Neovasc Inc (NASDAQ:NVCN) Making A Comeback

Shares of Neovasc Inc (NASDAQ:NVCN) are making a comeback as dip buyers sense an oversold opportunity. Neovasc got slammed last month after a Boston, MA jury ruled in favor of CardiAQ Valve Technologies in its lawsuit against Neovasc seeking relief for breach of contract, breach of the duty of honesty in contractual performance and three of CardiAQ's six asserted trade secrets. The jury awarded $70M to CardiAQ on the trade secrets claim but no damages on the contractual claims.Now buyers are realizing that there is still the appeals process. The verdict can still be overturned on appeal. Furthermore, NVCN finished March with more than $46 million in cash. The company's cash balance plus its assets and IP offset the jury award. In other words, we believe that there is still value in NVCN and that shares are trading below intrinsic value.Neovasc is a specialty medical device company that develops, manufactures and markets products for the rapidly growing cardiovascular marketplace. Its products in development include the Tiara, for the transcatheter treatment of mitral valve disease and the Neovasc Reducer for the treatment of refractory angina. The company also sells a line of advanced biological tissue products that are used as key components in third-party medical products including transcatheter heart valves.Revenues for the three months ended March 31, 2016, were $2,006,742 compared to revenues of $2,304,823 for the same period in 2015. The company is focusing its business away from its traditional revenue streams towards development and commercialization of its own products, the Neovasc Reducer and Tiara. The company started its sales of Reducer in the first quarter of 2015 as it initiated its focused commercialization of the product in Europe.Reducer sales for the three months ended March 31, 2016 were $213,765, compared to $40,398 for the same period in 2015, representing an increase of 429%. Included within these revenues are stocking orders from new territories and re-orders from certain territories in Europe.Revenues from consulting services for the three months ended March 31, 2016 were $1,186,194, compared to $1,477,452 for the same period in 2015. The company anticipates that its consulting services revenue will decline in the long term as its consulting customers continue to transition to becoming contract manufacturing customers. Contract manufacturing revenues for the three months ended March 31, 2016 were $606,783, compared to $563,562 for the same period in 2015, representing an increase of 8%.The problem for NVCN is that the company is still booking heavy losses and litigation is costly. Total expenses for the three months ended March 31, 2016 were $10,075,039, compared to $5,881,601 for the same period in 2015, representing an increase of $4,193,438 or 71%. The increase in total expenses for the three months ended March 31, 2016 compared to the same period in 2015 reflects a $3,501,019 increase in general and administrative expenses (of which $3,555,515 relates to an increase in litigation expenses) and a $651,394 increase in product development and clinical trial expenses to advance the Tiara and Reducer development programs.Litigation expenses for the three months ended March 31, 2016 represent a loss of $0.06 basic and diluted loss per share compared to a loss of $0.01 basic and diluted loss per share for the same period in 2015. To date, the company has incurred significant costs in defending itself in lawsuits filed by CardiAQ Valve Technologies, Inc. Total litigation costs since the initial claims were filed in June 2014 are approximately $11.93 million and the company may require an additional $5 million to cover additional litigation expenses up to and including the trial.Currently trading with a market cap of $51 million, NVCN is roughly a $9 million yearly enterprise with $46 million in cash. While the trial loss is a setback, we don't feel it's a deathblow. The company still has options as its consulting customers continue to transition to becoming contract manufacturing customers. Furthermore, we see Reducer sales continue to grow exponentially. Overall, we see NVCN as a good risk/reward scenario based on the market's initial overreaction. We will be updating Insider Financial as soon as we know more. For continuing coverage on NVCN, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in NVCN and have not been compensated for this article.