EDEN PRAIRIE, Minn., May 13, 2014 (GLOBE NEWSWIRE) -- Sunshine Heart, Inc. (Nasdaq:SSH) today announced its financial results and provided a corporate update for the first quarter ended March 31, 2014.
First Quarter Corporate Highlights:
- Thirteen sites activated in the C-Pulse® COUNTER HF™ U.S. investigational pivotal study, up from eight over the fourth quarter 2013.
- Nineteen additional sites committed to participate bringing the total number to thirty-two.
- Three additional patients enrolled with two new centers enrolling their first patient.
- Eight sites in total activated in the C-Pulse OPTIONS HF EU post-market study. The Company's two centers in the UK were not able to enroll in the first quarter 2014 but have now begun the screening process for patients.
- Procedural code established for C-Pulse System in Germany
- Ten implants completed in OPTIONS HF EU post market study with one potential re-hospitalization reported due to worsening heart failure (also U.S. COUNTER HF study primary endpoint), zero neurologic events, zero exit site infections, zero bleeding events, zero clotting events, and zero deaths as reported by the sites. Early data has demonstrated improvement in heart failure class reduction, six-minute hall walk, ejection fraction scores (33% improvement from Berlin experience). One patient was weaned from the therapy after 6.5 months on therapy. Compliance rates remained at 99%, higher than those seen in the previous U.S. feasibility study.
- Ninety-day pump chronic animal studies initiated and successfully completed with fully-implantable C-Pulse device.
- One new patent application filed bringing the Company's total intellectual property estate to 65 patents issued with 29 additional patents pending (eight in the U.S.).
- Patient and physician awareness campaigns fully launched.
- Numerous clinical papers accepted for trade show presentation and/or publication in 2014.
First Quarter Financial Highlights:
- SG&A expense totaled $2.4 million vs. $2.0 in the first quarter 2014 and 2013, respectively.
- R&D expense totaled $4.1 million vs. $2.4 in the first quarter 2014 and 2013, respectively.
- Loss per share decreased to $0.38 in the first quarter 2014 from $0.47 per share in the first quarter 2013.
- Cash used in operations was $6.7 million in the first quarter 2014 vs. $4.1 million in the first quarter 2013.
- Cash and cash equivalents on hand at March 31, 2014 was $47.4 million vs. $54.1 million at year-end 2013.
FINANCIALS
The Company's first quarter 2014 results include reimbursement revenue of $59,000 for an implant of the C-Pulse System under its U.S. COUNTER HF study. Although the Company's C-Pulse System is not approved for commercial sale in the U.S., the FDA has assigned the C-Pulse System to a Category B designation, making it eligible for reimbursement at certain U.S. sites during clinical studies. As such, the Company is able to invoice hospitals and clinics that are eligible for reimbursement by Medicare, Medicaid or private insurance companies. Product costs incurred for the Company's clinical studies are deemed to be development costs and, accordingly, are expensed to research and development as incurred. Upon commercialization, product costs will be capitalized in inventory and recorded to cost of sales as the inventory is sold.
Operating expenses in the first quarter of 2014 totaled $6.4 million, compared to $4.4 million in the first quarter of 2013. Equity compensation expense included in operating expenses totaled $0.7 million and $0.5 million for the three months ended March 31, 2014 and 2013, respectively.
Excluding equity compensation expense, non-GAAP operating expenses totaled $5.7 million and $3.9 million for the first quarter ended March 31 2014 and 2013, respectively. The increase over the prior year was primarily attributable to increased clinical research and infrastructure expenses related to the U.S. pivotal and EU post-market studies and increased development expenses associated with the Company's fully-implantable device.
Net loss in the first quarter ended March 31, 2014 was $6.3 million, or $0.38 per share, compared to net loss of $4.4 million, or $0.47 per share in the first quarter of 2013. Excluding equity compensation expense, first quarter 2014 and 2013 net non-GAAP losses totaled $5.6 million, or $0.33 per share and $3.9 million, or $0.42 per share, respectively.
