Finally, there's the risk that goes with a clinical trial. Investors may perceive the risks with Sunshine Heart higher because C-Pulse is a new and relatively unproven method to treat heart failure. The company must also convince the cardiology community that the C-Pulse system is a new paradigm treatment for later-stage heart failure.
Under new Medicare regulations, hospitals are penalized for heart failure and heart attack patients who are re-admitted within 30 days of discharge. By the time C-Pulse potentially gets approved, hospitals will be under pressure to find new procedures to make sure their heart failure patients are getting the best therapy. C-Pulse could become a major part of the solution hospital need.
There is massive upside in Sunshine Heart if the C-Pulse pivotal trials are successful in showing clear advantage over current therapy for Class III and ambulatory Class IV heart failure patients. Even factoring in a highly dilutive stock offering in a year or so, the Sunshine Heart's shares are still absurdly cheap. Despite the lack of near-term catalysts, I'm comfortable buying the stock today and wait the time necessary for the stock to turn into a big winner.
Rosenblum is long Sunshine Heart.