Ventracor posts $16m loss

Ventracor (ASX: VCR) yesterday posted an AUD$15.9 million net loss for the 2003-2004 financial year, up 70 per cent from last year's $9.4 million.

But the company is in a healthy position, with $60.2 million in the bank, and a burn rate of around $2 million per month, says CEO Colin Sutton.

The increased loss is primarily attributable to the company's almost completed pilot clinical trial for its left ventricular assist device VentrAssist, which got underway in June 2003. So far seven patients have been implanted with the device, and another patient is expected to round out the trial in the near future.

The company has also upgraded its manufacturing capabilities, building new clean rooms as part of a drive to bring critical processes in house.

Sutton said the company was going very well, and that he was pleased with its progress.

"I think we've made a lot of progress ... in ways that are not particularly obvious but that are laying the foundations for the future," he said.

Sutton noted that the company was targeting the US as its primary market and was putting a lot of effort into making sure its quality systems and documentation were robust and solid to avoid hold-ups with FDA processes.

To this end, the company was currently working to bring all of the critical manufacturing capabilities in house, he said, with the goal of carrying out all of the manufacturing steps in Australia within two years. The company has recently entered into an agreement to purchase a carbon coating chamber, used to line the interior of the pump with a diamond-like substance -- a process currently performed in the US.

The next big milestone for the company will be the commencement of the CE Mark pivotal trial, which will take place in six trial centres with a broader selection criteria for patients than that used in the pilot trial. Ethics committee approval has already been granted in several of the trial centres, said Sutton.

"We're poised to kick off that CE Mark trial ... we're just waiting for the right patient," he said.

Meanwhile, Ventracor is readying itself to submit an Investigation Device Exemption application to the US FDA, which will allow it to conduct pivotal trials in the US. The company plans to submit the IDE by the end of 2004, and if all goes well will enter the clinic there early next year.

The company has appointed a New York-based clinical trials management group to manage the US trials, Sutton said.

Ventracor also reported recently that it had received notification from the US Centers for Medicare & Medicaid Services (CMS) that its pump would be classed in the same reimbursement category as heart transplants, increasing the reimbursement rates. Previously, heart assist devices were only approved as 'bridge-to-transplant' devices, attracting a lower reimbursement rate.

Ventracor also reported revenues of $2.9 million in 2003-2004, mostly from interest on the company's $60 million cash balance and down from $5.2 million in the 2002-2003 financial year, when the sale of the company's eHealth division boosted the figure substantially.

Key events for Ventracor in 2003-2004 include:

• Implantation of VentrAssist device in five patients (seven total to date) in the pilot trial at the Alfred Hospital in Melbourne;
• A rights issue raising $33.35 million followed a $33.75 million placement in August;
• Colin Sutton took over CEO role from Michael Spooner in November;
• Commissioning of clean room facility in April