Credit: Shutterstock photoPremium heart valve manufacturer Edwards Lifesciences Corp.EW recently completed the acquisition of California-based CardiAQ Valve Technologies, Inc. - a privately held medical device developer of percutaneous mitral heart valve replacement system.
This news comes close on the heels of Edwards' peer Medtronic plc's MDT announcement of its plan to foray into the billion dollar transcatheter mitral valve replacement (TMVR) market through the acquisition of California-based medical device startup - Twelve, Inc.
As far as the financial terms of the deal are concerned, $350 million of the total $400 million purchase price has been paid in cash. The remaining amount will be paid once CardiAQ's mitral valve replacement system wins a European regulatory milestone.
The acquisition reflects Edwards' efforts to revolutionize the treatment of cardiac patients with mitral valve disorders, who at the moment, are not adequately served. This is in sync with the company's primary strategy to create valuable therapies that transform patient care. Edwards expects this acquisition to be slightly dilutive to its earnings per share in 2015.
Post-acquisition, the corporations believe their skilled expertise and valued experience in heart valve construction will jointly facilitate significant advancement in their respective mitral valve replacement systems - the FORTIS and CardiAQ systems.
The CardiAQ system, which incorporates multiple delivery approaches with a single valve, is a promising mitral valve technology that has already won the U.S. Food and Drug Administration (FDA) Investigational Device Exemption (IDE) approval to conduct an early feasibility study of upto 20 patients. Meanwhile, a CE Mark study for this system is in the cards in Europe.
With transcatheter aortic valve replacement (TAVR) having already made a name for itself, cardiology has shifted focus toward the next major frontier in interventional structural heart technology - transcatheter mitral valve repair (TMVR). Notably, mitral regurgitation is a common disease that affects over 4 million Americans - nearly one in 10 people aged 75 and older.
With the global cardiac prosthetic market estimated to grow at a CAGR of 8.41% over the period 2014-2019, we expect Edwards to capture a larger share of this market potential, effectively backed by the CardiAQ buyout.
On the other hand, the clinical program, aimed at estimating the efficiency of Edwards' FORTIS mitral valve system, had been briefly suspended in May this year. However, in what can be deemed an encouraging update, Edwards recently completed its review and has incorporated protocol revisions related to patient selection, post procedural drug regimens and enhanced imaging surveillance following the procedures. The company also received the FDA approval to proceed with the early feasibility study.
Apart from Edwards and Medtronic, Abbott Laboratories ABT has also entered the TMVR market. The company recently announced that it will acquire the remaining equities of Minnesota-based Tendyne (those that it already did not own), which is focused on developing minimally invasive mitral valve replacement therapies, for a total price of $250 million. Separately, Abbott also invested in Cephea Valve Technologies to develop a catheter-based mitral valve replacement therapy and secured an option to buy the company outright on a future date.
None of the mitral valve technologies of any of these medical device makers are currently available for sale in any country. We believe, once these technologies get their commercial go-ahead, these companies will be in a position to capture a considerable share of this huge market potential.
Currently, Edwards retains a Zacks Rank #3 (Hold). A better-ranked medical product stock is ICU Medical, Inc. ICUI with a Zacks Rank #1 (Strong Buy).
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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 Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
