Sunshine Heart to raise $15m in IPO

Sunshine Heart is preparing to float on the ASX, launching a AUD$15 million IPO in Australia and New Zealand last week to raise funding to support its upcoming clinical trials.

The underwritten offer of 30 million shares at a price of $0.50 per share includes a private placement of 1.4 million shares to US VC group Three Arch Partners, an existing shareholder in the company. A further $5 million may be raised through oversubscriptions.

The Sydney-based company has developed a unique heart assist device to treat moderate to severe long-term heart failure -- a market of around 1.8 million patients in the US alone.

Unlike left ventricular assist devices (LVADs) such as Ventracor's pump that take over the pumping action of the heart, Sunshine Heart's C-Pulse device consists of a cuff that fits around the aorta just above the heart, which inflates and deflates in time with the heart's rhythm to improve blood supply to the body and the heart.

"It's a bit like a blood pressure cuff that wraps around the ascending aorta," inventor and medical director Dr William Peters told Australian Biotechnology News. "It's designed to assist the heart to pump blood, so it can be turned down or even off if the heart recovers."

Because the device doesn't contact the blood at all, it has a decreased risk of infection, clots, or other adverse events, and is easier to implant than LVADs. Its market is also potentially much larger as it is targeted at patients with moderate heart failure as well as those with more severe disease.

Sunshine's device has been extensively tested in sheep, and has undergone short term intra-operative trials where patients undergoing heart bypass surgery were fitted with the device for 20 minutes during the operation.

Now the company is poised to begin two long-term clinical trials, one scheduled to commence in New Zealand in December 2004, and a second to begin in Germany in April 2005 to support CE Mark approval in European and other countries requiring it for registration. The trials will also underpin later trials to be performed in the US for FDA approval.

CEO Don Rohrbaugh said the company was aiming for CE Mark approval in 2007, and would launch the product on the market in Europe in 2008. US approval would take longer as additional efficacy trials would be required and the company was targeting 2010-2011 for approval by the FDA.

Some further work is also required by Sunshine to either develop or acquire a suitable wearable driver for the device, and a portion of the funds raised by the IPO will be assigned to this task. The company has two options -- to lease a compatible product from a competitor or to develop its own at an estimated cost of around $7 million.

Rohrbaugh said the capital raised through the IPO should last the company into 2006.

"At that time we'll probably need additional financing for the US study -- probably a further $15 million," he said.

The offer has been underwritten by Wilson HTM. The offer closes on September 14, and the expected listing date is September 28, 2004.