Heart failure (HF) has emerged as a major epidemic, affecting between five and six million Americans, with 670,000 new diagnoses per year and more than 250,000 patients in the most advanced stages of the disease. Despite major therapeutic advances in other areas of cardiovascular medicine, the prognosis for advanced, medically refractory HF remains dismal, resulting in about 250,000 deaths a year. (See Exhibit 1.)

Transplantation remains the only cure for patients with end-stage disease, but less than 3,500 donor hearts are available annually worldwide, according to the International Society for Heart and Lung Transplantation. Left ventricular assist devices (LVADs), mechanical circulatory support devices that are able to pump the full volume of a healthy heart (approximately 5 liters per minute, or about 2,000 gallons per day), are proving clinically that they can increase quality and length of life for select end-stage HF patients. These small but powerful pumps, implanted alongside a patient's diseased heart as a short-term bridge-to-transplantation (BTT) or for chronic use as a destination therapy (DT), now represent one of the highest-growth segments of the medical device market.

Exhibit 1

Heart Failure's Toll

Approximately 5.7 million people in the US have HF.
An estimated 400,000 to 700,000 new cases are diagnosed each year.
The number of deaths in the US in which HF was mentioned as a contributing cause has more than doubled since 1979, averaging 250,000 annually.
About half of the people who have HF die within five years of diagnosis, and less than 25% are alive at 10 years.
The condition costs the nation $34.4 billion each year, including the cost of health care services, medications, and lost productivity.

SOURCES: Centers for Disease Control & Prevention; Heart Failure Society of America; Heart Disease and Stroke Statistics – 2012 Update: A Report From the American Heart Association

The worldwide chronic support market is worth about $600 million (half of this in the US) and is forecast to grow in the high teens through the end of this decade. With roughly only 3% of the worldwide LVAD market penetrated as of 2012, there is a huge unmet clinical need to be filled. At least 100,000 Americans and 150,000 patients outside the US could benefit today from an LVAD. Just two public companies have US Food and Drug Administration approval to market these devices in the US, to the same, fairly limited pool of transplant and open-heart centers. Thus, the rivalry between these two is one of the closest-watched ongoing battles in the device space. On the West Coast, current US market leader Pleasanton, CA-based Thoratec Corp. has been selling its HeartMate II (HM II) device in the US since 2008 as a BTT, and since 2010 for the much larger, chronic DT market opportunity, where it enjoys a market monopoly. On the East Coast, market newcomer Framingham, MA-based HeartWare International Inc. has only three months of experience on the US market with its HeartWare Ventricular Assist System (HVAD) device, approved in November 2012 for the BTT indication only. The HVAD has been commercially available in Europe since 2009, and in other global markets including Australia since 2011, for both the BTT and DT indications. The company is about five years behind Thoratec in being able to address the significant US DT market, with a large, pivotal clinical trial ongoing. The brewing rivalry between these two firms is being followed closely, and it is also somewhat ironic, because Thoratec made a bid to acquire HeartWare back in 2009, but was thwarted by the US Federal Trade Commission due to antitrust concerns. (See Also see "Market & Industry Briefs" - Medtech Insight, 1 August, 2009..)

Despite its more limited indication, HeartWare has hit the ground running in the US. Both competitors are in an aggressive battle for market share in transplant and open-heart centers worldwide, touting the clinical advantages of their next-generation, compact, continuous-flow pumps. The HVAD is rapidly making inroads into US centers as surgeons welcome the addition of a new, more compact LVAD device to their limited end-stage HF repertoire. Internationally, where the company has approval for both indications, it is working to erode significant market share from Thoratec. Thoratec, meanwhile, is compiling and publishing extensive clinical data supporting the benefits of its market-leading device. The company also is penetrating more centers, and has a number of next-generation technologies in its pipeline.

Perhaps most significantly, recent clinical outcomes from the two FDA-approved devices have completely changed the treatment paradigm in the end-stage HF market over the past four years. The market has transitioned to safer, less invasive, less thrombogenic, and more energy-efficient and durable continuous-flow versus first-generation pulsatile-flow LVADs. (See Exhibit 2.) And, although the US market includes only two players for the time being, the future looks bright for heart assist devices. (See Also see "Heart Failure Devices: Raising Roadblocks To Readmission" - Medtech Insight, 27 January, 2012..) Technological advances are moving toward providing patients of all ages, across the spectrum of New York Heart Association (NYHA) class III HF, with a customized option that delivers the right amount of circulatory support for their specific condition. And, both Thoratec and HeartWare are working on some exciting next-generation technologies, including partial support and fully implantable, wireless LVADs.

Exhibit 2

Selected Implantable Ventricular Assist Devices, By Generation

Device

Manufacturer

Type

Regulatory Status as of January 2013

First-Generation Pulsatile

HeartMate XVE

Thoratec

Pulsatile.

