Edwards Lifesciences Corporation
) recently disclosed the approval of Japan's Central Social
Insurance Medical Council (Chuikyo) to provide reimbursement for
the Edwards Sapien XT transcatheter aortic heart valve in the
country. The reimbursement in Japan will be effective from Oct 1,
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Notably, Edwards gained reimbursement approval for Sapien XT
within its expected timeframe (before the end of 2013). The
expert review panel at the Japanese Ministry of Health, Labor and
Welfare (MHLW) recommended the establishment of reimbursement for
Sapien XT. Earlier, in June, the company had won the regulatory
clearance for the Sapien XT valve.
Following the approval, Chuikyo established a reimbursement of
4.53 million yen (roughly $4,600 at current exchange rate) for
the use of Sapein XT valve in patients with severe symptomatic
aortic stenosis. Generally, the reimbursement rate in Japan
covers the cost of the medical device and associated taxes,
certain hospital fees as well as the distribution expenditure.
As reported earlier, Edwards plans to begin the complete launch
of the product following the reimbursement approval. This makes
Sapien XT the foremost commercially available transcatheter
aortic heart valve in Japan. The launch should bolster the
company's foothold in the country. Edwards expects Sapien XT to
significantly leverage top line going forward.
Other Updates on Sapien XT
While Sapien XT is still under regulatory review in the U.S., it
is the leading transcatheter aortic heart valve in the European
market. Positive data from post-approval studies across Europe
continues to demonstrate the clinical competency of the Sapien XT
valve. Meanwhile, the company continues to enroll patients in the
intermediate risk cohort (Cohort A) of The Partner II Trial in
the U.S. The enrollment is expected to complete in October.
With submission of Cohort B clinical results from The Partner II
Trial for the U.S. Food and Drug Administration (FDA) pre-market
approval in late April, Edwards envisages the U.S. approval to
come through in mid-2014.
Considering that aortic stenosis is a potentially fatal disease
and mostly remains untreated in patients, we expect Edwards to
meaningfully expand its addressable market with the market launch
of Sapien XT. According to findings, the incidence of the disease
is higher in older populations. With a sizeable aging population
in Japan, we believe that the country presents a lucrative market
for Edwards' valve.
We note that Edwards reported poor sales performance in Japan in
the most recent quarter. Sales in Japan in the second quarter of
2013 decreased 0.6% (at constant exchange rate) to $59.3 million.
We believe that the company can turn around its performance in
Japan following the commercialization of Sapien XT and other such
product launches. Moving forward, the company should gain
momentum in the country.
Currently, the stock carries a Zacks Rank #3 (Hold). While we
remain on the sidelines for Edwards, other medical stocks such as
Gilead Sciences Inc.
), carrying a Zacks Rank #1 (Strong Buy), are worth considering.