By Zeba Siddiqui
(Reuters) - Shares of little-known Sunshine Heart Inc have quadrupled in value in the past five days as investors bet on a unique technology that some analysts say could provide a new treatment option for millions of heart failure patients.
The company is suddenly standing out in a sector that has attracted little attention in recent months amid uncertainty about government reimbursement for medical devices and a weak economy that has caused patients to postpone costly procedures.
The brainchild of Sunshine co-founder Dr. William Peters, the Australian-origin company's C Pulse Heart Assist System aims to offer a less invasive and safer alternative to current heart pumps.
Before last Friday, an average of 3,500 Sunshine shares had traded daily since the company listed on the Nasdaq in February.
Since then, an average of 1.3 million shares have changed hands up to Wednesday in anticipation of key milestones, notably the hoped-for approval to sell its system in Europe.
Sunshine is also seeking approval for a pivotal trial of the system in the United States, which it has said it expects to start in the second half of the year.
Peters, who like other Sunshine executives was unavailable for comment, has a record of success in the cardiac technology field, having developed a heart bypass system for minimally invasive cardiac surgery that was commercialized by Heartport Inc, a company that was acquired by Johnson & Johnson.
"(Heart devices) is an area of medicine that's entering its more revolutionary phase," said David Fischel, a principal at Los Angeles-based Dafna Capital Management LLC, Sunshine's second-largest investor.
Fischel, who also has holdings in Canada-based Novadaq Technologies Inc and St. Louis-based Stereotaxis Inc, said he is "always scouting for innovative medical device makers" and believes Sunshine is one of them.
"They have a responsible management team, they have good shareholder base in Australia and the U.S.," he said.
The stock, which made its Nasdaq debut in February, hit a life low of $3.01 only last Thursday. And it has been soaring ever since, hitting a high of $14.01 on Thursday.
"I would not be surprised if the reason the stock is higher is because they are on the road, fundraising for the pivotal trial of their heart device," independent medical device analyst Suraj Kalia told Reuters.
In response to a query from the Australian Stock Exchange, where it has maintained a listing since 2004, Sunshine said recent media coverage may have triggered the share spike.
It added that it was continuing to pursue opportunities to raise capital in the U.S. and Australian markets.
Heart failure is caused when the heart literally fails to pump enough blood into the body. Nearly 6 million people in the United States are currently living with the condition.
However, current heart failure devices consist of equipment that comes in contact with the blood, which may lead to blood clots that in turn may cause strokes. To prevent this, blood thinners such as Aspirin or Coumadin need to be administered.
Sunshine's device, which targets mid-stage heart failure patients, consists of a cuff -- linked to an external balloon --that wraps around the aorta without coming into contact with blood. This could be its main selling point, Kalia said.
The U.S. Food and Drug administration has historically scrutinized heart devices for stroke-related risks.
In October, the FDA rejected Medtronic Inc's device to treat atrial fibrillation, citing such risks, and an FDA advisory panel raised concerns in April about stroke rates related to the use of Heartware International Ltd's heart failure device.
C Pulse's efficacy does not yet compare to Thoratec Corp's Heartmate device, which is targeted at advanced heart failure patients, Kalia said, since the Sunshine product cannot pull in as much blood as the Heartmate can.
"I do think this company will get recognized," Kalia said.
"I think they have a good management team. I know the founder, Dr. Will Peters very well. He's a really solid cardiac surgeon. The CEO (Dave Rosa) also is trying to get their ship right. In my mind, I think they have something unique here. But the question remains - can they get a good clinical response?"
Investors seem to think they can.
(Reporting by Zeba Siddiqui in Bangalore; additional reporting by Himank Sharma; Editing by Anthony Kurian and Ted Kerr)