French heart firm Carmat gets lifeline without new Airbus cash
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[October 17, 2023]
By Michal Aleksandrowicz, Sudip Kar-Gupta and Tim Hepher
PARIS (Reuters) - Artificial heart maker Carmat on Monday secured a 7
million euro ($7.4 million) lifeline to survive an imminent cash crunch,
but the deal left questions over future support from co-founder Airbus
after the planemaker opted not to participate.
The 30-year-old French medtech champion, set up by a heart surgeon and
one of the planemaker's own founders, last month warned its survival was
at stake after problems with its supply chain, and appealed to
shareholders led by Airbus to re-invest.
On Monday, Carmat said the new 7 million euro capital increase would
cover its needs until the start of next year.
However, it estimated it would have to find around an extra 50 million
euros to run the business until the end of October 2024, plus 14.7
million euros to cover the first tranche of a European Investment Bank
loan due on Jan. 31 next year.
"We are confident in the robustness and safety of our artificial heart,
and in its strong potential," Carmat CEO Stephane Piat said in a
statement.
Shares in the Paris-based company rose 11% to recover the 4 euro mark,
before shedding most of their gains. They have fallen from 7.44 euros
before the cash warning last month.
Shareholders Lohas, Sante Holdings and Therabel Invest took part in the
short-term capital raising, the company said.
But a chart issued by Carmat showed that Airbus did not put up new cash,
at least for now, and its stake fell to 10.8% from 11.7%, making it the
second-largest shareholder behind Lohas, the family office of French
investor Pierre Bastid.
An Airbus spokesperson said it had "nothing to add for now" to Carmat's
statement.
FRENCH MEDTECH
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.
Airbus inherited the stake from a chance co-operation between late
French industrialist Jean-Luc Lagardere and French heart surgeon Alain
Carpentier.
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An artificial heart by French manufacturer Carmat is seen during an
interview with Reuters in Velizy, near Paris, January 11, 2021.
REUTERS/Christian Hartmann/File Photo
Together they set up a venture in
1993 backed by Lagardere's Matra Defense unit, now part of Airbus,
to pursue Carpentier's vision of a viable alternative to scarce
heart transplants.
Carmat says its devices - whose mechanisms were designed with the
expertise of French missile engineers employed by Lagardere - are
the only ones of their kind approved in Europe.
It estimates it needs another three years to submit a formal
application for approval in the U.S.
But the company has run into problems with its specialised supply
chain in the wake of the pandemic,
Last month Piat told Reuters the participation of existing
shareholders including Airbus in any fundraising would send an
important signal.
Airbus, which is in the midst of a reorganisation focused on
planemaking, has supported Carmat with 50 million euros since it was
created but has expressed little appetite to invest significant new
sums, people familiar with the discussions said.
Carmat meanwhile confirmed on Monday it expected European sales to
rise to between 4 million and 6 million euros in the second half of
2023, and to increase sharply in 2024.
It stuck to its forecast for production capacity of 500 hearts per
year, compared with 60-70 devices made in 2023.
It said it was working actively on other financing solutions and
measures to extend its financial visibility.
($1 = 0.9498 euros)
(Reporting by Sudip Kar-Gupta, Michal Aleksandrowicz, Tim Hepher;
Editing by Jacqueline Wong, Jamie Freed, Louise Heavens and Jan
Harvey)
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