Edwards Lifesciences Corp.’s chief executive expects 2014 to “become a very interesting year” as the Irvine-based heart valve maker girds for more competition, particularly in the U.S.
“The competitive landscape is changing pretty rapidly,” Michael Mussallem said earlier this month at Edwards’ annual investor day. “You can count on the fact that Edwards plans to aggressively respond to this [transcatheter heart valve] competition. We will meet force with force.”
Mussallem acknowledged, however, that 2014 would probably be “more challenging from a growth perspective than we have encountered in the past.”
“We’re expecting an early entrée from competition,” Mussallem said. “There is a fair amount of uncertainty in the year because, depending on when competitors are approved and our own products are approved, for example, in the U.S., it drives a relatively wide range of possibilities.
“So predicting this precisely is a little difficult now.” He said Edwards would provide more clarity as 2014 went on.
Edwards is considered an early leader in the transcatheter replacement heart valve market with its Edwards Sapien family of products. Sapien has been sold overseas since the end of 2007 and was approved by the Food and Drug Administration in 2011.
Potential new transcatheter valve entries include Medtronic Inc.’s Medtronic CoreValve, a less-invasive heart valve the Minneapolis-based device maker acquired through a $700 million deal for Irvine startup CoreValve Inc. in 2009.
Investors look to be exercising caution on Edwards already—shares of the cardiovascular device maker are down 31% since the start of 2013 with a recent market value of about $7 billion.
The company could see a full-year 2014 profit of roughly $328.2 million, based on a Business Journal extrapolation of recent guidance.
Edwards said in a news release that its per-share profit for 2014 “would be in a wide range around $3.”
Analysts expect Edwards to post a $341.4 million profit next year.
Edwards is projecting full-year sales of $2.05 billion to $2.25 billion. Wall Street expects revenue of $2.17 billion.
The company forecasts transcatheter heart valve sales of $700 million to $820 million for 2014. Sales of the valves have totaled $523.8 million through the first three quarters of 2013.
Edwards is set to release its results for the fourth quarter in February.
Upgrades Set
Edwards will soon be upgrading to next-generation valve technologies “and do that at current prices,” Mussallem said.
The device maker is expecting the Edwards Sapien XT valve to be approved by the FDA in the first half of 2014 and the Edwards Sapien 3 to be approved in Europe at the end of next year.
Larry Wood, the device maker’s corporate vice president, transcatheter valves, gave updates on the product line after Mussallem’s introductory remarks to investors.
“I think everyone’s aware that the U.S. has ramped a little slower than what we would have originally anticipated, but we think this opportunity remains very robust and we see a lot of growth in the future,” Wood said.
Edwards estimates the total transcatheter heart valve market to hit $2.5 billion to $3 billion by 2019.
Analysts
Analysts had mixed reactions to Edwards’ guidance.
Jason Mills, who follows Edwards for Toronto-based Cannacord Genuity, called the device maker’s 2014 outlook conservative but said some investors may welcome it “given the overly aggressive 2013 guidance that the company provided a year ago.” Mills maintained his “buy” rating on Edwards’ shares.
Wells Fargo Securities analyst Larry Biegelsen downgraded Edwards shortly after the investor day, citing competition from CoreValve.
