Update -- 11/6/2016

Last week, Neovasc informed investors that it planned to appeal the latest court ruling that denied Neovasc a new trial, awarded CardiAQ (now a subsidiary of Edwards Lifesciences) an extra $21M (bringing total judgement Neovasc owes to CardiAQ to $91M), and added CardiAQ inventors to Neovasc's Tiara patent. Neovasc expects the appeal process to take at least a year. Neovasc is also seeking to immediately stay the $91M payments until the appeal process is complete.

Neovasc is trying to buy as much time as possible. Smart. The company is currently valued at $35M and has ~$25M in cash (Q2 cash levels - average quarterly burn rate). The company is cash strapped and doesn't have the means to pay the $91M fine (if they are on the hook for it after the appeal process). Legal costs have amounted to ~$4M per quarter. With the expected appeal resulting in another four quarters (at least) of legal proceedings, it is clear the Neovasc needs to raise money and dilute. Neovasc should be focusing on Reducer commercialization in Europe, moving Reducer through FDA 510K pathway, and furthering Tiara trials/development, not lawsuits.

Until Neovasc can settle the CardiAQ litigation and raise enough money to fund Tiara and Reducer to the U.S. market, shares will be dead money, with the occasional pop on positive Tiara data updates. With ~$25M cash on hand, another year of legal proceedings that at current legal burn rate will cost at least $16M, and the need to remain competitive in the race to develop the first market-ready mitral valve, Neovasc needs to raise money and dilute shareholders. At a current $35M valuation, dilution would hurt existing shareholders, terribly. I expect my long position in my ROTH IRA to be dead money for years, and years, and years. A buyout is always possible, but not until that CardiAQ litigation is settled.

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Trick or treat?