Staff Writer

An FDA approval for Edwards Lifesciences' (Irvine, California) Sapien 3 Transcatheter Heart Valve could come in early 2016, the company said in an investor's call on Monday. Original expectations for FDA approval were estimated for mid-2016.

The company noted that Sapien 3, which received CE mark in January, has had great success in Europe and noted that as transcatheter technology continues to catch on there has been unexpected growth in the space.

The SAPIEN 3 valve stands out because it can be delivered through a low-profile 14 French expandable sheath (eSheath), which has shown through early clinical experience a low rate of complications. The valve can be implanted through multiple approaches: transfemoral, transapical or transaortic. Once implanted, the discreet valve anchors in the aortic annulus.

Analysts of the space said that this was fairly positive news for the company and that it faces stiff competition in the space.

"Regarding the pipeline, Edwards said that it now expects U.S. approval of Sapien 3 in early 2016 vs. its prior guidance of mid-2016 as the company has negotiated a shorter follow-up time in the trial (30 months vs. 12 months),"said Larry Biegelsen an analyst with Wells Fargo. "The company plans to file Sapien 3 in the US in the next 30 days and is assuming a 12 month review time which we view as conservative. As expected, Edwards continues to expect FDA to require two years of follow-up in the PARTNER 2A trial which means intermediate risk approval will likely occur around late 2016."

"This is a nice positive," Glenn Novarro, an analyst with RBC Capital Markets said. "We were assuming FDA approval in mid-2016. We believe Medtronic (Minneapolis) is likely to get approval of its next-generation CoreValve Evolut R in early 2016."

In the U.S., the Edwards Sapien 3 is being studied in the PARTNER II Trial.

Edwards pointed out that in 2015 it expects sales of $2.3 billion to $2.5 billion, which at current foreign exchange rates reflects an estimated $90 million unfavorable impact.

The firm also reaffirmed its current 2014 total sales and earnings guidance, which includes diluted earnings per share of $3.33 to $3.39, excluding special items. Underlying sales growth is expected to be 7% to 11%. Additionally, the company expects a gross profit margin of about 75%, a diluted EPS range of $3.90 to $4.10, and free cash flow of $375 million to $425 million, with all guidance excluding special items.

"We also expect to continue our strategic investment in research and development of 15% to 16% of sales in 2015, which positions Edwards for longer term growth, and enables us to serve more patients and drive greater shareholder value," Michael Mussallem, chairman/CEO of Edwards said.

The company said that it would be shifting some of its investment dollars in its research efforts.

"We're aggressive investors in innovation," Mussallem said during the call. "The double digit growth that we've experienced is a direct result of our investments. It will once again be substantial in 2015. In this particular year we're increasing our emphasis on mitral THV technologies, enhanced surgical recoveries, and on heart failure." We're de-emphazing some other areas like continuous glucose monitoring and some select cardio surgery tools."

It followed up by announcing that it was leading a $50 million round of funding for CardioKinetix (Menlo Park, California) a private company with a promising catheter-based heart failure therapy (Parachute) (see financings for more details).

This transaction increases Edwards' existing minority interest in CardioKinetix and provides an option to purchase the remaining outstanding shares for a future payment, plus additional milestone payments based on future regulatory and reimbursement approvals.

The firm also noted that it was continuing to make progress in its Fortis transcatheter mitral valve program. Patients in Europe and Canada continue to be enrolled in prospective feasibility studies, and a feasibility study in the U.S. is expected to commence in 2015. Although the journey to commercialization may be long and durable success will require significantly more experience, the company continues to believe transcatheter mitral technologies have the potential to address a large patient need.

"We expect 2015 to be another year of attractive organic sales growth for Edwards Lifesciences as we continue executing our focused innovation strategy to provide breakthrough therapies for patients in need," Mussallem said. "Sales of our market-leading technologies, together with greater operating leverage, position us for strong financial performance."

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