Carmat Fails to Meet Heart-Device Goals as Stock Holds Up

Carmat SAS, the medical-device maker whose shares soared more than sixfold in 2 1/2 years, said in 2011 it expected its experimental artificial heart to be sold in Europe this year. As it turns out, it’s not even close.

Carmat, based in Velizy-Villacoublay, France, is still awaiting a nod from French health authorities for the first trial of the device in a human. The product is designed to help patients with terminal heart failure who can’t get a human heart for a transplant. Carmat, which will publish full-year results March 4, has declined to say when it now expects the test to take place.

Carmat needs to provide extra information to Agence Nationale de Securite du Medicament before the regulator, known as ANSM, can authorize the first test of the device on a human being, Axelle de Franssu, a spokeswoman for the agency, said in a telephone interview today. ANSM currently has “‘no visibility’’ on the timing of a possible decision on Carmat’s artificial heart, she said.

Investors haven’t dumped the stock. While the shares are down 16 percent from their recent high in December, they’re still up more than 500 percent since Carmat’s initial public offering in July 2010, giving the unprofitable company a market value of 478.9 million euros ($621.9 million).

‘‘Carmat has been selling a dream,” Xavier de Villepion, a sales trader at Global Equities in Paris, said in a telephone interview today. “Either the device works, and it’s super, or it doesn’t, and we’ll have a total disaster.”

The company in February 2011 said it aimed to begin clinical trials by the end of that year. Chief Executive Officer Marcello Conviti said in July 2011 Carmat expected to obtain regulatory approval for the device in Europe by the first half of 2013 and to begin selling the product the same year.

Endurance Tests

In September last year, the company said France’s drug and medical-device regulator wanted a report on the test of five separate artificial heart systems over a four-month period to show if the devices would hold up. Those tests were “progressing well,” Carmat said on Sept. 17.

After the IPO, Carmat promoted the project with investors, in newspapers and in television appearances. The stock closed at a record 182.85 euros on June 9, 2011, while the device’s first implant in a human was still years away. The company sold 29.3 million euros of shares in a secondary offering in August 2011.


Even today, the valuation is disproportionate to the advance of the artificial heart’s development, according to Romain Zana, an analyst at Exane BNP Paribas in Paris.

“Investors continue to believe in a success,” Zana, who has a neutral recommendation on Carmat’s stock, said in a telephone interview. “It’s an ambitious project. Any disappointment would hurt a lot.”

Carmat, in a Jan. 31 letter to shareholders, said development was “moving forward and reaching further technical and regulatory milestones each day that are bringing us closer and closer to our first human implant.”

The project is “subject to a decision” by ANSM, Carmat added, without giving more details or elaborating on the possible timing.

Caroline Carmagnol, an outside spokeswoman for Carmat, said in an e-mail the company won’t comment on the delay, and will give no further details until it receives the nod from ANSM.

“The green light for a first trial in human beings would be a lifeline for Carmat,” de Villepion said. “It will be interesting to see what they have to say” on March 4, when Carmat releases results.

“If the device fails, there will be nothing left to the company, because it has no revenues,” he added. “Carmat will crash.”

Awaiting Transplant

An estimated 17.3 million people died from cardiovascular disease worldwide in 2008 and that number may rise to almost 23.3 million by 2030, according to the Geneva-based World Health Organization. Carmat’s heart is being developed to counter the low number of organs available for a transplant.

Each year there are more than 100,000 patients awaiting cardiac transplantation, and less than 4,000 organs are available for the procedure, according to the company’s website. Carmat’s founder, pioneering cardiac surgeon Alain Carpentier, has successfully developed heart valves in the past.

Carmat’s first-half loss widened to 10.7 million euros, from 4.79 million euros in the year-earlier period, the company also said on Sept. 17. As of June 30, it had 16.6 million euros of cash, it said.

“The advantage Carmat has is that there is no benchmark in this space,” Exane’s Zana said. “There is no competition, the patients they cater to are at a very advanced stage and have no alternatives. Authorities are more lenient in this situation.”