FDA approval for BTT in 2001 and DT in 2003; CE mark approved. Rarely used anymore due to reliability and safety concerns.

Thoratec PVAD (paracorporeal ventricular assist device)

Thoratec

Pulsatile system includes three major components: blood pump, cannula, and pneumatic driver (dual drive console or portable VAD driver).

CE mark approved; received FDA approval for BTT in 1995 and for postcardiotomy recovery (open heart surgery) in 1998.

Thoratec IVAD (implantable ventricular assist device)

Thoratec

Pulsatile system includes blood pump, cannula, and pneumatic driver (dual drive console or portable VAD driver).

CE mark approved; received FDA approval for BTT in 2004. Authorized only for internal implant, not for paracorporeal implant due to reliability issues.

Novacor

World Heart Corp.

Pulsatile system.

Was approved for use in North America, European Union (EU), and Japan. Now defunct and no longer supported by the manufacturer. (HeartWare completed its acquisition of World Heart in August 2012.)

Second-Generation Continuous Axial Flow

HeartMate II

Thoratec

Rotor driven continuous axial flow, ball and cup bearings.

Approved for use in North America and EU; CE mark approved; FDA approval for BTT in April 2008 and DT in 2010.

HVAD

HeartWare

Miniature device with centrifugal blood path and hydromagnetically suspended rotor that may be placed in the pericardial space.

CE mark approved January 2009; FDA PMA-approved for BTT indication November 2012.

Jarvik 2000

Jarvik Heart Inc.

Continuous flow, axial rotor supported by ceramic bearings.

Currently used in the US as a BTT under an FDA-approved clinical investigation; approved for both BTT and DT in Europe; pediatric version being developed.

Third-Generation Rotary Pumps

VentrAssist

Ventracor Ltd.

Continuous flow driven by a hydrodynamically suspended centrifugal rotor.

Approved in the EU and Australia; company declared bankruptcy while clinical trials for FDA approval were underway in 2009; now dissolved and intellectual property sold to Thoratec.

Levacor

World Heart

Hydrodynamic levitation and magnetic levitation for suspension.

HeartWare completed acquisition in August 2012.

Incor

Berlin Heart AG

Continuous flow driven by a magnetically suspended axial flow rotor.

Approved for use in the EU; used on humanitarian approvals on case by case basis in the US. Entered clinical trials in the US in 2009.

DuraHeart

Terumo Corp.

Magnetically levitated centrifugal pump.

CE mark approved; US FDA trials underway as of January 2010.

HeartMate III

Thoratec

Continuous flow driven by a magnetically suspended axial flow rotor.

Pivotal trials for HeartMate III expected to begin in mid-2013.

MVAD

HeartWare

Development-stage miniature ventricular assist device, approximately one-third the size of the HVAD.

FIM trials expected to begin in early 2013.

EVAHEART LVAS

Sun Medical Technology Research Corp.

Continuous flow pump with a continuously filtered, re-circulating fluid system, which creates a hydrodynamic bearing inside the pump and flushes the shaft seal, and Native Heart Load Control System, which can change the device's rotational speed in synchrony with the heartbeat.

FDA IDE approval for a BTT trial received December 2009.

MiTiHeart LVAD

MiTiHeart Corp.

Continuous flow driven by a magnetically suspended centrifugal rotor.

Yet to start clinical trials.

Note: In addition to these devices, SynCardia Systems Inc. markets its Total Artificial Heart (TAH) for patients with biventricular failure and now has approved indications in the US for both BTT and DT (the latter via an HDE). In 2012, the company completed enrollment in its US IDE trial for the Freedom Portable Driver, a wearable power source for the TAH.

SOURCES: Company data; "Current Trends in Implantable Left Ventricular Assist Devices," Garbade et al., Cardiology Research and Practice, Volume 2011; Medtech Insight

Market Leader Thoratec

Thoratec, a 35-year-old market-leading mechanical circulatory support company, broke new ground in the cardiovascular surgery arena with its first-generation HeartMate XVE LVAD and is the current leader in the US LVAD market with its HM II device. HM II is the most successful second-generation LVAD worldwide and the first continuous-flow device on the US market, PMA-approved for the BTT indication in April 2008, then for DT in January 2010. It is available for both indications internationally. As a DT device, the HM II serves as permanent support for the diseased, native myopathic heart in medically refractory, nontransplant-eligible patients with a left ventricular ejection fraction of less than 25% and functional limitations. DT implants are currently approaching 50% of the company's domestic HM II sales, and the firm expects the indication to account for the vast majority of future growth in the overall VAD market. (See Also see "Destination Therapy HeartMate II Implants Drives Thoratec’s Fast Growth" - Medtech Insight, 11 February, 2013..) The HM II is also the most extensively studied LVAD, with more than 250 published, peer-reviewed articles supporting its use. To date, the device has been implanted in more than 13,000 patients in over 35 countries worldwide, with more than 5,500 patients on ongoing support (2,000+ with two or more years of support). The longest patient duration exceeds eight years to date.

