Framingham-Based HeartWare Hit With Class Action Lawsuit

A class action lawsuit has been filed against Framingham-based HeartWare.

The complaint alleges that officers and directors of HeartWare International, Inc. violated the Securities Exchange Act of 1934 between June 10, 2014 and January 11, 2016, by making materially false and misleading statements about HeartWare’s business prospects

Robbins Arroyo LLP said the class action complaint was filed in the U.S. District Court for the Southern District of New York.

HeartWare, a medical device company, designs, develops, manufactures, and markets miniaturized implantable heart pumps or ventricular assist devices (“VADs”) for the treatment of advanced heart failure.

The company currently has one commercial product —the HeartWare Ventricular Assist System (“HVAD”), which provides patients with additional blood flow in order to manage congestive heart failure.

The company was in the process of developing a new device- the MVAD- based on HVAD technology but less than one-half HVAD’s size.

According to the complaint, HeartWare officials represented that MVAD would revolutionize the VAD market and be the key driver for HeartWare’s future growth.

The complaint alleges that on June 2, 2014, the U.S. Food and Drug Administration (FDA) issued a warning letter to HeartWare, identifying several manufacturing and regulatory failures at its Miami Lakes facility in Florida that were connected to reports of death and serious injuries.

On June 10, 2014, HeartWare publicly assured investors that the company was addressing its regulatory failures and that those failures posed no risk to timely MVAD approval.

Contrary to HeartWare officials’ statements, HeartWare failed to adequately address the issues the FDA identified, which caused an indefinite delay in commencing clinical trials of MVAD.

On September 1, 2015, HeartWare announced a highly dilutive acquisition of Valtech Cardio, Ltd., which, according to the complaint, led investors to question HeartWare’s confidence in its regulatory compliance and MVAD’s commercialization prospects.

Then, on September 9, 2015, HeartWare disclosed that it had identified manufacturing problems with the device’s controller—the same device component that the FDA had tied to previous deaths and injuries in HVAD users—and was halting enrollment in the MVAD trial.

On January 11, HeartWare confirmed that nearly half of all patients in the MVAD trial had suffered serious adverse events as a result of software issues with MVAD, and that the MVAD trial would be delayed indefinitely.

HeartWare stock declined 72 perecent from its class period high to close at $26.50 per share on January 12, of this year.