Edwards Lifesciences Corporation (EW) has received approval from the US Food and Drug Administration (FDA) for the transfemoral delivery of Sapien transcatheter aortic heart valve. The approval is meant for patients with severe symptomatic aortic stenosis who are considered unfit for surgery. Over the recent past, investors’ focus was primarily concentrated on this approval.
Although Sapien is approved in many countries outside the US, Edwards is the first company to receive approval for a transcatheter device (thus avoiding the need for open-heart surgery) in the US. Transcatheter aortic valve replacement (TAVR) with Sapien enables surgeons replace a patient's ailing aortic valve without resorting to open-heart surgery. Besides, during the procedure, the heart continues to beat thus avoiding the need for cardiopulmonary bypass.
The safety and effectiveness of Sapien was assessed in PARTNER study. Data from the trial demonstrated that patients receiving the Sapien valve experienced better quality of life compared to the control group patients. Additionally, the TAVR was found to be cost effective.
As part of this approval, FDA has requested the implementation of two post-approval studies. While one will follow patients already enrolled in the Partner trial, the second one will track new US patients. Edwards expects the second study to be incorporated into a new national patient registry.
During the third quarter of fiscal 2011, Edwards’ biggest segment, Heart Valve Therapy recorded sales of $246.1 million, up 22.7% year over year. Sales of surgical heart valves grew 7.7% to $163.5 million and transcatheter heart valve (THV) catapulted 69.1% to $82.6 million. The strong growth in THV was based on the successful penetration of the Sapien portfolio in Europe.
Sapien is expected to be launched at an approximate price of $30,000 in the US. Edwards expects sales of approximately $20−$25 million during the first three months of launch and $150−$250 million in the first full year. Per the original expectation, Sapien was due for approval in October. Despite the marginal delay, the company reiterated its THV guidance of $330–$360 million for fiscal 2011 based on robust growth in Europe.
According to Edwards’ estimates, approximately 500,000 people in the US suffer from severe aortic stenosis with half of them having conditions that make them the targeted patient population. At present, about one-third of this population gets treated, which means there is a substantial market yet untapped. The company has been experiencing robust growth in Europe which, coupled with little share gain indicating that new patients are coming into the system.
In Europe, Edwards operates in a highly competitive environment with the strong presence of CoreValve from Medtronic (MDT). Moreover, Boston Scientific (BSX) is also working to enter the THV market banking on the acquisition of Sadra Medical.
We currently have a Neutral recommendation on Edwards, which corresponds to a Zacks #3 Rank (Hold) in the short term.
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