SOURCE: Sunshine Heart

Sunshine Heart

March 11, 2013 06:00 ET

Sunshine Heart Reports Fourth Quarter and Full Year 2012 Results

EDEN PRAIRIE, MN and SYDNEY, AUSTRALIA--(Marketwire - Mar 11, 2013) - Sunshine Heart, Inc. (NASDAQ: SSH) (ASX: SHC) today announced financial results for the fourth quarter and year ended December 31, 2012 and provided an update on the progress of the C-Pulse® Heart Assist System.

Fourth Quarter Milestones:

  • Unconditional IDE approval for U.S. FDA pivotal trial
  • Release of 1 year follow up data on C-Pulse feasibility trial
  • Existing C-Pulse patients converted to new single unit driver
  • Infrastructure in place for European post market and U.S. pivotal trials

Fourth Quarter Financial Highlights:

  • SG&A expense totaled $1.9 million in the fourth quarter and $6.9 million for the full year 2012 compared to $2.1 million and $5.4 million in 2011, respectively
  • R&D expense totaled $2.2 million in the fourth quarter and $8.0 million for the full year 2012 compared to $3.3 million and $11.2 million in 2011, respectively
  • $14.2 million cash balance at December 31, 2012, up from $6.6 million at December 31, 2011

Q1 Accomplishments:

  • $25 million equity line of credit; $1M investment by Aspire Capital Fund, LLC
  • Addition of U.S. board member
  • Conditional approval to delist from ASX
  • First U.S. pivotal trial site activated, enrollment process commenced
  • First European post-market trial site activated, enrollment process commenced
  • First U.S. pivotal site received CMS reimbursement approval
  • Additional patent filings for fully implantable system
  • Initiation of fully implantable pump design program with Cirtec Medical Systems

"After achieving several key regulatory milestones in 2012 and making significant progress toward initiating our U.S. and European trials, we entered 2013 by further fortifying the company's financial resources, continuing to transition the board composition to U.S. market expertise and activating initial trial sites in the U.S. and Europe. We remain confident that 22 centers will be initiated to participate in the U.S. pivotal trial and eight centers in Europe will be activated by the end of 2013," said Dave Rosa, Chief Executive Officer of Sunshine Heart

The Berlin Heart Center, located in Berlin Germany, one of the leading heart failure centers in the world, was recently initiated for the European post market trial. By the end of 2013, the Company expects to have centers located in Germany, Italy and the United Kingdom enrolling patients in the European post market trial. In addition, St. Luke's Medical Center in Kansas City, Missouri, the leading enroller in the U.S. feasibility trial, was recently initiated and has received confirmation from CMS that the C-Pulse procedures will be reimbursed.

On the product development front, the Company completed its contract with Cirtec Medical Systems, a firm with decades of expertise in the development of implantable mechanical circulatory support devices and expects to have a contract completed with a transcutaneous energy transfer (TET) manufacturer this quarter. Once an implantable product is developed, it will eliminate the driveline exiting the skin, thereby removing the risk of exit site infections. As part of this effort, additional intellectual property has been filed regarding the fully implantable program. 

Additionally, the Company has taken steps to reduce the financial risk by executing a $25 million line of credit with Aspire Capital. This facility gives the Company an opportunistic means to access capital as well as provides a safety net in the event of uncontrollable market circumstances.

"The 2013 year will be focused on site initiations, enrollments and European patient data but we have many other exciting initiatives as well and look forward to reporting progress in each of these areas throughout the year," concluded Rosa.

Operating expenses in the fourth quarter 2012 totaled $4.1 million, compared to $5.4 million in the fourth quarter of 2011. The decrease was attributable to reduced spending on clinical trials and research and development projects during the fourth quarter 2012 versus the prior year primarily as a result of the timing of certain development activities and clinical trial expenses. 

Operating expenses totaled $14.9 million for the full year 2012 compared to $16.6 million in the prior year's period. The decrease resulted primarily from reduced spending on clinical trials and research and development projects in 2012 as a result of the timing of certain development activities and clinical trial expenses, partially offset by increased SG&A related to infrastructure development and increased non-cash compensation expense. The Company's full year 2012 results include a $730,000 research and development tax credit refund by the Company's Australian subsidiary related to eligible expenses incurred for the twelve-month tax period ended June 30, 2011, which was received and recognized in the second quarter of 2012.

Net loss in the fourth quarter and full year 2012 was $4.1 million and $14.1 million, compared to losses of $5.2 million and $16.2 million in 2011, respectively. 

The Company ended 2012 with a cash balance of $14.2 million compared to $6.6 million at December 31, 2011. Cash used in operating activities was $13.1 million in both 2012 and 2011.

Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
    Three months     Year  
    ended December 31,     ended December 31,  
    2012     2011     2012     2011  
Net sales   $ --     $ --     $ --     $ --  
Operating expenses                                
Selling, general and administrative     1,862       2,113       6,866       5,363  
Research and development     2,248       3,260       8,003       11,199  
Total operating expenses     4,110       5,373       14,869       16,562  
Loss from operations     (4,110 )     (5,373 )     (14,869)       (16,562 )
Interest income     3       23       33       251  
Loss before income taxes     (4,107 )     (5,350 )     (14,836)       (16,311 )
Income tax benefit     41       115       771       115  
Net loss   $ (4,066 )   $ (5,235 )   $ (14,065 )   $ (16,196 )
Basic and diluted loss per share   $ (0.44 )   $ (0.87 )   $ (1.98 )   $ (2.98 )
Weighted average shares outstanding -- basic and diluted     9,275       6,019       7,099       5,442  
Comprehensive loss   $ (4,067 )   $ (5,143 )   $ (14,012 )   $ (16,059 )
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
  December 31, 2012   December 31, 2011  
Current assets        
Cash and cash equivalents $ 14,224   $ 6,563  
Other current assets   333     346  
Total current assets   14,557     6,909  
Property, plant and equipment, net   479     522  
TOTAL ASSETS $ 15,036   $ 7,431  
Current liabilities            
Accounts payable $ 1,156   $ 1,857  
Accrued salaries, wages, and other compensation   931     978  
Total current liabilities   2,087     2,835  
Total liabilities   2,087     2,835  
Commitments and contingencies   --     --  
Stockholders' equity            
Preferred Stock as of December 31, 2012 and 2011, par value $0.0001 per share; authorized 40,000,000 shares   --     --  
Common stock as of December 31, 2012 and 2011, par value $0.0001 per share; authorized 100,000,000 shares: issued and outstanding 9,282,724 and 6,019,663 shares, respectively   1     1  
Additional paid-in capital   91,017     68,652  
Accumulated other comprehensive loss:            
Foreign currency translation adjustment   1,185     1,132  
Retained earnings   (79,254 )   (65,189 )
Total stockholders' equity   12,949     4,596  
Condensed Consolidated Statements of Cash Flows
(In thousands)
    For the year  
    ended December 31,  
    2012     2011  
Cash flows used in operating activities:                
Net loss   $ (14,065 )   $ (16,196 )
  Adjustments to reconcile net loss to cash flows used in operating activities:                
      Depreciation and amortization     138       50  
      Abandonment of fixed assets     63       --  
      Stock-based compensation expense     1,248       939  
      Expense for warrants issued in conjunction with service agreement     280       --  
Changes in assets and liabilities                
    Accounts receivable     --       258  
    Other current assets     13       (166 )
    Accounts payable and accrued expenses     (760 )     2,026  
Net cash used in operations     (13,083 )     (13,089 )
Cash flows used in investing activities:                
  Purchases of property and equipment     (158 )     (451 )
Net cash used in investing activities     (158 )     (451 )
Cash flows provided by financing activities:                
  Net proceeds from the sale of common stock     20,837       7,627  
Net cash provided by financing activities     20,837       7,627  
Effect of exchange rate changes in cash     65       126  
Net increase (decrease) in cash and cash equivalents     7,661       (5,787 )
Cash and cash equivalents - beginning of period     6,563       12,350  
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 14,224     $ 6,563  

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 counter-pulsation 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. Operating outside the patient's bloodstream, the extra-aortic approach of the C-Pulse technology offers greater flexibility, allowing patients to safely disconnect to have intervals of freedom to perform certain activities such as showering. The C-Pulse System may help maintain the patient's current condition and, in some cases, reverse the heart failure process, thereby potentially preventing the need for later stage heart failure therapies, such as left ventricular assist devices (LVADs), artificial hearts or transplants.

Caution: Investigational device, limited by Federal (or United States) Law to Investigational use.

About Sunshine® Heart

Sunshine Heart, Inc. (NASDAQ: SSH) (ASX: SHC) is an early-stage global medical device company committed to the commercialization of the C-Pulse System, an implantable, non-blood contacting, heart assist therapy for the treatment of moderate to severe heart failure. The C-Pulse System can be implanted using a minimally invasive procedure and is designed to relieve the symptoms of heart failure through the use of counter-pulsation technology, which enables an increase in cardiac output, an increase in coronary blood flow and a reduction in the heart's pumping load. 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 subsidiary presence in Australia. The Company has been listed on the Australian Securities Exchange (ASX) since September 2004 and on the NASDAQ Capital Market since February 2012. For more information, please visit

Forward-Looking Statements

Certain statements in this release are forward-looking statements that are based on management's beliefs, assumptions and 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 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 end-points or otherwise fail, that regulatory authorities do not accept our application or approve the marketing of the C-Pulse System, the possibility 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 U.S. Securities and Exchange Commission and ASX. 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 Information

  • For further information, please contact:

    Laura Forman
    Blueprint Life Science Group
    T: +1-415-375-3340

    Jeff Mathiesen
    Chief Financial Officer
    Sunshine Heart, Inc.
    T: +1-952-345-4200