Thoratec Wins FDA Consent to Expand HeartMate III US Trial - Analyst Blog
Thoratec Corp. THOR recently announced that it has received the final approval from the FDA to broaden enrollment of its HeartMate III U.S. IDE clinical trial, which commenced in September last year. With this approval, Thoratec can now extend the trial at up to 60 sites across the U.S. from the initial limited enrollment phase at 5 sites.
Following the announcement, shares of this Pleasanton, CA-based company rallied nearly 1.4% to touch a high of $42.40 in mid-day trading on Apr 2, pulling back to close at $41.77. Notably, this translates into an impressive year-to-date return of roughly 29%.
Thoratec’s HeartMate III is a next-generation continuous-flow left ventricular assist device (LVAD) based fully on magnetically levitated technology. This technology helps in reducing adverse event rates through improved hemocompatibility, while its compact size allows easy surgical placement.
The company’s previous-generation HeartMate II is an intermediate-to-chronic LVAD designed for the treatment of advanced heart failure. Notably, HeartMate II has been approved for use in North America and the EU.
The HeartMate III U.S. clinical trial is a randomized non-inferiority study comparing HeartMate III with HeartMate II. The primary endpoint of the study is a life without the need of device replacement and the occurrence of a stroke. The trial design allows for the evaluation of patients for both short and long-term support.
FDA's latest approval is based on the agency’s evaluation of safety data from the first 10 HeartMate III implants recently performed during the limited enrollment phase. With further enrollment of up to 1,028 patients in up to 60 sites, Thoratec intends to extend the treatment of heart failure and improve quality of life through chronic circulatory support with its HeartMate III technology.
Notably, Thoratec completed enrollment of the HeartMate III CE Mark study in late 2014 and expects a commercial approval and launch in European markets by late 2015. We believe that positive clinical data from the HeartMate III study and the eventual European launch are likely to drive the company’s growth.
However, despite making significant clinical progress with its pipeline products, the company’s revenues from the flagship HeartMate II were disappointing in the last reported quarter. Shipments of the HeartMate pumps took a hit due to strong competition and adverse market dynamics throughout Japan (Thoratec’s largest international market).
Moreover, the accelerated clinical trial activity, targeted commercial investments and product development costs will likely increase the operating expenses. We believe this will significantly hurt the company’s bottom line in the near term.
Stocks to Consider
Currently, Thoratec carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical instruments industry include Inogen INGN, Abiomed ABMD and Edwards Lifesciences EW. While Inogen sports a Zacks Rank #1 (Strong Buy), both Abiomed and Edwards Lifesciences carry a Zacks Rank #2 (Buy).
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