About the headline
In a 2nd quarter webcast conference call on 13 August, Dave Rosa, Sunshine Heart (NASDAQ:SSH) CEO, revealed that 7 of the sites it is activating for its COUNTER HF pivotal trial are also sites at which Thoratec (NASDAQ:THOR) will enroll patients for its Revive-It trial.
Enrolments for both trials are scheduled to commence in third quarter 2013.
In answer to a question during the conference call, Mr. Rosa replied:
I still think we will win at those sites because what Doctors are going to do is to give patients a choice as to which device to accept.
When patients are given advantages and disadvantages of both systems for Class III patients we are going to win that battle more often than not.
I give below some solid reasons for Mr. Rosa's confidence that C-Pulse will win against HeartMate II. I also draw some conclusions on what winning in this space means for Sunshine Heart's market cap and share price.
But first a little about the two technologies followed by information on the purposes of the two trials:
About Sunshine Heart C-pulse
The Sunshine Heart C-pulse system is a medical device to treat Congestive Heart Failure by assisting the natural heart's pumping function. To further explain:
- Drugs mostly just slow the progression of Congestive Heart Failure;
- LVADs such as those from Thoratec and Heartware take over much or all of the work load of the heart (but entail risks of bleeding, blood clotting and strokes); and
- The C-pulse system is not blood-contacting and does not take over from the heart. It employs proven counter-pulsation technology, to reduce the workload of the heart, and to create additional blood flow to the heart muscle. This provides ongoing permanent support and allows a tired heart muscle some opportunity to rest and recover, in a measurable way (NYHA Heart Failure class improvement). For further information see here.
About Thoratec HeartMate II
From the Thoratec website: HeartMate II is designed to take over the pumping function of the patient's left ventricle. The device is placed just below the diaphragm in the abdomen. It is attached to the left ventricle, and the aorta, the main artery that carries oxygenated blood from the left ventricle to the entire body. An external, wearable system that includes a small controller and two batteries is attached by an external driveline.
Purposes of the trials
1. Thoratec trial
Thoratec's REVIVE-IT Trial is a prospective, randomized, open-label, multicenter trial, evaluating the HeartMate II LVAS versus a control group consisting of optimal medical management (OMM) in selected non-inotrope dependent, ambulatory, moderately advanced heart failure patients who are not candidates for heart transplantation based upon assessment of comorbidities and age. Trial numbers are 100 patients including the control group on a 1:1 basis with a 2-year follow up period. In layman's terms, the trial's purpose is to determine if the patients have a better survival rate and a better enjoyment of life using the device compared to those on OMM and whether such improvements are sufficient to offset the downside risks including stroke and side effects of required anti-coagulation and blood thinning therapy.
2. Sunshine Heart trial
Sunshine Heart's COUNTER HF Pivotal Trial (see here and here) is a prospective, randomized, open-label, multicenter trial evaluating the safety and efficacy of the C-Pulse therapy in NYHA Class III and ambulatory Class IV patients by measuring freedom from worsening heart failure resulting in hospitalization, LVAD implantation, cardiac transplantation or death as compared to OMT. Trial numbers are 388 patients including the control group on a 1:1 basis with a 1-year follow up period. The purpose of the study is to determine whether the use of the C-Pulse as a treatment for patients in moderate to severe heart failure (HF) has demonstrated safety and efficacy, such that the C-Pulse System merits Food and Drug Administration (FDA) approval to market the device in the United States.
In layman's terms this is a larger trial to confirm repeatability of the outstanding results from the already completed and successful FDA approved 20-patient Feasibility Trial.
Why I would definitely choose Sunshine Heart's C-Pulse over Thoratec's HeartMate II:
Assuming I were a CHF patient with a choice of enrolling for either Thoratec's Revive-It trial or Sunshine Heart's COUNTER HF trial, here are some of the matters I would consider:
1. Operation required for implantation
1.1 Thoratec HeartMate II -The implantation of Thoratec's HeartMate II requires a full sternotomy and longer hospital stays. It also requires cardiopulmonary bypass during the operation to cut into the heart and implant the device in the blood stream. This also raises a concern of increased sensitization to HLA antibodies from exposure to blood products at the time of LVAD implantation.
Final clinical data from two LVAD studies indicated median hospital stays of 19 and 25 days (see here). That translates to a huge difference in hospitalization costs, on top of the difference in device costs when compared to C-Pulse.
1.2 Sunshine Heart C-Pulse - According to Sunshine Heart literature for the Pivotal Trial, to implant the C-Pulse System, the cardiac surgeon will make an incision in the chest and wrap the C-Pulse Cuff around the aorta. The surgeon does not make an incision on the heart itself or to any major vessels. Therefore, the heart is beating during the surgery and a heart-lung bypass machine is not necessary. Following surgery, the expected stay in the ICU is 2-3 days. The stay in the ward is usually 7-14 days.
It should however be noted that several patients enrolled in the C-Pulse FDA approved IDE feasibility trial were able to return home in as little as four days when the procedure had been performed minimally invasively.
2. Destination Therapy (DT) or Bridge To Recovery (BTR)
Both trials are by definition for Destination Therapy, as transplant eligible CHF patients are excluded.
So far, out of a 20-patient cohort, two patients implanted with C-Pulse have been permanently weaned from therapy, with analysis beginning on another two patients in Q3 2013.
With this information, many potential patients seeking enrollment in the trial will be hoping a C-Pulse implant will provide a Bridge To Recovery.
At the same time, there are many recorded instances in the past of patients implanted with LVADs who have recovered sufficiently to be explanted. I have found no reported weaning in respect of participants in the HeartMate II destination trial. But I would think that in the earlier stage NYHA Class III patients in the Revive-It trial there could be instances of weaning and explantation.
