Edwards Lifesciences Corp. Chief Executive Michael Mussallem reminded the crowd attending the company’s annual investor conference in New York this month that despite the success the company’s had with transcatheter heart valves, the technology is still relatively new.
The heart valve and critical-care device maker pioneered the transcatheter approach, a minimally invasive procedure that replaces the diseased heart valve through a very small opening and leaves all chest bones in place. Traditional valve replacements require a procedure that involves opening the chest. Edwards’ device, the Sapien transcatheter aortic valve, was the first transcatheter product to receive Food and Drug Administration approval six years ago.
Transcatheter heart valve therapy represented more than 55% of net sales last year, significantly higher than surgical heart valve therapy sales. The latter made up only 23% of total sales.
Mussallem said more hospitals are focusing on structural heart disease in the face of an aging population and that the company is an “aggressive investor in our future for all those things that matter.” It’s particularly eager to expand its transcatheter portfolio to new frontiers: mitral and tricuspid valves. It will assemble a team dedicated to those valves headed by Bernard Zovighian, corporate vice president of surgical heart valve therapy, effective Jan. 1, according to Mussallem. John Barry, vice president of heart valve therapy in Europe, will assume Zovighian’s current role.
Transcatheter and surgical heart valves accounted for sales of $481 million and $196 million in the three months ended Sept. 30. Sales were up 17.3% and 2.4%, respectively, compared to the same period a year earlier.
Edwards announced 2018 guidance of $3.5 billion to $3.9 billion, approximately 60% from transcatheter valve sales.
Strategic Buys
It projects that about 2.5 million Americans suffer from moderate to severe mitral regurgitation—a backflow of blood caused by failure of the mitral valve to close tightly—that can lead to heart murmurs, shortness of breath and potential heart failure. It’s put together a portfolio to address a wide range of mitral pathology, from stenosis to regurgitation.
Edwards leads the pack with four mitral valve regurgitation trials to enroll 288 patients, according to the American College of Cardiology. The nearly 70-year-old nonprofit medical association in Washington, D.C., said Edwards’ CardiAQ transcatheter mitral valve was the first transcatheter heart valve implanted in humans. Thirteen patients have been implanted with first- and second-generation CardiAQ valves.
Edwards paid $350 million in 2015 to buy CardiAQ Valve Technologies Inc. for its mitral valve replacement therapy. Six months later, it announced its investment in Baltimore, Md.-based mitral valve repair startup Harpoon Medical. Terms were undisclosed, but Harpoon Chief Executive Bill Niland said total investment was “magnitudes larger” than $6 million, according to a report by the Baltimore Sun.
Edwards acted on its exclusive option to buy Harpoon this month, paying up to $250 million made up of $100 million in cash and a $150 million milestone payment. Harpoon obtained European approval for its device in 2012 and is seeking U.S. approval.
Harpoon’s device doesn’t use a delivery catheter but operates on the heart in a minimally invasive way and avoids risks of open-heart surgery.
With CardiAQ and Harpoon, Edwards got mitral repair and replacement technologies. It beefed up its portfolio early this year with its purchase of Valtech Cardio Ltd., an Israeli company that develops transcatheter repair of mitral and tricuspid valves. Its Cardioband mitral repair system has European CE Mark approval.
Edwards paid $340 million in stock and cash, with up to $350 million in milestone payments.
As part of the purchase agreement, Valtech spun off its early-stage transseptal mitral valve replacement technology program. Edwards retained an option to acquire the program and its associated intellectual property.
Taking the Lead
Competitors, including Medtronic PLC and Abbott, all covet the mitral valve opportunity. The scramble for potential therapy is no surprise, given the clinical success of transcatheter aortic valve replacement.
Medtronic has transcatheter mitral valve replacement device startup Twelve Inc., which it bought in 2015 for $458 million, and is conducting a clinical trial of patients with severe symptomatic mitral regurgitation; Abbott owns the only approved transcatheter device for the mitral valve in the repair arena through its 2009 buy of Evalve Inc. for $410 million—Miraclip got FDA approval in 2013.
Edwards plans to maintain its lead by all means necessary. Mussallem, while noting challenges and uncertainties with being “the first,” pointed out there are also “opportunities with being the first.”
Edwards trades at $115 per share for a $24 billion market cap.
Edwards plans to fuel greater adoption of its flagship transcatheter aortic valve replacement products by conducting a clinical trial studying low-risk surgical patients. It also projects growth in its surgical heart valve portfolio, particularly in more developed regions.
