Edwards Lifesciences Corp. reported good news this week, with its third-quarter results exceeding expectations. Sales came in at $1.1 billion, an increase of 4%, and CEO Mike Mussallem highlighted the success of transcatheter aortic valve replacement (TAVR), with the Sapien valve platform performing well.

Mussallem noted that TAVR sales were $745 million, up 6%, with Europe showing strength. “Although third quarter treatment rates were lifted somewhat by the postponement of treatment in the second quarter, particularly in Europe, we believe that going forward, there is no significant backlog of patients in the system.”

In addition, the Irvine, Calif.-based company is raising the bottom end of full-year 2020 adjusted earnings per share guidance to $1.85 to $1.95 vs. previous guidance of $1.75 to $1.95.

Quarterly revenue stood at $1.14 billion, beating Wells Fargo’s forecast and consensus ($1.09 billion and $1.08 billion, respectively).

Analysts were encouraged by the results, particularly with TAVR. “Despite COVID-19-related risks to near-term execution, we believe it is a matter of when, not if, the TAVR market returns to double-digit-plus growth, supported by a strong clinical backing established over the past five-plus years,” wrote William Blair’s Margaret Kaczor. “As the market normalizes, we expect Edwards will benefit from its market-leading valve technology and growing market awareness/demand.” Her group rated the stock as outperform.

Cowen’s Josh Jennings noted that his organization had gained confidence in TAVR’s recovery after checking in with key opinion leaders. He also pointed to Medtronic plc’s recent commentary on Evolut’s sales to highlight the strength of the market.

For its part, at its recent investor day, Medtronic detailed the SMART trial, which is assessing the Evolut PRO and PRO+ vs. Edwards's Sapien 3 and Ultra in 700 patients with a small native annulus and in those undergoing TAVR for surgical valve failure.

Meanwhile, BTIG’s Marie Thibault said her organization was “wowed” by the results, even as some could nitpick the fourth-quarter guidance or see a more specific range related to the double-digit TAVR growth next year. More details are expected during the company’s Dec. 10 annual investor day. “With shares trading at a significant premium to peers, we remain at Neutral,” she concluded.

Promise with TMTT

Another promising area is transcatheter mitral and tricuspid therapies (TMTT), with Mussallem highlighting progress on five pivotal studies. He noted that the enrollment numbers are at pre-COVID rates.

In a note, Wells Fargo’s Larry Biegelsen wrote that TMTT sales were $12.1 million, “nicely ahead of our estimate of $9.0 [million].” Mussallem did note that TMTT sales are expected to be about $40 million compared with the previously estimated $30 million to $45 million. Biegelsen said that implies that TMTT revenue in the fourth quarter should be slightly less than what was seen in the third.

The company, however, sees great potential in this space. “In addition, while still early in the 2021 forecasting process, our aspiration is to double 2020 TMTT sales in 2021,” Mussallem said. With that, the company said it expects the opportunity in this space is great, with a $3 billion global market by 2025.

Joanne Wuensch with Citi asked about the doubling of those revenues. Mussallem said the company was early in its planning process for next year. “So, we're kind of going out there a bit and extending ourselves when we talk about our aspiration to double,” he explained, adding that the company will speak more at length during the investor conference.

He went on to explain that much of the sales likely would be Pascal. “[I]t's going to be the addition of new sites that are going to help do that, and we'll have Pascal and Pascal Ace that will help us. And we'll be doing treatment of not only MR patients, but TR patients next year, meaning tricuspid. So that combination is what's leading us to have this aspiration to double.”

Bob Hopkins with Bank of America asked about any updates for the time frame for U.S. Pascal approval. Mussallem said he was encouraged by the pickup in enrollment but was not providing an update at this time.

However, in mitral valve replacement, the company is advancing both transfemoral Evoque and Sapien M3 platforms. It remains on track to initiate the U.S. pivotal trial for Sapien M3 before the end of 2020. With Evoque tricuspid Mussallem said the company also is on track to initiate its pivotal trial by year-end.