Thoratec abandoned its planned $282 million acquisition of ventricular-assist-device-maker HeartWare July 31 after the deal was challenged by the Federal Trade Commission.

FTC filed an administrative complaint on July 30 against the transaction and threatened to seek a preliminary injunction to stop the deal. It charged Thoratec with substantially lessening competition, illegally attempting and conspiring to maintain its monopoly, and engaging in unfair methods of competition.

On the following day, Thoratec decided to fold.

"Although we continue to believe in the benefits of the transaction, our management and board of directors have determined that it was in the best long-term interests of Thoratec and its shareholders not to pursue what would likely be a protracted, costly and unpredictable litigation process," said Gary Burbach, CEO of Thoratec.

Thoratec announced the half-cash, half-stock deal in February and had hoped to complete it by year-end.

FTC's ¹ complaint explains that Thoratec has a monopoly in the U.S. left-ventricular-assist-device market with HeartMate XVE and HeartMate II and that HeartWare's HVAD miniaturized LVAD is "poised to be the first and most significant threat" to that standing.

Terumo, Abiomed/WorldHeart, VentraCor and Jarvik Heart are also are among firms developing LVADs, but they are far behind HeartWare, which has targeted 2011 or early 2012 for FDA approval (² 'The Gray Sheet' Feb. 16, 2009).

Even if some companies find an accelerated path to market, "none of these firms appears to have HeartWare's potential to challenge Thoratec's dominant market position," FTC says.

"By stopping the acquisition, the Commission's action will ensure that consumers have a choice of innovative products at lower prices for these critical cardiac devices," said Richard Feinstein, director of FTC's Bureau of Competition.

"Very Relevant Competitive Landscape" - Thoratec

When announcing the deal in February, Thoratec CEO Gary Burbach described it as an opportunity to transition LVAD from a relatively niche therapy to a "real standard of care for heart failure patients." Besides HVAD product, HeartWare has an even smaller assist device, the MVAD , farther back in its pipeline.

Burbach was asked numerous times about potential antitrust issues during a Feb. 13 call discussing the acquisition; but he said he was optimistic that the transaction would not run into trouble with the FTC.

"It's not as if there are two or three players," the CEO said at the time. "There are a significant number of players that are in various phases of evolution. So we view that there certainly is a very relevant competitive landscape."

In announcing the deal termination, Burback said Thoratec remained "focused on building a much broader market for VADs."

- David Filmore ( ³ d.filmore@elsevier.com )

Thoratec-HeartWare LVAD Deal Is Dead Following FTC Challenge

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