Analysts at Leerink Swann wrote that the FDA panel’s warnings "were not as bad as feared" and Barclays upgraded HeartWare shares to an "overweight" rating, maintaining a price target of $80 per share.
The news gave HTWR shares a 4.5% bump to $70.14 as of about 1:45 p.m. today. HeartWare’s HVAD heart pump will get the full FDA treatment this Wednesday.
"While there are a number of ‘panel risks’ that will come into focus at HTWR’s 4/25 FDA meeting (which we believe pressured shares over the last 2 months), we believe the most probable outcome is that HTWR’s HVAD device receives a recommendation for approval," Barclays analyst Matthew Taylor wrote in a note to investors. "On that basis, we think that the stock will work in the near term and are upgrading shares in anticipation of a favorable panel vote."
Members of the FDA’s circulatory systems advisory panel added that clinical trials for the HVAD system, the only heart pump trials to use a registry of patients as a control arm, may have been biased in favor of HeartWare’s device, Reuters reported.
"Though the day is likely to be tough, we continue to believe that HTWR will successfully convince the panel of HVAD’s overall benefit/risk profile," Leerink Swann analysts wrote.
The panel also noted that 8% of HVAD recipients in the clinical trials had an ischemic stroke, compared to 5-6% in trials for other pumps.
Overall, the HVAD studies reported a survival rate of more than 90% out to 180 days for the 250 studied patients using the device as a bridge to heart transplant, but also found a 6.4% rate of thrombosis and a 8.4% rate of thrombosis plus device exchange. That rate is "significantly higher" than for rival heart pump maker Thoratec’s (NSDQ:THOR) HeartMate II, which won FDA approval in 2008 and has enjoyed a corner on the market for bridge-to-transplant heart pumps for patients with heart failure since then, Leerink analysts noted.
"We believe the overall success of the pivotal trial and FDA’s desire to have an alternative pump on the market to Thoratec’s HeartMate II will result in approval of the HVAD later this year," Wells Fargo analyst Larry Biegelsen wrote.
"We expect a positive panel recommendation with potential conditions to approval, i.e. inclusion of thrombosis and stroke data on the label and extensive post-approval studies to monitor serious adverse events," the Leerink analysts wrote.