OAKLAND, Calif., Nov. 14 /PRNewswire-FirstCall/ -- World Heart Corporation (Nasdaq: WHRT - News; TSX: WHT - News), (“WorldHeart”), a developer of mechanical circulatory support systems, today announced that it expects to receive $14.1 million in new financing through a private placement transaction, subject to shareholder approval and that the Company will embark on a major restructuring of its business designed to enable it to better focus its operations on the development of the next-generation rotary VAD.
Private Placement
Gross proceeds from the private placement financing are expected to be approximately $14.1 million and includes participation of both existing investors, including Maverick Ventures Management, LLC, Special Situations Fund, and Medical Strategy (on behalf of Medical BioHealth-Trends), as well as new investors, including Greenway Capital, and members of WorldHeart’s management team. The financing, in conjunction with the cost-containment efforts, are expected to fund operations through the initiation of U.S. clinical trials for WorldHeart’s next-generation product in 2007 and on into the second quarter of 2008.
“This financing will enable WorldHeart to focus its energies exclusively on the final development, evaluation and eventual commercialization of our next-generation Levacor rotary VAD,” said Jal S. Jassawalla, president and chief executive officer of WorldHeart. “We expect to initiate clinical use of the Levacor in Canada in the near-term and start a U.S. feasibility trial in the latter half of 2007. Thus far, we have been very pleased with the performance of the Levacor in the first two patients in our European feasibility trial. As a result, we have seen strong worldwide interest from leading clinical centers wishing to participate in clinical trials of our fourth-generation, fully magnetically levitated, bearingless, centrifugal pump.”
Jassawalla continued, “The enthusiastic participation of our existing and new investors is also demonstrative of the high-level of optimism they have in both the long-term success of our products and the plan we have put together with respect to the restructuring of the business. I look forward to putting our plan into action and feel that it is an important step toward achieving our ultimate objective of being the leading player in the mechanical circulatory support system arena.”
World Heart entered into a purchase agreement with investors for a private placement financing on November 13, 2006. Gross proceeds from the financing are expected to be approximately $14.1 million at a price of $0.25 per common share. The completion of the private placement is subject to shareholder approval which is expected to occur at WorldHeart’s Annual and Special Meeting to be held on December 20, 2006, and certain other conditions. Approximately $2.8 million of the financing is expected to close this week, while the second closing of approximately $11.3 million is expected to occur immediately after shareholder approval is received at the December meeting. In addition, over the next year, the Company will seek to monetize certain assets and to form strategic partnerships to increase financial flexibility.
Restructuring and Realignment of WorldHeart’s Business
In addition to the new financing, WorldHeart also announced today a significant restructuring and realignment of its business designed to control spending and better position the Company to changing market conditions and diminished demand for its first-generation Novacor® LVAS.
WorldHeart will reduce manufacturing, selling and administrative costs primarily associated with the Novacor LVAS, although the Company plans to continue to support that product. The restructuring will also include a reduction in WorldHeart’s workforce by 50 - 55 people or approximately 50% of the Company’s total employees, primarily at the Oakland, California and Heesch, Netherlands locations. The Company will incur initial restructuring expenses of about $0.7 million, primarily severance-related charges, in the fourth quarter of 2006. Additional restructuring charges may be incurred and will be reported when available.
These initiatives are designed to enable WorldHeart to focus its resources on preparing and qualifying the next-generation Levacor rotary VAD for clinical trials in the U.S., which are expected to begin in the latter part of 2007.
“The restructuring, while difficult, will put the Company in a favorable position to aggressively address the growing market for next-generation devices,” said Mr. Jassawalla. “We believe the trend in the industry toward next-generation technology is positive overall and for WorldHeart specifically. We expect to capture a significant share of this emerging market by putting all of the technical, regulatory and clinical experience we gained with the Novacor LVAS toward the development of the Levacor rotary VAD. Furthermore, the subsequent expected development of the Novacor II pulsatile VAD, the next device in our pipeline, will give WorldHeart potentially, the broadest product platform in this field.”