DT implants are currently approaching 50% of Thoratec's domestic HM II sales, and the firm expects the indication to account for the vast majority of future growth in the overall VAD market.

An axial flow device, the HM II can be adjusted to pump up to 10 liters of blood per minute, and it is designed to provide long-term cardiac support. The HM II LVAD weighs approximately 10 ounces, with a length of about 3 inches and a diameter of about 1.5 inches, a seventh of the size and a fourth of the weight of its predecessor, the HeartMate XVE. It is easier to implant than prior devices, in a minimally invasive surgical procedure. And, it has only one moving part, a continuously spinning rotor, a design intended to provide a much longer, quieter functional life and much improved patient outcomes compared with the previous generation of pulsatile-flow devices. The latest multicenter results with HM II for DT demonstrate 75% survival at one year, according to Thoratec.

The HM II pump has been tested in over 1,300 patients in both BTT and DT clinical trials, with excellent clinical outcomes in terms of survival and a low incidence of adverse events, and it has extensive postmarket study experience in seriously ill patient populations. In the HM II BTT data set, at baseline, only 16% of patients could complete the six-minute walk test. At six months, 94% of them could perform the test, according to Thoratec.

The pump has the ability to function tethered or untethered to an electricity source, the latter via a power base unit, batteries (lithium ion with up to 10 hours of charge), and an emergency power pack carried by the patient. An electrical driveline cable that powers the pump passes through the patient’s skin to a battery-powered external controller worn around the patient’s waist. The system also can be powered by a car battery via a rapid-charging universal battery charger.

Extensive Clinical Profile For HM II

Thoratec has invested heavily in clinical support for the HM II and has made the advancement of ongoing trials and the collection of postmarket evidence a strategic priority for 2013. The HM II LVAD has a well-established clinical profile, with three of the most recent data sets – a BTT post-approval study, a BTT post-trial commercial use study, and the DT CAP (Continued Access Protocol) midtrial – all reporting excellent survival at six (89%–90%) and 12 months (73%–85%), a low stroke rate (0.08 to 0.10), and improved quality of life in seriously ill patient populations. As surgeons gain experience in patient selection, operative techniques, and postoperative care, these rates have gradually improved, according to study researchers.

The company is also working to demonstrate the utility of its LVAD device in a broader, earlier-stage HF patient population, with its complementary Evaluation of VAD Intervention Before Inotropic Therapy (REVIVE-IT) and Risk Assessment and Comparative Effectiveness of Left Ventricular Assist Device and Medical Management (ROADMAP) studies. In early January, Thoratec received investigational device exemption (IDE) approval to begin the National Institutes of Health-sponsored, prospective, multicenter, randomized, controlled REVIVE-IT study. Enrollment will begin in the middle of this year and will include up to 100 earlier-stage (NYHA class III) HF patients. The trial will compare HM II implantation with standard-of-care optimal medical management in an ambulatory patient population not on inotropes and not transplant eligible. Endpoints include a composite of survival, freedom from disabling stroke, and functional improvement, all measured at two years. Key study partners include the University of Michigan, the University of Pittsburgh, and the NIH’s National Heart, Lung, and Blood Institute (NHLBI), and Thoratec is providing up to $11 million to co-sponsor the trial.

The ROADMAP trial is underway, assessing use of the HM II device in earlier-stage NYHA class IIIb/IV HF patients compared with medical management. ROADMAP is focused on ambulatory patients not dependent on inotropic support (Interagency Registry for Mechanically Assisted Circulatory Support [INTERMACS] profiles 4 to 6), and the study has enrolled 90 of 200 patients total to date in the western US. Thoratec plans to eventually include up to 50 sites and expects to complete study enrollment in 2013.

A third study, TRACE, is examining reduced anticoagulation and antiplatelet therapy in HM II patients in North America and Europe, with 102 of 200 patients enrolled to date. Thoratec also is enrolling patients in its Driveline Silicone Skin Interface Registry, which is studying a new technique to reduce driveline infection, in which only the silicone portion of the driveline is externalized. (Driveline infection is one of the most critical concerns and adverse events for DT patients.) This study has enrolled 206 of 400 patients to date, and single-center experiences utilizing these techniques are reporting high success rates.

In addition to these trials, a European study known as SEE-HF is evaluating and implanting the HM II in a slightly less sick patient population. Patient screening for this study began in fourth-quarter 2012.

