|Thoratec's HeartMate II left ventricular assist device--Courtesy of Thoratec|
Industry bigwig St. Jude Medical ($STJ) is discussing a buyout of specialist Thoratec ($THOR), a maker of left ventricular assist devices (LVAD), which give heart failure patients awaiting a donated heart a bridge to organ transplantation by pumping their blood in the meantime. Thoratec stock is up 18% to around $58 on the rumor, as of 3 p.m.
Citing unnamed sources with knowledge of the situation, Bloomberg reports that the deal has not been finalized and could still fall apart. Another source said Thoratec could look for another buyer.
Thoratec said it shipped 3,618 LVADs last year, out of an estimated market of about 6,500 implantations per year. It's a two-company market, with the other player being fellow specialist HeartWare ($HTWR).
The news occurs while Thoratec is testing its next-generation HeartMate III LVAD and entering new device markets.
Leerink equity analysts expect the third-generation device to gain market share in Europe against HeartWare's HVAD device following CE mark approval, expected by the end of the year, with FDA approval expected in 2018. In the European trial, Thoratec is emphasizing implantation of the device via a less invasive mini-thoracotomy procedure.
Eventually the HeartMate III will likely be competing with HeartWare's next-generation MVAD, which is a lot smaller than the HeartMate III, making it easy to implant. The MVAD also just commenced its CE mark trial in Europe.
Unlike the HVAD, Thoratec's HeartMate II is also approved as a long-term destination therapy for patients who are not waiting for a transplanted heart.
In addition, Thoratec just received CE mark approval for its HeartMate Percutaneous Heart Pump. The acute cardiac assist device can generate average blood flow of four to 5 liters per minute after percutaneous insertion. It's designed to keep patients' blood flowing during complex procedures like stent implantation.
The company reported non-GAAP earnings of $79.7 million on revenues of $477.6 million in 2014.
For St. Jude Medical, the acquisition would further diversify its cardiac offerings, which include pacemakers, implantable defibrillators, transaortic valve replacements and imaging devices.
The mega $50 billion merger of Medtronic ($MDT) and Covidien has left other players scrambling to get bigger. In addition, consolidating hospitals have increased their negotiating power in bulk purchase contracts of implants, causing devicemakers to consolidate in return.
- read the Bloomberg article