $    529,769  $    433,061  $    828,399  $    837,924
      Consulting
       services             70,555             -       127,409        28,622
    -------------------------------------------------------------------------
                           600,324       433,061       955,808       866,546
    COST OF SALES,
     including
     underutilized
     capacity of $16,038
     (2008: $25,144)       277,265       220,344       427,025       428,604
    -------------------------------------------------------------------------
    GROSS PROFIT           323,059       212,717       528,783       437,942
    -------------------------------------------------------------------------
    EXPENSES
      Selling              163,683       785,491       466,568     1,534,995
      General and
       administration      659,004       779,363     1,409,833     1,317,648
      Product
       development and
       clinical trials     864,702       414,958     1,741,482     1,036,703
      Inventory write
       down                      -        94,404             -        94,404
      Amortization          31,103        75,670        63,459       121,436
    -------------------------------------------------------------------------
                         1,718,492     2,149,886     3,681,342     4,105,186
    -------------------------------------------------------------------------
    LOSS BEFORE OTHER
     INCOME (EXPENSES)  (1,395,433)   (1,937,169)   (3,152,559)   (3,667,244)
    -------------------------------------------------------------------------
    OTHER INCOME (EXPENSES)
      Interest income        1,355        14,208        10,976        23,303
      Interest on
       long-term debt       (2,276)       (5,021)       (5,529)      (12,535)
      Accreted interest
       on repayable
       contribution
       agreement                 -        (3,846)            -        (7,685)
      Gain (Loss) on
       foreign exchange     65,903        16,155        70,421         6,913
    -------------------------------------------------------------------------
                            64,982        21,496        75,868         9,996
    -------------------------------------------------------------------------
    NET LOSS AND
     COMPREHENSIVE LOSS
     FOR THE PERIOD     (1,330,451)   (1,915,673)   (3,076,691)   (3,657,248)
    DEFICIT, BEGINNING
     OF PERIOD         (61,636,203)  (27,371,973)  (59,889,963)  (25,630,398)
    -------------------------------------------------------------------------
    DEFICIT, END
     OF PERIOD        $(62,966,654) $(29,287,646) $(62,966,654) $(29,287,646)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    BASIC AND DILUTED
     LOSS PER SHARE   $      (0.05) $      (0.34) $      (0.14) $      (0.66)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    WEIGHTED AVERAGE
     NUMBER OF
     COMMON SHARES
     OUTSTANDING        27,384,365     5,560,477    22,570,658     5,560,477
    WEIGHTED AVERAGE
     NUMBER OF FULLY
     DILUTED SHARES
     OUTSTANDING        28,215,935     5,560,477    23,406,692     5,560,477
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Statements of Cash Flows
    For the three and six months ended June 30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                      Three months ended June 30   Six months ended June 30
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
      Net loss for
       the period     $ (1,330,451) $ (1,915,673) $ (3,076,691) $ (3,657,248)
      Items not
       affecting cash
        Inventory write
         down                    -        94,404             -        94,404
        Amortization        31,103        75,670        63,459       121,436
        Interest on
         repayable
         contribution
         agreement               -         3,846             -         7,685
        Stock-based
         compensation       40,399        16,457       126,451        29,740
    -------------------------------------------------------------------------
                        (1,258,949)   (1,725,296)   (2,886,781)   (3,403,983)
      Change in non-cash
       operating assets
       and liabilities
        Accounts
         receivable       (106,089)       38,235        28,417       228,316
        Inventory          (35,974)       81,126      (184,586)      (88,034)
        Prepaid expenses
         and other assets      115       (40,440)       (6,164)     (169,585)
        Accounts payable
         and accrued
         liabilities      (192,967)      118,393       (59,232)      105,493
    -------------------------------------------------------------------------
                        (1,593,864)   (1,527,982)   (3,108,346)   (3,327,793)
    -------------------------------------------------------------------------
    INVESTING ACTIVITY
      Purchase of
       property and
       equipment              (574)       (6,510)       (8,545)      (13,692)
    -------------------------------------------------------------------------
                              (574)       (6,510)       (8,545)      (13,692)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Repayment of
       long-term debt      (17,287)       (7,265)      (22,318)      (12,035)
      Repayment of
       repayable
       contribution
       agreement                 -        (2,655)            -        (4,383)
      Proceeds from share
       issue, net of
       costs             1,979,686             -     1,979,686             -
      Proceeds from
       exercise of
       stock options             -             -         1,555             -
    -------------------------------------------------------------------------
                         1,962,399        (9,920)    1,958,923       (16,418)
    -------------------------------------------------------------------------
    (DECREASE)/INCREASE
     IN CASH               367,961    (1,544,412)   (1,157,968)   (3,357,903)
    CASH AND CASH
     EQUIVALENTS,
      BEGINNING OF
       PERIOD              972,510     1,428,913     2,498,439     3,242,404
    -------------------------------------------------------------------------
      END OF PERIOD   $  1,340,471  $   (115,499) $  1,340,471  $   (115,499)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    REPRESENTED BY:
      Cash                 538,006      (234,346)      538,006      (234,346)
      Cashable
       guaranteed
       investment
       certificates        802,465       118,847       802,465       118,847
    -------------------------------------------------------------------------
                      $  1,340,471  $   (115,499) $  1,340,471  $   (115,499)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTAL CASH
     FLOW INFORMATION
      Interest paid   $      2,276  $      5,021  $      5,529  $     12,535
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About Neovasc Inc.

    Neovasc Inc. is a new specialty vascular device company that develops,
manufactures and markets medical devices for the rapidly growing vascular and
surgical marketplace. The company's current products include the Neovasc
Reducer(TM), a novel product in development to treat refractory angina, as
well as a line of advanced biological tissue technologies that are used to
enhance surgical outcomes and as key components in a variety of third-party
medical products. 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," "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. 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;
history of losses and lack of and uncertainty of revenues, ability to obtain
required financing, 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 securities regulators. Although the
Company believes that expectations conveyed by the forward-looking statements
are reasonable based on the information available to it on the date such
statements were made, 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.





For further information:

For further information: Corporate contact: Neovasc Inc., Chris Clark,
(604) 248-4138; U.S. media & investor contact: GendeLLindheim BioCom Partners,
Barbara Lindheim, (212) 918-4650


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