Sunshine Heart Announces Third Quarter 2013 Financial Results and Corporate Update

Sunshine Heart Announces Third Quarter 2013 Financial Results and Corporate
Update

EDEN PRAIRIE, Minn., Nov. 11, 2013 (GLOBE NEWSWIRE) -- Sunshine Heart, Inc.
(Nasdaq:SSH) today announced financial results and provided a corporate update
for the third quarter ended September 30, 2013.

Third Quarter Corporate Highlights:

  *Company successfully completed $46 million public offering in September,
    2013, sufficient to fund U.S. pivotal trial and EU post-market trial
    through completion.
  *Three new sites activated in COUNTER HF^™, the U.S. pivotal randomized
    clinical trial in the quarter, with eight total sites activated and 26
    sites either activated or committed to participate. Two patients were
    randomized in the study. As a reminder, the primary endpoint of the study
    is defined as freedom from worsening heart failure related
    hospitalization, LVAD implant, heart transplant, and death
  *Eight total sites implant-ready in Europe and seven patient implants
    completed in OPTIONS HF, the EU post market study. No neurologic events,
    bleeding events, clotting events, infections, deaths or
    re-hospitalizations due to worsening heart failure were observed.
    Clinically significant improvements in 6 minute walk distance at 6 weeks
    were observed.
  *Multiple C-Pulse product enhancements, including driver enhancement, have
    been approved by the FDA with several additional improvements underway.
  *Acute animal study successfully completed utilizing new fully-implantable
    system with chronic study on target to commence before year-end.

Third Quarter Financial Highlights:

  *First C-Pulse® revenue reported from COUNTER HF, the U.S pivotal
    randomized trial
  *Loss per share of $0.47, or $0.39 per share excluding non-cash
    compensation expense
  *Cash used in operations of $4.2 million
  *Cash on hand at September 30, 2013 of $59.8 million

FINANCIALS:

We reported reimbursement revenue for the first time for the implant of our
C-Pulse System under our U.S. COUNTER HF trial totaling $59,000. Although our
C-Pulse system is not approved for commercial sale in the U.S., the FDA has
assigned the C-Pulse system to a Category B designation, making it eligible
for reimbursement at certain U.S. sites during our clinical trials. As such,
we are able to invoice hospitals and clinics that are eligible for
reimbursement by Medicare, Medicaid or private insurance companies. Product
costs incurred for our clinical trials are deemed to be development costs and,
accordingly, are expensed to research and development as incurred. Upon
commercialization, product costs will be capitalized in inventory and recorded
to cost of sales as the inventory is sold.

Operating expenses in the third quarter of 2013 totaled $6.2 million, compared
to $3.3 million in the third quarter of 2012. Operating expenses in the first
nine months of 2013 totaled $15.9 million, compared to $10.8 million in the
first nine months of 2012. Non-cash compensation costs totaled $1.0 million
and $2.1 million for the three and nine months ended September 30, 2013,
respectively, as compared to $0.4 million and $1.1 million, respectively, for
the comparable periods of 2012.

Excluding non-cash compensation costs, operating expenses totaled $5.2 million
and $13.8 million for the third quarter and nine months ended September 2013,
respectively; as compared to $2.9 million and $9.7 million in the comparable
periods 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.

We received an income tax benefit of $136,000 for the state on Minnesota R&D
tax credit during the third quarter of 2013. Included in the nine month period
results are income tax benefits from the receipt of R&D tax credit refunds in
Australia totaled $1.1 million in 2013 and $0.7 million in the comparable
period of 2012.

Net loss in the third quarter and nine months ended September 30, 2013 was
$6.0 million, or $0.47 per share; and $14.7 million, or $1.29 per share,
respectively. This compares to losses of $3.3 million, or $0.42 per share; and
$10.0 million, or $1.49 per share in the comparable periods in 2012. Excluding
non-cash compensation costs, third quarter and nine months net losses totaled
$5.0 million, or $0.39 per share; and $12.5 million, or $1.10 per share,
respectively. This compares to $2.9 million, or $0.37 per share; and $8.9
million, or $1.33 per share, in the comparable periods of 2012.

Cash used in operating activities totaled $11.8 million in the first nine
months of 2013 compared to $9.7 million in the comparable period of the prior
year, with the increase driven primarily by the higher clinical and research
expenses. In September of 2013, we completed a public offering, generating net
cash proceeds of $42.7 million. Year-to-date, we have received net proceeds of
$57.6 million through the sale of common shares. The Company ended the third
quarter with $59.8 million in cash, compared to $14.2 million at December 31,
2012.