About the Levacor
The Levacor is a fourth-generation rotary VAD. It is the only bearingless, fully magnetically levitated implantable centrifugal rotary pump in clinical trials. An advanced, continuous-flow pump, the Levacor uses magnetic levitation to fully suspend the spinning rotor, its only moving part, inside a compact housing. The proprietary levitation technology employs a unique arrangement of magnetics expected to provide optimal system simplicity and reliability. In contrast to pumps with blood-immersed mechanical or hydrodynamic bearings, full magnetic levitation eliminates wear within the pump and dependence on blood properties for rotor suspension, and is expected to provide improved blood handling by allowing greater clearances around the rotor and more idealized flow patterns across a wider range of operation. The Levacor VAD has been designed with the objective of addressing the needs of future heart failure patient populations with a high safety profile and robust operation.
Recent Events
In September 2006, WorldHeart received the ICMT Award at the International Society of Rotary Blood Pumps annual conference in Leuven, Belgium. The award is given by the International Center for Medical Technology, located in Houston, Texas, to a company making significant contributions to the advancement of rotary blood pump technology.
During the same Conference, Dr. Antonis Pitsis, cardiac surgeon and Director of the Thessaloniki Heart Institute at St. Luke’s Hospital, Thessaloniki, Greece, presented the first report of the initial clinical trial with the Levacor VAD. At that time, two patients had been supported, each successfully for three months. A unique feature of this trial included using the Levacor, in conjunction with high-risk surgical repair, to facilitate recovery from highly compromising heart failure. Both of these patients experienced recovery, underwent VAD removal with a minimally invasive procedure and are functional at home.
Conference Call and Webcast
Management will discuss the private placement financing and the realignment and restructuring of the business along with WorldHeart’s third quarter results (announced via a separate press release) in a conference call to be held today, November 14, 2006 at 10:00 am EST (7:00 am PST). This presentation will be Webcast, and may be accessed through the Company’s home page, www.worldheart.com , by clicking on the “Investor Events” link under “Investor Relations.” Interested parties may join the teleconference by dialing 800-901-5247 (for North America callers) or 617-786-4501 (for callers outside of North America) and indicating passcode 8365 1539 at least 10 minutes prior to the start time. A telephonic replay of the call will be available for one week beginning approximately one hour after the call’s conclusion at 888-286-8010 or 617-801-6888, accessed with passcode 9070 8539.
About World Heart Corporation
WorldHeart is a developer of mechanical circulatory support systems with leading next-generation technologies and a full portfolio of product candidates. The company is headquartered in Oakland, California, USA with additional facilities in Salt Lake City, Utah and in Heesch, Netherlands. WorldHeart’s registered office is Ottawa, Ontario, Canada.
Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding the Company’s expectations with respect to the cost reduction efforts and its impact on the Company’s ability to maintain operations, the Company’s ability to secure additional funding, including the completion of the $14.1 million private placement or the ability to monetize certain assets, or to form strategic partnerships and statements about the Company’s future development plans for its next-generation product candidates, including the timing and scope of clinical trials, as well as, other statements that can be identified by the use of forward-looking language, such as “believes,” “feels,” “expects,” “may,” “will,” “should,” “seeks,” “plans,” “anticipates,” or “intends” or the negative of those terms, or by discussions of strategy or intentions. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including without limitation: continued slow market acceptance of and a shift in market demand away from the Company’s Novacor LVAS product; completion of the private placement and need for additional financing in the future; costs and delays associated with clinical trials; limitations on third-party reimbursement; inability to protect proprietary technology; continued slower Destination Therapy adoption rate for VADs; loss of commercial market share to competitors due to WorldHeart’s financial condition; delays in completion of cost reductions programs associated with the restructuring plan; and other risks detailed in the Company’s filings with the United States Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the year ended December 31, 2005, as amended.
Source: World Heart Corporation
