Abiomed: Straight From The Heart – Seeking Alpha

The artificial heart is very effective as a bridge to transplant, but the number of people that can be saved with human hearts is limited. A perfect artificial heart could save many more patients. - Robert Jarvik

Impella, Abiomeds (ABMD) artificial heart, has been in the market since 2008. Impella 2.5 received approval for use in high-risk PCI (Percutaneous Coronary Intervention) in 2015. In 2016 and beyond, the approval got extended to AMICS (Acute Myocardial Infarction and Postcardiotomy Cardiogenic Shock) for Impella 2.5 and its newer versions.

Though sufficient observational data was always available on Impella use, the one bit of data that wasnt sufficient pertained to Impellas use in patients with AMICS.

Now heres the kicker:

On February 10, 2020, an investigation published on JAMA (Journal of the American Medical Association) opined that LVAD (Left Ventricular Assist Device [Artificial Heart]) may be worse when compared with IABP (Intra-Aortic Balloon Pump), as indicated by in-hospital clinical outcomes for patients with AMICS.

The investigation was conducted by clinicians from Mayo Clinic, Yale University, UCSF, and Washington University. Though it concluded by saying that more research was needed and that this interpretation was limited by the observational design, this new investigative report is bad news for ABMD, especially because more than 16,000 patients suffering from cardiogenic shock were being assisted by the Impella device as of 2017.

Image Source: JAMA

Actually, the controversy surrounding Impella began a little earlier in November 2019.

In November 2019, a study was published at the American Heart Associations Scientific Sessions. It researched a database of 48,000 patients across 432 U.S. hospitals and discovered that there was an increased risk of death, bleeding, kidney injury, and stroke among patients while they were still hospitalized after receiving Impella pumps versus balloon pumps.

This was an observational study that concluded that patients receiving Impella pump versus balloon pumps faced a 24% higher risk of death and 34% increased risk of stroke. Of the 48,000 people, 10% received an Impella pump, and 90% received a balloon pump. It was an observational study that advocated the need for conducting large randomized clinical trials.

ABMD rubbished the research. It countered that the study had manipulated a subset of 4% of its patients over a 10-year observational database. Plus, the study did not disclose its methods to other researchers. ABMD also alleged that the study contained factual inaccuracies and that its authors lacked knowledge of the total Impella data. The companys request to AHA to get the studys data validated by a third-party research organization or by the FDA was turned down.

The company announced that it would start a new wave of clinical studies designed by true experts in the field, with best practice protocols, derived from 15 years of clinical experience and studies. The results are awaited.

ABMDs stock price predictably took a hit twice first after the AHA study in November 2019 and then after the JAMA investigative report of February 2020. The stock already was in a bear zone and these two events made it worse.

Image Source: Seeking Alpha

ABMD is in the life-saving business; so naturally, any study from an authoritative source that reports an adverse conclusion will make potential customers and physicians think twice about using the companys product.

This is a major headwind that ABMD faces now, and if physicians take a cautious view, Impellas sales will drop. Customer and physician trust can only be regained after the company publishes the results of its randomized controlled trials, and it is already working on these.

I looked up other artificial heart makers to check if they too were facing similar problems: Companies such as Bivacor, Abbott (ABT), Carmat (OTC:CKMTF), and Jarvik Heart seem to have no such problems. One peer, SynCardia Systems, faced issues in 2018 when the FDA warned of higher mortality risk in patients who had received its Temporary Total Artificial Heart Companion 2 Driver System (TAH-t System).

So, it seems that ABMD has to weather this attack alone its misery has no company.

The companys 2020 guidance puts the FY 2020 revenue at $846877 million, an increase of 10-14% over 2019. However, given this hugely disruptive development, analyzing the 2020 guidance and forward-looking statements made during the companys Q4 2019 earnings call seems like a pointless exercise.

Despite the headwinds faced by ABMD, I am not bearish. Id rather wait for ABMD to release the results of its new clinical trials.

After the new results are published, there will be some back and forth so, for the moment, I am neutral on ABMD.

I believe that a bullish or bearish bet on ABMD should be taken only after the results are published. Until then, the stock will be enveloped by a cloud of uncertainty and it will most likely drift.

*Like this article? Don't forget to hit the "Follow" button above!

How To Avoid the Most Common Trading Mistakes

Sometimes, you might not realize your biggest portfolio risks until its too late.

Thats why its important to pay attention to the right market data, analysis, and insights on a daily basis. Being a passive investor puts you at unnecessary risk. When you stay informed on key signals and indicators, you'll take control of your financial future.

My award-winning market research gives you everything you need to know each day, so you can be ready to act when it matters most.

Click here to gain access and try the Lead-Lag Report FREE for 14 days.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This writing is for informational purposes only and Lead-Lag Publishing, LLC undertakes no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Lead-Lag Publishing, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Read the original post:
Abiomed: Straight From The Heart - Seeking Alpha