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

CORPORATE UPDATE:

In the third quarter of 2013, Sunshine Heart made significant site progress
within its C-Pulse COUNTER HF U.S. pivotal trial. Within the period, three new
sites were activated and a total of eight sites have been activated to-date.
Sunshine Heart reports a total of 26 centers either activated or committed to
joining the trial, up from 17 centers in the second quarter of 2013. The
Company is currently waiting to hear from an additional four centers with
regard to intention to participate in the COUNTER HF trial. Sunshine Heart
expects to have between 11-19 sites activated and approximately 35 sites
activated or committed to participate in the trial by year-end. In addition,
the Company commenced patient enrollment in the quarter, enrolling two
patients in the trial.

U.S. sites continue to average six months from enrollment to activation. Last
quarter, the Company announced new initiatives to expedite site presentations
and subsequent site activations. This included the hiring of a consultant to
supplement in-house patient recruiting, as well as the addition of three new
enrollment-related internal positions, including a Chief Medical Officer and
VP Clinical Research and a Patient Recruitment Director. As a direct result of
this, encouraging progress was made in the third quarter with regard to site
commitments.

With regard to reimbursement for C-Pulse, the Company continues to receive
feedback from sites with qualifying LVAD programs that they have received
regional CMS reimbursement approval for the C-Pulse procedure under
established LVAD codes. The Company also submitted an NUB application for
reimbursement in Germany in October and expects to receive feedback in
February of 2014 as previously indicated.

The Company reported last quarter that it was developing a formal weaning
protocol following the successful weaning of two patients from its pilot
feasibility study due to improved results. The protocol has now been fully
reviewed by clinical advisors and is finalized to include heart failure class
and ejection fraction targets, improvement across other objective functions,
and reduction in counter-pulsation therapy, ultimately leading to permanent
disconnection. The Company expects this full weaning process to require
approximately 12 months from time of implant. The decision to wean and the
appropriate timing is ultimately the decision of the physician and not the
Company. There is no single parameter that indicates recovery, but rather a
body of data available to the individual doctor. Encouragingly, none of the
patients weaned thus far have been reconnected due to worsening heart failure
and have remained off certain pre-operative drugs that were needed for their
heart failure condition. At the 2013 Transcatheter Cardiovascular Therapeutics
(TCT) conference on October 29, Dr. Andrew Kao presented details of his
experience weaning two patients with a third in the later stages of the
process. If successful with the third patient, Sunshine Heart will have weaned
a total of five patients from the C-Pulse therapy. As previously indicated,
Sunshine Heart does not plan to allow patients to be weaned in its ongoing
trials as doing so could impact the primary endpoint of the respective trials.

Site activation and patient enrollments also continue to advance in the
C-Pulse OPTIONS HF post-market study in the EU with seven total patients
implanted to-date, up from four patients at the end of the second quarter of
2013. The Company has eight sites now activated and able to implant, including
five in Germany and three in Italy. UK centers continue to progress through
the approval process and the Company continues to expect UK site activation by
the end of the year.

In addition to trial progress, Sunshine Heart continues to advance its
internal R&D. The Company received approval in the U.S. for a driver
enhancement program intended to improve physician ease of use, reduce nuisance
alarms, and improve signal clarity. Sunshine Heart expects to implement the
new program as quickly as possible across U.S. sites. The same program has
been submitted for approval in the EU and the Company expects to receive
approval in early 2014. With regard to the fully-implantable C-Pulse system,
an acute animal trial has been successfully completed, displaying the ability
to implant the device and provide comparable support to the existing C-Pulse
system in worldwide clinical trials. As previously stated, the Company also
plans to evaluate the fully-implantable system in a chronic trial, which will
commence in the fourth quarter.

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://ir.sunshineheart.com. Alternatively, you may access
the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194
(international) and using conference ID 93959593. An audio archive of the
webcast will be available following the call at http://ir.sunshineheart.com.



SUNSHINE HEART, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except per share amounts)

                                                        
                                     Three months ended  Nine months ended
                                      September 30,       September 30,
                                     2013      2012      2013       2012
Net sales                             $ 59      $ --      $ 59       $ --
                                                                 
Operating expenses                                                
Selling, general and administrative   2,486     1,495     6,612      5,004
Research and development              3,747     1,802     9,323      5,755
Total operating expenses              6,233     3,297     15,935     10,759
Loss from operations                  (6,174)   (3,297)   (15,876)   (10,759)
Interest income                       3         1         9          30
Loss before income taxes              (6,171)   (3,296)   (15,867)   (10,729)
Income tax benefit                    (136)     --        (1,213)    (730)
Net loss                              $ (6,035) $ (3,296) $ (14,654) $(9,999)
                                                                 
Basic and diluted loss per share      $(0.47)  $(0.42)  $ (1.29)   $ (1.49)
                                                                 
Weighted average shares outstanding – 12,732    7,789     11,354     6,727
basic and diluted
                                                                 
