Nearly two years after agreeing to accept fistfuls of stock rather than calling a $5 million loan due, Abiomed Corp. (NSDQ:ABMD) is cashing in a portion of its stake in World Heart Corp. (NSDQ:WHRT)
Over the past five weeks, Abiomed has sold slightly more than 230,000 World Heart shares, generating nearly $740,000 in gross proceeds for the Danvers, Mass.-based manufacturer of miniaturized heart pumps. Abiomed still owns more than 2.5 million shares, worth about $6 million, and remains among the largest individual shareholders of World Heart with nearly 19 percent of its stock.
Abiomed‘s selling appears prescient, beginning just as World Heart shares moved off some of their best prices in months into a slump that had shaved more than half the stock’s former value by early this week.
Between Feb. 16 and March 19, World Heart shares lost $3.02 each, sinking from $5.14 a share to $2.12. Abiomed had an obvious hand in the decline, occasionally accounting for up to two-thirds of all activity for the stock in recent sessions. The skid ended this week with World Heart bouncing back to around $2.40 a share after the company announced surgeons at the University of Utah had successfully implanted its Levacor ventricular assist device for only the fourth time ever in this country.
The relationship between Abiomed and World Heart, now based in Salt Lake City, began in December 2007 as a clinical and marketing support agreement between would-be rivals. At the time, World Heart needed a quick infusion of cash and Abiomed stepped up with a $5 million, two-tiered loan secured by virtually all of World Heart’s assets, including the magnetic-levitation rotary pump technology underpinning the Levacor device.
By the following May, however, World Heart was again down to its last $600,000 after another investor backed away from a deal, triggering default provisions of the Abiomed loan. World Heart pieced together a $30 million recapitalization package on June 20, with Abiomed acquiring a 21.6-percent stake worth about $8.6 million based on the value of other stock issued as part of the deal.
Abiomed also got the rights to be first in line to negotiate a distribution pact for Levacor if the device is eventually cleared for U.S. sales. Abiomed last year began sales of its own Impella cardiac-assist device, generating $15.9 million in revenues over the final six months of 2009.