Edwards Lifesciences ($EW) was up 7% in early trading after it reported sales for its transcatheter heart valves grew a whopping 46% during the fourth quarter over the same period a year earlier. The company chalked up the strong results to the launch of Sapien 3 valve in Europe and Sapien XT in the U.S. It hopes to launch Sapien 3 in the U.S. by early 2016.
All that growth came despite a strong launch last year for transcatheter aortic valve replacement (TAVR) competitor CoreValve from Medtronic ($MDT), which received early FDA approval in January 2014. Last May, Edwards and Medtronic settled a patent feud over the CoreValve device with latter agreeing to pay the former $750 million with ongoing royalties based on a percentage of sales of at least $40 million annually through April 2022.
But the TAVR market is growing fast enough that everyone is benefiting so far. In its most recent quarter, Medtronic reported transcatheter valve revenue of $131 million, a gain of 60% over the same quarter a year prior. It pegged the global transcatheter valve market as worth more than $1.5 billion annually.
In the fourth quarter, Edwards’ transcatheter heart valve therapy sales were $267.5 million–up by almost half from the same quarter a year ago. The company had $944 million in sales of these TAVR products for the year, an increase of one-third over the prior year.
“For the quarter, we experienced robust growth across all regions with transcatheter heart valves sales that exceeded our expectations, most notably in Europe, driven by the further adoption of Sapien 3,” Edwards chairman and CEO Michael Mussallem said on a conference call. “Other new products like our minimally invasive intuitive valve platform and ClearSight also contributed to our growth,”
Edwards launched the Sapien XT in the U.S. in June. It’s a next-gen system designed to treat high-risk and inoperable patients suffering from severe symptomatic aortic stenosis. The Sapien 3 was given a CE mark in January 2014; Edwards has dubbed the transcatheter aortic valve as its most advanced. It has a seal designed to prevent paravalvular leak.
The company recently submitted a PMA for Sapien 3 with the FDA. The device is in pivotal testing for high risk and intermediate risk patients. Edwards expects a first U.S. approval for Sapien 3 in early 2016.
Edwards guided to 2015 sales of $2.3 to $2.5 billion–they were $2.3 billion in 2014, a gain of 13.6%. It also guided to full year 2015 diluted EPS of $4 to $4.30; that figure was $3.50 in 2014.
The R&D focus going forward for Edwards is its aortic and mitral valve programs. It spent 13.6% of sales, or $84 million, during the fourth quarter on R&D. For 2015, it expects R&D will be between 15% and 16% of sales.
Mussallem detailed Edwards’ approach to mitral valve research, “So there are a number of companies with mitral valve alternatives and we try and stay close to them. In the final analysis we just want to be the leader. We’re really committed to being the leader in transcatheter mitrals, and we would be willing to do something outside the company.”
“Even though we’re aggressive investors inside, that doesn’t preclude the opportunity for us to do something externally,” he added. “One of the things that we’ve learned over time is, it makes us a better acquirer as well if we were to go that direction by having all the experience that we’d have by having our own internal program.”
Investors can’t seem to get enough of the TAVR story; Edwards shares have roughly doubled in the last year.
Source: FierceMedicalDevices
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