A skeleton crew of 6 employees at World Heart Corp. (NSDQ:WHRT) will push ahead with the development of its MiFlow heart pump despite layoffs for 77% of their colleagues, CFO Morgan Brown told MassDevice.com this morning.
The Salt Lake City-based firm said yesterday that it laid off 19 full-time workers and 1 part-time employee in an effort to hoard cash while it explores "various corporate strategic options." The layoffs, made across all departments, include its chief technology officer, John Woodard, effective today, according to a regulatory filing.
Brown said the layoffs will allow World Heart to continue operating while it explores its options, which might include a joint venture, a co-development deal, a merger or an acquisition. In the meantime, he said, the company is still working on the MiFlow device, an adult-sized version of its PediaFlow cardiac assist device.
"The bottom line is that we continue to push that program forward, obviously with fewer people," Brown told us, adding that World Heart will focus on developing the pump itself, as opposed to peripherals such as a controller or batteries. "We still have plenty of cash, in excess of $9 million as of the end of the year. Especially since we’ve cranked down our burn with this most recent announcement, if we wanted to put it on a slow drip we could keep it alive for the next several years. This was meant to allow us to have greater flexibility to evaluate options and create a longer timeline for that to happen."
Losing Woodard won’t affect the MiFlow program, he said.
"We’ve kept our vice president of R&D, who really is the detailed technical team leader on the MiFlow program, so it doesn’t affect anything at all," Brown said.
As for the proverbial "strategic options" the company is looking into, World Heart is shopping itself to potential suitors, he said.
"The landscape’s fairly narrow. We know who the players are," Brown told us.
World Heart said the move is expected to cost between $965,000 and $1.1 million, with about $860,000 coming due during the 1st and 2nd quarters and the remainder over the rest of the year.
Last summer the company cut 21 employees, nearly half of its workforce, and halted clinical trials of its Levacor ventricular assist device. That prompted its shares to slip below the $1 apiece mark, triggering a warning from the NASDAQ stock exchange of a potential de-listing as of Feb. 13, 2012.
But earlier this month, NASDAQ gave World Heart a 6-month de-listing reprieve, giving the company another 6 months to boost its share price above the $1 requirement. The new deadline is August 13.
When the original layoffs were announced, Brown told us that the decision to leave the Levacor device on the table came after conversations with the FDA made it apparent that the timeline to approval was longer than expected.
“It became increasingly clear that as we went down process timelines we were hoping for were not going to be achieved and we were going to be delayed significantly,” Brown told us at the time.
WHRT shares were trading at 22 cents as of about 11:45 this morning, down 18.4%.
