Investors are once again taking a shine to Irvine-based Edwards Lifesciences Corp. after a tough 2013.
The heart valve maker’s stock is up about 13% since the beginning of the year to a recent market value of $8 billion. That’s a switch from 2013, when the device maker’s shares fell 29% in the wake of looming competition and conservative profit guidance.
Edwards ranks No. 4 on this week’s list of the largest publicly held companies based in Orange County (see related stories through-out issue, list on page 10).
The company got another boost last week when results from a head-to-head comparison trial showed its Edwards Sapien XT less-invasive heart valve outperformed Minnesota-
based competitor Med-tronic Inc.’s Med-tronic CoreValve in what’s called “device success,” or implantation of the valve in the correct position with little or no aortic regurgitation.
Investigators presented the comparison trial data at the American College of Cardiology’s annual meeting in Washington, D.C.
Edwards’ Sapien line of valves are inserted with catheters, eliminating the need for open-heart surgery. The company expects sales of its transcatheter valves to come in at $700 million to $820 million in 2014.
Edwards’ shares closed up 4% on March 31 on news that the studies had been released at the cardiologists’ meeting.
Study results are “consistent with the experience in Europe, where more clinicians choose Sapien XT over CoreValve for their patients,” Edwards said in a statement on the trial.
The company added that study data reflected findings of “multiple real-world” European transcatheter heart valve patient registries.
“We are pleased that this randomized controlled trial demonstrated positive patient outcomes with the Sapien XT valve, including a significantly better rate of device success, low rates of aortic regurgitation and high rates of symptom improvement in patients one month after” transcatheter aortic valve replacement, Edwards said.
Edwards Sapien and Medtronic CoreValve have competed in Europe for several years.
In late 2011, Edwards was the first of the pair to receive Food and Drug Administration approval, while Medtronic got an earlier-than-expected approval for CoreValve in January.
Medtronic makes its heart valves in Orange County and employs 700 people here.
Edwards had been one of OC’s fast movers on Wall Street for several years, primarily based on anticipation of Sapien’s domestic launch.
Valleys
Last year, however, saw some valleys.
Edwards’ shares lost nearly 20% of their value within a seven-day period starting at the end of October. That slide came after it issued lower-than-expected fourth-quarter earnings guidance and was poised to get competition from Natick, Mass.-based Boston Scientific Corp.’s Lotus, which received European approval at the time.
Edwards’ shares also slipped in early December after it issued below-expected earnings guidance for this year.
The device maker said its per-share profit would be “in a wide range around $3,” compared to analyst expectations of $385.1 million. A Business Journal extrapolation showed Edwards could see a profit of roughly $328.2 million this year.
Edwards forecast sales of $2.05 billion to $2.25 billion, compared to Wall Street expectations of $2.2 billion.
Its guidance was constrained because of looming competition, even though patient demand for Sapien “remains strong worldwide,” Chief Executive Michael Mussallem said in December.
“Edwards will face new competition in the U.S. and Europe early in 2014,” he said. “With the uncertain timing of these competitive entries, as well as the regulatory approvals of our own next-generation technologies, we are providing a wide range of forecasted sales.”
The recent bump for shares is based on the results that showed Edwards Sapien maintaining its lead over CoreValve on the recent head-to-head testing didn’t come with any guarantees.
Analysts expect competitors to affect the performance of Edwards Sapien.
Brooks West of Minneapolis-based investment bank Piper Jaffray said in a note issued during the cardiology conference that he expected doctors to “quickly adopt the CoreValve device” for high-risk aortic heart valve patients once the FDA approves it for that patient pool.
“In our opinion, over the next 1-2 years, the CoreValve … will make a meaningful impact to patients and clinicians and we expect [more than] 30% U.S. market share for CoreValve until [Edwards’] Sapien III arrives in 2016,” West said.
Dr. Sean Lavin of New York-based BTIG argued in a February report initiating coverage that hospitals would welcome competition because of Sapien’s pricing and buying requirements prior to clinician training, among other things.
