HeartWare International, Inc. (HTWR)

[cjgaddy]

5-5-14: Baron Funds Comments on HeartWare Intl.
Holly LaFon
“We ( http://www.baronfunds.com ) also initiated a position in HeartWare International, Inc. (HTWR), which sells an implantable heart pump for the treatment of advanced heart failure. HeartWare's HVAD is the smallest and lightest pump available and is easier and less invasive to implant. HeartWare is rapidly taking share from its competitor who was first to market.

The NIH estimates up to 100,000 patients just in the U.S., as potential candidates for a left ventrical assist device. The global market is over double that. Only 6,300 devices were implanted globally in 2013, so this market is in a nascent stage of development. Barriers to entry are very high, due to long and arduous clinical and regulatory requirements and we think this will remain a duopoly. HeartWare has a next generation pump in trials that has the potential to be disruptive technology, which could accelerate market adoption and market share gain. They also are developing products that treat earlier stages of heart failure and offer less invasive treatments.

HeartWare did a little over $200mm in revenues last year, and we believe that will more than triple in the next 5 years. However, the company is not profitable and won't be until 2016. Wall Street values these businesses on revenues, which is something I am uncomfortable with, and we suspect that clinical trials and product rollout will have ups and downs, so we are prepared for a bumpy ride. But if this plays out how we expect, the stock could appreciate over three-fold in the next five years, so it's worth the agita…”
http://www.gurufocus.com/news/257952/baron-funds-comments-on-heartware-international