DENVER, NC / August 30, 2019, / CVR Medical Corp. (CVM.V) (TSXV: CVM) (OTCQB: CRRVF) (“CVR Medical” or the “Company”) a Canadian listed and US based healthcare company in the medical device sector provides the following letter, which was sent to shareholders of the Company:
Dear CVR Medical Shareholder,
After a silence which spanned far longer than both you, and I, deem to be reasonable I am taking this opportunity to shed some light on the current status and trajectory of CVR Medical Corp. Over the past quarter we have all been very frustrated with many aspects of this venture, many of which were not plainly apparent to those of you following the project. The primary cause of this frustration has been the delayed submission of our 2018 independent audit, both halting the ability to trade on the TSX-V and greatly impairing the progress of the Carotid Stenotic Scan (CSS) on its path to market. Many variables come into play with the audit; the previous accounting practices of prior members of the CVR team, a lack of true understanding of the relationship between CVR Medical Corp. and CVR Global Inc. after the restructuring enacted in 2018, as well as frustration on the part of the internal audit committee with the current structure of the organization. I personally take responsibility for the failure of establishing clear communication and collaboration between all parties involved. This lack of foresight allowed for what should have been an insignificant speed bump to become a major roadblock. As it became apparent that critical components, both internally and externally, were going to delay the release of the audit, the timeline was always communicated as being near completion to both myself and management. This lack of communication allowed for the issue to escalate and span a timeframe which is wholly unacceptable.
Even though the delay of the audit was a standalone situation, it had wide ranging impact on many aspects of the overall project, specifically our timeline to market and the ability to raise the funds necessary to meet the milestones previously communicated. Following the De Novo submission of the CSS to the US Food and Drug Administration (FDA) in January 2019, feedback was received from the FDA within the allotted time regarding perceived deficiencies and recommendations for submission enhancement. Immediately upon receipt of this communication an in-person meeting was requested with the FDA for clarification and was conducted on May 31, 2019. The meeting was attended by the expert review team assigned to the submission by the FDA, as well as representatives from CVR’s leadership, clinical advisory board members, and regulatory consultants from both Hyman, Phelps, & McNamara, P.C. & J.D. Lymon. The primary purpose of the meeting was to receive feedback and clarification on several topics; specifically, CVR’s proposed Indications for Use, amended clinical substantiation plan (including statistical justification), and outline overall submission trajectory. We came out of this meeting feeling very confident in the understanding of FDA recommendations with a clearly defined pathway to approval, and our ability to work with them in amending the required documentation, conducting additional testing, and updating the overall clinical implementation plan (CIP). Though these tasks seemed onerous, internally we felt confident it could be conducted quickly, with the major hurdle being the additional (~244) patients required under the updated CIP to acquire the statistical justification requested by the FDA. Based on our current clinical footprint and the projected recruitment rate it was estimated that the data could be obtained in time to potentially hit our targeted 2H 2019 market clearance based on prior submission metrics. Our timeline has always been based on the premise that we are functioning at 100% capacity, both organizationally and financially. This then is where the audit delay and the timeline directly oppose each other to the detriment of the project. Without the ability to raise funding to support our clinical substantiation, a major cost within our budget, we lack the necessary capital to acquire the clinical data necessary. Though we continue to collect data, the rate of collection had to be slowed due to capital limitations, therefore making it near impossible to complete the requisite updates to the current FDA submission within the mandatory window. Given the capital limitations, the current FDA submission time limit will expire September 25th, 2019 necessitating a new De Novo submission planned for the first quarter 2020. Once we are funded following this audit delay both myself, and our internal Clinical Advisory Board, believe that we will be able to collect the additional data in the required timeframe, allowing us to re-submit. This delay will push the targeted market launch to 2H 2020. This is a hard reality to come to, but as a person who has supported this project for the past thirteen years, I feel updating you on all facets of the project is imperative as we move forward if we hope to maintain your support.
Furthermore, following the completion of the audit, I am sure that you have recently seen the news pertaining to the departure of two Board Members (Mr. Wayne Hellman and Mr. Joel Kanter) and our CFO (Mr. Tommy Harris). I will not elaborate on the details of the split, but frustrations over both the audit and the current structure of the organization resulted in irreconcilable differences. Specifically, the inability for CVR Medical to fully merge with its supplier and shareholder CVR Global. Many efforts were made on both sides to try and come to terms which would leave both entities feeling positive about the partnership, but in the allotted timeframe both parties were unable to achieve this goal. The Board has struck an independent committee to consider the Company’s relationship with CVR Global. In the interim, Dr. Dallas Hack will act as interim CFO, a position which I believe his background will allow him to succeed while a replacement for Mr. Harris is found. We are already vetting several potential board members and I hope to announce their appointment in the very near future. Lastly, I would like to announce that we have started the process of finding a seasoned and experienced Chief Executive Officer to take on my duties. This is a task which I will not rush or force through because I feel strongly that the right person has to be found who can lead this project across the finish line and capitalize on the shareholder potential I passionately believe we possess. Once this individual is found and brought up to speed I will step aside and hand them the reigns with my full support. I will remain on the Board of Directors, but like many of you, understand that we are at a transition point for the organization and therefore need someone with the specific skill set for that evolution.
I know much of what I have included in this letter will not be taken as positive, but I assure you that the project continues to move forward with the full understanding of what needs to be accomplished to make it succeed. Past events have slowed progress but has not stopped us. I will personally ensure that the groundbreaking technology housed within this company has the human capital, financial support, and anything else deemed necessary to allow us to see this through. Thank you for your ongoing support and please do not hesitate to reach out to me if you have any questions or concerns about anything I have touched on.
ON BEHALF OF THE BOARD:
(signed) “Peter Bakema” CEO, President & Director
About CVR Medical
CVR Medical is a healthcare company that operates in the medical device industry focused on the commercialization of its disruptive, proprietary Carotid Stenotic Scan (the “CSS”). The CSS is a diagnostic tool that encompasses subsonic, infrasonic, and low frequency sound wave analysis technology. The CSS is a patented device designed to detect and measure carotid arterial stenosis. On many developmental, regulatory, and manufacturing aspects related to the CSS, CVR Medical works in unison with CVR Global Inc. and the abbreviation “CVR” is used in describing the collaboration. CVR is currently conducting clinical trials at leading institutions and has submitted its CSS device to the FDA as a De Novo application. CVR is led by an experienced and proven team of professionals with extensive healthcare, medical device, international expansion, regulatory and sales experience. CVR Medical trades on the TSX Venture Exchange under the symbol “CVM” and on the OTCQX under the symbol “CRRVF”.
This press release contains forward-looking information that involves various risks and uncertainties regarding future events and regarding the Company’s timing expectations for the new De Novo submission, collection of additional clinical data and targeted market launch. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements and are not guarantees of future performance of CVR Medical. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits CVR Medical will obtain from them. These forward-looking statements reflect management’s current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties and speculative nature associated with commercialization of technology and the practice of medicine, (3) a change in health regulations, (4) any number of events or causes which may delay or cease commercialization and development of the CSS, (5) the risk that CVR Medical does not execute its business plan, (6) inability to retain key employees, (7) inability to finance operations and growth, (8) the timing expectations for the new De Novo submission and collection of additional clinical data; and (9) other factors beyond CVR Medical’s control. These forward-looking statements are made as of the date of this news release and, except as required by law, CVR Medical assumes no obligation to update these forward-looking statements, or to update the reasons why actual results differed from those projected in the forward-looking statements.
THE TSX VENTURE EXCHANGE INC. HAS NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS RELEASE. NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.