Heartport roll-out disappoints analyst as company moves to cut staff by a third
This article was originally published in Clinica
The most recent quarterly financial results from Heartport, the company producing tools and techniques for minimally-invasive coronary surgery under the Port-Access name, have prompted adverse comments from investment analysts at Morgan Stanley Dean Witter.
Morgan Stanley analyst Glenn Reicin observed in a report entitled "More Questions than Answers" the fact that Heartport's first-quarter sales of $7.5 million represented around 1,200 procedures, just slightly up on the two previous quarters.
Morgan Stanley also pointed out that the time-intensive nature of the procedure is still causing concern within the company. Heartport's president and CEO, Dr Wesley Sterman, acknowledged that the company is addressing the problem. He said: "We are now focused on making it easier and faster for [surgeons] to perform Port-Access procedures to take maximum advantage of the available market."
Heartport, Morgan Stanley noted that had introduced some new tools during the quarter, designed to speed up the procedure time. They included two devices. The first was an endocoronary sinus catheter, used to occlude the coronary sinus and monitor sinus pressure during the procedure. The second was the EndoAortic clamp, which occludes the ascending aorta, vent the aortic root and allow monitoring of aortic root and balloon pressures.
Using these, Redwood City-based Heartport operations are now said to take a great deal less time for those surgical centres which are new to the Port-Access procedure.
Rival companies are beginning to offer experimental procedures somewhat similar to Heartport's. This month, equipment made by Computer Motion and Vista Medical Technologies was used in combination for a minimally-invasive, robot-assisted mitral valve procedure in Grosshadern University Hospital in Munich, Germany.
Despite the analyst's prediction for Heartport, the company saw its turnover rise by 132% in the quarter, going up from sales of $3.2 million the year before. While R&D remained at around $4.4 million, the company's cost of sales rose from $9.2 million to $11.5 million year on year for the first quarter. This resulted in a quarterly net loss of $13.1 million compared with $12 million for the first quarter of 1997.
Further acknowledging the problem, Heartport has appointed a new chief executive, moved the co-founder, Dr Sterman, to chairman and announced a reduction of a third of its US workforce.
Heartport has taken on Frank Fischer as president and CEO. Mr Fischer was formerly president and CEO of Ventritex for ten years until that company's sale to St Jude last year.
The company also plans to scale back its manufacturing capacity and reduce its workforce by 33%. At the same time the company will boost its sales force by putting more clinical training specialists to work with surgical teams already using Port-Access.