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Sunshine Heart Announces Second Quarter 2013 Financial Results and Corporate Update

EDEN PRAIRIE, Minn., Aug. 7, 2013 (GLOBE NEWSWIRE) -- Sunshine Heart, Inc. (Nasdaq:SSH) today announced financial results and provided a corporate update for the second quarter ended June 30, 2013.

Second Quarter Corporate Highlights:

  • Three new sites activated (five total) in C-Pulse® COUNTER HFU.S. pivotal trial with a total of seventeen sites committed to participate. On schedule to meet guidance of twenty two by year end.
  • Two sites activated (three total) in C-Pulse OPTIONS HF EU post-market study. On schedule to meet guidance of eight by year end.
  • Four implants completed in OPTIONS HF EU post market study with zero neurologic events, zero bleeding events, zero clotting events, zero deaths and zero re-hospitalizations due to worsening heart failure (also US COUNTER HF trial primary endpoint).
  • Multiple C-Pulse product enhancements approved with several additional enhancements underway. Fully implantable system on schedule per previous guidance of Q4 chronic animal study.
  • Two additional patents issued for C-Pulse for a total of 67 (14 in the U.S.) with 27 additional (8 in the U.S.) patents pending.

Second Quarter Financial Highlights:

  • SG&A expense totaled $2.2 million in the second quarter and $4.1 million year-to-date 2013 vs. $1.6 million and $3.5 million, respectively in 2012
  • R&D expense totaled $3.2 million in the second quarter and $5.6 million year-to-date 2013 vs. $1.8 million and $4.0 million, respectively in 2012
  • Australia R&D tax credit refund of $1.1 million in the second quarter 2013 vs. a refund of $0.7 million in the second quarter 2012
  • Loss per share of $(0.35) and $(0.81) in the second quarter and year-to date 2013, respectively, vs. loss per share of $(0.42) and $(1.08) in comparable periods of 2012
  • Cash used in operations was $7.6 million year-to-date 2013 vs. $6.8 million in 2012
  • Cash on hand at June 30, 2013 was $21.5 million

FINANCIALS:

Operating expenses in the second quarter 2013 totaled $5.3 million, compared to $3.4 million in the second quarter of 2012. Operating expenses in the first half of 2013 totaled $9.7 million, compared to $7.5 million in the first six months of 2012. The increase over the prior year periods was attributable to increased clinical research and infrastructure expenses related to the U.S. pivotal trial and EU post-market study, as well as increased non-cash compensation expenses.

Income tax benefits from the receipt of R&D tax credit refunds in Australia totaled $1.1 million in the second quarter and six months ended June 30, 2013, compared to $0.7 million in the comparable periods of the prior year.

Net loss in the second quarter and six months ended June 30, 2013 was $4.2 million, or $0.35 per share, and $8.6 million, or $0.81 per share, respectively compared to losses of $2.6 million of $0.42 per share, and 6.7 million, or $1.08 per share in the comparable periods in 2012.

Cash used in operating activities totaled $7.6 million in the first half of 2013 compared to $6.8 million in the comparable period of the prior year, with the increase driven primarily by the higher clinical and research expenses. In April 2013, the Company completed a public offering, generating net proceeds of $14.0 million. The Company ended the second quarter with $21.5 million in cash, compared to $14.2 million at December 31, 2012.

In addition to financial results for the second quarter and first six months of 2013, Sunshine Heart also announced several corporate updates with regard to financing, ongoing clinical trials for C-Pulse, and progress of internal product development.

CORPORATE UPDATE:

Since the first quarter, Sunshine Heart has made significant site progress within its C-Pulse® COUNTER HF U.S. pivotal trial. Within the quarter, three new sites were activated with a total of seventeen committed to participate in the trial. Since June 30, one additional site has been activated for a total of five active sites in the trial, including the top three enrolling sites in the 2011 U.S. feasibility study. The Company is currently waiting to hear from an additional eight centers with regard to intention to participate in the COUNTER HF trial.

Given multiple ongoing device trials and additional stem cell studies examining Class III heart failure patients, U.S. sites are currently taking an average of about six months from trial commitment to activation, longer than the initially expected. The Company has instituted new initiatives to expedite site presentations and subsequent activations, including the hire of a consultant to supplement in-house patient recruitment and enrollment efforts. In addition, Sunshine Heart plans to add three new enrollment-related positions in the third quarter, including a Chief Medical Officer, a VP of Clinical Research, and a Patient Recruitment Director. The Company expects the addition of these positions to increase study focus, tighten enrollment timelines, and increase trial vigilance, thus ensuring the appropriate patients are being enrolled. Given these key clinical changes, Sunshine Heart continues to expect to have 22 total sites by year-end 2013.

As previously announced in the Company's first quarter release, Dr. Margarita Camacho from Newark Beth Israel Medical Center has been named National Surgical Principal Investigator for the ongoing U.S. pivotal trial joining Dr. William Abraham from The Ohio State University (National Principal Investigator). In addition, Dr. Mark Zucker, Director of Heart Failure Treatment and Transplants at Newark Beth Israel Medical Center, has also joined the advisory board for the trial. On the reimbursement front, the first three centers with qualifying LVAD programs have received regional CMS reimbursement approval for the C-Pulse procedure under established LVAD codes.

The Company has previously reported that two patients from the initial twenty patient feasibility trial had been successfully weaned from the therapy due to improved results. In anticipation of future patients being targeted for weaning, the Company is developing a formal patient weaning protocol. The proposed protocol is being reviewed with clinical advisors. Two additional patients have been identified as potential candidates for weaning from the therapy. Sunshine Heart expects to release full weaning data to-date at the 2013 Transcatheter Cardiovascular Therapeutics (TCT) conference at the end of October.

