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Thursday, May 23, 2024

Mussallem Pumps Edwards to Future

Mike Mussallem knows well that 2022 wasn’t the best year for Edwards Lifesciences Corp., the Irvine-based maker of heart valves, from Wall Street’s perspective.

While the company introduced several new products, Edwards (NYSE: EW) saw a steady decline in its stock price; after it announced quarterly earnings that missed analyst expectations in late October, it saw its market cap drop $10 billion in one day.

“It’s been a difficult climate this past year,” Mussallem told the Business Journal. “Our customers have struggled with COVID.”

Still, Mussallem’s achievements are measured by far more than one year, and are hard to overstate, as the only chief executive that Edwards has ever known in its 23 years since it went public.

Mussallem oversaw the invention of a new way to replace heart valves without having to crack open a patient’s chest.

More than 800,000 patients have been treated with Edwards’ transcatheter therapies.
Mussallem grew the company’s revenue more than fivefold to over $5 billion annually.

He boosted the company’s employee count to 17,000, including almost 5,000 in Orange County, with a local campus that continues to expand.

He also created an R&D department that spends almost $1 billion annually.

Edwards’ market cap was around $1 billion when it went public in 2000; it’s now worth about $47 billion, making it the most valuable publicly traded company with headquarters in Orange County.

Mussallem, 70, announced plans last month to retire as CEO this coming May, retaining the title of chairman of the board.

For his years of contributions to Orange County’s business community, the Business Journal named Mussallem its Businessperson of the Year, in the health sector.

“I’m seriously honored by that,” Mussallem told the Business Journal.

“Thanks for the recognition. It means more than you know.”

Staying Involved

Taking over as CEO at Edwards this May is Bernard Zovighian, who joined the company in 2015.

“It is super important for me to have someone like Mike helping me with this transition,” Zovighian told investors last month at the company’s annual conference.

“We have a great company. When I joined the company eight years ago, I was amazed, and I am still today. We have great people, amazing culture. The way we are innovating is pretty unique.”

Mussallem says he’s planning to stay well involved in Orange County business and charitable affairs, and expects to host events at Edwards’ large campus in Irvine. As a co-founder of local tech and medtech business accelerator Octane, he’s also expected to continue to help push OC businesses to focus on innovative industries that bring well-paying jobs to the area.

Working Class

Born and raised to a working-class family in Gary, Ind., Mussallem began his business career delivering 72 newspapers daily for the Gary Post Tribune, learning to collect 35 cents from each subscriber every two weeks.

“It was a diverse climate and I learned to respect all,” he told the Business Journal last May.

His parents taught him to be involved in his local community and he learned empathy from his older brother, George, born with Down syndrome.

At the age of 18, Mussallem went to work at a local steel mill, so he could pay for his chemical engineering degree at the Rose-Hulman Institute of Technology, which he noted has been ranked the nation’s best undergraduate engineering school for 23 straight years by U.S. News & World Report.

In 1979, he joined Baxter International as an engineer.

“It was the kind of climate where if you got something done, they gave you more to do.”

He eventually transferred to Orange County in 1988, rising through the ranks where he “fell in love with the cardiovascular business because of the connections with patients.”

Baxter decided to exit the cardiovascular business with a spinoff named in honor of Miles “Lowell” Edwards, who built the world’s first mitral valve successfully placed in a patient. Baxter had acquired Edwards Laboratories in 1985.

Bell Ringer

Mussallem fondly recalls the exact day that Edwards went public, April 3, 2000.

“I remember ringing the bell,” he said. “We had big eyes and big dreams of what was ahead. I’ll never forget those moments.

“At that time, I would not call us a high-performing company. Our sales growth was a couple percent a year. We didn’t have much budget for research and didn’t have much of a pipeline. We were dramatically different at that time.”

A pivotal moment came in 2004 when Edwards paid $155 million to acquire PVT, a company experimenting with a catheter to replace aortic heart valves. Instead of performing open-heart surgeries, a catheter could be introduced in a small hole in the upper thigh and then make its way to a diseased heart valve. The replacement valve would inflate like a balloon, pushing aside the diseased valve.

“We’d been advised that it was a fool’s errand, would never work,” Mussallem recalled. “It was a bet-the-company investment because of the promise. We didn’t know if it was going to work.”

There was no eureka moment.

“There were some very good cases, and then not so good. We had to stop the first trial because early patients didn’t live. We had to do a revamp of the procedure. It was not a straight line.”

Eventually, the European Union in 2007 approved the procedure, followed by the U.S. in 2011.

“It now happens under an hour, no anesthesia. Patients go home within a day,” he said of the current procedure. “It’s a spectacular change in technology.”

Entering Golden Age

The company’s stock, which began trading at a split adjusted $1.15 in 2000, hovered below $10 for most of the 2000s. Since 2012, it began rising until its current level today around $75, making it a 65-bagger.

Mussallem is proud that the company continues to innovate.

In August, the company received European regulatory approval for Pascal Precision, a system designed for transcatheter-based edge-to-edge leaflet repair in patients suffering from mitral and tricuspid regurgitation. In September, it received early U.S. FDA approval for Pascal Precision for the treatment of patients with degenerative mitral regurgitation.

Also in September, the company announced approval to begin selling the Sapien 3 Ultra Resilia valve in the U.S. Additionally, during the third quarter, enrollment accelerated in its two pivotal trials in its largest business unit—Transcatheter Aortic Valve Replacement, or TAVR—that are evaluating patients with moderate AS and Alliance for its next-generation TAVR technology, Sapien X4.

“Nowadays, our teams today are so capable and so strong,” Mussallem said. “The capability that we’ve built is something that I’m very proud.”

He’s told investors that the company’s total addressable market could be $20 billion annually.

He predicted the company can about double its annual sales to $10 billion within the next six years or so.

“We’re moving to an exciting new era, what I call the golden era of structural heart disease. The potential over the next decade is incredible.”

OC Fan

When asked where he’ll spend his time going forward, he replied, “That’s a good question.”

“Right now, I’m still very focused until May and making a smooth transition.”

He’s been involved in community groups such as the CEO Leadership Alliance Orange County (CLAOC).

Mussallem said he and his wife, Linda, enjoy philanthropy. One recent donation included funding a kitchen to teach healthy cooking techniques to patients at the Susan Samueli Integrative Health Institute at the University of California, Irvine (see story, page 8).

“I continue to really care about our community,” Mussallem said. “It’s a special community that I’m proud of. There’s not a better place on Earth.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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