A medical dream nearly fulfilled

By MARY K. PRATT

Essex County Newspapers

DANVERS _ Hearts beat strongly behind the walls of Abiomed Inc.

Abiomed is testing its manmade hearts by having them work as normal hearts do. But these hearts belong to no one - yet.

Abiomed plans to implant an artificial heart, the AbioCor Implantable Replacement Heart, in a patient early in 2001.

"It's cardiac medicine's dream, making an artificial heart that functions as well as a real heart," said Dr. David Lederman, who founded Abiomed in 1981.

"It has been a dream for centuries."

Building dreams, though, doesn't come cheap - even when it's as noble as saving lives with a manmade heart.

The company, located in Cherry Hill Industrial Park, took 20 years and millions and millions of dollars to develop its primary product.

Most other businesses couldn't survive two decades without its dream product on the market. But Abiomed leaders knew from the start that a business that wants to make artificial hearts couldn't be run the same as a company that puts out widgets. Its business plan and its financing had to be different from the setup of conventional corporations.

Abiomed, tackling one of the toughest medical challenges around, had to attract workers to a startup company while finding the funding necessary to keep research moving forward. In the end it was the company's challenge - to build an artificial heart - that did both.

"We'd like to be the first in something that no one else has done before that saves lives," Lederman said. "Our goal was to solve medical problems."

That goal, by any standards, was an ambitious one. And many viewed it as an impossible one back in the early 1980s: Washington dentist Barney Clark died after suffering for 112 days with a Jarvik-7 artificial in 1982. The second Jarvik-7 patient, William Schroeder, who received the device in 1984, lived 620 days.

But Lederman, a Colombia native and Cornell University graduate, was undeterred. He started Abiomed in the basement of his Marblehead home with one objective: building an artificial heart that works. He built on research that had been going on since 1964, originally under the federal Artificial Heart Program with the National Institutes of Health.

Despite setbacks with the Jarvik-7, Lederman moved ahead with his company and its research.

And while Abiomed's goal of developing a successful artificial heart never wavered, the company did produce other medical products, most notably the BVS 5000 Biventricular Support System.

The federal Food and Drug Administration approved the BVS 5000 in 1992. The BVS is essentially a temporary artificial heart used in more than 500 medical centers worldwide; it has been used to keep more than 4,000 patients alive since it came on the market in 1994. "Right now we are a single-product company in the commercial sense," Lederman said.

Staying focused

As successful as the BVS is, Lederman remained focused on his mission of developing an artificial heart.

That mission helped Lederman build his company from 16 employees working in the basement of his Marblehead home to the 200-plus workers Abiomed employees today.

Top scientists and engineers are attracted to such challenging work, he said. The research "is perhaps the most exciting project in medicine," he added. "There can be nothing higher than that." (Abiomed's proximity to Boston also helped attract high-caliber researchers to the company, Lederman said.)

That same mission also allowed Lederman to obtain the money needed not only to stay afloat but also to make the needed investment in research and development.

"The company has been lucky that the NIH has shared its vision and made significant contributions," said John Thero, Abiomed's chief financial officer. "It's allowed us to grow a company that can make this contribution of a heart today. As a result, investors have listened to our story."

The National Heart, Lung and Blood Institute, a division of the NIH, has sent $20.5 million to Abiomed over the past 15 years, Thero said.

"NIH funding for medical research is absolutely critical," said Heather Yanyar, director of communications for the Boston division of the American Heart Association. "The NIH gives more research funding than any individual. They are the largest source of funding."

Lederman, who has a Ph.D. in aerospace engineering from Cornell University, admitted that Abiomed couldn't have made the scientific strides it did without the federal funds.

Abiomed also raised $20 million when it went public in 1987, and it raised another $100 million in equity financing in February 2000, Thero said. He also said the company has $20 million in annual revenues from its BVS 5000. The numbers seem impressive, but Abiomed has been running in the red for the past three years. The company annually puts about $10 million to $15 million - money from its profits and its savings - into research, Lederman said.

"We're showing losses right now because of our R&D," he explained. "If we did not invest, we would be a profitable company."

Promising a profit

The FDA has given Abiomed approval to implant the AbioCor into patients who would probably die within 30 days, Thero said. The FDA approval is for clinical testing, which is a two-year process after which Abiomed can seek commercial approval. (Thero, however, said that Abiomed might be able to sell AbioCor sooner internationally because laws in other countries might allow for quicker approval.)

The grapefruit-sized AbioCor is equipped with an internal motor and is able to move blood through the lungs and to the rest of the body by simulating the rhythm of a heartbeat. It is primarily made of titanium and Angioflex, a type of plastic developed by Abiomed.

The AbioCor consists of an internal thoracic unit, an internal rechargeable battery, an internal miniaturized electronics package and an external battery pack. The internal batteries last for a half-hour, so patients can do some activities, such as take a shower, without the external battery pack. The external battery pack lasts six to eight hours.

With the whole package weighing about 3« pounds, patients who will be equipped with this heart can remain mobile. The design goal is to have the heart last five years.

The price tag will be about $75,000 per heart.

While it seems expensive, Lederman said, it's not so pricey when compared to the cost of transplanting a human heart. The five-year cost of a transplant is $400,000 on average, he said, and the five-year cost of a transplant with complications can be $1 million. An Abiomed heart will cost about $100,000 over five years.

In business terms, though, the market is huge.

More than 100,000 cardiac patients need heart transplants annually, but only about 3,000 donor hearts become available. Patients who don't receive transplants now have an alternative to dying.

"It's still a multibillion-dollar market," Lederman said.

"A lot of people need a heart," he added. "People should not die because they have a bad heart. Much like when we break a hip, we replace it."

It's a market that Abiomed will unquestionably be a leader in, considering Abiomed not only developed its own artificial heart but also, in September 2000, purchased the rights to the artificial heart being developed at Pennsylvania State University.

"That one is behind ours a couple of years," said Lederman, explaining that the Penn State heart uses different technology that might be more beneficial to some patients. "But it would have languished in an academic setting. If we didn't do it, they might not find a company who would have a commitment to bringing it to market."

With artificial heart technology advanced enough to move to clinical trials, financial forecasts for Abiomed are looking up. Thero said analysts are predicting a profit for the company in 2002.

Lederman said profits will go back into refining Abiomed's products. And, while Lederman is committed to scientific and medical research for its benefits to people, he also said he is dedicated to the company's financial health.

He added: "We are committed to making this a profitable company."