WorldHeart Announces Recent Accomplishments and Second
Quarter 2005 Results
Oakland, CA, USA - August 8, 2005: (NASDAQ: WHRT, TSX: WHT) - World Heart
Corporation, a global technology leader in mechanical circulatory support
systems, today reported on recent accomplishments, highlighted by the MedQuest
Products, Inc. acquisition, and its second quarter financial results.
WorldHeart will hold a teleconference today at 11:00 a.m. (EDT). The
teleconference can be accessed domestically by calling 800-814-4890 and
internationally by calling 416-640-4127. A replay will be available starting at
1:00 p.m. (EDT) today through Friday, August 12, 2005 and can be accessed at
877-289-8525 and entering pass code 21133571#.
MedQuest Acquisition
On July 29, 2005, WorldHeart completed the acquisition of MedQuest Products,
Inc., a private Salt Lake City, Utah-based medical device company, significantly
expanding its product pipeline with the addition of the HeartQuest(TM) rotary
ventricular assist device ("VAD"). In conjunction with the acquisition, the
Company raised approximately US$23 million in gross financing in a private
placement with Maverick Venture Management, LLC, and the exercise of certain
outstanding warrants. WorldHeart also simplified its capital structure through
the conversion of all of its outstanding convertible debentures which occurred
in conjunction with the acquisition.
At the close of these transactions WorldHeart had:
o eliminated US$11.6 million of convertible debentures and up to US$2
million of interest that would have been payable over the remaining
five-year life of the debentures;
o issued approximately 10.7 million common shares in connection with the
exercise of warrants;
o raised approximately US$23 million in gross financing proceeds; and
o approximately 55.4 million common shares outstanding.
Other Recent Milestones
o First domestic patient successfully weaned from the Novacor(R) LVAS by
Dr. John Elefteriades, Professor at Yale University and Chief of
Cardiothoracic Surgery at Yale-New Haven Hospital;
o A successful first animal implant of our next-generation pulsatile
Novacor II LVAS by Dr. Philip E. Oyer, Professor of Cardiothoracic
Surgery, at Stanford University School of Medicine;
o Key additions to our executive team, including the appointments of
Richard Juelis as Vice President, Finance and Chief Financial Officer
and John Vajda as Vice President, Manufacturing. Both executives have
over twenty-five years of experience in the healthcare industry; and
o Completion of the transition of headquarters operations from Ottawa to
Oakland.
In commenting on the acquisition and financial results, Jal S. Jassawalla,
WorldHeart's President and Chief Executive Officer said, "We are delighted to
add the MedQuest team and the HeartQuest rotary system to WorldHeart. In
addition to the Novacor LVAS, we will now have a full platform of
next-generation 'assist' and 'replacement' systems under development, to meet
the needs of late and end-stage heart failure patients. We are disappointed with
the rate of Destination Therapy (DT) implants in the second quarter. However, we
have had a good rate of center enrollment in the study, consistent with our
expectation. To-date, we have 19 centers enrolled in the RELIANT trial and 15
patients. Once the new centers are past their learning curve, we expect the
patient enrollment rate to increase. We are pleased to have achieved a number of
important milestones, including having the new executive team members on board
in Oakland and the successful results of the first animal implant of the Novacor
II."
2005 Second Quarter Financial Results
WorldHeart recorded revenues of $2.4 million in the second quarter of 2005, an
increase of $303,000, or 14%, over the revenues reported in the second quarter
of 2004 and a sequential decrease of $1.0 million compared with the previous
quarter's revenues. For the first six months of 2005, revenues were $5.9
million, an increase of 37% over revenues of $4.3 million for the first six
months of 2004.
In the second quarter of 2005, WorldHeart recognized revenue on 23 implant kits
compared with 24 implant kits in the second quarter of 2004, and 32 implant kits
in the first quarter of 2005. The net loss for the second quarter of 2005 was
$4.6 million, or $0.27 per share, compared with the net loss of $5.4 million, or
$0.35 per share, in the second quarter of 2004. The net loss for the six-month
period ending June 30, 2005 was $8.6 million, or $0.51 per share, versus $8.9
million, or $0.59 per share, for the six-month period ending in June 2004.
The net loss of $4.6 million in the recent quarter includes non-cash interest
charges of approximately $330,000 due to the interest accretion associated with
WorldHeart's convertible debentures as well as the non-cash amortization of
intangibles and non-recurring restructuring costs which together total
approximately $339,000. With the conversion of all of the convertible debentures
in July 2005, accrued interest will be eliminated. In addition, the amortization
of intangibles was completed in the second quarter and remaining restructuring
costs will be complete in the third quarter, such that all of these expenses
will be eliminated in future periods.
