Neovasc Inc (US) (NASDAQ:NVCN) Gets A Boost, Remains Undervalued

Neovasc Inc (US) (NASDAQ:NVCN) ran up to over $1 a share back at the end of October, but suffered a huge hit at November start, when a Federal District Court ruled on some overhanging motions related to the company's ongoing patent dispute.The company just announced an update relating to a separate (but related) class action lawsuit, and while there has been some positive reaction from markets, it's – as yet – cautious.Back when Neovasc announced the above ruling, at the start of the month, we highlighted the subsequent decline as being something of an opportunity to get in long on a value driven thesis. Yes, the outcome resulted in Neovasc having to stump up extra cash on the back of the trial's outcome, but the key ruling for us, was the company's ability to continue marketing and developing its lead assets.The latest litigation win reinforces this thesis, and could serve as the catalyst that sparks a return of speculative volume in-flow to the company. Before we get started on exactly why, let's quickly bring readers unfamiliar with the situation up to speed.The situation is pretty simple. At the turn of the decade, a company called CardiAQ to help it develop a transcatheter mitral valve implant (TMVI) device. Fast forward a couple of years, and while the relationship between the two companies closed out (from a commercial development perspective), Neovasc has its own TMVI device in development, and CardiAQ claims the company stole its trade secrets and used them to develop the device, called Tiara.A judge felt that CardiAQ was right to be aggrieved, and after a long, drawn out suit, awarded the company $70 million damages. In the most recent update, the early November ruling, this expanded to $91 million. That's not a great liability to have hanging over you as a young medical device company, sure, but the key element of the ruling was that – as mentioned above – Neovasc can continue developing the Tiara device.In this ruling, the company went from what was essentially a bankruptcy stock, to a company with a high potential development asset, albeit one with a substantial liability that it's going to have to address at some point (or at various points) between now and, say, 2020.This happened, but markets didn’t revalue Neovasc from its potential to be forced in to bankruptcy to its now current situation. Our argument was then, and remains, that this revaluation is going to take place, and any opportunity to pick up an exposure at current prices is an opportunity to get in ahead of a substantial upside correction.So that's where things stand, what did the latest announcement refer to?It's related to a flurry of shareholder class action suits – the type that we consider the equivalent of ambulance chasing in the small cap space – that hit after the ruling early this month. Essentially, a bunch of lawyers claimed management's representation of the CardiAQ suit understated the latter's chances of a win.A judge just ruled that this isn’t the case, however, and management now has a clean run to get things back on track with its development program.The $91 million liability aside, Neovasc is actually in pretty solid financial shape. Revenues for the three months ended September 30 hit a little over $3 million, and sales of the company's lead product, called the Reducer, increased from $160 third quarter 2015 to $262K for the same period this year. Cash on hand at September 30 was a little over $25 million, and total current assets came in at $30 million.At a market cap of just $34 million, and against a backdrop of high double digit sales growth and favorable developments on the legal side of things, Neovasc remains undervalued.We will be updating our subscribers as soon as we know more. For the latest updates on NVCN, sign up below!Disclosure: We have no position in NVCN and have not been compensated for this article.