Friday, December 5, 2008

Thoratec (THOR) with Positive Data

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It appears Thoratec (THOR) has weathered the storm from late October when we exited the name [Oct 26: Closing Thoratec First Thing Tomorrow]. The company has executed as we expected operationally [Oct 30: Thoratec Smashes Earnings; Somehow Guides Up] but threw a massive monkey wrench at investors with it's product warning 2 months ago. It appears the market has digested that news and it's a lot less material than it appeared at first glance when investors jumped off a cliff sending the stock down 50% in after hours.

Now we get some more positive news
  • Medical device maker Thoratec Corp. says clinical trial data shows its new HeartMate II pump is more effective than one of its older products in patients who are too ill to receive a heart transplant.
  • Late Thursday, the Pleasanton, Calif., company said a clinical trial showed its HeartMate II pump is significantly more effective than its HeartMate XVE for patients with end-stage heart failure. Those patients, termed "destination therapy" recipients, are considered a significant market for the device.
  • The report came earlier than some analysts expected. They said that means Thoratec could get the device approved more quickly than they originally believed. Thoratec said it will ask the Food and Drug Administration to approve the device in destination therapy during the first half of 2009. The FDA approved the HeartMate II in April as a temporary treatment for patients who are waiting for heart transplants. JPMorgan analyst Taylor Harris said he hadn't expected Thoratec to report this data until late 2009. The company could be as much as six months ahead of schedule, he wrote.
  • The HeartMate II Left Ventricular Assist System is a battery-sized implanted device that helps the lower left chamber of the heart pump blood. It is designed to be smaller and simpler than the HeartMate XVE, with fewer moving parts.
  • Lazard Capital Markets analyst Sean Lavin raised his profit and revenue estimates for Thoratec due to the timing of the report, and said the FDA should approve in the first half of 2010. He now expects the company to earn 76 cents per share that year on $416 million in revenue, and 90 cents per share on $484 million in revenue in 2011.
  • In a client note, Harris said HeartMate II might have a significantly longer life than HeartMate XVE: while HeartMate II's life span is estimated at five years or more, 35 percent of HeartMate XVEs failed within two years.
  • Interim data from the trial showed patients implanted with the HeartMate II were much less likely to die, have a stroke or require device replacement. The data was based on the results for about 134 patients who were implanted with the device at least two years ago. A total of 607 patients are enrolled in the trial. Based on the data, Thoratec has asked that it be allowed to stop implanting HeartMate XVE in the trial patients.
[Aug 4: One for the Radar - Thoratec]

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