Legal Overhangs Keep Ladenburg Neutral On Neovasc Despite Positive Tiara Clinical Data

The market's bullish response to Neovasc Inc (US) NVCN's announcement that Boston Scientific Corporation BSX was set to buy a 15 percent stake in the company was bolstered by a positive data release on Neovasc's Tiara mitral valve. Shares gained 70 percent over the trading day Tuesday and were seen up nearly 400 percent over the past three trading days.

In contrast to the bullish market response, Ladenburg Thalmann analyst Jeffrey Cohen maintains a Neutral rating on the stock. The analyst cited mostly legal concerns and the ramifications ongoing litigation could have on financial strength as key factors behind his bearish rating.

Legal Concerns

Neovasc has been in an ongoing lawsuit filed by CardiAQ Valve Technologies, Inc. for breaches of contract and duty of honesty in contractual performance and over trade secrets. A jury awarded $70 million to CardiAQ, as well as $21 million in enhanced damages in May.

“It’s unclear how these legal issues will play out, but there is a considerable likelihood that Neovasc will be subject to monetary damages, injective relief and perhaps future royalty payments to Edwards/CardiAQ,” said Cohen.

In addition to the tangible costs, Cohen speculates the battle could hamper Neovasc’s ability to sign new investors and hinder any potential sale, even with successful data from Tiara trials in 2017.

At time of writing, shares of Neovasc were trading down about 10 percent at $2.16.

Image Credit: Calcification of the mitral valve as seen on plain X ray. By James Heilman, MD - Own work, CC BY-SA 3.0, Wikimedia Commons
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Posted In: Analyst ColorBiotechNewsHealth CareReiterationFDALegalAnalyst RatingsMoversGeneralCardiAQ Valve Technologies IncEdwardsJeffrey CohenLadenburg ThalmannTiara
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