Edwards Lifesciences Corporation
(
EW
), a leading developer of heart valves and hemodynamic
monitoring, recently received China State Food and Drug
Administration's ("SFDA") approval for its Carpentier-Edwards
Perimount Mitral Heart Valve. After a challenging third quarter
performance with lower-than-expected heart valve sales, the
latest approval came as a major boost for this $10 billion
company.
Since its introduction for clinical use, 28 years back, the
Perimount Mitral Heart Valve has played a vital role in replacing
the mitral pericardial heart valve in patients who cannot afford
the lifelong blood-thinning medication required to support
mechanical heart valves. This product works with the
Carpentier-Edwards ThermaFix process, Edwards' proprietary
advanced tissue treatment developed to mitigate the calcification
of tissue heart valve leaflets. The Carpentier-Edwards ThermaFix
process was co-developed by cardiothoracic surgeon Prof. Alain
Carpentier. In 2000, the Carpentier-Edwards Perimount Mitral
Heart Valve was first approved in the U.S. for commercial
distribution. It also received CE mark for the European Union
countries.
Apart from this approval, which is expected to expand the
company's footprint in the international arena, we are also
encouraged by the company's focus on developing its pipeline that
should strengthen its foothold in the transcatheter aortic valve
replacement ("TAVR") segment. Edwards is making progress on the
development of Centera valve (a low profile, repositionable
self-expanding valve with a motorized delivery system for stable
deployment and single operator use), Sapien 3 (a lower profile
balloon expandable valve, designed to further reduce paravalvular
leak), among others. Successful commercialization of these
products should drive the company's top line in the long
term.
Moreover, we are encouraged to note that there has been a ramp
up in the US Sapien sales following the approval of Sapien (for
the treatment of certain inoperable patients with severe
symptomatic aortic stenosis) in November 2011. Although a
later-than expected approval led the company to lower its 2012
outlook, over the long term the company should benefit as the
targeted patient population expands. Besides, with the resolution
of uncertainties related to reimbursement of the procedure, sales
of Sapien should pick up in the forthcoming quarters. Meanwhile,
the company is working on regulatory approval and reimbursement
for Sapien XT in 2013.
However, over the last few quarters, surgical heart valve
sales have been struggling due to lower-to-flat procedure volume
resulting from the economic uncertainty. Moreover, sales in the
US were adversely affected due to the introduction of
St Jude Medical
's
(
STJ
) pericardial valve, Trifecta, last year. Despite the expectation
of improving sales in the fourth quarter as prior year
comparisons moderate, we remain skeptical due to the persisting
macroeconomic conditions.Moreover, the scenario in Europe is
competitive with the presence of
Medtronic
(
MDT
) and some other players. Currently, Edwards retains a Zacks #3
Rank (Hold) in the short term.
EDWARDS LIFESCI (EW): Free Stock Analysis
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MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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