Cash used in operating activities totaled $6.7 million for the first quarter 2014 compared to $4.1 million for the first quarter of 2013, with the increase driven primarily by higher clinical and research expenses. The Company received net proceeds of approximately $16,000 and $0.9 million through the sale of common shares in first quarter of 2014 and 2013, respectively. The Company ended the first quarter of 2014 with $47.4 million in cash and cash equivalents, compared to $54.1 million at December 31, 2013.
CORPORATE UPDATE
The Company achieved significant traction with the C-Pulse COUNTER HF U.S. pivotal study in the first quarter of 2014, finishing the period with three new enrollments at two new centers. Thirteen centers were activated at the end of the first quarter, eleven of which could enroll patients, with19 additional centers committed to participate. To date, fifteen sites are able to enroll patients. In the fourth quarter of 2013, the Company reported a number of changes designed to increase awareness and improve enrollment and they have begun to demonstrate encouraging results. As such, the Company is enthusiastic with the enrollment process given the number of patients identified at the sites and the progress with the overall patient and physician awareness campaigns. Other key corporate activities that occurred during the quarter include the following:
- Hired staff to support all of the Company's European centers
- Company's U.S. direct therapy development specialists made progress introducing C-Pulse to additional departments within hospital sites that can identify patients
- Patient and physician public relations campaign generated a great deal of awareness at six U.S. pilot centers. Company's web program yielded over 13 million hits between February and April. Referrals were also received from NPR newscasts and local newspaper advertisements. The Company is still exploring other promotional strategies including social media and will have results of the campaign in the next few months.
- Presentations were made at the German Society of Cardiovascular Surgery and The Royal Society of Medicine.
- The Company's U.S. feasibility study was accepted by the JACC Heart Failure Journal and once published, will be broadly distributed to key audiences impacting study enrollment.
In an effort to strengthen its Clinical Affairs Department, the Company recently hired Kimberly Oleson as Senior Vice President. Ms. Oleson was formerly at Medtronic Inc., where she served as Vice President of Global Clinical Operations. Her vast experience in clinical evidence strategy and trial conduct will be critical to the success of Sunshine Heart's worldwide clinical program.
There were two physician presentations at the ISHLT meeting in San Diego, April 10-13 pertaining to the OPTIONS HF study. Dr. Holger Hotz presented early results from his first six patients. One patient had to undergo cancer surgeries and as such, the device was turned off 6.5 months after implantation. While the Company has requested that no attempts for weaning be conducted in current studies, the Company requested the device to be turned off during the patient's cancer treatments. Dr. Hotz evaluated the patient's ejection fraction before reinitiating the C-Pulse therapy and noted an improvement in the ejection fraction from 25% to 55%. The decision was made by Dr. Hotz to wean this patient based on his improvement. The patient reportedly remains stable off the therapy but there is risk he may have to be reconnected given the severity of his overall health condition.
With regard to reimbursement in the U.S. for the C-Pulse System, the Company continues to receive feedback from sites with qualifying LVAD programs that they all have received regional CMS reimbursement approval for the C-Pulse System under established LVAD codes. Currently, there are thirteen centers that have received regional CMS confirmation.
With respect to European reimbursement, the Company learned that a new OPS (procedural) code was established in Germany that is unique to the C-Pulse system. Code 5-376.9 refers to a permanent implantable extra-aortic cardiac assist device. Six other additional codes were established that deal with replacement of the driveline, external pump, leads, etc.
Sunshine Heart continues to make steady progress with internal R&D with regard to the fully-implantable C-Pulse system as both acute and chronic animal studies have been successfully completed as of May 12th. As part of the development process, the Company continues work on system miniaturization and external power configuration.
QUARTERLY CONFERENCE CALL
The Company will host a conference call and webcast at 9:00 a.m. Eastern time today to discuss its financial results and provide an update on its ongoing clinical studies. The Company's two principal investigators for the COUNTER HF study, Dr. William Abraham of The Ohio State University and Dr. Margarita Camacho of Newark Beth Israel Medical Center, will be available to answer questions after the Company's prepared remarks.
