Edwards Lifesciences Corp. added more than $20 billion so far this year to its market cap to exceed a $50 billion valuation. Executives worked to convince Wall Street that 2020 and beyond are lining up to be additional banner years for the cardiovascular med-tech giant at the company’s annual investor meeting. While the newly introduced guidance for next year from Edwards was largely in line or a bit better than analysts had anticipated, its share price remained relatively flat on the event.

Overall, Edwards expects sales growth of 10% to 12% in 2020, which would put the sales total for the year at $4.5 billion to $5 billion. Transcatheter aortic valve replacement (TAVR) growth is slated to be 12% to 15% next year, below the exceptional nearly 20% expected for this year. But the emerging business for transcatheter mitral and tricuspid therapy (TMTT) is anticipated to come together a bit more slowly than anticipated, with $50 million to $70 million in the 2020 sales guidance, below the consensus $75 million. The critical care business is expected to have a growth rate of 6% to 9% next year, in line with consensus, but a little less than the 8% to 10% in 2019.

Great expectations?

BTIG’s Andrea Alfonso, with her neutral company rating, is among the more cautious Wall Street analysts looking forward to assess ongoing momentum. “In our view, Edwards has a well-rounded aortic, mitral and tricuspid portfolio that should make it very competitive in the long-term. We are more confident now that a trans-septal mitral replacement product could be closer than we previously estimated. However, we feel the $51 billion market cap prices in many things going right and bakes in a successful mitral program.”

Edwards saw a big boost this year to its TAVR adoption following the August U.S. FDA expanded approval for Sapien 3 to treat severe, symptomatic aortic stenosis patients who are at low risk with an open-heart surgery, in addition to demonstrating superiority to surgery in data released in September and a similar European expanded approval in November. The company believes that the initial bolus of low-risk patients will taper a bit in 2020, although even it was surprised by the surge in Sapient 3 demand this year.

Some analysts, such as William Blair’s Margaret Kaczor, expect that low-risk patients, alongside additional factors, will continue to boost TAVR demand more than management anticipates. She expects 22% U.S. TAVR sales growth this year and 15% next year.

“We continue to believe Edwards can sustain its market leadership in an accelerating TAVR market as it benefits from new product launches and their recently expanded indication to treat low-risk patients,” said Kaczor. We think market demand is building for not only low-risk but high- and intermediate-risk patients as well. Recent survey work has been supportive of the use of TAVR for patients, with multiple societies calling for surgical risk scores to no longer be a guide choice for TAVR vs. SAVR [surgical aortic valve replacement].

“Looking to 2020, we believe management has set appropriately conservative expectations for TAVR growth, but believe the company is capable of delivering upside as it benefits from an accelerating TAVR market and sustains its leadership position in the market,” she concluded.

Tempering TMTT

In TMTT, which drove an M&A frenzy several years ago among the major cardiovascular players, including Edwards, the company has seven programs and four pivotal trials that will be ongoing next year. In Europe, it already is marketing the Pascal transcatheter valve repair system that received the CE mark to treat mitral regurgitation in February.

But one of the trio of U.S. pivotal trials for PASCAL may take a bit longer than previously expected. In the CLASP IID trial, which compares Pascal to Abbott’s Mitraclip in high-risk degenerative mitral regurgitation patients, the enrollment now is slated to complete around year-end 2020.

That could push that data into 2021, rather than the previous expectation of late 2020, according to Wells Fargo analyst Larry Biegelsen. He now doesn’t expect an FDA approval of Pascal could come until 2022 and removed all the U.S. 2021 revenue from his model as a result.

Additional Pascal pivotal trials – CLASP IIF in in patients on guideline directed medical therapy with functional mitral regurgitation and CLASP IITR in symptomatic severe tricuspid regurgitation – are continuing to enroll.

Abbott also has sued Edwards in relation to intellectual property around Pascal, and Biegelsen cautioned to watch that litigation closely. Trials are slated to start in the U.K. shortly, with a U.S. trial expected in May, and a German one anticipated in July, he noted. Edwards’ guidance does not incorporate any potential negative impact from this litigation.

In addition, Edwards also is slowing its pace on its Cardioband Mitral Reconstruction System. Rather than pursue a pivotal trial with the existing device, it has opted to pursue a next-gen version before advancing it in clinical testing due to longer-than-expected procedure times. Biegelsen doesn’t expect that a next-gen Cardioband would be ready for about a year or so.

Beyond Pascal and Cardioband, Edwards also cited its two TMTT replacement programs: Sapien M3, which will start the first transseptal replacement pivotal study next year, and Evoque, which already had positive data in mitral valve replacement and will now move into an early feasibility trial in the U.S. next year in tricuspid valve replacement.

Despite the slowdowns, Edwards remains upbeat on the long-term vision for TMTT. “What surgeons do today is miraculous procedure. They stop the patient’s heart, they open the heart, and they fix it. They do it very well, but it is very invasive, not easily teachable, not easily reproducible and, frankly, it is lacking class I evidence. So, our objective is basically build on these surgical insights and address their limitation by making it teachable, reproducible, backed with the body of evidence,” concluded Bernard Zovighian, Edwards VP of transcatheter mitral and tricuspid therapies.

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