Slow start for Heartware float

Artificial heart company Heartware (ASX:HTW) today completed its makeover from US venture capital play to ASX-listed company, with shares debuting below their issue price at AUD$0.49.

At the $0.50 issue price, Heartware has a market capitalisation of AUD$76.42 million, and raised US$24.95 million (AUD$32.42 million) in an oversubscribed initial public offering.

CEO Stuart McConchie -- a medical device executive who has returned to Australia after 20 years overseas -- was unfazed by the slow beginning. "The share price is going to be influence more by that than what people do on the first day," he said.

He said Seth Harrison of venture capital firm Appletree Partners had 'nursed' Heartware through a rough few years. Heartware's predecessor company was California-based Kriton Medical, which filed for chapter 11 bankruptcy in 2003. The company's intellectual property was sold to Heartware, and Appletree has invested $20 of the $32 million in the company pre-IPO.

"[It's] had a relatively rocky course," McConchie told Australian Biotechnology News. "That's not unusual for medical device companies. They have a tendency to have significant ups and severe downs -- some things go well and some things go wrong."

Of the hurdles now in Heartware's path, the most immediate is a lawsuit issued by Sydney artificial heart firm Ventracor (ASX:VCR) late last year alleging that Heartware's device infringed on the patents underlying Ventracor's ventricular assist device. A response is due by Feburary 7, and McConchie is upbeat in his prognosis of the outcomes.

"The best case scenario is that the suit is dismissed," he said. "I don't believe that worst case scenario is detrimental to moving artificial heart through clinical trials. It is not possible to sue a company for patent infringement in the US while the company is in clinical trials. In theory you are immune from prosecution in the US. That will be dealt with during February."

Meanwhile, Heartware is negotiating with clinical trial centres in Australia, and scouting for centres in the US and Europe. He said many centres here have the capacity to work with one or more pumps. "It depends on what they're attracted to [if they like the technology] they will find room to conduct the clinical trial."

Trials for European CE Mark approval and Australian regulatory approval will be conducted under essentially the same protocol, McConchie said. He anticipates around 25 implants will be needed for EU approval.

"For the US, they require two clinical trials, one for bridge-to transplant of around 50 patients [and one for] destination therapy with in excess of 200 patients. We're planning to [conduct] the first implant in the first quarter of 2006," he said.

The float of New Zealand biotech Neuren is now scheduled for Thursday, according to EG Capital's Greg Ward.