To access the live webcast, please visit the Investors page of the Sunshine Heart website at http://ir.sunshineheart.com. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 42866693. An audio archive of the webcast will be available following the call at http://ir.sunshineheart.com.
| SUNSHINE HEART, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
| (Unaudited) | ||
| (In thousands, except per share amounts) | ||
|
Three months ended March 31, |
||
| 2014 | 2013 | |
| Net sales | $ 59 | $ - |
| Operating expenses: | ||
| Selling, general and administrative | 2,361 | 1,976 |
| Research and development | 4,063 | 2,426 |
| Total operating expenses | 6,424 | 4,402 |
| Loss from operations | (6,365) | (4,402) |
| Other income, net | 33 | 3 |
| Loss before income taxes | (6,332) | (4,339) |
| Income tax benefit | - | - |
| Net loss | $ (6,332) | $ (4,399) |
| Basic and diluted loss per share | $ (0.38) | $ (0.47) |
| Weighted average shares outstanding – basic and diluted | 16,859 | 9,417 |
| Other comprehensive income: | ||
| Foreign currency translation adjustments | $ (19) | $ (8) |
| Total comprehensive loss | $ (6,351) | $ (4,407) |
| Condensed Consolidated Balance Sheets | ||
| (Dollars in thousands, except share amounts) | ||
|
March 31, 2014 |
December 31, 2013 | |
| (unaudited) | ||
| Current assets | ||
| Cash and cash equivalents | $ 47,421 | $ 54,136 |
| Accounts receivable | 59 | 59 |
| Other current assets | 824 | 448 |
| Total current assets | 48,304 | 54,643 |
| Property, plant and equipment, net | 572 | 587 |
| TOTAL ASSETS | $ 48,876 | $ 55,230 |
| Current liabilities | ||
| Accounts payable | $ 2,030 | $ 2,188 |
| Accrued salaries, wages, and other compensation | 637 | 1,315 |
| Total current liabilities | 2,667 | 3,503 |
| Total liabilities | 2,667 | 3,503 |
| Commitments and contingencies | - | - |
| Stockholders' equity | ||
| Series A junior participating preferred stock as of March 31, 2014 and December 31, 2013, par value $0.0001 per share; authorized 30,000 shares | - | - |
| Preferred stock as of March 31, 2014 and December 31, 2013, par value $0.0001 per share; authorized 39,970,000 shares | - | - |
| Common stock as of March 31, 2014 and December 31, 2013, par value $0.0001 per share; authorized 100,000,000 shares: issued and outstanding 16,875,116 and 16,825,284 shares, respectively | 2 | 2 |
| Additional paid‑in capital | 152,363 | 151,530 |
| Accumulated other comprehensive income: | ||
| Foreign currency translation adjustment | 1,188 | 1,207 |
| Accumulated deficit | (107,344) | (101,012) |
| Total stockholders' equity | 46,209 | 51,727 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 48,876 | $ 55,230 |
| Condensed Consolidated Statements of Cash Flows | ||
| (Unaudited) | ||
| (In thousands) | ||
|
Three months ended March 31, |
||
| 2014 | 2013 | |
| Net loss | $ (6,332) | $ (4,399) |
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||
| Depreciation | 61 | 40 |
| Stock-based compensation expense, net | 632 | 367 |
| Amortization of warrants for service agreements | ˗ | 120 |
| Changes in assets and liabilities | ||
| Other current assets | (468) | (171) |
| Accounts payable and accrued expenses | (580) | (71) |
| Net cash used in operations | (6,687) | (4,114) |
| Cash flows used in investing activities: | ||
| Purchases of property and equipment | (46) | (9) |
| Net cash used in investing activities | (46) | (9) |
| Cash flows provided by financing activities: | ||
| Net proceeds from the sale of common stock | 16 | 874 |
| Net cash provided by financing activities | 16 | 874 |
| Effect of exchange rate changes in cash | 2 | (5) |
| Net decrease in cash and cash equivalents | (6,715) | (3,254) |
| Cash and cash equivalents - beginning of period | 54,136 | 14,224 |
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 47,421 | $ 10,970 |
| Supplement schedule of non-cash activities | ||
| Stock options and restricted stock units classified as liabilities, net | $ (278) | $ ˗ |
USE OF NON-GAAP MEASURES
Management uses non-GAAP measures to establish operational goals and cash flows, and believes that non-GAAP measures may assist investors in analyzing the underlying trends in the Company's business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this press release, the Company has reported non-GAAP measures of operating expenses, net loss and loss per share excluding equity compensation expense, which exclude equity expenses related to stock options, service warrants, restricted stock units and common stock awards, and reconcile to GAAP operating expense, GAAP net loss and GAAP loss per share as follows:
