Orange County is shaping up to be the stage for a two-horse race for a new type of heart valve.
Last month, Medtronic Inc., which has operations in Santa Ana and Irvine, touted the performance of a less-invasive replacement heart valve it bought earlier this year.
Medtronic, based near Minneapolis, has emerged as the primary competition to Irvine-based Edwards Lifescienes Corp., which is seen as having an early lead in less-invasive valves.
The market for less-invasive valves “is now annualizing at roughly $200 million, and we continue to command half the market,” Medtronic Chief Execu-tive William Hawkins said on a recent conference call with analysts.
Medtronic entered the market with its February buy of Irvine’s CoreValve Inc. for $700 million. It now sells its CoreValve device in Europe, where it competes with Sapien, Edwards’ less-invasive valve.
Sapien, which is expected to have some $100 million in sales this year, is in a large U.S. trial with an eye toward potential launch here in 2011.
CoreValve isn’t expected to be sold in the U.S. until 2014.
Less-invasive valves are considered the biggest development in the business in years. Surgeons insert them via a catheter through blood vessels in the leg or through an incision in the ribs, instead of cracking open a patient’s rib cage for open-heart surgery.
The valves are seen as broadening the market by offering treatment to patients who are too old or too sick for major surgery.
Medtronic has seen a “seamless integration” of CoreValve, according to Chief Executive Hawkins. The valve is being worked on in Irvine, at CoreValve’s former headquarters.
Medtronic’s Santa Ana facility, where it makes traditional heart valves made from pig tissue, is responsible for development work
on Melody, a less-invasive valve that is awaiting Food and Drug Administration approval for “humanitarian” use, meaning that its market will be limited to 4,000 patients or fewer yearly.
‘Star of Quarter’
Heart devices including those from CoreValve were the “star of the quarter” for Medtronic, Lawrence Neibor and Robert Krecak, analysts with Milwaukee’s R.W. Baird & Co., wrote in a research report.
Medtronic also makes devices for neurological disorders, spinal conditions, urological and digestive disorders, diabetes, and ear, nose and throat conditions. It has yearly sales of about $15 billion.
Medtronic’s heart device revenue, including that from CoreValve, was $689 million in the three months through June, up 9% from a year earlier.
But Neibor and Krecak were cautious about whether less-invasive heart valves will be big enough to drive growth at Medtronic.
“Generating an incremental $100 million in sales from CoreValve is outstanding but does not really change growth,” the analysts said.
Morningstar Inc. analyst Debbie Wang said in a report she eventually expects Edwards to take market share from CoreValve because it already is working on Sapien XT, a next-generation, smaller valve that will be implanted in patients via a catheter threaded through the groin.
Groin implantation, Wang said, “is an area where CoreValve continues to be favored. We think the competitive situation could change, with the Sapien XT poised to launch in Europe as early as 2010.”
Other Players
St. Jude Medical Inc., another Minnea-polis area device maker, and others are expected to follow with their own less-invasive valves, said Greg Simpson, a medical device analyst with Stifel, Nicolaus & Co. in St. Louis.
St. Jude has said it plans to start clinical trials of a transcatheter aortic valve by the end of 2010 with a goal of getting European regulatory approval in mid-2012.
Edwards said earlier this month that it finished enrolling 1,040 patients in a U.S. trial of Sapien.
New Brunswick, N.J.-based Johnson & Johnson also said it would be developing a less-invasive valve. Some analysts have suggested Johnson & Johnson could be interested in buying Edwards once Sapien progresses.
