Edwards' Sapien 3 Cleared in Europe - Analyst Blog

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Perfectly in line with its expectations, Edwards Lifesciences Corporation ( EW ) recently acquired the European CE mark approval for its latest transcatheter aortic valve, Sapien 3. The company is now initiating the commercial launch of the product in this region.

Amid attempts to thrive in a fiercely competitive TranscatheterHeart Valves (THV) global market and the recent earlier-than-expected U.S. Food and Drug Administration (FDA) approval for Medtronic Inc. 's ( MDT ) less-invasive heart valve - CoreValve, this news indeed comes as a respite for Edwards.

The Sapien 3 valve is the only commercial transcatheter heart valve that can be delivered through a low-profile 14 French expandable sheath (eSheath) with its clinical experience showing low rate of complications. This new generation valve can be implanted through multiple approaches such as transfemoral, transapical and transaortic.

Over the past few quarters, austerity measures across Europe have affected the overseas financial results of Edwards. Nevertheless, the company has managed to perform well with impressive THV sales in this region on the back of greater adoption.  This product launch should add some further upside to the company's business in this region.

Late last year, Edwards received reimbursement for Sapien XT in Japan (effective Oct 1, 2013).  Moreover, the company received regulatory approval for Sapien in Australia and Sapien XT in Canada.We are also encouraged with the company's strong pipeline updates. Edwards is at present working toward the FDA approval for Sapien XT with a NovaFlex delivery system by mid-2014. The company has also completed enrollment in Cohort A, the surgical arm of the PARTNER II trial.

Edwards expects THV technology adoption to ramp up in Japan in the near future and contribute meaningfully to sales beginning 2014. The company also continues to expect global THV underlying sales growth of 25% to 30% in the coming quarters.

However, we are wary about the earlier-than-expected FDA approval of Medtronic's CoreValve. This go-ahead will expedite the launch of CoreValve in the U.S. market - the only U.S. rival of the company's significant revenue generating product Sapien. CoreValve - whose market price is expected to remain on par with that of Sapien - might bring down Edwards' revenue growth rate significantly by weakening its dominance in the U.S market.

Although Edwards is optimistic about the expected approval of the company's next generation Sapien XT valve in the first half of 2014, this long time lag between the CoreValve and Sapien XT launches may help Medtronic gain traction in the THV market.

The stock currently carries a Zacks Rank #5 (Strong Sell). While we choose to avoid Edwards at present, better-ranked medical product stocks worth considering include Covidien plc ( COV ) and Stryker Corporation ( SYK ). Both these stocks hold a Zacks Rank #2 (Buy).



COVIDIEN PLC (COV): Free Stock Analysis Report

EDWARDS LIFESCI (EW): Free Stock Analysis Report

MEDTRONIC (MDT): Free Stock Analysis Report

STRYKER CORP (SYK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COV , EW , MDT , SYK

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