EXHIBIT 99.1
News Release
For Immediate Release
WorldHeart Announces 2004 Financial Results
Reports 41% Year-Over-Year Revenue Growth
Oakland, CA, USA - March 22, 2004: (NASDAQ: WHRT, TSX: WHT) - World Heart
Corporation ("WorldHeart" or the "Company"), a global technology leader in
mechanical circulatory support systems, today reported its fourth-quarter and
full year results to December 31, 2004.
Summary annual financial statements are included with this release. The fiscal
2004 financial statements and financial information included in this release
have been prepared in accordance with accounting principles generally accepted
("GAAP") in the United States ("U.S. GAAP") and are presented in U.S. dollars.
Prior to December 31, 2004, WorldHeart's annual and quarterly financial
statements have been prepared in accordance with Canadian GAAP and in Canadian
dollars. The decision to use U.S. GAAP and U.S. dollars for financial reporting
reflects the change of the Company's business activities and reporting
environment from Canada to the United States.
2004 Fourth Quarter and Yearly Financial Results
For the fourth quarter of 2004, the Company had record revenues of $3.0 million
which is an increase of $2.4 million over the revenues of $560,000 recorded in
the fourth quarter of 2003 and an increase of $700,000 or 31% over revenues of
$2.3 million generated in the third quarter of 2004. In the fourth quarter of
2004, WorldHeart recognized revenue from the shipment of 35 Novacor(R) LVAS
implant kits as compared to 25 implant kits in the same quarter in 2003 and 28
implant kits in the third quarter of 2004. The comparative fourth quarter-2003
implant kit sales are before reflecting the return of 20 implant kits and
various hardware as part of the Company's re-acquisition of certain non-U.S.
distribution rights in 2003. Shipments in the fourth quarter of 2004 totaled 40
kits with five kits included in deferred revenue. The net loss applicable to
common shareholders in the fourth quarter of 2004 was $6.3 million as compared
to $6.9 million in the same quarter of 2003.
For the fiscal year ended December 31, 2004, WorldHeart generated revenues of
$9.6 million which represents an increase of $2.8 million or 41% over the
previous fiscal year. Revenues for fiscal 2004 included the sale of 113
Novacor(R) LVAS implant kits as compared to 98 in the 2003 fiscal year.
Shipments in the fiscal 2004 year totaled 131 implant kits with revenues
associated with 17 implant kits included in deferred revenue. Gross margins for
the fiscal 2004 year totaled $1.9 million, or 20% of sales, as compared to $1.8
million, or 27% of sales, in the 2003 fiscal year. Gross margins are expected to
improve as production volumes increase. The net loss applicable to common
shareholders for the fiscal year of 2004 was $26.1 million, or a net loss of
$1.70 per share, as compared to a net loss applicable to common shareholders in
the 2003 fiscal
year of $18.2 million or $2.90 per share. WorldHeart ended 2004 with cash and
cash equivalents of $8.8 million.
Other expenses for fiscal 2004 were $6.5 million as compared to other income in
fiscal 2003 of $5.7 million representing a change of $12.2 million. In 2003
other income consisted primarily of an approximate $10 million non-cash foreign
exchange gain on the preferred shares of WorldHeart's subsidiary, partially
offset by non-cash interest expense. These preferred shares were converted into
common shares in 2003. In 2004 other expenses primarily relates to a non-cash
charge of $5.8 million relating to the beneficial conversion feature of the
convertible debentures issued during the year.
A Review of Highlights for 2004
Other important achievements and developments for WorldHeart in 2004 included:
o Appointment of Jal S. Jassawalla as President and Chief Executive
Officer in the third quarter and the decision to consolidate North
American operations to Oakland, California;
o The addition of eight new US clinical centers in the second half of
2004 as compared to one new center in the eighteen months prior to
that;
o Food and Drug Administration ("FDA") approval and commencement of the
RELIANT long-term use (destination therapy) trial for the Novacor LVAS
in the United States, led by a distinguished clinical executive
committee including Dr. Bartley P. Griffith (University of Maryland
Medical Center), Dr. James W. Long (LDS Hospital) and Dr. James B.
