Thoratec shed almost one-third of its value after reporting abysmal second quarter earnings. The advanced heart failure device company attributed most of the miss to a New England Journal of Medicine article that came out late last year and linked the company's HeartMate II left ventricular assist device to an increasing rate of pump thrombosis.
"We believe perceptions about pump thrombosis since the late 2013 New England Journal of Medicine article along with greater scrutiny of clinical outcomes overall continues to be the largest factor impacting our business on a worldwide basis," Thoratec President and CEO Gerhard Burbach said on the second quarter conference call.
The NEJM study argued that pump thrombosis is leading to increased rates of patient morbidity and death. To address surgeons' lack of faith in the product following publication of the study, the company is starting a new clinical trial designed to determine the best practices for pump implantation and patient management to minimize pump thrombosis with HeartMate II. The PREVENT study is expected to be of up to 300 patients at 20 U.S. centers.
About the study impact on HeartMate II sales Burbach added, "We believe some implanting clinicians have become more selective in their patient evaluation criteria. As a result, we believe the current conversion of referrals to implants within these centers may be trending lower than historical experience."
Thoratec speculated that three factors could be contributing to the observed increase in HeartMate II pump thrombosis in recent years: implant technique, anticoagulation management and pump speed. The study will enroll through the end of 2015, although the company said it could report preliminary results before then. In addition, the company expects to report data from a couple of studies, including a postmarketing study with FDA, that will show that pump thrombosis has stabilized.
The company is currently conducting clinical trials aimed at obtaining CE marks for HeartMate III and HeartMate PHP. It expects to have approval in Europe for both those devices in 2015.
HeartMate revenues fell 12% to $102 million, while shipments fell 16% to 863 units. Sales volume of HeartMate II fell 10% in the U.S. and 30% internationally due to strong competition and adverse market dynamics throughout Europe and Japan. European surgeons are leaning toward less invasive vascular assist devices that are already on the market there but have not reached the U.S. market yet, Burbach said.
Thoratec lowered its revenue guidance to $455 million to $470 million from $520 million to $535 million due to reduced expectations for HeartMate II. It also reduced adjusted EPS expectations to $1.25 to $1.35 from $1.39 to $1.49.
On Wall Street, the company finished down 30% on Aug. 7 with a market cap of $1.3 billion.