Frequently Asked Questions

The C-Pulse is designed to meet the needs of patients in moderate (Class III) to severe (Class IV) heart failure. The C-Pulse assists the native heart to pump blood without actually contacting the blood itself. Of the 1.4 million US patients in these categories, the Company estimates that over 1 million could benefit from the C-Pulse.

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The C-Pulse device and associated surgery and hospitalisation costs are likely to be less to the health care system when compared to an LVAD which costs US$60,000 to US$100,000 per device. In addition to the device costs, LVADs are associated with significant surgery and hospitalisation costs which have been estimated at around US$60,000 to US$100,000. Bi-ventricular pacemakers (a new technology to treat electrical disorders of the heart in moderate heart failure (Class III) patients, sells for approximately US$35,000 to $US45,000.

Sunshine Heart estimates that its surgery and hospitalisation costs will be around US$30,000 making the total cost to implant a C-Pulse about half that of an LVAD.

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Approximately 80% of the current shareholders of Sunshine Heart Inc are located in Australia and New Zealand. The company has a desire to maintain the majority of its shareholder base in Australasia.

In addition the costs for developing C-Pulse in the initial stages are significantly lower as compared with the same development pathway in the USA and therefore it is generally more cost efficient to maintain the majority of research, development and early manufacturing operations in Australia and New Zealand.

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It has taken Sunshine Heart four years to design and verify the C-Pulse. No patents currently exist around the idea of counterpulsation because this concept has been known for around 30 years and has been in the public domain for that time period.

Sunshine Heart's intellectual property strategy has been to patent certain aspects of C-Pulse which provide its unique shape and pulsing action. For example, our "thumbprinting" action (pulsing the balloon from one side only) has been found to be the most effective way in which to maximise blood flow while minimising aortic strain.

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The pressure on the aortic valve is expected to be lower when the C-Pulse deflates just prior to the heart ejecting blood, and higher when the aortic valve is closed and the C-Pulse inflates as the heart is re-filling. Overall, the average aortic pressure does not vary significantly from normal blood pressure.

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As evidenced in long-term animal studies, minor structural changes to the outer wall of the aorta are expected to occur due to the presence of the cuff. These changes are not expected to be progressive. The implanted materials used in the C-Pulse cuff are FDA Master File approved materials. The wrap is made of a polyester and the balloon of a polyurethane.

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LVADs are currently indicated for patients in severe (Class IV) heart failure. The C-Pulse device is intended for the larger group of patients in moderate heart failure (Class III), and it is expected that in a significant proportion of these patients the heart will recover sufficiently for the device to be weaned down and turned off. The C-Pulse device may also provide benefit to patients in severe heart failure. LVADs can not be turned off as they are in the bloodstream. The Company expects LVADs to be primarily used for patients in severe heart failure (Class IV) and the C-Pulse to be used for patients in moderate heart failure (Class III).

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The cost of manufacturing the device for commercial purposes is currently not known but the Company expects the cost to be lower than that of the current LVADs.

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Currently moderate (Class III) to severe (Class IV) heart failure patients are managed with a) drug therapy, (b) bi-ventricular pacemakers to treat patients with electrical disorders, and (c) LVADs for severe heart failure (Class IV) patients.

In the future we can expect the use of (a) passive cardiac containment devices which are currently in clinical trials to treat early stage Class III patients and (b) newer generation LVADs which will be designed to treat a broader range of Class IV patients.

C-Pulse has "cost" advantages (see FAQ 2) over LVADs and has "active" blood pumping advantages over the passive constraint devices.

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Yes. Unlike LVADs, which need to be implanted at heart transplant centres, the C-Pulse can be implanted at all heart surgery centres. The C-Pulse is designed to be simple to implant and does not require the need for a heart-lung machine and does not need any incision to be made in the heart or aorta.

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To place the C-Pulse cuff around the aorta and sew it in place takes about 15 to 20 minutes. The total operation time is expected to take 60-90 minutes. This compares to 4 to 8 hours for and LVAD implant.

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The device is implanted permanently. The clinical trials require measurements of quality of life and heart size/function before the implant and at 6 months following implantation. Comparing the results from pre-operatively and at 6 months allows "long-term" assessment of the C-Pulse in regard of testing the device safety and performance. Patients' well-being will continue to be monitored following the end of the clinical trial assessment.

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The primary end points of the first clinical studies are:

1. Safety and the occurrence of expected and unexpected adverse events (medical and technical)
2. Quality of life as measured by a health questionnaire and measures of clinical functionality
3. Heart size and function as measured by external (transthoracic) cardiac ultrasound

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The funds raised in the IPO will predominantly be used for continuing R&D and clinical trials in New Zealand and Germany. The Company anticipates completing development and building of a commercial wearable driver unit. Money will also be used for advancing intellectual property and patents, and for regulatory and quality systems compliance. It is expected that with the funding the company will largely complete the New Zealand trial, be well advanced in the Germany-based trail, and will initiate work on the FDA application (Investigatory Device Exemption) to allow the Company to commence US long term human clinical trials.

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• Europe and Australia - 2007/2008
• USA - 2011

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Hospitals are typically reimbursed by public-funded payors (eg Government funded Medicare program) or private payors (eg private health insurance companies). Reimbursement is typically set at a given rate for an approved product and or procedure. The hospital needs to provide the product and or procedure for less cost then the reimbursement it receives from the payor to make a profit. Currently, in the USA, the Heartmate LVAD is the only device approved for long-term implantation in patients in severe heart failure. The total reimbursement approved by Center for Medicare and Medicaid Services (CMS) is approximately US$140,000.

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Through a wearable driver unit which pumps air into the balloon and back again. The C-Pulse Driver Unit is programmable to adjust both the inflation volume and the rate of inflation and deflation.

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Sunshine Heart is designing its business to be a stand-alone company which has the capability to manufacture and distribute the C-Pulse. However another possible scenario is for Sunshine Heart to be acquired by a major medical device company. Directors of the Company will at all times act in the best interest of its shareholders.

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The technology for external wearable drivers is well known and state-of-the-art technology is available in terms of electro-mechanical devices. For instance, wearable drivers already exist for several LVADs.

Because the driver is external to the body, there is significantly less risk involved in building the Driver Unit.

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Clinical trials done outside the USA have previously been acceptable to the US FDA to support application to conduct an Investigational Device Exemption study within the USA. To receive approval to market the C-Pulse device in the USA, the Company will need to conduct an IDE study within the USA. At the discretion of the FDA, this may include centres outside the USA.

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Germany represents the single largest market within CE Mark countries, since the incidence of heart failure in Germany is higher than other European countries. German hospitals and doctors are also significant users of LVAD blood pumps, as well as other advanced medical technologies.

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The company subcontracts manufacture of subcomponents of the C-Pulse cuff and undertakes its own final assembly, packaging and sterilization. The commercial Driver Unit is under development with an experienced medical device developer and manufacturer, capable of producing a final product that meets international medical device quality standards. The Company will own all intellectual property in regard of the Driver Unit developed by the subcontract manufacturer.

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Harefield Cardiac, based in England, is reportedly developing a non-blood contacting counterpulsation pump for the descending aorta. It is understood that first patents relating to this device were filed in 2002. CardioVAD, which is a blood contacting device on the descending aorta, is currently in a one centre feasibility study in US.

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