Young (Cleveland Clinic Foundation);
o An increase in reimbursement rates in the United States by the Centers
for Medicare and Medicaid Services ("CMS") the effect of which
increased reimbursement for Novacor LVAS procedures by approximately
30% to 40%;
o Continued medical milestones for the Novacor LVAS including the
1,500th implant, the first six-year supported patient supported by the
Novacor LVAS and the 20th anniversary of the first Novacor LVAS
implant;
o FDA Approval to a revision to the United States labeling of the
Novacor LVAS to reflect the current device reliability data available
to patients and physicians which demonstrates the performance
longevity of the Novacor LVAS; and
o Listing of our common shares for trading on the NASDAQ National
Market.
Recent and Planned Activities for 2005
o MedQuest Acquisition
In early 2005 WorldHeart announced that it has agreed to purchase the
operations for MedQuest Products, Inc. ("MedQuest"), which is in final
development stages
of a magnetically-levitated, centrifugal flow rotary ventricular
assist device ("VAD"), and to complete a $23 million financing
transaction consisting of a private placement and the voluntary
exercise of existing shareholder warrants. This transaction is subject
to WorldHeart shareholders' approval which is expected to be received
on May 9, 2005 at the Company's Annual and Special Meeting of
Shareholders and the transaction is expected to close shortly
thereafter. Also, with the close of the transaction, WorldHeart will
have eliminated all $13.3 million of its convertible debentures and up
to $1.8 million of interest that would have accrued over the five-year
life to their maturity on September 12, 2009.
o RELIANT Trial
To date we have enrolled ten clinical centers and nine patients in the
trial. Approximately ten other leading centers are well into the
process of completing their internal institutional review processes.
Total center enrollment is expected to be approximately 35.
o Next-Generation Products
We have met our key 2004 milestones in the development of our
next-generation (Novacor II) pulsatile system. Development of the
Novacor II, a small bearingless, pulsatile VAD, will continue with
animal implants expected by the end of 2005.
The MedQuest acquisition will provide WorldHeart with a small,
next-generation rotary pump with a magnetically levitated rotor, which
is now at an advanced stage of development. Preclinical animal and
bench testing are underway with initial feasibility clinical trial
expected to beinitiated by the beginning of 2006.
"I am very pleased with the overall progress we have made in 2004, including our
41% year-over-year growth in revenues. We have positioned the company to focus
on long-term VAD support or Destination Therapy (DT), which represents the most
significant need and growth opportunity in our field" commented Mr. Jassawalla,
WorldHeart's President and Chief Executive Officer. "WorldHeart's Novacor is
currently the world leader in terms of VAD reliability and long-term durability
and we are pleased with the rate of new clinical centers added in the second
half of 2004. Our industry needs both pulsatile and rotary VADs to treat the
full spectrum of clinical needs of end and late-stage heart failure patients and
we have made major strides in the development of a next-generation product
platform."
Ceasing to be a Foreign Private Issuer
Prior to March 21, 2005, WorldHeart has been a "Foreign Private Issuer" as
defined in the Securities Exchange Act of 1934, as amended the "Exchange Act".
Upon consolidation of WorldHeart's operations to Oakland, California, the mind
and management of the Company is now located in California and as a result,
WorldHeart is no longer a Foreign Private Issuer and is subject to all of the
reporting requirements of the Exchange Act applicable to a U.S. domestic
issuer. In addition, effective immediately, shareholders will be unable to
submit any share certificates for the removal of U.S. legends except in
accordance with Rule 144 and/or the qualification of the shares pursuant to a
registration statement in the United States.
Update on North American Consolidation
WorldHeart's previously announced transition of its Ottawa, Ontario-based
operations to Oakland, California is entering its final stages and is expected
to be completed in the second quarter of 2005. Having substantially completed
the transition, Mark Goudie, WorldHeart Vice President, Finance and Chief
Financial Officer and Robert Corson, Vice President, Manufacturing, both located
in Ottawa, are expected to leave the Company in the second quarter of 2005. The
Company is in the process of recruiting for these Oakland-based positions, and
Mr. Goudie and Mr. Corson will remain as advisors to WorldHeart through a
transition period.
