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Neovasc Inc. Reports First Quarter 2009 Financial Results

    --Company Focuses on Rebuilding Revenue Base While Stabilizing Costs--

    TSX Venture Exchange: NVC

VANCOUVER, June 1 /PRNewswire-FirstCall/ - Vancouver, BC, Canada - Neovasc Inc. (TSXV: NVC), today announced financial results for the three months ended March 31, 2009.

"The first quarter continued to show financial effects from our strategic decision late last year to refocus Neovasc on our most promising growth areas," said Alexei Marko, chief executive officer of Neovasc. "During this transition period we have been laying the groundwork to increase sales from our tissue product line and have continued to advance the development and approval process for our Reducer device for the treatment of refractory angina. Despite the fact that we started the year without a US distributor for our biological tissue products, sales for the quarter were only down slightly compared to last year. We have seen a significant ramp in sales since our agreement with LeMaitre Vascular came into effect and as we continue to grow our business supplying tissue to industry partners developing and manufacturing vascular devices. On the cost side, we have made good progress in reducing our cost structure and continue to focus on wringing unnecessary expense out of the business."

Mr. Marko continued, "Since the close of the quarter, we have had several encouraging developments: We successfully completed a non-brokered private placement of approximately $2.0 million to strengthen our cash position and earlier this month we reported very encouraging preliminary data from the three-year follow-up study of refractory angina patients implanted with our Neovasc Reducer(TM). Refractory angina is a painful and debilitating condition that affects millions of patients and currently lacks effective treatments. The preliminary three-year data indicates that the Reducer was very well tolerated and showed positive signs of efficacy in the majority of patients. We look forward to releasing the full study data in a peer-reviewed forum and to seeking regulatory approval for Reducer in Europe later this year. We remain optimistic that 2009 will be a turning point for Neovasc, generating good revenue growth and achieving significant progress in advancing our Reducer device that has the potential to transform the treatment of refractory angina."

Financial Results

Results for the three months ended March 31, 2009 follow. All amounts are in Canadian dollars.

Net Losses

The consolidated net loss for the three months ended March 31, 2009 was $1,746,240 or $0.10 basic loss per share as compared with a net loss of $1,741,575 or $0.31 basic loss per share for the comparative period in 2008.


Revenues decreased 18% year over year from $433,485 for the quarter ended March 31, 2008 to $355,484 for the quarter ended March 31, 2009. Sales of catheter products for the quarter ended March 31, 2009 were $16,207, an 80% decrease over sales of $80,236 in the comparable period in 2008. The termination of a direct sales force for Metricath products at the end of 2008 contributed to this decrease in sales. Sales of tissue and surgical products and services for the three months ended March 31, 2009 were $339,277, as compared to sales of $353,249 for the same period of 2008, representing a 4% decrease. These revenues were derived from the sales of Peripatch products, consulting services and contract manufacturing revenues for tissues and surgical products. The company revamped its internal sales and marketing activities during the quarter to attract more consulting services and contract manufacturing clients for its tissues business and has begun to experience an increase in interest from potential new customers.

Cost of Sales

The cost of sales for the three months ended March 31, 2009 were $149,760 as compared to $208,260 in 2008, and the overall gross margin for 2009 was 58% as compared to 52% in 2008. The improvement in gross margin reflects a shift to certain contract and patch products with higher margins than the company's Metricath or standard Peripatch products.


Total expenses for the three months ended March 31, 2009 and 2008 were $1,930,494 and $1,909,534 respectively. Sales and marketing expenses declined 60% to $302,885 for the three months ended March 31, 2009 as compared to $749,504 for the same period in 2008. The company made a strategic decision to terminate its endovascular direct sales force in the fourth quarter of 2008 and will continue to minimize sales and marketing costs until new products from its acquisitions and other sources are ready for market. General and administrative expenses for the three months ended March 31, 2009 were $750,829 as compared to $538,285 in 2008, an increase of 39%. In the first quarter of 2009, the increase in general and administrative costs of $212,544 is largely attributable to a stock compensation charge of $86,052 relating to the immediate vesting of options granted to the Board of Directors in February 2009 and approximately $65,485 in increased expenses related to the costs of the company's operations in Israel. Product development and clinical trial expenses were $876,780 for the three months ended March 31, 2009 as compared to $621,745 for the same period of 2008, an increase of 41%. The final PMA submission to the U.S. Food and Drug Administration in March 2009 for the Gemini Metricath product and the additional expense of the Israel R&D operation contributed to the increase.