Comprehensive loss                    $ (6,200) $ (3,308) $ (14,744) $(9,948)



Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

                                                   September 30, December 31,
                                                    2013          2012
                                                   (unaudited)   
Current assets                                                   
Cash and cash equivalents                           $ 59,807      $ 14,224
Accounts receivable                                 59            --
Other current assets                                511           333
Total current assets                                60,377        14,557
Property, plant and equipment, net                  431           479
TOTAL ASSETS                                        $ 60,808      $ 15,036
                                                                
Current liabilities                                              
Accounts payable                                    $ 2,042       $ 1,156
Accrued salaries, wages, and other compensation     910           931
Total current liabilities                           2,952         2,087
Total liabilities                                   2,952         2,087
                                                                
Commitments and contingencies                       --            --
                                                                
Stockholders' equity                                             
Series A junior participating preferred stock as of
September 30, 2013 and December 31, 2012, par value --            --
$0.0001 per share; authorized 30,000 shares
Preferred stock as of September 30, 2013 and
December 31, 2012, par value $0.0001 per share;     --            --
authorized 39,970,000 shares
Common stock as of September 30, 2013 and December
31, 2012, par value $0.0001 per share; authorized   2             1
100,000,000 shares: issued and outstanding
16,805,411 and 9,282,724 shares, respectively
Additional paid‑in capital                          150,667       91,017
Accumulated other comprehensive income:                          
Foreign currency translation adjustment             1,095         1,185
Accumulated deficit                                 (93,908)      (79,254)
Total stockholders' equity                          57,856        12,949
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 60,808      $ 15,036



Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                    
                                                    For the nine months ended
                                                     September 30,
                                                    2013          2012
Net loss                                             $ (14,654)    $ (9,999)
Adjustments to reconcile net loss to cash flows used              
in operating activities:
Depreciation                                         130           98
Loss on disposal of plant and equipment              --            63
Stock-based compensation expense, net                1,821         907
Amortization of warrants for service agreements      240           160
Changes in assets and liabilities                                 
Accounts receivable                                  (59)          --
Other current assets                                 (179)         (321)
Accounts payable and accrued expenses                946           (574)
Net cash used in operations                          (11,755)      (9,666)
Cash flows used in investing activities:                          
Purchases of property and equipment                  (82)          (132)
Net cash used in investing activities                (82)          (132)
Cash flows provided by financing activities:                      
Net proceeds from the sale of common stock           57,591        20,620
Net cash provided by financing activities            57,591        20,620
Effect of exchange rate changes on cash              (171)         61
Net increase in cash and cash equivalents            45,583        10,883
Cash and cash equivalents - beginning of period      14,224        6,563
CASH AND CASH EQUIVALENTS - END OF PERIOD            $ 59,807      $ 17,446

USE OF NON-GAAP MEASURES

Management uses non-GAAP measures to establish operational goals and cash
flows, and believes that non-GAAP measures may assist investors in analyzing
the underlying trends in the Company's business over time. Investors should
consider these non-GAAP measures in addition to, not as a substitute for or as
superior to, financial reporting measures prepared in accordance with GAAP. In
this press release, the Company has reported non-GAAP measures of operating
expenses, net loss and loss per share excluding non-cash compensation costs,
which exclude non-cash expenses related to stock options, service warrants and
equity incentive arrangements, and reconcile to GAAP operating expense, GAAP
net loss and GAAP loss per share as follows:



SUNSHINE HEART, INC.
Reconciliation of non-GAAP amounts to GAAP
(Unaudited)
(In thousands, except per share amounts)
                                                        
                                     Three months ended  Nine months ended
                                      September 30,       September 30,
                                     2013      2012      2013       2012
GAAP operating expenses               $ 6,233   $ 3,297   $ 15,935   $ 10,759
Non-cash compensation costs           (1,008)   (446)     (2,137)    (1,067)
Non-GAAP operating expenses           $ 5,225   $ 2,851   $ 13,798   $ 9,692
                                                                 
GAAP net loss                         $ (6,035) $(3,296) $ (14,654) $ (9,999)
Non-cash compensation costs           1,008     446       2,137      1,067
Non-GAAP net loss                     (5,027)   (2,850)   (12,517)   (8,932)
                                                                 
GAAP Basic and diluted loss per share $ (0.47)  $(0.42)  $ (1.29)   $ (1.49)
GAAP Basic and diluted loss per share $ (0.39)  $ (0.37)  $ (1.10)   $ (1.33)
                                                                 
Weighted average shares outstanding – 12,732    7,789     11,354     6,727
basic and diluted

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
November2011.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 November2012 to
initiate its pivotal trial.In July2012, 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
February2012.

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

Sunshine Heart logo
 
Press spacebar to pause and continue. Press esc to stop.