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HeartWare Limited

(ASX: HTW)
Heart Failure Device Company

Corporate Update

August 2005

Stuart McConchie, Chief Executive Officer

1

Overview

•

HeartWare's Product Family
–

The HVAD – the smallest full output pump in development
–

The MVAD – the next generation in ventricular support
•

HeartWare's Market Opportunity
–

10 million people have heart failure, with 1 million new cases per year
–

Growing clinical acceptance of device-based treatments
–

US$136,000 approved re-imbursement per patient in the US
•

HeartWare's Positioning
–

"Best in Class" technology and outstanding Intellectual Property
–

Experienced management and unmatched clinician support
–

Aggressive commercialisation path – first implant Q1/2006, first revenue 2007
2

HeartWare's HVAD Device

At only 45cc, the HVAD is the smallest full output pump

in development

The HVAD is implanted directly

in the pericardial space

3

How the HVAD Works

Please see video

animation of the HVAD

operation, which can be

downloaded from

HeartWare's website:

www.heartware.com.au

4

The HVAD's Advantages

•

The smallest full output pump in development
–

45cc / 145g
–

Pericardial placement
–

Shorter and less complex operating procedure
•

Fully suspended impeller
–

Only one moving part
–

No mechanical bearings
–

"wearless"
•

"Best in Class" Design
–

Proprietary integrated inflow cannula
–

Proprietary wide bladed impeller
–

Superb blood flow characteristics
5

The MVAD – Next Generation LVAD

Technology

•

HeartWare's proprietary technology enables the miniaturisation of its
devices – one of the company's foremost competitive advantages

•

HeartWare's Miniaturised VAD (MVAD) has the potential to revolutionise
the LVAD industry:

–

Approximately one tenth the size of the HVAD
–

Implantable by minimally invasive techniques
–

Intra-vascular placement
•

The MVAD is approximately 24 months behind the HVAD:
–

Currently in prototype
–

Very promising "bench" performance
–

Animal studies planned to commence this quarter
6

The LVAD Market Opportunity

•

Congestive Heart Failure (CHF) will be "the number one cause of death in the
world by 2010" (World Health Organisation)

–

10M people suffer CHF, 5M in the US
–

1M new diagnoses annually, 0.5M in the US
•

The HVAD will address patients in NYHA Class IV (end stage) heart failure
–

1M patients in NYHA Class IV heart failure
–

Estimated 100,000 patients eligible for an LVAD implant
–

US reimbursement US$136,000 per procedure (~US$75,000 for the device)
•

The MVAD has potential to target NYHA Class III patients
–

2.5M patients in NYHA Class III (~1.25M in the US)
–

Generally treated at cardiology centres rather than cardiac surgery centres
–

250,000 potential additional eligible patients per year
7

Limitations of Current Devices

The HeartMate (and all competing full-output

pumps) are implanted below the diaphragm

The HVAD is approximately one tenth the size of the

HeartMate device

•

Thoratec's HeartMate XVE is the only LVAD with FDA approval for destination therapy
-

Abdominal placement
-

Long and complex surgical procedure
-

Mechanical Wear - 1 to 2 years working life
-

Large size – Impacts patient quality of life
Volume

Mass

Pericardial

Placement

Wearless

Able to

Miniaturise

Not included due to various problems

with these first generation devices

•

Thoratec HeartMate I
•

WorldHeart Novacor
•

Jarvik 2000
•

MicroMed DeBakey
•

Thoratec HeartMate II
•

WorldHeart HeartQuest
•

Terumo DuraHeart
•

Thoratec Heartmate III
•

Berlin Incor
•

Ventracor VentrAssist
•

HeartWare HVAD
LVAD Technology

First Generation

Volume displacement

Second Generation

(Mechanical Bearings)

Rotary

Active Maglev

Third Generation

(Wearless)

Axial Hydrodynamic Support plus MagLev

Passive Suspension

25cc 85g

37cc 95g

63cc 281g N N N

•

Arrow CorAide
Radial Hydrodynamic Support

Radial & Axial Hydrodynamic Support

155cc 540g N N N

150cc 420g N N N

195cc 500g N N N

60cc 200g N N N

200cc 300g N Y N

122cc 298g N Y N

45cc 145g Y Y Y

The Competitive Landscape

The smallest third

generation pump in

development

9

The Competitive Landscape (Cont'd)

•

There are 10 second and third generation devices under development, none FDA approved
•

Market shares will be determined over the next 5 years by competing devices' relative
technical and clinical performances

•

The HVAD is expected to demonstrate significant clinical advantages over competing
LVAD's

Company LVAD Ownership

EU Trial

CE Mark

US BTT Trial

US DT Trial

FDA Approval

Notes

Jarvik Heart Jarvik 2000 2G Private May-05 CE mark for BTT and DT. US BTT trial underway.

MicroMed DeBakey 2G Private May-01 CE mark for BTT and DT. US BTT and DT trial underway.