Worldwide Expansion Efforts

Broadening the universe of implant centers in which LVAD surgery is performed is critical to the success of both Thoratec and HeartWare, with about 164 transplant and open-heart centers (approximately 100 being transplant centers) in the US on board to date, almost exclusively for the DT indication, and 159 internationally, as of year-end 2012. Thoratec has the upper hand at the moment as it has approval for both BTT and DT (HeartWare is working toward DT approval in 2015), but both companies are focused on educating surgeons and staff at these centers on their specific value proposition. Thoratec has instituted programs for ensuring clinical support, training, and education, as well as reimbursement, technical support, and patient support, among other endeavors.

HM II sales growth (and Thoratec's overall growth) is being driven by the large DT market opportunity in the US, and this approved indication has kept the company one beat ahead of rival HeartWare. Implantations for the DT indication are approaching 50% of total HM II utilization, up from 20% in 2009, as more DT-certified centers come online (118 total as of year-end 2012). Smaller-size centers represented approximately 20% of US HM II volume in 2012. By 2015, the company plans to achieve 10,000 implants worldwide, based on anticipated high-teens growth each year.

Thoratec has an aggressive plan for HM II adoption at emerging US implant centers, and reports greater than 60% growth through the first nine months of 2012 at these facilities. Emerging centers represent approximately 20% of HM II volume, according to Thoratec president and CEO Gary Burbach, speaking at the 31st Annual JP Morgan Healthcare Conference (JPM) in San Francisco in January. In the first nine months of 2012, the company added 23 new centers worldwide to its HM II roster, including 11 in the US and 12 internationally, bringing the total number of HM II-trained centers to 316. Securing adoption in those centers with DT certification (and thus Medicare reimbursement) is a critical component of Thoratec's growth strategy, and in 2012, 14 new centers in the US achieved this certification, bringing the total to 117. Thoratec is assisting centers in achieving DT certifications from the Joint Commission, and the company expects approximately 200 to 300 US centers to be DT-certified by the middle of this decade. In its full-year 2012 earnings call in early February, company management stated that the there were over 100 community cardiologists in 2012 who referred three or more patients who were implanted with an LVAD, up from approximately 70 in 2011, and the company is expanding its community outreach efforts.

Although only 50 of these surgeries currently take place in Japan each year, Thoratec believes the Japanese market is a large growth opportunity and will eventually grow to 15% to 20% the size of the US market.

Thoratec is also busy expanding its presence internationally, and in late 2012 received approval to market the HM II device in Japan. It will begin a product launch late in the first quarter, initially targeting the 15 Japanese hospitals that perform VAD implants. Although only 50 of these surgeries currently take place in Japan each year, Thoratec believes the Japanese market is a large growth opportunity and will eventually grow to 15% to 20% the size of the US market. Thus far, clinicians in the Asia-Pacific region are reporting excellent results with the device: in an initial group of over 50 implanted patients, results showed an estimated Kaplan-Meier survival rate of more than 85% at the two-year mark, according to Thoratec. And, in Europe, the company has expanded sales into Turkey and other countries (note that HeartWare was already selling its LVAD device in Turkey), and it is also working to secure regulatory approval in Latin America this year. Thoratec expects to train about 20 to 25 new international centers in 2013, half of which are expected to be in Japan, according to an update provided by the company in early February.

Extensive Pipeline

Thoratec is setting the stage for future growth in both the chronic and acute HF VAD space with a variety of next-generation products in development, clinical testing, and just entering the market. These include the Pocket Controller, the HeartMate III (HM III) LVAD, the HeartMate Percutaneous Heart Pump (PHP; for acute support), HeartMate X, and a fully implantable left ventricular assist system (FILVAS).

In August 2012, Thoratec received CE mark approval and initiated a European market launch for the HeartMate II Pocket Controller, which is smaller and lighter than currently available patient controllers. It fits in a patient's pocket and incorporates an easy to use interface, as well as a backup battery that can support the patient for a short period of time in the event of a disconnection from power sources. The new controller has been utilized at 10 centers to date, and feedback from both physicians and patients has been highly encouraging, according to Thoratec. The company will expand this European launch later in the first quarter, and then plans to expand to a worldwide commercial launch in the first half of 2013.

Thoratec's next-generation LVAD, the HM III, is moving into European pivotal clinical trials in the middle of this year.

Thoratec's next-generation LVAD, the HM III, is moving into European pivotal clinical trials in the middle of this year and is the focus of the company's research and development efforts at the moment. The device features an ultra-compact design to facilitate intrathoracic placement, and a fully magnetically levitated rotor and bearingless motor for durability. It is designed to help reduce the risk of pump-related clots, bleeding, and strokes, with a potential for reduced anticoagulation therapy. The HM III can generate a near physiologic artificial pulse, as well, according to Thoratec. The company is aggressively moving forward with this product's trial design and is finalizing a European study that optimizes approval time frames for both the BTT and DT indications. It expects to have the study parameters finalized in the next couple of months and to start a nonrandomized, 50-patient, five- to 10-site trial in Europe and Australia in the middle of this year, with a primary endpoint of survival at 180 days compared with estimated survival of these patients on medical therapy as predicted by the Seattle Heart Failure Model. Thoratec may be ready to present preliminary data from this trial in 2014 at the 17th Annual Heart Failure Society of America Meeting. The company is also discussing a US trial design with the FDA and expects to initiate that study by the end of this year.