| SUNSHINE HEART, INC. AND SUBSIDIARIES | ||
| Reconciliation of non-GAAP amounts to GAAP | ||
| (Unaudited) | ||
| (In thousands, except per share amounts) | ||
|
Three months ended March 31, |
||
| 2014 | 2013 | |
| GAAP operating expenses | $ 6,424 | $ 4,402 |
| Equity compensation costs | (735) | (487) |
| Non-GAAP operating expenses | $ 5,689 | $ 3,915 |
| GAAP net loss | $ (6,332) | $ (4,399) |
| Equity compensation costs | 735 | 487 |
| Non-GAAP net loss | $ (5,597) | $ (3,912) |
| GAAP Basic and diluted loss per share | $ (0.38) | $ (0.47) |
| Non-GAAP Basic and diluted loss per share | $ (0.33) | $ (0.42) |
| Weighted average shares outstanding – basic and diluted | 16,859 | 9,417 |
About the C-Pulse® Heart Assist System
The C-Pulse Heart Assist System, or C-Pulse System, an investigational device in the United States, Canada and countries that do not recognize the CE mark approval, utilizes the scientific principles of intra-aortic balloon counterpulsation applied in an extra-aortic approach to assist the left ventricle by reducing the workload required to pump blood throughout the body, while increasing blood flow to the coronary arteries. Combined, these potential benefits may help sustain the patient's current condition or, in some cases, reverse the heart failure process, thereby potentially preventing the need for later-stage heart failure devices, such as left ventricular assist devices (LVADs), artificial hearts or transplants. It may also provide relief from the symptoms of Class III and ambulatory Class IV heart failure and improve quality of life and cardiac function. Based on the results from our feasibility study, we also believe that some patients treated with our C-Pulse System will be able to stop using the device due to sustained improvement in their condition as a result of the therapy.
Caution: Investigational device, limited by Federal (or United States) Law to Investigational use.
About Sunshine® Heart
Sunshine Heart, Inc. (Nasdaq:SSH) is an early-stage medical device company focused on developing, manufacturing and commercializing the C-Pulse System for treatment of Class III and ambulatory Class IV heart failure. Sunshine Heart has completed an approved U.S. Food and Drug Administration (FDA) feasibility clinical study of the C-Pulse System and presented the results in November 2011. In March 2012, the FDA notified the Company that it could move forward with an investigational device exemption (IDE) application. Sunshine Heart received unconditional approval from the FDA in November 2012 to initiate its pivotal study. In July 2012, Sunshine Heart received CE Mark approval for its C-Pulse System in Europe. Sunshine Heart is a Delaware corporation headquartered in Minneapolis with wholly owned subsidiaries in Australia and Ireland. The Company has been listed on the NASDAQ Capital Market since February 2012.
Forward-Looking Statements
Certain statements in this release are forward-looking statements that are based on management's beliefs, assumptions, expectations, and information currently available to management. All statements that address future operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements, including, without limitation, our expectations with respect to future clinical study activities and results including patient enrollment in studies. These forward-looking statements are subject to numerous risks and uncertainties, including, without limitation, the possibility that our clinical studies do not meet their enrollment goals, meet their endpoints or otherwise fail, that regulatory authorities do not accept our application or approve the marketing of the C-Pulse System, the possibility that we may be unable to raise the funds necessary for the development and commercialization of our products, that we may not be able to commercialize our products successfully in the EU and the other risk factors described under the caption "Risk Factors" and elsewhere in our filings with the SEC. You should not place undue reliance on forward-looking statements because they speak only as of the date when made and may turn out to be inaccurate. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We may not actually achieve the plans, projections or expectations disclosed in forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the forward-looking statements.