Officials and investors in Kolff Medical, the tiny company that developed the permanently implanted artificial heart, are considering a public stock offering to raise funds to mass produce the device.
Dr. Robert K. Jarvik, the 36-year-old developer of the Jarvik-7 device that kept Seattle dentist Barney B. Clark alive for 112 days, said in a telephone interview last week that "the market is extremely good for new issues. It is something we are thinking about." But as president of Kolff Medical, he added that no decision has been made.
Kolff Medical is a privately held firm with headquarters in Salt Lake City. It was organized in 1976 to develop the artificial heart for patients who cannot qualify for natural heart transplants or for whom transplants could not be found.
Jarvik cautioned that the drive mechanism for the air-powered heart would have to be improved for it to become commercially attractive, but said that the company should be profitable in five years and eventually be "one of the major U.S. medical companies."
An estimated 36,000 to 66,000 Americans a year could qualify as candidates for artificial hearts, said Rodman W. Moorhead III, a managing director of the New York investment firm E. M. Warburg, Pincus & Co. Inc., which has organized two major investments in Kolff since late 1981. At an estimated price of $15,000 for each Jarvik-7 heart, he said, the U.S. market could reach $1 billion.
With proceeds from a major stock offering, "you can attract other bright minds, people who have had other projects going in their garages," said Dr. Thomas F. Frist Jr., president of the Hospital Corporation of America, the nation's largest hospital chain and a major Kolff investor.
Jarvik said that if his company does go public, he does not anticipate that its officers and individual investors would suddenly have a lot of money to spend. "We'd be holding stock worth a lot on paper," he said, "but we wouldn't be taking the money out of the company . . . . I don't think we'd suddenly be rich men, . . . except in the sense that we would have the sense of accomplishing something to develop the heart to the point where it can help a lot of people."
The chairman of the board of Kolff Medical is Dr. Willem J. Kolff, the Dutch-born physician who invented the artificial kidney and organized the effort to develop an artificial heart. But investors in the firm say that the driving force of the company is Jarvik. "He is an exceptional businessman, as well as being a fine scientist," said Dr. David Rollo of Humana Inc., a Louisville firm that owns and manages 90 hospitals throughout the world and has invested in Kolff Medical.
Jarvik said his company has been selling artificial hearts to other institutions, particularly Philadelphia's Temple University, since 1976 for research purposes, and received about $110,000 from such sales last year. He said he expects that the University of Utah, which also has holdings in the company, will be the only center performing heart implants in humans for the next two years. He predicted that those years will be followed by two in which perhaps six to 10 medical centers will be allowed by federal authorities to perform the operations. For three years after that, he said, the technique could be used under special federal rules in dozens of hospitals, with 1,000 to 2,000 artificial heart implants being done a year.
Before the artificial heart goes into full commercial use, Moorhead said, Kolff Medical may be drawing profits from other devices, including an artificial ear.