Staff Writer

Sunshine Heart Inc. (Eden Prairie, Minn.) hopes to have a bigger impact on class III heart failure patients by making its C-Pulse heart assist system wireless. The technology is currently being tested in animals and the company is in discussion with the FDA to have the device go through the agency's expedited access pathway program (EAP).

The company said an update to the C-Pulse makes the pump completely wireless with no drive line breaching the skin as all left ventricular assist device (LVAD)s and heart assist devices do. The power pack lies outside the skin and charges the C-Pulse wirelessly.

"We had a discussion with the FDA and we feel this therapy does meet the requirements (of an EAP)," Dave Rosa president/CEO of Sunshine Heart, told Medical Device Daily. "We expect to have the documentation to [apply for the EAP] by the end of the year."

The company has CE mark for a previous generation of C-Pulse - which isn't wireless – and is in U.S. trials to gain FDA approval of the tethered version of the device. The company said the main focus in Europe is Germany and that there is a push now to secure reimbursement.

"We have not generated revenue [in Europe] because we received the CE mark with our U.S. based safety study," he said. "We've submitted for reimbursement for our device, because without reimbursement it's very difficult to get people to pay. We should be able to find out the first week in February whether or not we've able to secure reimbursement in Germany."

Rosa noted that it would be difficult to predict when the when it expected approval for C-Pulse in the U.S., because potential EAP acceptance for its wireless version of the device could alter trial plans.

Earnings and data

Earlier this week, the pre-revenue company released its quarterly earnings report. The company reported - 36 cents earnings per share (EPS) or $6.6 million for the quarter, beating the analyst consensus estimate by $0.03. Analyst had a consensus of -39 cents EPS.

Cash used in operations was $18.2 million in the first nine months of 2015 vs. $17.4 million in the first nine months of 2014. The company said that cash and cash equivalents on hand at September 30, 2015 was $27.9 million vs. $31.3 million at year-end 2014.

Excluding equity compensation expense, 3Q15 and 2014 net non-GAAP losses totaled $6 million, or 33 cents per share, and $5.4 million, or 32 cents per share, respectively. Net loss in the nine months ended September 30 was $20 million, or $1.11 per share, compared to $18.8 million, or $1.12 per share, in the nine months ended Sept. 30. Excluding equity compensation expense, net non-GAAP losses for the nine months ended Sept. 30, 2015 and 2014 totaled $17.9 million, or 99 cents per share, and $16.7 million, or 99 cents per share, respectively.

Rosa noted that analysts look at pre-revenue companies a bit differently.

"What Wall Street cares about is the data coming out of these studies and the speed in which we're enrolling the studies and the future application of the device," he said. 'What's the market size, what's the opportunity and is the market growing for this ..."

The company stumbled a bit with the COUNTER HF U.S. pivotal trial, which is a prospective, randomized, multi-center clinical study. It is being conducted by heart failure and cardiac surgeon specialists in the U.S. and is expected to randomize 388 patients in up to 40 clinical sites.

In March, the company announced a temporary enrollment pause in accordance with the study's original "stopping rule." This particular protocol indicated that, in the event more than three of the first twenty subjects pass away for any reason, including non-device related deaths, the company would work with the FDA to establish a plan before resuming enrollment. An independent Clinical Events Committee (CEC) determined that all four of the reported deaths were adjudicated as being non-device related and, on May 26th, the company announced the FDA's approval to resume enrollment in the COUNTER HF study.

Due to site related delays, the company finished the quarter with 23 sites activated, with eight sites being reactivated in the last few weeks of the quarter. Despite the limited number of sites, Sunshine Heart enrolled seven patients during the third quarter, and five patients have been enrolled so far in the fourth quarter. As of the quarter ended September 30, an aggregate of 55 patients have been enrolled, of which 30 have been randomized into the COUNTER HF study. Subsequent to quarter end, the company activated an additional four sites and now has 27 activated centers with another 13 in process. In total, twenty centers have been activated since the end of the second quarter.

"We got hurt this year because of this clause," he said. "While in essence it was a two month delay with FDA, we also had to go back to all our centers and have them resubmit to their hospital IRBs for six months. It really hurt the stock and the momentum."

Shares of Sunshine Heart (NASDAQ:SSH) were down by 6.85 percent trading at $2.22 on Thursday. Shares it hit an all-time low this year of $1.99.

Players in the space foster interest not competition

While the argument could be made Thoratec (Pleasanton, Calif.) and Heartware (Framingham, Mass.), both big players in the LVAD space, are competition, Rosa disagrees. He noted that these two companies are focused on class IV heart failure patients. Although the two companies have made attempts at the class III market, nothing yet has come to fruition for them.

"Think of it this way, our device is a partial assist device, we can't take over the entire function of the left heart," he said. "An LVAD is a full support system, because it is powerful enough to support all of what the left heart does. When a patient is ready for an LVAD the left heart is in essence dead. "When we're dealing with a patient the left heart is not dead yet. It's severely damaged. I don't believe in their current form that LVAD's will ever be successful competing with a technology like ours for class III heart failure."

Sunshine Heart finds itself in an interesting position with Thoratec, which merged with St. Jude Medical Inc. (St. Paul, Minn.) in a $3.3 billion deal. The acquisition closed last month (Medical Device Daily, Oct. 12, 2015). Thoratec is an investor and has an observational seat on Sunshine Heart's board.

"The reason why these acquisitions become important to us is not because we think someone will come and acquire us, but we're a company that continues to have to raise money because we're pre-revenue," Rosa said. "When investors see that this company has been acquired for $4 billion they are more apt to invest in other technologies in the space. That's why it is important for us to keep a pulse on this."//

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