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Sunshine Heart Inc (SSH) is another little company that has positioned itself to make a monumental difference in the world of medicine. Having developed the C-Pulse Heart Assist System, a device small enough to be implanted in the heart with minimally-invasive surgery, Sunshine may have made a breakthrough in controlling - if not outright reversing - the effects of Class III and Ambulatory Class IV heart failure.

According to statistics posted by the National Institutes of Health (NIH), heart failure is an all too common condition where the heart becomes unable to pump sufficient blood to meet the demands of one's body. The condition is progressive, effecting over five million people in the United States alone, and leads to over a quarter million deaths per year.

Over 1.5 million of these cases fall into the category of Class III heart failure, where current treatments may temporarily relieve a patient's symptoms, but are not fully capable of controlling the effects or symptoms of the disease. The still-investigational C-Pulse Heart Assist System may provide the breakthrough that could fix that. Not only may the C-Pulse significantly improve the quality of life for patients in Class III, but it may also be able to halt - if not reverse - disease progression.

Clinical studies are underway to investigate these claims and, in fact, the medical authorities in Canada recently granted Sunshine permission to modify its ongoing trial to fit patients with the smaller, and potentially more effective, next-generation C-Pulse driver. Additionally, Health Canada also granted permission to expand the number of patients in the trial to 20. Four are currently enrolled and the improvements of the next-generation device were based on feedback from those who have already utilized the first-generation device.

The company is also looking receive a CE Mark approval in Europe and submitted supporting documentation earlier this year. Sunshine has also completed the initial steps in preparation for conducting a pivotal trial in the United States, with sights set on an eventual FDA clearance.

Assuming developments proceed as expected, Sunshine could register its first sales later this year, while initiating a US trial right around the same time. Both events provide significant potential catalysts for the company and its trading shares.

In accordance with the pipeline progression, the company has also received increased interest from investors and media outlets of late. Exposure on both MSN Money and Fox Business last week likely contributed to Friday's trading volume that exceeded - in just one session - the number of shares traded in the past two months COMBINED.

Trading opened light again this week, but it's become apparent that new investors may be starting to take notice of the company and its potential.

With a minimally-invasive procedure to implant the device, the technology falls well in line with today's medical trends of finding cheaper and more effective ways to treat what have been very expensive and invasive conditions. C-Pulse is also implanted outside of the bloodstream, a very key fact considering quality-of-life, because patients can disconnect for convenience - when showering, for example. Medical costs are also conserved, based on data thus far collected, due to the decreased need for hospital visits and/or extended stays.

Given the relatively modest market cap while the C-Pulse device makes its way through various regulatory processes, consideration should also be given Sunshine Heart's status as a potential takeover or merger target. The market cap is currently relative chump change for large medical device companies - whose market caps are in the billions - and its likely that, if C-Pulse continues to prove successful, one of the big players would look to acquire the technology.

Volume was picking up again on Tuesday for shares of SSH. With key catalysts pending for the duration of the year, it'll be worth keeping an eye on this company as it emerges from under the radar.

Disclosure: Long SSH.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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2 Comments

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