A Medical Device Daily
The Federal Trade Commission has authorized a lawsuit to block Thoratec's (Pleasanton, California/Sydney, Australia) proposed $282 million acquisition of rival medical device maker HeartWare International (Framingham, Massachusetts) charging that the transaction would substantially reduce competition in the U.S. market for left ventricular devices (LVADs), a life-sustaining treatment for patients with advanced heart failure. Thoratec currently has a monopoly on the commercial sale of LVADs in the U.S., and the FTC's administrative complaint alleges that Thoratec seeks to maintain its monopoly by acquiring HeartWare, thus eliminating the only significant threat to its continued dominance of the LVAD market.
The FTC said it would seek a preliminary injunction in federal district court to stop the transaction and limit the harm to competition, pending completion of the administrative trial.
"We can't have healthcare reform that truly benefits American consumers unless we have competition, and competition is particularly important when it comes to life-saving devices such as the LVAD," said Richard Feinstein, FTC Bureau of Competition director. "We need competition and innovation in these critical cardiac devices – not monopoly. By stopping the acquisition, the commission's action will ensure that consumers have a choice of innovative products at lower prices for these critical cardiac devices."
LVADs are surgically-implantable miniaturized blood pumps designed to support and sustain patients suffering from end-stage heart failure, typically a fatal condition, FTC noted. LVADs provide full circulatory support by assuming the work of the left ventricle, the heart's primary pumping chamber. End-stage heart failure patients have severely weakened hearts, and the only curative treatment is a heart transplant. LVADs provide temporary support for end-stage heart failure patients awaiting a donor heart and may function as a permanent therapy for patients ineligible to receive a heart transplant.
According to the FTC, Thoratec is the world's leading supplier of LVADs. The company's flagship product, the HeartMate II, and its first-generation LVAD, the HeartMate XVE, are the only FDA-approved LVADs currently on the market. Under a Feb. 12 merger agreement, Thoratec proposes to acquire all of the outstanding voting securities of HeartWare in a deal valued at roughly $282 million (Medical Device Daily, Feb. 17, 2009).
HeartWare is one of a small number of companies developing LVADs. Its device, the HVAD, is currently being used by patients participating in clinical trials and is positioned to be the next FDA-approved LVAD, according to the FTC. The agency said the HVAD offers a design that "promises superior reliability with fewer surgical complications and is poised to be the first and most significant competitive threat to Thoratec's LVADs when it gains FDA approval, as expected, by 2012." The few other companies developing LVADs are significantly behind HeartWare in clinical trials, and none of these devices are likely to reach the market as soon as or be as competitive as the HVAD, the FTC said.
The agency's administrative complaint charges that Thoratec's proposed acquisition of HeartWare would be anticompetitive and violate federal antitrust laws. The complaint alleges that Thoratec is "willfully attempting to monopolize and conspiring to maintain its monopoly in the U.S. LVAD market, thereby denying patients the potentially life-saving benefits of competition between Thoratec and HeartWare." Competition from HeartWare has already forced Thoratec to innovate even though the HVAD is still in clinical trials, according to the complaint. This competition will intensify once HeartWare's HVAD receives FDA approval, resulting in lower prices and enhanced features that will increase the availability and quality of these life-saving devices.
The three-count complaint charges Thoratec with: substantially lessening competition in violation of Section 7 of the Clayton Act; illegally attempting and conspiring to maintain its monopoly; and engaging in unfair methods of competition in violation of Section 5 of the FTC Act. It also notifies the parties that the administrative complaint seeking to stop the transaction will be heard on Dec. 28.
The FTC votes approving the filing of the administrative and federal district court complaints were 4-0. The agency authorizes the filing of a complaint when it has "reason to believe" the law has or is being violated, however a complaint is not a finding or ruling that the defendants have actually broken the law.
According to a joint statement from the companies, Thoratec and HeartWare are "disappointed" with the FTC's decision to challenge the acquisition. The companies intend to review the agency's decision and mutually assess the appropriate next steps and promptly communicate their intentions once a decision has been made.
In other dealmaking activity, Antares Pharma (Ewing, New Jersey) said it has received a payment from Teva Pharmaceutical Industries (Petach Tikva, Israel), which will be applied to the design and purchase of commercial tooling and assembly equipment related to an undisclosed, fixed, single-dose, disposable injector product using Antares' Vibrex Autoinjector platform.
The payment of roughly $4 million is related to an amendment to the original license, development and supply agreement signed in July 2006 between the two companies. Pursuant to the amendment, the payment mostly relates to reimbursement for commercial tooling previously paid for by Antares and an advance for the purchase of new tooling and automation equipment, the company noted. The balance of the payment is an advance relating to design and development work associated with the purchased equipment. Teva will own the dedicated commercial tooling and assembly equipment, and Antares will continue to receive potential future royalty payments on Teva's net sales of the undisclosed product as well as revenues for each device sold.
"Following the recent FDA approval of the Tev-Tropin Tjet Injector system (needle-free hGH), we are pleased to have Teva's financial and commercial commitment for our second injector product, which uses our proprietary Vibex platform. It is also a testimony to the focused and dedicated efforts of the management team here at Antares," said Paul Wotton, PhD, president/CEO.
Antares Pharma is a product development company that says it is committed to improving pharmaceuticals through its drug delivery systems. Teva Pharmaceutical makes generic and human "innovative" pharmaceuticals.