Edwards Lifesciences Corporation (EW) has received the much awaited recommendation from the advisory panel of the US Food and Drug Administration (“FDA”) for its Sapien transcatheter heart valve (“THV”). The panel recommended Sapien (via both transfemoral and transapical delivery) for high-risk patients with severe, symptomatic aortic stenosis. Consequently, shares gained 7% to close at $96.88 yesterday.
The panel voted 11-0 (with one abstention) supporting that the benefits of the Sapien outweighed the risks. Although the FDA is not bound to follow the panel’s recommendations, it generally does so. The panel, however, remained concerned about increased risk of stroke.
In November 2011, Sapien received FDA approval for the treatment of inoperable patients with severe, symptomatic aortic stenosis. Since the launch of Sapien in US, in November 2011, Edwards has imparted training at approximately 60 centers and is on track to render training at 150-250 new commercial sites in the first 12 months. The favorable recommendation is significant for Edwards as approval for the high-risk patients will expand the targeted patient population.
The company submitted a pre-market application in April 2011 of Sapien (for high-risk patients) based on data from Cohort A of the Partner trial. The trial compared the outcomes of high-risk patients for traditional open-heart surgery who were evenly randomized to receive either surgical aortic valve replacement or the Sapien valve via transfemoral or transapical delivery.
Edwards had expected an earlier panel date. The one-quarter delay besides a decline in southern Europe and unfavorable foreign exchange rates compelled the company to cut its THV guidance for the fiscal year by $30 million to a band of $530−$600 million. The mid-point of US Sapien sales guidance for 2012 was lowered by only $10 million to $200−$240 million despite the delay in approval for Cohort A patients. This was possible due to better-than-expected ramp up in Sapien sales in US.
The FDA had raised concerns regarding some adverse events in a document published by it. The agency did not find any significant difference in mortality between the treatment (aortic stenosis patients treated with Sapien valve) and control groups (patients undergoing open heart surgery) up to one year.Moreover, data beyond two years was limited due to which mortality comparisons over the long term were unclear. The agency is in favor of post-approval studies if Sapien receives final approval.
We have a Neutral recommendation on Edwards. The stock retains a Zacks #3 Rank (hold) in the short term.
EDWARDS LIFESCI (EW): Free Stock Analysis Report
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