With regard to infection control measures, the Company has established an Infection Control Committee, which includes the following: an infectious disease specialist, a cardiac imaging physician expert, a cardiac surgeon with both C-Pulse and LVAD experience, and a former LVAD clinical coordinator experienced in managing exit site infections. On the whole, the committee is intended to provide guidance to mitigate and minimize potential adverse events associated with exit site infections.

Site activation also continues to advance in the C-Pulse OPTIONS HF post-market study in the EU with two sites activated in the quarter and an additional site activated in July. The Company expects to have another five sites activated by the end of the third quarter. To-date four patients have been implanted with the C-Pulse device in the study, averaging one patient implant per month per site. Importantly, no patients have been re-hospitalized for worsening heart failure since implantation. On the safety side, the Company reports no strokes, no bleeding, and no blood clots. The first three month patient follow up is expected in August. The initial release of results is targeted at the September 26th German Heart Failure Society meeting.

Sunshine Heart also continues to progress with its internal R&D with the Company receiving worldwide approval for an enhanced percutaneous interface device lead, providing for increased external length, intended to minimize exit site infections. An additional external length of approximately five-inches is targeted for regulatory submission in the fourth quarter of 2013. The Company also announced FDA conditional approval and EU submission for a new driver lead assembly intended to improve device reliability. Several program software enhancements have also received FDA approval and have been submitted in the EU, which will facilitate greater ease of use for programmers. A driver design enhancement is currently underway with a targeted fourth quarter approval. The Company has submitted a patent application for its fully implantable C-Pulse® system, with a planned trial in acute and chronic animals intended to commence in the third and fourth quarters, respectively.

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 trials.

To access the live webcast, please visit the Investors page of the Sunshine Heart website at http://www.sunshineheart.com/investors/. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 27553402. An audio archive of the webcast will be available following the call at http://www.sunshineheart.com/investors/.

SUNSHINE HEART, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except per share amounts)
Three months ended
June 30,
Six months ended
Jun 30,
2013 2012 2013 2012
Net sales $ -- $ -- $ -- $ --
Operating expenses
Selling, general and administrative 2,150 1,569 4,126 3,509
Research and development 3,150 1,787 5,576 3,953
Total operating expenses 5,300 3,356 9,702 7,462
Loss from operations (5,300) (3,356) (9,702) (7,462)
Interest income 3 4 6 29
Loss before income taxes (5,297) (3,352) (9,696) (7,433)
Income tax benefit (1,077) (730) (1,077) (730)
Net loss $ (4,220) $ (2,622) $ (8,619) $ (6,703)
Basic and diluted loss per share $ (0.35) $ (0.42) $ (0.81) $ (1.08)
Weighted average shares outstanding – basic and diluted 11,911 6,277 10,664 6,223
Comprehensive loss $ (4,137) $ (2,610) $ (8,544) $ (6,640)
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

June 30,

2013
December 31,
2012
(unaudited)
Current assets
Cash and cash equivalents $ 21,526 $ 14,224
Other current assets 704 333
Total current assets 22,230 14,557
Property, plant and equipment, net 413 479
TOTAL ASSETS $ 22,643 $ 15,036
Current liabilities
Accounts payable $ 1,324 $ 1,156
Accrued salaries, wages, and other compensation 926 931
Total current liabilities 2,250 2,087
Total liabilities 2,250 2,087
Commitments and contingencies -- --
Stockholders' equity
Preferred Stock as of June 30, 2013 and December 31, 2012, par value $0.0001; per share; authorized 40,000,000 shares -- --
Common stock as of June 30, 2013 and December 31, 2012, par value $0.0001 per share; authorized 100,000,000 shares: issued and outstanding 12,384,867 and 9,282,724 shares, respectively 1 1
Additional paid‑in capital 107,005 91,017
Accumulated other comprehensive income:
Foreign currency translation adjustment 1,260 1,185
Accumulated deficit (87,873) (79,254)
Total stockholders' equity 20,393 12,949
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,643 $ 15,036
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
For the six months ended
June 30,
2013 2012
Net loss $ (8,619) $ (6,703)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization 83 63
Loss on disposal of plant and equipment -- 63
Stock-based compensation expense 838 621
Amortization of warrants for service agreements 240 --
Changes in assets and liabilities
Other current assets (371) (286)
Accounts payable and accrued expenses 258 (573)
Net cash used in operations (7,571) (6,815)
Cash flows used in investing activities:
Purchases of property and equipment (17) (107)
Net cash used in investing activities (17) (107)
Cash flows provided by financing activities:
Net proceeds from the sale of common stock 14,910 2,068
Net cash provided by financing activities 14,910 2,068
Effect of exchange rate changes in cash (20) 63
Net decrease in cash and cash equivalents 7,302 (4,791)
Cash and cash equivalents - beginning of period 14,224 6,563
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 21,526 $ 1,772

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 trial, 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 trial 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 trial. 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 a wholly owned subsidiary in Australia. 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, future clinical trial activities and results including patient enrollment in trials. These forward-looking statements are subject to numerous risks and uncertainties, including, without limitation, the possibility that our clinical trials 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.

CONTACT: Media: Laura Forman Blueprint Life Science Group T: +1-415-375-3340 Investor: Jeff Mathiesen Chief Financial Officer Sunshine Heart, Inc. T: +1-952-345-4200

Source:Sunshine Heart, Inc.