Thoratec HeartMate II 2G NASDAQ US trial commenced Nov 03. First to include both BTT and DT.

Berlin Heart Incor 3G Private April-03 CE mark based on 26 patients. No US trials.

Terumo DuraHeart 3G Tokyo EX EU trial commenced Jan-04.

Arrow Coraide 3G NASDAQ EU trial suspended, resumed in Feb-05.

Ventracor VentrAssist 3G ASX May-05 First EU implant. Jul-05 First US implant

Thoratec HeartMate III 3G NASDAQ Early preclinical development.

WorldHeart HeartQuest 3G NASDAQ Aims to start trials in 2006.

HeartWare HVAD 3G ASX Trials to commence early 2006.

Stage Complete Stage Underway

BTT - Bridge to Transplant
DT - Destination Therapy

10

Key Milestones to Market

Calendar Years

Q 1 Q 2 Q 3 Q 4

Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4
Australian and EU Multi Centre Trials

Final processes prior to human implants

TGA Human Clinical Study Approval

Australian trials - DT

EU Human Clinical Study Approval

EU trials - BTT and DT

Australian and EU Approvals & Sales

Australian TGA Approval

Australian Commercial Sales

EU CE Mark Approval

EU Commercial Sales

US Multi Centre Trials

IDE approval prior to US BTT implants

US BTT trials

IDE approval prior to US DT implants

US DT trials

US Approvals & Sales

PMA Submission and review for BTT

US BTT approval

US BTT Commercial Sales

PMA Supplemental Submission and review for DT

US DT approval

US DT Commercial Sales

2005

2006 2007 2008 2009
11

•

HVAD GLP Studies Nearing Completion
–

Six sheep successfully implanted under the GLP program
–

Four studies complete, with the devices removed after 90 days
–

Fifth study due for completion in August 2005
–

Over 12 months cumulative GLP experience
–

Pathology tests confirm that the devices are performing well
–

Data to support applications to commence clinical trials
•

Life Cycle Testing Underway
–

Test platform to simulate long term real world operating conditions
–

Platform operational and pumps performing well
–

Data accumulating in support of regulatory submissions
Advancing Towards the Clinic

12

•

Participation of Clinical Trial Centres Confirmed
–

Parallel participation of up to 7 hospitals
–

Five European Centres - UK, Germany, Austria and Italy
–

Two Australian Centres
•

Trial Protocol Established
–

Refined in collaboration with investigators and Advisory Board
–

Submission to ethics committees in Q4 2005
•

Clinical Timeline Remains on Track
–

Q1 2006 : First implant in Europe / Australia
–

Q2 2006 : First implant in the US
Advancing Towards the Clinic (Cont'd)

13

Update on Patent Dispute

•

Developments
–

Dec 04: Ventracor initiates legal action against HeartWare subsidiary
HeartWare, Inc., alleging infringement of two patents in the US

–

Feb 05: HeartWare files "Motion to Dismiss" on grounds of "Safe Harbour"
exemption

–

June 05: Court orders Discovery
–

August 05: HeartWare lodges its defence and counterclaims
•

HeartWare's Position
–

HeartWare denies any infringement of Ventracor patents
–

HeartWare claims that the Ventracor patents are invalid and unenforceable
–

HeartWare has filed six counterclaims and is seeking costs and damages
–

HeartWare has an exceptionally strong IP portfolio including 25 issued patents
in the US, Europe and Australia, with 1996 earliest priority dates

14

Board of Directors

•

Formerly Managing Director J&J Research
•

Former Foundation Professor of Clinical Pharmacology, UNSW
Non Executive

Director

Dr Denis Wade AM

•

25 years in medical device industry internationally
•

Over a decade in heart failure devices – Jarvik Heart Inc
•

Based in Sydney
CEO,

Managing

Director

Stuart McConchie

•

Qualified surgeon, Presbyterian Hospital, New York
•

14 years in life science venture capital
•

8 years with HeartWare as an investor
•

Number of successful biomedical and biotech start ups
Deputy

Chairman,

Non-Executive

Director

Seth Harrison, MD

•

Qualified paediatrician and previous advisor to Health Dept
•

Currently CEO of Research Council of Australia Limited
•

Previously CEO Westmead Hospital, Head of KPMG Health
•

Number of directorships including Resonance Health Limited
Non Executive

Director

Dr Christine Bennett

•

30 years experience in securities industry
•

Previously Chairman, Citigroup Australia, CEO of Salomon Smith
Barney, CEO of County NatWest Securities

•

Directorships include Deputy Chairman of Benitec Limited
Non Executive

Chairman

Rob Thomas

Name Role Relevant Experience

15

Advisory Board

•

Clinical Director of Mechanical Circulatory Support, Vienna General Hospital
•

Secretary General of the International Society of Rotary Blood Pumps
Georg Wieselthaler, MD

