Here's The Ottawa Citizen's coverage of yesterday's AGM. A few of my comments follow on the next post...
WorldHeart skips a beat
Company announces yet another delay in
human trials of its heart replacement
Jeff Pappone
The Ottawa Citizen
World Heart Corp. announced a further delay in the race to a successful
implant of a ventricular assist device (VAD) designed to give heart disease
patients new leases on life.
Chief executive Rod Bryden said the delay will push the human trials planned
for mid-2000 back to at least first quarter of 2001.
The delay was blamed on WorldHeart's acquisition of U.S.-based Novacor,
a subsidiary of Edwards Lifesciences Corp. WorldHeart will integrate new
technology into the device before any clinical trails begin, he said.
The deal, which gives Edwards a 25-per-cent share of the Ottawa-based
company, was announced in May.
"(Delays have) been announced four times now, so it's certainly no surprise
to anybody," he said. "On this occasion I believe the price to shareholders of
a few weeks to integrate the benefits of what we've acquired in Novacor is
overwhelmingly in the shareholders' interest."
Mr. Bryden made the announcement yesterday during WorldHeart's annual
general meeting at the Chateau Laurier hotel.
Not one shareholder asked a question concerning the delay.
While the merger does give the company revenues from the sale of Novacor
products, the amounts will be relatively small, totalling about $5 million for
2000 and rising to about $20 million in 2001.
With another delay, revenues from the Heartsaver, expected about 12
months after the commencement of clinical trails, are further away.
If the trials begin as scheduled early next year, the company won't see any
real revenues until at least 2002.
There are roughly 650,000 new heart disease patients in Canada, the U.S.,
and Europe each year and about half of those are potential candidates for
the $60,000 WorldHeart VAD.
While it's bad news there is a delay, the good news is the company has
instantly gained a major position in the market, Mr. Bryden said.
One of WorldHeart's closest rivals, ThermoCardio Systems Inc., has said in
the past that the delays are caused by the simple fact that the Heartsaver will
not work.
ThermoCardio claimed its researchers had tried the concept in the past and
decided it wasn't viable.
But, Mr. Bryden said the delay was simply good business practice. It would
be unwise to continue developing the existing VAD without using the newly
acquired technology, he said.
"It would be nonsense to carry on as though we hadn't done that just to meet
a timetable," he said. "We bought this for a reason and I think the
shareholders will be delighted we can absorb that in a few weeks and carry
on with an increased level of certainty and an increased pot of gold at the
end of the rainbow."
Novacor produces an external "bridge to transplant" VAD unit for patients
awaiting new hearts. While its device is different that the fully-implantable
WorldHeart model, the already Federal Drug Administration and Health
Canada approved biomaterial used in the larger external VAD will be
adapted to the Heartsaver. Last year, in a year Mr. Bryden called
disappointing, a battery failure caused the company to redesign the power
unit. Before the failure, Mr. Bryden predicted tests in animals would be
completed and a successful implant in a human would be attempted by the
end of 1999. But, the battery problem moved it to early 2000 which was
revised to mid-2000.
"The risks today verses the risks last year are infinitely today and the
prospects of the association with Edwards and Novacor are infinitely
higher," he said. "While it was a disappointment, we've used that year to
good advantage and the shareholders will probably find themselves not far
off where they would have been if we'd been on the other schedule."
But, he said the real impact of the Novacor acquisition was to move the
company from a start-up to one of the leaders in the medical devices
industry.
"I hope (shareholders) will go away seeing there has been a major shift in the
position of WordHeart," he said. "We think we've done what we said we
were going to do, but we've done it a little earlier and by putting them
together we've recovered most of the time that was consumed by the
technical issues."
Edwards also added about $30 million to WorldHeart's books. The
company now has about $60 million in cash on hand for research and
development. And, without the merger, the company would have used a
good portion of its reserves to build a distribution channel in order to get the
VAD to market once it finally is successfully implanted, he said. The
acquisition gives WorldHeart not only Novacor's FDA approved plant and
clinical trial structure but also a ready-made distribution channel.
"The combined deal was improving our ability to produce the product,
improving our certainty of getting it approved and improving our ability to get
it to market. It was all three not one or the other."
The shareholders also approved the financial statements, which have the
company posting a loss of 17.443 million or $1.30 per share in 1999,
compared with $3.665 million or 33 cents per share for the previous year.
Edwards CEO Michael Mussallem joined WorldHeart's board of directors,
taking the seat vacated by Corel chief executive Michael Cowpland who
resigned the day the merger was announced. |
