Peter et al...
I attended the AGM on May 15 and found it very interesting. Dr. Mussivand provided an update on the progress of the technology and Rod Bryden presented financial projections for 1999 to 2003. Here are a few points from the meeting:
- TSE listing has been applied for and approval is expected sometime in July or August.
- There are approximately 1500 shareholders at this point. Prior to the warrant conversion when TSE listing is approved, I estimate the float currently is only about 2.7 million shares.
- Two analysts are initiating coverage: Midland Walwyn and Scotia Capital. Their reports will likely be issued after the TSE listing is confirmed.
- The Novacor N100 and the TCI Heartmate are the products deemed to be the closest competitors. However these devices weigh 1000 grams and have 4 holes perforating the body. They are designed to be implanted in the abdomen. As Rod Bryden quipped "I don't know about you, but I'd rather have my heart in my chest".
- $400 million was invested in pulsatile VAD research by the National Institute of Health in the U.S., before abandoning the effort. Their research now is totally directed towards developing a non-pulsatile VAD. (More on that later...)
- Rod Bryden observed that a much larger firm might try to buy World Heart when clinical approval appears imminent. (My guess is pacemaker manufacturer Medtronic! This had been one of the questions I had planned to ask at the meeting, and he answered it in his presentation). He stated that WorldHeart's strategy to avoid a buyout is to communicate clearly with shareholders what the downstream potential is. If they understand the potential, they will be far less likely to tender their shares for anything less then a healthy premium over the true value of the company.
- 43% of the target market (patients with heart failure) are younger than 65 years of age.
- WorldHeart expects to sell 300 HeartSavers in 2000 during clinical trials, 2,000 in 2001, 3,000 in 2002 and 7,500 in 2003. The main limitation is not the market size or production capacity. It is training enough doctors and clinics to implant the devices.
- In Canadian dollars, profit is projected at $18.9 million in 2001, $45 million in 2002 and $123 million in 2003. Assuming shares remain at 13 million or so in 2001, that would make for $1.45 earnings per share. If the P/E ratio were similar to Thermocardiosystems which is in clinical trials now, then that would put the share price at $145 per share in 2001. Obviously it is in everyone's interest to avoid further equity offerings until the share price rises substantially. I asked Rod whether they would consider debt instead of equity and he said definitely, depending on various circumstances prevailing at the time (interest rates, amount required, etc.)
Clearly some people liked what they heard at the meeting, as the share price rose as high as $8 1/4 U.S. on the Nasdaq, before settling back down around $6 3/4 as of yesterday.
Dan |