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 March 31, 2009, the company had cash and cash equivalents of $972,510 as compared to cash of $2,498,439 as of December 31, 2008. At March 31, 2009 the company had working capital of $483,896 as compared to working capital of $2,123,519 at December 31, 2008. In addition, at March 31, 2009 the company had restricted cash related to a security on long-term debt of $50,000 (December 31, 2008 -$50,000) included in long-term assets. The decrease in working capital was predominantly due to the decline in cash during the quarter. Cash used in operations was $1,514,482 for the three months ended March 31, 2009, as compared to $1,799,811 for the same period of 2008, a decrease of $285,329. The decrease in cash usage was facilitated by the accumulation of accounts payable at March 31, 2009 for expenses related to the filing of the Metricath Gemini PMA submission. Net cash used in investing activities was $7,971 for the three months ended March 31, 2009 compared to cash used of $7,182 in the same period in 2008. The company made minimum purchase of equipments in the first three months of 2008 and 2009. Net cash used in financing activities was $3,476 for the three months ended March 31, 2009 compared to cash used of $6,498 in 2008. After the close of the quarter on April 24, 2009 the company reported completion of a non-brokered private placement of approximately 9.52 million units at the price of $0.21 per unit for aggregate gross proceeds to Neovasc of $2.0 million.

    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Balance Sheets
                                                    March 31,    December 31,
                                                        2009            2008


      Cash and cash equivalents                $     972,510   $   2,498,439
      Accounts receivable                            335,694         470,200
      Inventory                                      490,176         341,564
      Prepaid expenses and other assets               58,635          52,356
                                                   1,857,015       3,362,559
    RESTRICTED CASH AND CASH EQUIVALENTS              50,000          50,000
    RETIREMENT ASSETS                                  8,320               -
    PROPERTY AND EQUIPMENT                         1,375,259       1,399,644
                                               $   3,209,594   $   4,820,523


      Accounts payable and accrued liabilities $   1,352,140   $   1,218,405
      Current portion of long-term debt               20,979          20,635
                                                   1,373,119       1,239,040
    LONG-TERM DEBT                                   413,237         418,612
    RETIREMENT LIABILITIES                             8,964               -
                                                   1,795,320       1,666,616


    Share capital                                 58,608,624      58,607,066
    Contributed surplus                            4,522,856       4,436,804
    Deficit                                      (61,636,203)    (59,889,963)
                                                   1,495,203       3,153,907
                                               $   3,290,594   $   4,820,523

    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Statements of Operations, Comprehensive Loss and Deficit
    For the three months ended March 31
                                                        2009            2008

      Product sales                            $     298,630   $     404,863
      Consulting services                             56,854          28,622
                                                     355,484         433,485
      including underutilized capacity of
       $12,345 (2008: $12,579)                       149,760         208,260
    GROSS PROFIT                                     205,724         225,225

      Selling                                        302,885         749,504
      General and administration                     750,829         538,285
      Product development and clinical trials        876,780         621,745
      Amortization                                    32,356          45,766
                                                   1,962,850       1,955,300
    LOSS BEFORE OTHER INCOME (EXPENSES)           (1,757,126)     (1,730,075)
      Interest income                                  9,621           9,095
      Interest on long-term debt                      (7,253)         (7,514)
      Accreted interest on repayable
       contribution agreement                              -          (3,839)
      Gain (Loss) on foreign exchange                  8,518          (9,242)
                                                      10,886          11,500
     PERIOD                                       (1,746,240)     (1,741,575)
    DEFICIT, BEGINNING OF PERIOD                 (59,889,963)    (25,630,398)
    DEFICIT, END OF PERIOD                     $ (61,636,203)  $ (27,371,973)

    BASIC AND DILUTED LOSS PER SHARE           $       (0.10)  $       (0.31)

     OUTSTANDING                                  17,756,951       5,560,477
     SHARES OUTSTANDING                           22,142,567       5,560,477

    Neovasc Inc. (formerly Medical Ventures Corp.)
    Consolidated Statements of Cash Flows
    For the three months ended March 31
                                                        2009            2008
      Net loss for the period                  $  (1,746,240)  $  (7,830,954)
      Items not affecting cash
        Amortization                                  32,356          45,766
        Interest on repayable contribution
         agreement                                         -           3,839
        Stock-based compensation                      86,052          13,283
                                                  (1,627,832)     (1,678,687)
      Change in non-cash operating assets and
        Accounts receivable                          134,506         190,081
        Inventory                                   (148,612)       (169,160)
        Prepaid expenses and other assets             (6,279)       (129,145)
        Accounts payable and accrued liabilities     133,735         (12,900)
                                                  (1,514,482)     (1,799,811)
      Purchase of property and equipment              (7,971)         (7,182)
                                                      (7,971)         (7,182)
      Repayment of long-term debt                     (5,031)         (4,770)
      Repayment of repayable contribution
       agreement                                           -          (1,728)
      Proceeds from exercise of stock options          1,555               -
                                                       3,476          (6,498)
    (DECREASE)/INCREASE IN CASH                   (1,525,929)     (1,813,491)
      BEGINNING OF PERIOD                          2,498,439       3,242,404
      END OF PERIOD                            $     972,510   $   1,428,913
      Cash                                           (33,120)        (72,753)
      Cashable guaranteed investment
       certificates                                1,005,630       1,501,666
                                               $     972,630   $   3,242,404
      Interest paid                                    7,253           7,514

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:

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.

SOURCE Neovasc Inc.
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