HeartWare suffers from blocked pipeline
On a conference call last autumn, HeartWare International’s chief executive, Doug Godshall, said the flaws in its second heart pump could be easily fixed, which was just as well because if they turned out to be more severe “all bets would be off” regarding resumption of its halted EU approval trial.
Tear up those betting slips. The company announced at the JP Morgan meeting that the MVAD device would have to be altered significantly to make it safer, and efforts to get it approved are in limbo for several months at least; shares plunged 35% yesterday. HeartWare has been dealing with fractious investors since its acquisition of valve developer Valtech Cardio in September, and further convulsions look likely.
Algorithm and blues
Data from the CE mark trial of the MVAD, a smaller version of HeartWare’s marketed HVAD left ventricular assist device, was initially expected in October 2015. But in September enrolment was paused because of manufacturing and software issues with the MVAD’s control unit. The company said it would restart recruitment in November.
In October, though, it admitted that having started to investigate reports of adverse events – which it did not then specify – it was unsure when the trial would start again. At that point 11 of 60 patients had been enrolled (HeartWare hopes for heart pump treat, not trick, October 29, 2015).
The company has completed the controller fix and software enhancements that prompted the halt in September, it has now found algorithms that appear to increase the chance of pump thrombus after two such events were seen in trial participants in December. These are in addition to the unspecified events – also thrombi – seen in Q3 2015.
It appears that a piece of software that allows the speed at which the MVAD pumps blood to be controlled can increase the chances of suction events, where the pump inflow cannula is blocked by either the interventricular septum or ventricular free wall. This suction caused the pump thrombus to occur.
The worst case scenario is that the device will have to be redesigned, and all the work done for the CE mark study junked and a new trial started. Neither the company nor analysts are willing to predict CE mark timing for MVAD, but this scenario could delay European approval by around two years.
The HeartMate 3, a device developed by Thoratec to be a rival to the MVAD, was CE marked in October. Thoratec was bought by St Jude Medical last year, and the longer it has the niche to itself the harder HeartWare will find it to break in.
There is a small ray of sunshine for HeartWare in that its older device, the HVAD, is in with a chance of US approval as destination therapy – permanent implantation in end-stage heart failure patients – earlier than expected.
It will submit data from the Endurance trial six months earlier than expected, potentially allowing FDA approval in the second quarter of next year. HVAD is already approved as a stepping stone for patients awaiting a heart transplant; permitting its use in patients ineligible for the operation would allow HeartWare access to a $300m market.
Here again it is playing catch-up to St Jude. The company’s older pump HeartMate II was FDA approved as destination therapy in 2010 and remains the only option for these patients.
Even if the expanded HVAD approval arrives six months early, it is unlikely to placate HeartWare’s more restive shareholders, led by activist investors from Engaged Capital. Engaged owns 1.3% of HeartWare and opposes the company’s dilutive $360m purchase of Valtech Cardio (Mitralmania continues as HeartWare buys Valtech, September 3, 2015).
The Valtech deal was a move into a new area for HeartWare, and the added bulk means it is less appealing as a takeover target. A target is exactly what Engaged Capital wants, so it has been fighting hard for HeartWare to focus on its core pump business. Perhaps MVAD’s troubles will make Valtech’s technology look more promising by comparison, quieting the dissent.
St Jude Medical, meanwhile, is doubtless congratulating itself on choosing Thoratec.