SynCardia Systems yesterday registered for an initial public offering worth up to $40 million, making it the 2nd medical device company in as many weeks to file for an IPO.
SynCardia, which makes an artificial heart system designed to replace the functions of both the left and right ventricles and all 4 heart valves, said it plans to list on the NASDAQ exchange under the “TAHT” symbol. The total artificial heart SynCardia calls TAH-t is on the market in the U.S., European Union and Canada for use as a bridge to heart transplantation in patients with advanced heart failure.
SynCardia’s IPO filing comes on the heels of Penumbra‘s maiden bid last week. Penumbra, which makes devices for the peripheral vascular and neurovascular markets, estimated its flotation at $115 million.
The Tucson-based company reported sales of $20.6 million for 2013 and accumulated debt of $137.3 million as of June 30. SynCardia said it ran into a supply problem after Medtronic (NYSE:MDT) decided to stop making the Med-Hall valves that are an integral element of the TAH-t device. Although it stocked up on the valves while it could, by June 2013 Medtronic had decided to stop evaluating alternative valve designs as well.
That prompted SynCardia to cut 18% of its workforce, including its entire U.S. sales team, and suspend training and certification of new implant centers. As its remaining inventory was reserved for existing customers, the worldwide supply of approved SynCardia devices dwindled to 18 by September 2014. Revenues consequently plunged -25.2% to $15.4 million in 2014, the company said.
In July 2014, SynCardia won FDA approval for a version of the TAH-t device using the SynHall valve, a contract-manufactured version of the Med-Hall valve licensed from Medtronic. The SynHall valve costs SynCardia $7,000 more than the Med-Hall iteration, but no reimbursement changes are in the cards, meaning potential gross margin erosion, SynCardia said. The company won an FDA nod for the Freedom portable driver that same month.
The worldwide supply of the devices was up to 95 by June 30, the company said, and the company estimates it now has enough capacity to meet its demand projections. A destination therapy trial won FDA approval in January.
SynCardia is also running a trial for a bridge-to-transplant indication for a smaller version of its device sized for women and children.
Last month the company warned surgeons about its Companion 2 driver, a smaller replacement for its original C2 driver. Patients who received pre-implant circulatory rescue interventions, such as intra-aortic balloon pump or extracorporeal membrane oxygenation, had a higher mortality rate with the C2 console compared with the older version, SynCardia said.