“HeartWare’s decision last fall to acquire Valtech represented a unique opportunity to bring together 2 complementary portfolios for substantial, high-growth markets and create a broad technology pipeline for the treatment of patients with heart failure,” president & CEO Doug Godshall said in prepared remarks. “While we continue to believe Valtech’s portfolio of mitral and tricuspid interventional tools holds tremendous promise, HeartWare finds itself in a different set of circumstances than when we first entered into the agreement.”
Godshall said Framingham, Mass.-based HeartWare will focus on getting its next-generation MVAD program back on line and pursue a destination therapy indication for its HVAD device. Both are left ventricular assist devices designed to treat patients with heart failure.
“By stepping away from the acquisition, all of our resources will be dedicated to strengthening our existing business to put the company in the best position to take advantage of the significant opportunities within our ventricular assist device portfolio. We recognize from our discussions with shareholders over the past several weeks that they, too, share our enthusiasm for the strength of our core VAD franchise, and we look forward to realizing this value together,” Godshall said. “This decision does not, in any way, reflect a lack of enthusiasm for Valtech or the mitral and tricuspid valve opportunities, and we wish Valtech all the best in advancing their company to the next level.”
The move means HeartWare must make a $30 million convertible promissory note to Valtech.
In a separate release, HeartWare said it settled its beef with activist investor Engaged Capital by agreeing to jointly select an additional independent director for HeartWare’s board and setting up a business strategy committee.
“We have maintained an open dialogue with Engaged Capital over the last several months, and following recent, constructive discussions, we are pleased to have reached an agreement with them,” Godshall said. “We look forward to working collaboratively to select a new, highly qualified, independent director who will bring a complementary perspective and further strengthen our Board of Directors.”
“We are pleased to have reached an amicable resolution with HeartWare following the termination of the Valtech transaction. We appreciate the steps the company has taken today to maintain focus on its core ventricular assist device business,” added Engaged Capital principal & chief investment officer Glenn Welling. “We invested in HeartWare because we are confident in the strength of HeartWare’s core VAD business and in the significant opportunity for growth within the global mechanical circulatory support market. We believe HeartWare’s VAD franchise is significantly undervalued and that additional objective, financial perspectives represented on the Board can help support HeartWare’s efforts to drive growth and enhance shareholder value.”