Annual and Special Meeting of Shareholders
WorldHeart will hold its Annual and Special Meeting of Shareholders on Monday,
May 9, 2005 in Toronto, Ontario, Canada. A subsequent release will provide
details as to location and timing of the meeting.
WorldHeart will hold a teleconference today at 11:00 a.m. EST. The
teleconference can be accessed domestically by calling 1-800-814-4890 and
internationally by calling 416-640-4127. Please dial in ten to fifteen minutes
prior to the beginning of the call. A replay of the conference call will be
available through Tuesday, April 5, 2005 starting at 2:00 pm (EST) on March 22,
2005. The recording can be accessed at 1-877-289-8525 and by entering passcode
21117845#.
About the RELIANT Trial:
The RELIANT Trial (Randomized Evaluation of the Novacor LVAS in a Non-Transplant
Population) will evaluate the Novacor LVAS for Destination Therapy use by
patients suffering from irreversible left ventricular failure who are not
candidates for transplantation. Recipients will be randomized, on a 2:1 basis,
to receive the Novacor LVAS or the HeartMate(R) XVE LVAS.
About Novacor(R)LVAS:
The Novacor LVAS, a pump implanted alongside the patient's own heart to take
over a large portion of the workload of the natural heart, supports end-stage
heart failure patients. It is an electrically powered, pulsatile flow device
with 20 years of clinical use. The Novacor LVAS has unprecedented reliability
and durability. It is the first ventricular assist device to provide a recipient
with more than 6 years of circulatory support and continues to hold the industry
record for longest support on a single device, over 4.5 years. To date, more
than 1,600 patients have been supported with the Novacor, with almost 600
patient years of experience, and no deaths attributable to device failure.
The Novacor LVAS is commercially approved as a bridge to transplantation in the
U.S. and Canada. In Europe, the Novacor LVAS has unrestricted approval for use
as an alternative to transplantation, a bridge to transplantation, and to
support patients who may have an ability to
recover the use of their natural heart. In Japan, the device is commercially
approved for use incardiac patients at risk of imminent death from
non-reversible left ventricular failure for which there is no alternative except
heart transplantation.
About World Heart Corporation:
World Heart Corporation is a global medical device company headquartered in
Oakland, California, USA with an additional facility 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.
Investors are cautioned that all forward-looking statements involve risk and
uncertainties, including without limitation, risks in product development and
market acceptance of and demand for the Company's products, risks of downturns
in economic conditions generally, and in the medical devices markets, risks
associated with costs and delays posed by government regulation, limitations on
third-party reimbursement, inability to protect proprietary technology,
potential product liability and other risks detailed in the Company's filings
with the U.S. Securities and Exchange Commission.
For more information, please contact:
- ------------------------------------
World Heart Corporation
Peggy Allman
(510) 563-4721
www.worldheart.com
WORLD HEART CORPORATION
Consolidated Balance Sheets
(United States Dollars)
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December 31, December 31,
2004 2003
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ASSETS
Current assets
Cash and cash equivalents $ 3,818,767 $ 6,337,677
Short-term investments 4,999,034 11,720,510
Trade and other receivables 4,238,049 3,894,911
Prepaid expenses 575,261 614,222
Inventory 8,112,525 5,902,866
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21,743,636 28,470,186
Long-term receivable 318,553 -
Cash pledged as collateral for lease 750,000 527,997
Capital assets 2,011,586 3,041,657
Goodwill 17,179,643 17,179,643
Intangible assets 255,012 879,118
Other assets - 81,468
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$ 42,258,430 $ 50,180,069
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 3,854,833 $ 8,214,090
Taxes payable 832,000 -
Accrued compensation 1,343,364 1,748,364
Deferred revenue 1,607,622 176,573
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7,637,819 10,139,027
Convertible debentures 8,177,140 -
Long-term obligation 16,368 -
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15,831,327 10,139,027
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Commitments and contingencies
Shareholders' equity
Common shares 214,616,061 212,457,492
Issued and outstanding - 15,744,522 common shares
(December 31, 2003 - 15,023,689)