According to Thoratec, the differences between its HM III and HeartWare's HVAD focus on the blood pathway and how the pumps operate. The HVAD utilizes a hydrodynamic bearing, whereas the HM III employs a fully magnetically levitated system, so the gaps are much larger, reducing shear and the potential for thrombus/stroke issues, according to Thoratec.

The company has another LVAD in the design phase, the HeartMate X, a small pump that could provide partial support and potentially a full support function. Design and proof-of-concept work for this product are expected to take place this year, although development on this device has been de-emphasized by the company at the moment in favor of the HM III. Both Thoratec and HeartWare are working on fully implantable systems, as discussed later in this section.

The Challenger: HeartWare International

Last year was a landmark year for US LVAD market newcomer HeartWare, which received PMA approval for its HVAD device in November 2012 (following submission in late 2010), completed enrollment in its large DT trial, and published data from the ADVANCE BTT study. And, according to a January 2013 device industry outlook report from JP Morgan analyst Michael Weinstein, 10-year-old HeartWare is looking to be a standout performer this year, as well. Its HVAD is projected to post 80% growth for the year, with penetration into 100 US centers, and a 40% compound annual growth rate (CAGR) through 2016, as it rapidly captures share from Thoratec for the BTT indication. Since the first patient was treated in 2006, nearly 3,000 HVADs have been implanted worldwide.

HeartWare’s miniature HVAD pump weighs only 5 ounces, 64% lighter than the HM II and about half the size, allowing surgeons to implant the device pericardially via a thoracotomy, without the need to create an abdominal pouch. It incorporates a hybrid magnetic/hydrodynamic impeller suspension with a wide blade impeller that the firm says reduces fluid stress and optimizes blood flow and washing within the system. The pump is driven by an external battery controller, connected to the pump via a thin (4.2 mm) flexible driveline with fatigue-resistant cables. Speaking at the JPM meeting in January, HeartWare’s president and CEO Douglas Godshall said that the device has had zero cable fractures reported. Its smaller size and ability to pump up to 10 liters per minute is a meaningful differentiator for the technology, improving ease of use, reducing procedure times, and making less invasive and pediatric implantation possible, according to the company.

Growing Clinical Profile

The HeartWare HVAD was approved based on data from the pivotal ADVANCE trial, in which 137 advanced HF patients received an HVAD and were compared with historical controls who had received Thoratec’s HM II device and were followed in the INTERMACS registry. The INTERMACS registry was established in 2005 as a joint effort involving the FDA, NHLBI, Centers for Medicare and Medicaid Services, clinicians, scientists, and industry, and it is managed by the University of Alabama, Birmingham. According to the FDA, this was the first time it had approved an LVAD using registry data as a control.

Survival outcomes were comparable in the HeartWare LVAD and INTERMACS groups. Moreover, key serious adverse events (SAEs), such as infection and stroke, were assessed in the trial and compared with events discussed in the scientific literature based on clinical trials or postmarket studies of other LVADs. Although rates of most SAEs were comparable, the study researchers concluded that a possible risk of stroke associated with the HeartWare HVAD necessitates patients and clinicians to discuss all treatment options before deciding to use the device. Of note, the final FDA approval includes a warning in the device’s instructions for use about the risk of stroke, something that was uncovered in the firm’s ENDURANCE pivotal trial, which is investigating the HVAD for the DT indication. That study reportedly found a higher rate of hemorrhagic stroke in the HVAD group versus the HM II group at six months (5.1% vs. 0%) and a slightly higher rate of ischemic stroke in the HVAD group (6.7% vs. 4.3%). Thoratec has cited this data to tout the superiority of its HM II, although researchers and industry analysts believe that the competitors' pumps are essentially equivalent from a performance standpoint. As part of its approval, the FDA is requiring HeartWare to perform a postapproval study in the form of a registry consisting of 600 HeartWare patients and an additional 600 control patients, and will also require sites that implant the device to undergo an approved training program.

As for HeartWare's highly sought-after DT approval, this is being tested in ENDURANCE, a pivotal US DT clinical study to evaluate the use of the HVAD versus the HM II in patients with end-stage HF. Enrollment in this trial was complete in May 2012, with 450 patients who have not responded to standard medical management and are transplant ineligible. Patients will be followed to the primary endpoint at two years, with a subsequent follow-up period extending to five years post-implant. The primary endpoint is survival at two years, defined as alive on the originally implanted device without a debilitating stroke, transplant, or explant due to patient recovery. Secondary endpoints include adverse events such as bleeding and infection, as well as functional status, hospitalization, assessment of neurocognitive function and patient quality of life. HeartWare plans to request FDA approval to implant additional DT patients under a CAP in US centers that implanted a patient in the ENDURANCE trial. Two-year results from this trial are expected to be available by mid-year. HeartWare gained expanded labeling in Europe in May 2012 for long-term use of its HVAD in all patients at risk of death from refractory, end-stage HF, a label extension similar to a DT indication in the US.

