Artificial heart maker Carmat's future seen in hands of core backers

Carmat SA

29/09/2023 17:15

By Michal Aleksandrowicz, Tim Hepher and Laura Lenkiewicz
       PARIS, Sept 29 (Reuters) - Troubled artificial heart
maker Carmat  ALCAR.PA  is appealing to key shareholders led by
Airbus  AIR.PA  to invest new funds to avoid the collapse of the
30-year-old venture dating back to a chance meeting between a
French surgeon and a missile magnate.
    Shares in the French medtech champion plummeted 37% this
week after it warned it could run out of cash at the end of
October following supply issues, as it actively explores
"several financing options".
    Airbus is the largest shareholder after one of its own
founders - late industrialist Jean-Luc Lagardere - diverted
engineers specialising in precision missile parts into a new
venture with prominent heart surgeon Alain Carpentier in 1993.
    The company they created, whose name is forged from the
opening letters of Carpentier and Lagardere's Matra Defense
business, later went public and Airbus now owns 12%.
    Carmat Chief Executive Stephane Piat told Reuters the
participation of existing shareholders including Airbus in any
fundraising would send an important signal.
    "This is the message which we are giving to our existing
shareholders: that we live thanks to them," he said.
    "They are the ones who decide whether or not we pursue and
so they have the most important role among our shareholders. We
hope that (the decision) will be positive".
    Funding talks are ongoing, with the French government aware
of the situation, sources said. 
        President Emmanuel Macron has made health technology a
key part of a flagship re-industrialisation roadmap for 2030 and
the French venture is one of only a handful of companies
developing alternatives to heart transplants amid a shortage of
organs.
        Sources said Carmat, which had 24 million euros cash at
mid-year, was looking to raise a total of around 100 million.
The company has not disclosed amounts.
    The decision whether to keep investing in the firm is
expected to be one of the immediate topics on the desk of new
Airbus  AIR.PA  finance director Thomas Toepfer.
    "(Airbus) are important because they are the first investor
and co-founder and they have a key role, and I believe that they
are conscious of this and are responsible," Piat said.
    Airbus said this week it had invested 50 million euros in
Carmat but did not address whether it would spend more. 
    "It’s very challenging market conditions to raise equity
capital for healthcare stocks currently," said Samir Devani,
managing director of Rx Securities, noting cash-burning, smaller
healthcare firms have underperformed the market this year.
    
   
    
    U.S. STUDIES
    Carmat's Aeson prosthetic heart is connected to a battery
and controller carried in a pouch. Currently 13 people are
fitted with the device which costs some 90,000 euros to make. 
    It remained unclear what, if any, contingency plans may be
needed to continue to support them if Carmat fails to raise the
funds it needs to survive.
    Carmat won European approval for "Bridge-to-Transplant" in
2020, meaning its devices can be fitted to people awaiting  
transplants. In December 2021, it suspended implants after
quality issues and was cleared to restart in late 2022.
    Feasibility studies are underway in the United States, where
it plans to apply for FDA pre-market approval by end-2026.
    Airbus has indicated in the past that Carmat is non-core
while contributing to periodic cash calls. It most recently
invested 10 million euros in March 2022.
    It continues to invest in other medical research, however.
In June, Airbus said it was working with Zurich University on
growing human tissue in space to treat damaged organs.          
  
    Airbus's 12% Carmat stake sits in the now largely dormant
Matra Defense unit inherited from Lagardere.
    In the past, that business stood at the centre of some of
France's most storied and sensitive dealmaking including missile
sales to Taiwan in 1992. 
        Now, Carmat is one of two holdings in the unit where it
is dwarfed by a stake in missiles giant MBDA. Matra Defense paid
a dividend of 207 million euros to Airbus in 2022, filings show.

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 (Reporting by Tim Hepher, Michal Aleksandrowicz and Laura
Lenkiewicz, Additional reporting by Stephanie Hamel and
Josephine Mason; Editing by Elaine Hardcastle)
 ((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters
Messaging: tim.hepher.thomsonreuters@reuters.net))