If a patient is hoping the chosen device will provide a Bridge To Recovery, the choice becomes one of:
2.1 The Sunshine Heart C-Pulse device, which has:
- a recent history of patient recovery and successful weaning off the device;
- a minimally invasive operation; and
- a weaning procedure facilitated by ease and safety of switching on and off to gradually increase time off the device (one patient weaned themselves off the device without supervision but this is strongly recommended against by Sunshine Heart who are in the process of establishing a formal protocol for weaning).
2.2 The Thoratec HeartMate II, which involves:
- a major operation utilizing cardiopulmonary bypass and cutting into the heart muscle to implant;
- reversal of the process requires additional major surgery, an additional sternotomy, and repeat cardiopulmonary bypass. This may be a concern for patients with a prior cardiac surgery (previous valvular, coronary artery bypass graft, or congenital repairs (See here); and
- a complex weaning operation carried out by expert medical personnel almost certainly in a hospital situation (unlike the C-Pulse, with an LVAD, any interruption to operation through loss of power supply or device malfunction is an immediate major life threatening event -- so weaning by slowing or stopping the pump is necessarily complex).
3. Risk of stroke
This quote from a 2011 American Heart Association (AHA) publication provides some perspective:
The most dreaded complication of mechanical circulation is debilitating strokes, which remain as common with continuous as with pulsatile devices.4 The overall stroke rate most recently published is 0.13 events per patient-year.4 The optimum duration and intensity of anticoagulation and antiplatelet therapy during LVAD support has yet to be defined. As we move forward to offer these devices to patients with an anticipated 70% 1-year survival without VAD, a 1 in 10 incidence of major stroke is a formidable risk.
3.1 Thoratec HeartMate II device related stroke risk
Thoratec reports stroke percentages for its FDA BTT Pivotal trial as ischemic stroke 5% and hemorrhagic stroke 3%. Corresponding stroke rates for a post approval study were lower at 4.7% and 1.2%, respectively.
3.2 Sunshine Heart C-Pulse no device related stroke risk
Of particular note, throughout decades of treatment, C-Pulse has never recorded a neurologic event associated with the device, most commonly defined as a stroke or transient ischemic attack (TIA). This neurological safety profile represents a potential unique advantage of C-Pulse as the device does not contact the blood stream nor require blood thinning agents. To date, no other known cardiovascular blood contacting mechanical support devices have shown these results in a published pilot or pivotal clinical trial.
4. Risk of bleeding
4.1 Thoratec HeartMate II LVAD
An article published in the AHA journal in 2012 paints a concerning picture for incidences of bleeding during and after LVAD implantation:
Bleeding is the most common complication associated with the placement of an LVAD.
However, despite >2 decades of experience with LVADs, the incidence of major bleeding is currently still >20%. More important, newer CF pumps require anticoagulation, thereby significantly increasing bleeding-related complications at the time of cardiac transplantation and LVAD explantation and imposing a bleeding risk throughout the duration of LVAD support.
4.2 Sunshine Heart C-Pulse
Implantation of the Sunshine Heart C-Pulse does not require the procedures or medications described in 4.1 above for LVADs.
My conclusions based on 1. to 4. above
With an understanding of 1. to 4. above, I believe the decision is clear for a patient with NYHA Class III CHF.
Most informed NYHA Class III CHF patients would definitely have little or no hesitation in choosing C-Pulse over HeartMate II for the many safety aspects and the prospect of ease of weaning in case of recovery.
It not only offers efficacy with superior safety, but there is also the fact that the C-Pulse is considerably cheaper than an LVAD; it will attract full CMS reimbursement; and hospital stays are shorter and therefore less costly.
From an investor's rather than a CHF patient's viewpoint
I believe we will, in the not too distant future, see a paradigm shift from drug therapy to MCS for NYHA Class III CHF patients, with full support from the NHLBI, the AHA and the ISHLT.
The entity that wins leadership in MCS for NYHA Class III CHF patients will totally eclipse the present combined market caps of both Thoratec ($2.1bn) and Heartware ($1.3bn).
This is only logical because Class III patients in the US total ~1.4M with a further ~3.5M in the EU, as against the present 50,000 to 100,000 late stage Class IV patients that Thoratec and Heartware presently both target.
Based on my reasons given above for preferring a C-Pulse implant over an LVAD implant, I believe Sunshine Heart will dominate this new emerging market.
In a future article, I will look at the role of INTERMACS in this paradigm shift that is taking place.
Based on its very likely domination of the NYHA Class III market, Sunshine Heart has far more medium- to long-term growth potential than Heartware, and yet its market cap is less than 12% of Heartware's.
Sunshine Heart's market cap should arguably be at least in the region of Heartware's present market cap of $1.33bn.
A recent report by Runway Research nominating a price target of $50 (4 times the current price) indicates that others are starting to recognize the potential of C-Pulse.
Caution: The information above is not intended to replace the advice of a doctor. I disclaim any liability for the decisions you make based on this information.
Additional cautions: As always, please do your own research before any buy or sell decisions. Use of information and research in the article above is at your own risk.
Investing in micro cap companies is not suitable for all investors and can be risky. It's important that investors thoroughly perform their own due diligence and analyze the potential risks. Due to illiquidity, share prices can fall despite strong fundamentals and possible inability to raise sufficient additional cash to continue to fund ongoing operations is always a serious concern. Fuller details of risks associated with Sunshine Heart as identified by the company may be found with their form 10-12B/A registration filing with the SEC and their other SEC filings.
Disclosure: I am long SSH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.