HeartWare also released new data on its HVAD in early February at the 49th Annual Meeting of the Society of Thoracic Surgeons showing that more than 90% of patients with severe HF who were implanted with the HVAD as a BTT survived at least 180 days. In addition, the researchers noted that the device accomplished the BTT with few adverse events. The primary endpoint of the trial was survival at 180 days – defined as patients being alive on the original device, or being transplanted, or having the device explanted for recovery and alive at 60 days post-removal. Failure of treatment was death, the need to exchange the device, or death after explantation that occurred within 60 days. Originally, 140 patients were assigned to treatment with the HeartWare device, but a CAP eventually allowed 256 additional patients into the study. CAP survival was 97% at 60 days, 91% at 180 days, and 84% at 360 days. At 360 days, 4.5% of patients had a device exchange, 6.9% had died while on the original device, 21.4% had gone on to transplant or achieved recovery, 67.1% were alive with the original device in place, and 88.5% were alive with the device in place or had achieved cardiac recovery (or had gone on to receive a transplant). Quality-of-life scores improved significantly as well, as did six-minute walk test distance, which increased from 69.5 meters at baseline to 254.9 meters at 180 days.

As a side note, also in early February, HeartWare issued a "voluntary field correction" recall, due to the occurrence of a mechanical problem in at least 11 of 2,900 HVAD implants. The malfunction stems from the rear portion of the HVAD's driveline connector housing, which the company said became either partially or entirely separated from the front part of the driveline connector after extended use. Surgeons are warned that a repair might be necessary when this happens, and that they should inspect the part during routine office visits. Physicians can tighten the connector housing by hand, but the company recommends contacting HeartWare to arrange a company inspection and permanent repair. No patient has had any health problems based on the malfunction, but HeartWare said it issued the correction to make sure the breakdown isn't more widespread.

Worldwide Expansion Efforts

HeartWare is sprinting to catch up to Thoratec in terms of market penetration, with three phases of center conversion planned to take place within one year of the HVAD launch. The company has now converted all 50 of its clinical sites to the commercial side, with 39 of these performing implants since January, according to comments made by Godshall during a presentation at the Leerink Swann Global Healthcare Conference 2013 in February. In the second phase, 20 additional new priority sites will complete training and start purchasing HVADs by the end of February, ahead of the original six-month target, he said. Five additional sites will train in the spring, followed by 25 more sites, selected out of the top 100 transplant and open-heart centers in the US, set to complete training later in the year. Surgeons have been very enthusiastic about adding the new device to their limited armamentarium for treating end-stage HF, and the company reports demand from pediatric heart centers, as well. With the US comprising 60% to 70% of the global VAD market, now that it has its FDA approval in hand, HeartWare expects the US portion of its sales to increase substantially over the coming years.

JP Morgan’s Weinstein estimates that the company's share of all open-heart and transplant sites will rise from 40% in first-quarter 2013 to 55% at the end of the year, and this doesn't take into account potential off-label use in the DT segment, for HF patients in the gray area between the BTT and DT designations. HeartWare isn't expected to receive FDA approval for the DT indication until late 2015.

The company, which received the CE mark in 2009, also has done well internationally over the past three or so years. In 2012, HeartWare may have bypassed Thoratec to become the market leader in Europe (49% share versus 44%, respectively, according to recent estimates, although final numbers are not yet available). This is despite being available in about two-thirds as many international centers as the HM II, according to Weinstein. The company is expanding its international presence, with 106 commercial sites in 27 outside the US countries (32 centers added in 14 countries last year), and more than 900 units sold internationally last year. The company reports more than 50% international unit growth in 2012 over 2011, particularly in the first half of the year. It also is planning a clinical trial in Japan in 2013, which is poised to become the second-largest international market after Germany, says Godshall.

The small size of HeartWare's HVAD is offering some unique opportunities for market expansion. The company is planning to file for FDA humanitarian device exemption (HDE) clearance later this year for use of the HVAD in pediatric patients and for use in biventricular and right ventricular support, as these indications aren't large enough to justify an investigational device exemption (IDE) trial. In addition, a number of European clinicians have been experimenting with different implantation techniques enabled by the HVAD's size, according to Godshall. One minimally invasive approach being employed involves placing the pump via a thoracotomy and tunneling the outflow graft to the subclavian artery, rather than the ascending aorta. HeartWare plans to set up a registry in Europe to optimize and be able to reproduce this new technique in the future.