(Vienna General Hospital)

•

Cardiothoracic surgeon, John Radcliffe Hospital
•

Over 500 cardiac operations annually
•

Implanted the longest surviving LVAD patient, Peter Houghton
Stephen Westaby MD,

PhD

(John Radcliffe Hospital,

Oxford)

•

Professor of Surgery and Director of Thoracic and Cardiovascular Surgery at the
University of Louisville School of Medicine

•

Was the original investigator for the Novacor VAD System, and implanted the first
AbioCor Implantable Replacement Heart

Laman A. Gray, Jr., MD

(University of Louisville School

of Medicine)

•

Director of Heart Failure/Heart Transplant Program at the University of Minnesota
•

Past President of the International Society for Heart and Lung Transplantation
Leslie Miller, MD

(Lillehei Heart Institute

University of Minnesota)

•

Director of Heart Transplantation, Washington Hospital Centre
•

Involved with the development of HeartWare devices since 1996
Steven Boyce, MD

(Washington Hospital Centre)

•

Chairman of Advisory Board
•

Chief of Transplant Services, Texas Heart Institute
•

Implanted almost 300 LVADs
Bud Frazier, MD

(Texas Heart Institute)

Name Relevant Experience

16

Other Senior Management

•

Previously CFO & General Counsel for a listed medical device company
•

Served as a corporate and commercial law specialist at an international law
firm, plus senior financial roles at multinationals

Chief Financial

Officer, Company

Secretary

(Sydney)

David McIntyre

•

Previously corporate finance executive for a life-sciences investment bank
•

10 years experience in engineering, venture capital and corporate finance
Director, Corporate

Development

(Sydney)

Howard Leibman

•

25 years experience in medical device engineering and manufacturing
•

Involved in the development of over 20 FDA approved medical devices
•

Previous roles with Guidant, Medtronic and St Jude
VP Manufacturing

and Product

Development

Bill Rissmann

•

20 years experience in directing clinical affairs, sales and marketing in the
circulatory assist device industry

•

Former Director of Clinical Services and market development for Thoratec –
integrally involved in bringing HeartMate I to market

Jane Reedy

VP Clinical Affairs
•

30 years of regulatory experience
•

FDA compliance officer for heart devices
•

Responsible, as VP Regulatory, for bringing Abiomed's TAH to market
VP Regulatory

Affairs

(Consultant)

Janice Piasecki

•

Inventor of HeartWare's platform technology
•

18 years in hydraulic design and blood pump development
•

Leader in Computational Fluid Dynamics modelling
Chief Technical

Officer

Jeff LaRose

Name Role Relevant Experience

17

HTW Market Statistics

•

IPO, 31 January 2005: Raised AU$32.4M / US$24.95M at
AU$0.50 per share

•

Shares on Issue: 155.70 million
•

Market Capitalisation: AU$70 million (at 45c Share Price)
•

Cash: AU$23.5 million (at 30 June 2005)
•

Cash Burn: ~AU$1.5M per month
•

10 largest holders: 73.9% of total stock
•

Cornerstone shareholder: Apple Tree Partners
(59.1%, escrowed to Feb 2007)

18

Important Notice

Not an Offer for Securities

This Presentation does not constitute nor does it contain an offer to buy or subscribe for securities in HeartWare Limited (the "

Company ").
Restrictions on US Persons

The Company's shares are listed for quotation on the Australian Stock Exchange ("

ASX") with a 'FORUS" restriction. The Company's securities
have not been registered under the United States Securities Act of 1933 (as amended) and they may not be offered, sold or delivered in the

United States, or to, or for the account or benefit of, any US Person, as such term is defined in Regulation S of the US Securities Act. In

addition, hedging transactions with regard to the shares may not be conducted unless in accordance with the US Securities Act.

Forward looking Statements

This Presentation contains '

forward looking statements' which involve subjective judgment and analysis and are subject to significant
uncertainties, risks, and contingencies, many of which are outside the control of, and are unknown to the Company and its subsidiary. In

particular, these

forward looking statements are made only as of the date of this Presentation, they assume the success of the Company's
business strategies, and are subject to significant regulatory, business, competitive and economic uncertainties and risks. No representation,

warranty or assurance (express or implied) is given or made in relation to any

forward looking statement by any person (including the
Company). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that

any

forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the
assumptions on which the

forward looking statements are based. Given these uncertainties, recipients are cautioned to not place undue
reliance on such

forward looking statements. Subject to any continuing obligations under applicable law or any relevant listing rules of the ASX,
the Company disclaims any obligation or undertaking to disseminate any updates or revisions to any

forward looking statements in this
Presentation to reflect any change in expectations in relation to any

forward looking statements or any change in events, conditions or
circumstances on which any such statement is based. Nothing in this Presentation shall under any circumstances create an implication that

there has been no change in the affairs of the Company since the date of this Presentation.

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