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Neovasc Inc (US) (NASDAQ:NVCN) Should Strengthen Further Into 2017

Neovasc Inc (US) (NASDAQ:NVCN) Should Strengthen Further Into 2017
Written by
Chris Sandburg
Published on
December 29, 2016
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Neovasc Inc (US) (NASDAQ:NVCN) has had a big close to the year. The company entered December at around $.5 a share. By December 6, this had risen to more than $3.20 a share. At most recent close, the company went for $1.70 – a 22% gain on the November close. For a company that has so much uncertainty surrounding its operations, and associated litigation, this is a top run. But what's driving it, and what next?The answer is pretty simple – the just mentioned uncertainty is dwindling, and investors are starting to see a path through to commercialization (and by proxy, revenue generation) from Neovasc's lead development asset. Those who have followed along with our coverage of this one will know we've outlined a number of different situations in which this path would become a simple, and very viable, route to market. Recent developments have reinforced our thesis on these potential pathways, and served up some clarity as to their construction.Here's a look at the latest developments, and what they mean for Neovasc and its shareholders.First, let's bring those new to the situation up to date. Neovasc is a development stage biotech company with a lead asset called TIARA. It's what’s called a transcatheter mitral valve implant (TMVI) device, and it's designed to improve on the current standard devices used in the space, as well as improve on the delivery method (trans catheter, in this instance). For the purposes of this discussion, we don't need to go in to the device in too much detail. It's suffice to say that all data to date suggests it works, and works well, and that there are some big names in support of this efficacy (one of which is Boston Scientific Corporation (NYSE:BSX), which we'll come back to shortly).The problem is, a company called CardiAQ thinks Neovasc ripped off its technology from the former, and the two have been in court battle for the last few years. This came to what we might deem an initial close earlier this year, when the court ruled in favor of CardiAQ and demanded Neovasc pay $70 million (later increased to $91 million) to compensate. This left the situation as follows: Neovasc couldn’t afford to pay the cash all in one go, but it was still allowed to continue developing TIARA. As such, it needed a way to avoid having to pay, while it completed development and started generating revenues, or, come up with the cash to pay all in one go and then go about with its business.Two things have since happened, and they've covered both of the above mentioned bases.First Boston Scientific bought a bunch of technology from Neovasc, and took a position in the company, injecting $75 million in cash into the company's balance sheet. Add this to the company's already on hand, and it covers the liability entirely.Second, a court just granted a stay on payment while Neovasc appeals, which will delay any requirement to pay by at least a year. There's a stipulation to the stay that requires Neovasc to put $70 million aside while the appeal takes place, but the Boston Scientific capital more than covers that.So the situation now is that we’ve got a company with a very promising development asset, a big pharma and medical device backer, cash on hand (somewhere around $30 million given the recent developments, and taking into account the $70 million set aside) and a clear path to development. It may have to pay $91 million after the appeal, but the hope is that by the time the appeal resolves, it will be generating revenues. From a very bullish perspective, it may not have to pay the cash at all, and will be in the same position as it is now, but with an incredibly healthy balance sheet.These are the factors conspiring to pus the company higher right now, and we expect them to inject further strength into what we see as a market realignment in the coming months.We will be updating our subscribers as soon as we know more. For the latest updates on NVCN, sign up below!Disclosure: We have no position in NVCN and have not been compensated for this article.

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