HeartWare has also developed a next-generation pump, the MVAD, that is less than half the size of the HVAD and smaller than any other pump on the market.

HeartWare has also developed a next-generation pump, the MVAD, that is less than half the size of the HVAD and smaller than any other pump on the market. The device is designed to be more versatile than the HVAD in terms of its flow range. It can provide partial or full support, with a variable flow range of 0.5 liters to 7 liters, with 22 ccs of displacement volume and 5 ccs of priming volume. The MVAD will use the same impeller concept as the HVAD with new wide helical flow channels, an ultra-thin driveline, and lighter and smaller patient peripherals. The device is designed for implantation via thoracotomy into the pericardial space, with the potential for left, right, or biventricular support. It also includes a steerable sewing ring that enables the physician to steer the inflow cannula into the center of the ventricle.

As a unique feature, and to expand the device's potential opportunity, the MVAD's impeller and motor assembly can be placed in a variety of different outer housing designs and delivery systems to enable the treatment of different patient populations (including pediatric). Reconfigured MVAD designs under development include a “Longhorn” transapical VAD for elderly or poor surgical risk patients, an implantation that can be performed in a 30-minute procedure, as well as a 3- to 4-liter pump specifically targeted to class IIIb patients, being developed in partnership with cardiothoracic surgeon and device entrepreneur Paul Spence, MD. First-in-man and clinical trials for the MVAD are planned to begin outside the US in early 2013, followed by a US study late in the year or in early 2014. The Longhorn and class IIIb designs will follow the primary MVAD design into the clinic.

The MVAD will also include HeartWare's new, small, one-piece, wearable controller and battery controller, designed to give patients as close to a normal lifestyle as possible. The Peripherals for an Active Lifestyle (PAL) controller includes a high-capacity internal battery that can last up to an hour, and it features a touch-screen display, clip-on batteries of various sizes, and only one cable for the driveline. The upgraded accessory, which will also be added to the HVAD product offering in the next year or so, also incorporates greater computing power and more advanced algorithms and can change speed settings/pulse to help with bleeding and aortic insufficiency and provide more normal physiologic pumping capabilities.

The Battle For Market Share

The US LVAD market is expected to be one of the two fastest growing cardiovascular medtech markets over the next five years, the other being transcatheter heart valves, according to Elsevier Business Intelligence estimates and industry analysts. Both Thoratec and HeartWare will benefit in 2013 from a healthy overall worldwide LVAD market, especially Thoratec due to US DT therapy growth, whereas HeartWare's HVAD market penetration will be dependent on the slower-growing BTT indication, growth at pediatric centers, and limited off-label/clinical trial-related DT implants. By 2016, the HM II and HVAD are expected to pull in combined revenues of over $600 million. (See Exhibit 3.)

Exhibit 3

FDA-Approved Left Ventricular Assist Devices, US Market Forecast, 2012–2016E

Company/Product

2012

2013E

2014E

2015E

2016E

CAGR (2012–2016E)

Thoratec/HeartMate II

Units Sold

3,034

3,110

3,188

3,212

3,311

2.2%

Average Selling Price

$79,700

$79,800

$79,900

$80,000

$81,000

0.4%

Revenues

$241.8M

$248.2M

$254.7M

$256.9M

$268.2M

2.6%

HeartWare International/HVAD

Units Sold

243

851

1,470

2,140

3,200

90.5%

Average Selling Price

$93,500

$104,000

$108,000

$111,000

$114,000

5.1%

Revenues

$22.7M

$88.5M

$158.8M

$237.5M

$364.8M

100.2%

Notes: Thoratec forecast assumes US sales are 82% of worldwide sales for the company through the forecast period. HeartWare forecast assumes US sales are 65% of worldwide sales for the company through the forecast period.

SOURCES: Wells Fargo Securities; Canaccord Genuity; Medtech Insight

In early February, Thoratec reported fourth-quarter 2012 sales of $128.5 million, up 17.5% versus the same quarter in 2011. This included revenues of $102 million in the US versus $88.2 million in the prior year, up 16%, and international revenues of $26.5 million versus $21.2 million a year ago, representing an increase of 25%. The HM II posted strong growth: 20% US and 23% outside the US (OUS), with solid growth in core Western European markets as well as newer markets in Eastern Europe and the Middle East. The company sold 1,066 pumps in the fourth quarter, a unit volume increase of 21% in the US and 30% internationally, driven by the DT indication and growth in emerging centers. It also reported 31% growth in its CentriMag acute support business, with more than 10,000 implantations to date. (See sidebar, “Acute Support A Growth Driver For Thoratec.”)