Additional paid-in capital 11,451,267 1,081,977
Cumulative other comprehensive income (6,285,577) (6,285,577)
Accumulated deficit (193,354,648) (167,212,850)
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26,427,103 40,041,042
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42,258,430 $ 50,180,069
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WORLD HEART CORPORATION
Consolidated Statements of Operations
(United States Dollars)
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Year ended Year ended
December 31, December 31,
2004 2003
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Revenue $ 9,575,761 $ 6,775,807
Cost of goods sold (7,680,384) (4,968,898)
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Gross margin 1,895,377 1,806,909
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Expenses
Selling, general and administrative (13,363,796) (7,263,759)
Research and development (5,838,754) (8,687,901)
Restructuring costs (1,787,129) (3,356,487)
Amortization of intangibles (515,012) (2,854,774)
------------------------------------------
(21,504,691) (22,162,921)
------------------------------------------
Loss before the undernoted (19,609,314) (20,356,012)
Other income (expenses)
Foreign exchange gain (loss) (308,338) 10,055,129
Investment income 99,427 105,596
Loss on disposal of capital assets (46,431) (27,147)
Interest expense and financing costs (6,277,142) (4,406,620)
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Net loss for the year (26,141,798) (14,629,054)
Accretion on preferred shares - (1,614,855)
Inducement related to conversion of preferred shares - (1,924,395)
------------------------------------------
Net loss applicable to common shareholders $ (26,141,798) $ (18,168,304)
------------------------------------------
Weighted average number of common shares outstanding 15,373,689 6,259,757
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Basic and diluted loss per common share $ (1.70) $ (2.90)
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WORLD HEART CORPORATION
Consolidated Statements of Cash Flow
(United States Dollars)
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Year ended Year ended
December 31, December 31,
2004 2003
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CASH FLOWS FROM (USED IN)
Operating activities
Net loss for the period $ (26,141,798) $ (14,629,054)
Items not involving cash -
Amortization 1,390,508 3,302,044
Loss on disposal of capital assets 46,431 27,147
Write down of capital and intangible assets 547,366 -
Issuance of options and warrants for services and financing costs 81,466 2,704,247
Interest on debt 6,266,027 -
Unrealized foreign exchange loss (gain) 7,956 (9,728,237)
Gain on settlement of obligation - (1,694,300)
Change in operating components of working capital (5,132,726) (4,939,234)
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(22,934,770) (24,957,387)
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Investing activities
Purchase of short-term investments (4,999,035) (10,847,245)
Redemption of short-term investments 11,504,032 -
Purchase of capital assets (363,224) (150,135)
Cash pledged as collateral for lease (222,003) 217,178
-----------------------------------------
5,919,770 (10,780,202)
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Financing activities
Capital lease repayments - (40,460)
Short-term loan proceeds - -
Repayment of short-term loan and accumulated interest - (1,308,558)
Senior and subordinated loan proceeds - 6,542,790
Repayment of senior and subordinated loan and accumulated interest - (7,367,568)
Convertible debenture proceeds 13,318,750 856,837
Repayment of convertible debenture and accumulated interest - (884,108)
Bridge loan proceeds - 767,771
Repayment of bridge loan and accumulated interest - (775,068)
Issuance of common shares through private placement - 48,453,282
Funds received on the exercise of warrants 1,499,403 1,120,555
Payment of expenses relating to financing (378,162) (379,646)
Repurchase of warrants (1,000) -
Payment of expenses on the exercise of warrants - (33,618)
Payment of expenses related to the issuance of common shares - (4,760,352)
-----------------------------------------
14,438,991 42,191,857
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Effect of exchange rate changes on cash and cash equivalents 57,099 (273,905)
-----------------------------------------
Change in cash and cash equivalents for the period (2,518,910) 6,180,363
Cash and cash equivalents, beginning of the period 6,337,677 157,314
-----------------------------------------
Cash and cash equivalents, end of the period $ 3,818,767 $ 6,337,677
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