HeartWare International, Inc. (HTWR)

[cjgaddy]

1-13-16: Heartware sees 35% stock-plunge on bad news@JPMorgan, to $26.50.
By: Don Seiffert, Editor Boston Business Journal
A Framingham heart pump-maker already under fire from one investor over a proposed acquisition, Heartware Intl., saw its shares collapse by a third Tuesday after disappointing revenue news and even more worrying trial news.
http://www.bizjournals.com/boston/blog/bioflash/2016/01/framingham-s-heartware-sees-35-stock-plunge-on.html
Heartware (Nasdaq: HTWR) shares fell 35% to $26.50 Tuesday, their lowest point since 2010. The stock low gives the company, which had 585 employees worldwide when it last reported headcount a year ago, a market valuation of $458mm.

The drop was driven by news from its presentation at the JP Morgan Healthcare Conference in San Fransisco. Particularly, the company said it completed a review of problems that caused a temporary delay of its European trial of a newer, smaller pump called the MVAD Pump and now believes it could take a few months to fix and may even require the company to start the trial over. Enrollment of patients into the trial, which began in July 2015, was paused a couple months later due to a manufacturing problem. The company now says it believes there is a software issue with the MVAD Pump that caused potential blood clotting.

It’s more bad news for a company that’s seen significant opposition lately since a proposed $929mmn acquisition of an Israeli company developing a device to prevent heart failure called Valtech Cardio. When the company first announced plans for the acquisition last September, its had a market value that was more than twice the point at which it closed yesterday. Heartware now faces a proxy fight with activist investor Engaged Capital, in which the Florida investment firm is looking to replace 3 of the 8 current board members. Among other problems with the Valtech acquisition, Engaged points to several provisions in the merger agreement that would accelerate certain milestone payments to Valtech’s current shareholders if Heartware itself is acquired in the next 10 years, effectively lowering the value of the company as a whole.

Also Tuesday, the company gave a preliminary revenue estimate of $68mm for the final 3mos of 2015, lower than the $73.2m reported for the same period in 2014. The company said the drop in sales of its HVAD Pump is largely due to an unfavorable foreign exchange rate. The revenue estimate led to a downgrade by analysts at the investment firm, JP Morgan.