HeartWare Sees the Silver Lining in Thoratec Acquisition

HeartWare's CEO strikes an optimistic tone regarding the acquisition of competitor Thoratec by cardiac company St. Jude Medical. 

Marie Thibault

As one of two major players in the left ventricular assist device (LVAD) market, HeartWare has been seen as an acquisition target in the past. In fact, LVAD pioneer and HeartWare competitor Thoratec tried to purchase the company once upon a time. But last week, it was Thoratec, not HeartWare, in the spotlight, when St. Jude Medical announced it plans to buy Thoratec for $3.4 billion, net of cash acquired. 

All the more credit to HeartWare's executives for taking the high road when discussing the proposed acquisition. In a July 30 earnings call with analysts, according to a Seeking Alpha transcript, HeartWare CEO and president Doug Godshall said, "First, we couldn't agree more with St. Jude's choice of a market to jump into . . . We do believe the long-term implications are encouraging for LVAD referrals and market growth, given St. Jude's reach into the cardiology community."

St. Jude's proposed purchase of Thoratec immediately raises two big questions for HeartWare. What does this mean for HeartWare's chances of acquisition? And how will HeartWare compete against a relatively large company like St. Jude Medical?

Godshall was asked to reflect on both questions by analysts, and he had an upbeat outlook on St. Jude's potential impact on the LVAD market. He pointed out that St. Jude, which is known primarily as a maker of ICDs and pacemakers, has a direct line to electrophysiologists (EPs). Up to this point, cardiologists and cardiac surgeons have been the main targets for LVAD makers, so EPs represent a new entry point to reach new patients. HeartWare should see some benefit from this, Godshall said, because EPs will not be referring patients for a specific brand of LVAD.

HeartWare and Thoratec are the only LVAD companies that have FDA approval for their products, though Thoratec has a more extensive approval for the destination therapy population. Destination therapy patients remain on LVAD therapy instead of using the LVAD as a bridge to a heart transplant.

According to the Seeking Alpha transcript, Godshall said,

In response to whether HeartWare needs to consider being acquired by a larger company in order to remain on a level playing field with St. Jude/Thoratec, Godshall emphasized his team's commitment to building a strong standalone business—but not without a little added humor. According to the transcript, he said, "And I think, as I've joked for a long time, everyone who doesn't buy a VAD company is missing the boat. But at the same time, we love building this business and have a team that is firmly committed.  . . We want to build a great company that saves more lives than anyone else. And that's what we plan to do." 

Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie. 

 [Image courtesy of GREENLEAF DESIGNS/FREEDIGITALPHOTOS.NET]