Canaccord is out with a very strong defense on Thoratec (NASDAQ:THOR) following a medical device correction (MDC) notifying physicians the percutaneous lead in HM-II may malfunction over time via
wear.
Action. *Buy aggressively on any weakness in the stock. $31 target.
*NOT a recall...clearing the air. *Released Friday post-close, this report has been broadly mistaken as an HM-II recall; which it is NOT. It is instead a notification mandated by FDA making physicians/patients aware the lead, which connects the pump with the external controller, may suffer “wear and fatigue [that] may result in damage that could interrupt pump function, require re-operation to replace the pump and potentially… serious injury or death.” There were only 27 lead failures in 1,972 HM-II implants over five years (five deaths; none caused by the lead).
*Is this “significant” to docs? Will it impact uptake? *After speaking over the weekend with several LVAD surgeons, Canaccord's key takeaways are: 1) every physician said the notice is NOT new news to clinicians, thus would not impact practice patterns at all; if anything they were surprised by the “low” incidence rate (27/1,972); 2) HM-II improves patients’ health so much their activity level increases dramatically (e.g., driving a Harley to work) which increases wear on the lead; 3) these patients are sick and have NO other options; as such lead fatigue is the least of their worries; 4) all of the investigators agreed this issue would have NO impact on the DT trial outcome.
*Weekend due diligence turned out quite bullish – think upside is possible to Q3 (report Thursday), Q4 and 2009 estimates. *Not only did clinicians quell initial concerns that this may adversely impact HM-II uptake, but our surgeon calls also suggested adoption by both transplant and non-transplant hospitals continues at a strong clip.
Notablecalls: Bounce candidate for sure. BofA is also out in defense. Could hit $20 level in a jiffy
PS: Lazard on THOR: Firm notes THOR fell ~50% after hours and they believe it is possible it could fall further on Monday as they believe the current market is not very comfortable with risk."
wear.
Action. *Buy aggressively on any weakness in the stock. $31 target.
*NOT a recall...clearing the air. *Released Friday post-close, this report has been broadly mistaken as an HM-II recall; which it is NOT. It is instead a notification mandated by FDA making physicians/patients aware the lead, which connects the pump with the external controller, may suffer “wear and fatigue [that] may result in damage that could interrupt pump function, require re-operation to replace the pump and potentially… serious injury or death.” There were only 27 lead failures in 1,972 HM-II implants over five years (five deaths; none caused by the lead).
*Is this “significant” to docs? Will it impact uptake? *After speaking over the weekend with several LVAD surgeons, Canaccord's key takeaways are: 1) every physician said the notice is NOT new news to clinicians, thus would not impact practice patterns at all; if anything they were surprised by the “low” incidence rate (27/1,972); 2) HM-II improves patients’ health so much their activity level increases dramatically (e.g., driving a Harley to work) which increases wear on the lead; 3) these patients are sick and have NO other options; as such lead fatigue is the least of their worries; 4) all of the investigators agreed this issue would have NO impact on the DT trial outcome.
*Weekend due diligence turned out quite bullish – think upside is possible to Q3 (report Thursday), Q4 and 2009 estimates. *Not only did clinicians quell initial concerns that this may adversely impact HM-II uptake, but our surgeon calls also suggested adoption by both transplant and non-transplant hospitals continues at a strong clip.
Notablecalls: Bounce candidate for sure. BofA is also out in defense. Could hit $20 level in a jiffy
PS: Lazard on THOR: Firm notes THOR fell ~50% after hours and they believe it is possible it could fall further on Monday as they believe the current market is not very comfortable with risk."
Thoratec posts better than expected3Q profit on heart device sales:
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