re: question for syringe closed vcr short? Ventracor sets its...

re: question for syringe closed vcr short? Ventracor sets its heart on US
Author: Eli Greenblat
Date: 08/07/2005
Words: 811
Source: AFR
Publication: The Financial Review
Section: Companies and Markets
Page: 68


Ventracor chief executive Colin Sutton carries with him two heart pumps to illustrate the huge technological leaps made by the Australian medical device company in the past few years.
The first is a rather clunky metallic system that looks more at home in a washing machine than a person's chest cavity. It weighs 1 kilogram. The other is about the size of a cigarette packet, is less than one-third the weight and is smooth to the touch thanks to its diamond-coated finish.

Sutton, who once worked at former Pacific Dunlop pacemaker unit Teletronics, hopes American cardiologists are impressed by Ventracor's cardiac assist system, called VentrAssist.

The implanting in an American patient of VentrAssist later this year will be the biggest test for Ventracor and its team of scientists and engineers. It will eclipse the clamour surrounding the first procedure in June 2003 when a Melbourne man was given the system.

"It is, I think, the most significant step we as a company can make. It will give verification to what we said we were going to do and once we start on that trial, people will know we are going for the most important and most profitable market," Sutton says.

Australia has form for producing world-beating medical devices, and Ventracor hopes its heart pump will ultimately share the plaudits of Cochlear's bionic ear implant and ResMed's sleep disorder machine. But that success will come only with a successful pilot trial in the US. "You cannot succeed in this business unless you have a successful business over there. Simply, it's where the immediate revenue opportunity is," Sutton says.

Ventracor is primed to push the button on its American trial; it has shipped three pumps to participating hospitals and has a clinical support team ready to assist surgeons, nurses and the patients.

The first stage will be a feasibility study placing the device in 10 seriously ill patients. Then, up to 90 patients will get VentrAssist under a "bridge to transplant" regime. This is a term for patients who might die before a heart can be found for them.

Then up to 400 patients categorised as "destination" will go under the knife. Destination-classed patients are people who will never get a heart transplant due to age or ill health and could use VentrAssist as a long-term solution.

Importantly for Ventracor and its investors, the company has brokered a deal with the US government to reimburse the hospitals $US140,000 ($189,000) for the cost of the procedure.

VentrAssist is expected to sell for about $US70,000 and the rest of the cost is associated with surgical fees and post-surgery care.

"It means we will be able to fund the entire clinical trial out of the reimbursement," Sutton says. " It's been a long road, and it's just thrilling, the fact that we now have all the pieces in place.

"There is good response from cardiologists, they say 'you are going to be the first 3G product' in the market, you will be the first', and they think that's great."

Ventracor's third-generation product has tantalised investors with its potential. Ventracor has a market capitalisation of about $275 million. At its peak share price of nearly $4 in 2003, the company was valued at $600 million. The stock lost 9 ? yesterday to close at $1.265.

So far, 27 people in Australia and New Zealand have received VentrAssist most of whom are still alive, with the present record 20 months. The patients implanted were gravely ill and not expected to live long without a heart transplant. To date, no patient using VentrAssist has died of heart failure, rather succumbing to other illnesses.

Last month, Ventracor announced the maiden successful implant of its patented VentrAssist in a European patient.

Within 10 years, heart pumps like VentrAssist could be implanted into 60,000 patients a year. By then, the global market is expected to be worth billions of dollars. "We think we can make sure VentrAssist will be accepted for 'destination therapy' . . . to do that, we need to have a device that is slick, smooth, easy to implant and one which cardiologists will feel engaged with," Sutton says. "And we think we've got a development program to take this to the next step physiological control: the pump will respond to the body's needs, and it will be a pump that will be easier to manage."

Part of that program will include Ventracor manufacturing its heart pumps in Australia at its own specially built factory in outer Sydney.

There are nearly a dozen companies in the world chasing the heart pump market. In Australia, listed company Heartware is in a pitched battle with Ventracor. It is such a heated contest that Ventracor and Heartware are locked in a lawsuit over intellectual property rights.

"We think the logical thing is to negotiate a settlement, we are keen for that, we would have done it a long time ago but they played hard to get, but eventually sanity will prevail," Sutton says.