[Sidebar#2013700022]

Thoratec's revenue for the full year 2012 totaled $491.7 million, up 16.3% from $422.7 million in 2011, which included growth of 15% in the US and 21% internationally. The HeartMate and CentriMag product lines drove growth for the full year at 19% and 39%, respectively. HM II volume grew 23% worldwide to 3,858 units in 2012, including 21% growth in the US and 30% OUS. Thoratec, which also provided first-time 2013 sales guidance of $490 million to $510 million, expects global LVAD market growth of around 15% in 2013 with similar growth in the US and OUS markets.

Thoratec management also mentioned that it is assuming some share loss to HeartWare in the BTT segment in 2013, particularly in the first half of the year, due to the HVAD trials. However, Thoratec seems confident in its competitive position given the clinical data supporting the HM II compared with HeartWare, the support and service Thoratec provides its customers, and the work it is doing to develop the LVAD market, according to a February report from Larry Biegelsen, senior analyst at Wells Fargo Securities. Analysts expect Thoratec’s share to decline about 10 points over the next two years, reaching about 75% US market share in 2015, down from estimates of about 87% in 2012.

As of early January, HeartWare expects its total revenues for the fourth quarter of 2012 to be approximately $32 million, representing 40% revenue growth year-over-year. Full-year 2012 revenues are expected to total approximately $110 million, 33% growth over 2011, based on positive initial trends in the US launch of the HVAD device and overall positive results internationally. Approximately 40% of fourth-quarter revenues were derived from domestic HVAD sales, with an estimated 130 HVAD units sold in the fourth quarter and strong performance forecast for 2013, according to Canaccord Genuity.

The Quest For A Fully Implantable LVAD

Both Thoratec and HeartWare are moving forward aggressively to develop potentially game-changing, fully implantable, wirelessly powered implants – the "Holy Grail" of the mechanical circulatory support industry. The rivals are working on advanced LVAD systems that incorporate transcutaneous energy transfer (TET), which utilizes magnetic fields provided by internal and external coils to transfer power across the skin without direct electrical connectivity. This offers the prospect of lifetime operation and overcomes the number-one problem with LVADs: the risk of infection associated with the driveline passing through the skin. These advanced systems will also contain high-power internal batteries that are under development to lessen the amount of external battery packs and other accessories that patients currently have to carry with them, as well as external wires. Infection caused by driveline wires, which create a bacteria superhighway from the external environment to the heart, continues to be the most common LVAD adverse event, representing 40% of all complications with the devices, according to data from the REMATCH trial. And, self-contained systems will go a long way toward increasing the quality and "normalcy" of life for LVAD patients.

Thoratec is working with an undisclosed battery technology partner to design a cutting-edge battery that is capable of powering a fully implantable ventricular assist system (FILVAS). In another agreement inked in May of last year, it partnered with Watertown, MA-based wireless electric power component company WiTricity Corp. (spun off from the Massachusetts Institute of Technology), which also works with large consumer companies in the automobile and consumer electronics space. Under terms of the deal, Thoratec will support the development of the FILVAS based on the HM II device. The agreement also provides Thoratec with an option to license the FILVAS technology for incorporation into future VADs, including HM III and HeartMate X. WiTricity's system is based on resonant magnetic coupling, whereby the oscillating magnetic fields exchange energy across space with minimal power loss when the resonant frequencies of two coils are aligned. The power transfer depends on the alignment of the resonant frequency of the fields, not the physical proximity or alignment of the two coils. Therefore, using this approach, an external battery could deliver safe, consistent energy to an implanted device even when the positions of the coils change during patient movement. Moving into animal testing is Thoratec's next major milestone for this product, but a specific time line for these efforts has not yet been announced.

A year ago January, HeartWare entered into an exclusive agreement with DUALIS MedTech GMBH, a subsidiary of AVRA Surgical Inc. and a spin-off from the German Aerospace Centre, to develop VADs with wireless TETs. HeartWare and DUALIS have been working together since mid-2011 to successfully demonstrate the feasibility of integrating DUALIS' proprietary wireless energy transfer technology with the HeartWare HVAD and MVAD systems, conducting over a dozen animal studies. The DUALIS wireless system for implantable devices is designed to allow patients to safely and efficiently provide power during normal daily activities. It transfers electricity through the patient's skin by coupling an external "sender" coil with an implanted "receiver" coil, thereby eliminating the traditional power and transmitter cable utilized in current VAD models. Under terms of the agreement, HeartWare will fund a TETs development program for LVADs, as well as receive an option to fund programs to explore developments in biventricular support and first rights to future developments outside the field of TETs and VADs. Although the company is still working out some bugs with the new technology, progress has been encouraging, according to Godshall. Preclinical work for an acute support indication has been completed and testing for chronic use began in the fourth quarter of 2012.

The availability of a miniature, fully implantable system that can be placed minimally invasively could one day make LVAD implantation procedures as safe and common as pacemaker and implantable cardioverter defibrillator implants.

Pressure Builds In Ventricular Assist Market

More from Archive

More from Medtech Insight