WASHINGTON (AFX) - A late December Medicare proposal to increase the number
of hospitals authorized to implant a specialized mechanical heart device made by
Thoratec could significantly expand the market for the company's products, an
analyst said Wednesday.
Thoratec is the only company with a US-approved device to treat heart
failure patients who are not eligible for heart transplant because they have a
life expectancy under two years.
The Pleasanton, Calif. company's battery-powered Heartmate device is
surgically implanted in the chest where it helps the heart pump blood throughout
the body. The $65,000 device is also used as a temporary treatment for patients
awaiting a heart transplant and patients recovering from open-heart surgery.
Medicare, health care provider to 42 million senior citizens, pays for a
select group of 69 hospitals to implant Heartmates. A Dec. 27 proposal could
nearly double that number.
More importantly, Medicare's proposal, when ultimately approved, could
familiarize doctors with the company's next-generation product.
Heartmate II is more durable and could be used as an "off-label" treatment
in thousands of heart failure patients who aren't eligible for highly expensive
transplant operations, but are expected to live several years, analysts predict.
In a research note, First Albany analyst Jason Mills says the Medicare
change could significantly widen the market for HeartMate II, which is slated
for Food and Drug Administration approval this summer.
Mills reiterated his "buy" rating for the stock and a 12-month $21 target
price for the company's stock. Shares of Thoratec climbed 38 cents Wednesday to
$17.96 on the Nasdaq.
Heart Mate II is smaller, quieter and has a longer operating life than the
current model, according to Thoratec. Because of its increased durability, the
company says it could probably be used to treat heart failure patients who are
expected to live beyond two or three years.
Although FDA is only expected to approve the device as temporary treatment
for patients awaiting heart transplant, Mills states that many doctors could use
it "off label" in patients who are not candidates for transplant.
Mills previously called Heartmate II a "potentially paradigm-changing
device," with significant growth potential.
Medicare plans to expand the number of hospitals eligible for Heartmate
implant payments by changing its facility criteria. The Medicare policy change
would eliminate the requirement that Heartmate-implanting hospitals be
Medicare-certified to perform heart transplants. The new policy would also lower
the number of previous heart device operations a hospital would have to perform
to 10 from 15. New criteria would instead focus on higher levels of training and
experience for implanting surgeons.
"Certainly we view the new criteria as a positive step forward that will
enable more centers to offer this technology," said Thoratec Chief Executive
Gary Burbach.
The government will take comments on the proposed policy through Jan. 26 and
will issue a final decision in April. Hospitals can then apply to become
Medicare-certified to implant Heartmate under the new criteria.
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