Edwards Lifesciences Corp. is taking a familiar path to build up its less-invasive heart valve product offerings.
The Irvine-based company said this month that it was spending up to $400 million to acquire closely held, venture-backed CardiAQ Valve Technologies Inc.
CardiAQ also is based in Irvine, where it’s working on replacement mitral heart valves delivered by minimally invasive catheters. Its valve is not commercially available in any country, although in 2012 it was the first to be implanted in a human being.
The mitral valve is between the heart’s left atrium and left ventricle. CardiAQ’s valve treats mitral regurgitation, or leakage—a condition that currently requires open-heart surgery.
CardiAQ received a Food and Drug Administration investigational device exemption approval to conduct an early feasibility study of up to 20 patients. It also plans to start a CE Mark study in Europe, a step toward approval for the market there.Â
Edwards is already among the leaders in less-invasive heart valves, thanks to its Edwards Sapien family of replacement aortic valves, which has been on the market in Europe for eight years and in the U.S. for almost five.
Parallels
The CardiAQ buy has parallels to a deal that kickstarted Edwards’ race into transcatheter valves, according to Chief Executive Michael Mussallem.
That deal came nearly 12 years ago, when Edwards acquired New Jersey-based Percutaneous Valve Technologies Inc. for $125 million. The deal brought technology that eventually became Sapien.
“We believe the acquisition and integration of CardiAQ will advance our development of patients with mitral valve disease who aren’t well-served today, much like we experienced with prior transactions such as PVT,” Mussallem said in an e-mail interview.
Percutaneous Valve Technologies and other deals “successfully integrated complementary technologies into our existing programs to better address patient needs,” Mussallem said.
Emerging Technologies
Edwards approached CardiAQ about a deal and had discussions for a number of months before the deal was executed, Mussallem said, noting that Edwards executives “have the opportunity to see a lot of emerging technologies at medical congresses throughout the year.”
The device maker’s “been continually evaluating internal and external growth opportunities in transcatheter mitral valve replacement,” Mussallem said.
He said Edwards pursues internal and external ways of developing devices.
“In this case, we plan to combine both development programs, which we believe will be mutually beneficial,” he said.
The chief executive noted that CardiAQ’s design had “more delivery options and provides an opportunity to advance our development of a transformational therapy for patients with mitral valve disease who aren’t well-served today.”
Wall Street
Investors have been cheery on Edwards, sending its shares up by about 80% over the past 12 months to a market cap of nearly $17 billion.
Wall Street also liked the CardiAQ deal—Edwards made “a smart move” buying CardiAQ, analyst Suraj Kalia of Minneapolis-based Northland Securities wrote in a client note.
Kalia said that CardiAQ’s management, including Chief Executive Rob Michiels, has “a prior background at CoreValve, therefore bringing a wealth of knowledge to Edwards in the [mitral valve implant] space.”
Michiels held various global sales and marketing jobs with Edwards when it was part of Chicago-based Baxter International Inc.’s cardiovascular unit.
An integration plan is being developed “with close involvement from senior management at Edwards and CardiAQ,” Mussallem said. “It’s likely that we will retain the [CardiAQ] facility after the close of the transaction.”
CardiAQ’s team looks “forward to joining Edwards, whose experience and leadership as a developer of breakthrough therapies for heart valve disease will advance our work,” said J. Brent Ratz, the company’s cofounder, president and chief operating officer.
Fortis
Analyst Kalia noted that the deal for CardiAQ came about two months after Edwards stopped a clinical trial for its own Fortis transcatheter mitral valve and that he was “not so confident” about Fortis’ potential to succeed.
Edwards previously said it reached an agreement with the clinical investigators in the Fortis trial on protocol revisions to restart enrollment.
“We believe the experiences and technologies of Fortis and CardiAQ are complementary and that this combination will enable important advancement for patients,” Mussallem said.
Other analysts are taking a long view of what CardiAQ could mean for Edwards down the road if it is developed and approved.
CardiAQ’s valve should bring Edwards, which has annual revenue of just over $2 billion, an additional $1.5 billion to $2 billion in annual revenue by 2025, said Glenn Novarro of Toronto-based RBC Capital Markets.
Novarro’s report also mentioned a current trial for Sapien, something that he predicted “will be positive” and significantly expand the worldwide transcatheter aortic valve replacement market.
The FDA cleared Edwards Sapien 3 last month.
