Tucson tech: Local artificial-heart maker posts first annual profit

2012-01-10T00:00:00Z 2014-07-02T12:38:16Z Tucson tech: Local artificial-heart maker posts first annual profitDavid Wichner Arizona Daily Star Arizona Daily Star
January 10, 2012 12:00 am  • 

Tucson-based artificial-heart maker SynCardia Systems celebrated a banner year in 2011, doubling sales and posting an annual profit for the first time.

But 2012 may be the real breakout year for the Tucson company.

SynCardia was founded in 2002 to commercialize the technology behind the CardioWest artificial heart. University of Arizona Medical Center had acquired the technology in 1991 from Symbion Inc., founded by heart pioneer Dr. Robert Jarvik, to market the first artificial heart, the Jarvik-7.

Made in Tucson and approved by the U.S. Food and Drug Administration in 2004 as a bridge to transplants for patients with irreversible failure of both ventricals, SynCardia's Total Artificial Heart has been implanted in nearly 1,000 people worldwide.

It remains the only fully FDA-approved, Medicare-reimbursable artificial heart on the market. The SynCardia Total Artificial Heart has helped patients survive for months, or even years, while awaiting donor hearts.

With clinical success has come long-awaited financial success.

"We know that globally, we've almost doubled (sales) for the second year in a row," said Michael Garippa, president of SynCardia since 2010 and CEO since last May.

"We didn't make money in every quarter, but for the aggregate over the year, we made a lot of money relative to never having made a dime before."

The results helped the company win a gaggle of technology awards last year, including a 20th-place ranking in Fast Company's annual list of the "World's 50 Most Innovative Companies."

Meanwhile, the company has expanded its staff in Tucson from under 40 employees last year to about 50, also adding staff at a new office in Germany.

But Garippa expects sales to take off later this year, when the FDA is expected to approve SynCardia's portable Freedom pneumatic driver for the Total Artificial Heart. The power unit was approved for use in Europe in 2010 and is in clinical trials at 30 sites in the United States.

So far, Garippa said, 35 patients have been enrolled in the trials and 23 have been sent home; 12 other patients received transplants. After 30 patients are discharged with the driver, the data will be submitted to the FDA for full approval of the driver, expected by the third quarter, he said.

FDA approval will encourage many more hospitals to join the 50 current SynCardia implant centers and the 39 in process of certification, he said.

"The biggest impediment to the device getting traction in the last four or five years has been the economics of having people stay in the hospital for an infinite amount of time," Garippa said.

Though at about $125,000 each the Syncardia Total Artificial Heart doesn't come cheap, it can save money in the long run, considering that hospital care can run into thousands of dollars per day.

In most cases, patients with the portable driver can take care of themselves - though they aren't allowed to drive - needing only periodic hospital visits.

"We've had people bicycle, we've had people skateboard, dance, do tai chi, sometimes too aggressively," Garippa said. "You're just wearing a backpack that weighs 14 pounds."

Besides the Freedom driver, SynCardia plans to roll out a smaller, 50cc version of its artificial heart to fit smaller patients.

The company also is working to get its artificial heart approved for use as a "destination therapy" - for long-term use to extend and improve the lives of patients who are not eligible for transplants.

Privately held by more than 60 individual investors, including former UMC heart surgeon Dr. Jack Copeland, along with a few venture-capital firms, SynCardia doesn't release exact sales figures.

But Garippa said he projects revenues to grow from the $30 million range this year to upwards of $60 million in 2013.

At that point, the company will have grown big enough to allow investors to cash out through an initial public offering of stock, or perhaps more likely, an acquisition by a larger company, said Rodger Ford, former SynCardia CEO.

"I think SynCardia is positioned to become an arrow in someone else's quiver," said Ford, who with longtime business partner David Mackstaller helped raise $70 million to capitalize the company.

Garippa said even if the company is acquired, he expects its new owners would keep it in Tucson. "We believe that this is such a well-run, highly leveraged facility with a lot of know-how that there would be no advantage at all to consolidating the operations from here to somewhere else."

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.

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