* World Heart, Abiomed among potential targets * Co itself seen as a target for larger players By Anuradha Ramanathan
BANGALORE, Aug 24 (Reuters) - After a failed attempt at buying a rival with a potentially superior product, cardiac-device maker Thoratec Corp will likely look to buy an early-stage product developer or diversify into other heart device areas.
Thoratec itself could also become an acquisition target for other device makers, mainly due to its potential to serve some heart-failure patients who cannot undergo transplants.
The merger deal with Australia's HeartWare International Inc -- which could have allowed Thoratec to jump a couple of steps in the technology curve -- was nixed by U.S. regulators last month on antitrust concerns.
"(Thoratec) has about $300 million in the bank and it is not earning them any money. I think they want to put it to use," SMH Capital analyst Suraj Kalia said.
Privately owned cardiac device makers such as New Jersey-based Circulite Inc, Levitronics Inc and World Heart Corp could be among the potential acquisition targets for Thoratec, analysts said.
Although these products are in the nascent stages of study, Wedbush Morgan Securities analyst Duane Nash said that he "would not be surprised" if Thoratec jumped in and bought one of these early stage products and improved on it.
Last week, World Heart received a conditional approval from the U.S. health regulators to begin a clinical study of its magnetically levitated implantable heart pump.
Greg Simpson, analyst with Stifel Nicolaus, said Abiomed Inc, which focuses on acute heart failure, could also be of "interest" to Thoratec, whose products cater to more chronic heart condition.
Thoratec's left ventricular assist devices (LVADs) are needed by patients with severe congestive heart failure with few medical options, whereas Abiomed's catheter-based pumps are used to provide circulatory support for periods of up to 6 hours.
And with HeartWare now seen as a legitimate competitor, any bid for Abiomed or an early stage developer would probably attract less antitrust scrutiny.
BIG POTENTIAL
Analysts identified Medtronic Inc, Johnson and Johnson Inc and Boston Scientific Inc as possible Thoratec acquirers.
Though, Garp Research & Securities Co analyst Alastair Mackay said big conglomerates also run the risk of overpaying for Thoratec.
The shares have risen about 13 percent this year to $27.82. At those levels, the stock is trading at about 35 times forward earnings compared with a sector average of about 20.
"Theoretically, Thoratec would be the first option (for would-be acquirers). It is going to be in the destination therapy market by early next year, which is the Holy Grail," SMH Capital's Kalia said.
Destination therapy refers to the use of ventricular assist devices as a long-term alternative to cardiac transplants.
Garp Research's Mackay said that of 75,000 U.S. patients who needs a new heart, only about 3000 are on the transplant list -- leaving a huge potential market for destination therapy.
Thoratec's HeartMate II device is currently being tested for safety and efficacy on advanced heart-failure patients who do not qualify for a heart transplant.
"Could (this cardiovascular space) ultimately be a $1 billion or $2 billion market? I think the answer is absolutely yes. There is no shortage of patients who could benefit from these devices," Stifel's Simpson said. (Reporting by Anuradha Ramanathan; Editing by Anthony Kurian)