WorldHeart ended the second quarter of 2005 with cash and cash equivalents of
$1.8 million, a reduction of $2.7 million from the March 31, 2005 cash and cash
equivalents balance of $4.5 million and a total reduction of $7.0 million from
December 31, 2004. With the exercise of warrants and completion of the private
placement, offset by other MedQuest acquisition costs and operating expenses,
the Company's current cash and cash equivalents are approximately $20.0 million.
While the Company had previously anticipated that the current financing would be
sufficient to fund operations through the end of 2006, additional financing by
mid-year 2006 will likely be required assuming a more conservative DT adoption
rate.
"With the broadened product platform that supports our DT strategy, the
completion of our financing and the key additions to our executives, we are well
positioned to serve the unmet needs in this emerging market," commented Jal S.
Jassawalla. "Our entire executive team is very focused and committed to making
WorldHeart successful and growing this field."
WorldHeart's Product Platform
o The Novacor(R) LVAS pulsatile device which is the first device to
provide a recipient with more than six years of circulatory support.
It holds the industry record for longest support on a single pulsatile
VAD of 4.8 years and is currently commercially available as a
Bridge-to-Transplant in the US, Canada, the European Union and Japan.
In Europe, it is also commercially available for DT and
Bridge-to-Recovery. In the US, it is under evaluation in a pivotal
study for DT (RELIANT Trial);
o The Novacor II LVAS is a small, bearingless next-generation pulsatile
VAD building on proven Novacor(R) LVAS technology and driven by direct
magnetic actuation. It is currently under development with the first
successful animal trial completed in July; and
o The HeartQuest(TM) Rotary VAD is an even smaller, next-generation
rotary pump, now at an advanced development stage in pre-clinical
animal and bench testing. A feasibility clinical trial is expected to
be initiated by early 2006.
About Novacor(R)LVAS
The Novacor(R) 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(R) LVAS has unprecedented reliability
and durability. To date, more than 1,600 patients have been supported with the
Novacor, with over 600 patient-years of experience and no deaths attributed to
device failure.
About World Heart Corporation
World Heart Corporation is a global medical device company 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.
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; inconsistent and
difficult to predict use of the Company's Novacor LVAS product; costs and delays
associated with government regulation; limitations on third-party reimbursement;
inability to protect proprietary technology; potential product liability;
inability to achieve anticipated synergies associated with the MedQuest
acquisition; need for additional financing and other risks detailed in the
Company's filings with the U.S. Securities and Exchange Commission, including
its Amended Annual Report on Form 10-KSB/A for the year ended December 31, 2004.
Contact Information:
World Heart Corporation
Richard Juelis (510) 563-4713
Peggy Allman (510) 563-4721
www.worldheart.com
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WORLD HEART CORPORATION
Condensed Consolidated Balance Sheets
(United States Dollars)
- ----------------------------------------------------------------------------------------------------------
June 30, 2005 December 31, 2004
--------------------- --------------------
(Unaudited)
ASSETS
Cash, cash equivalents and investments $ 1,811,931 $ 8,817,801
Trade and other receivables 2,679,684 4,238,049
Inventory 8,816,864 8,112,525
Capital assets 1,772,509 2,011,586
Goodwill 17,179,643 17,179,643
Other assets 2,745,296 1,898,826
-------------------------------------
Total Assets $ 35,005,927 $ 42,258,430
=====================================
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities $ 5,865,693 $ 3,854,833
Deferred Revenue 1,391,862 1,607,622
Convertible Debentures 7,804,317 8,177,140
Other liabilities 1,051,449 2,191,732
-------------------------------------
Total Liabilities 16,113,321 15,831,327
-------------------------------------
Total Shareholders' equity 18,892,606 26,427,103
-------------------------------------
Total Liabilities and Shareholders' equity $ 35,005,927 $ 42,258,430
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WORLD HEART CORPORATION
Condensed Consolidated Statements of Operations
(United States Dollars)
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Six months ended Three months ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
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(unaudited) (unaudited) (unaudited) (unaudited)
Revenue $ 5,866,166 $ 4,338,731 $ 2,449,178 $ 2,146,388
Cost of goods sold 4,253,968 2,880,162 2,142,266 1,701,765
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Gross margin 1,612,198 1,458,569 306,912 444,623
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Operations expenses
Selling, general and administrative 6,463,159 6,837,802 3,017,330 3,802,357
Research and development 2,462,068 3,030,403 1,274,510 1,684,835
Restructuring costs/Intangibles amortization 596,430 258,332 339,418 129,166
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9,521,657 10,126,537 4,631,258 5,616,358
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Operating Loss (7,909,459) (8,667,968) (4,324,346) (5,171,735)
Other income (expenses) (675,678) (244,431) (318,395) (231,057)
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Net loss $ (8,585,137) $ (8,912,399) $ (4,642,741) $ (5,402,792)
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Weighted average number of common
shares outstanding 16,830,658 15,195,392 17,101,359 15,273,689
Basic and diluted loss per common share $ (0.51) $ (0.59) $ (0.27) $ (0.35)
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