Michael A. Mussallem, Chairman and CEO
Scott B. Ullem, Corp. VP, CFO
Donald E. Bobo, Jr., Corp. VP, Strategy and Corporate Development
John P. McGrath, Ph.D., Corp. VP, Quality, Regulatory, Clinical
Stanton J. Rowe, Corp. VP, Advanced Technology and Chief Scientific Officer
Katie M. Szyman, Corp. VP, Critical Care
Larry L. Wood, Corp. VP, Transcatheter Heart Valves
Bernard J. Zovighian, Corp. VP, Surgical Heart Valve Therapy
NUMBER OF EMPLOYEES: 11,100
GLOBAL HEADQUARTERS: Irvine, Calif.
Any alternative treatment for an ailment requiring open-heart surgery is a welcome one. Though the procedure is relatively commonplace and carries much less risk than years past, it is still incredibly invasive and recovery is a long and arduous process.
At the American College of Cardiology’s (ACC) 65th Annual Scientific Session in April 2016, Edwards Lifesciences unveiled the results of a study that promised to reduce the amount of open heart surgeries for a condition typically requiring it. The PARTNER II trial’s data ascertained that for aortic stenosis (i.e., aortic valve narrowing due to calcium buildup) patients with an intermediate open-heart surgery risk, transcatheter aortic valve replacement (TAVR) with the Sapien 3 valve was superior to surgery with regard to mortality, stroke, and moderate to severe aortic regurgitation.
“Results from the PARTNER II trial presented at ACC should establish the Sapien 3 valve as the new benchmark for the treatment of intermediate-risk patients with severe, symptomatic aortic stenosis,” Vinod Thourani, M.D., co-director, Structural Heart and Valve Center of the Emory Heart and Vascular Center, chief of cardiothoracic surgery at Emory Hospital Midtown and professor of surgery, Division of Cardiothoracic Surgery, Department of Surgery, Emory University School of Medicine, said in a company press release. (Dr. Thourani was also the co-principal investigator of the Sapien 3 study.) He continued, saying “the size and rigor of this 3,000-patient PARTNER II trial provide powerful evidence in favor of this therapy for the treatment of patients with aortic stenosis.”
The announcement had a hearty economic benefit, as well. A few days after the trial data became public, Edwards shares ascended 17 percent, according to Fortune. The company’s stock closed at an all-time high of $103.03 that day. The Sapien 3 valve had already been approved for high-risk patients—that is, those unadvised to undergo open-heart surgery—with aortic valve stenosis. The PARTNER II trial was Edwards’ attempt to widen the market by winning a Sapien 3 label expansion for intermediate-risk patients.
In August, Sapien 3 was awarded its sought-after expanded indication by the U.S. Food and Drug Administration (FDA). Intermediate-risk aortic stenosis patients now had the far less invasive TAVR option to replace a long stint in the operating room. It was awarded CE mark certification for the expanded use in September.
“The Sapien 3 valve has set a new standard for performance and patient outcomes with aortic valve replacement,” Thourani announced in a company statement. “The clinical outcomes of 1.1 percent mortality and 1 percent disabling stroke at 30 days in this intermediate-risk population treated with the Sapien 3 valve are changing the paradigm of how we treat patients with aortic stenosis.”
ANALYST INSIGHTS: TAVR space, Edwards remains in a great place with a big lead and first movers advantage. How they maintain this and continue to innovate will determine whether they will continue to be a Wall St. sweetheart.
—Mark Bonifacio, Founder & President, Bonifacio Consulting Services
Edwards’ Transcatheter Heart Valve Therapy (THVT) business is its most profitable, generating over half of Edwards’ $3 billion in fiscal year 2016 sales (ended Dec. 31). The global structural heart technology company achieved double-digit growth in both total sales (up 19 percent from 2015) and its THVT segment’s $1.6 billion in revenue (up a whopping 38 percent). The impressive bump is chiefly the result of the Sapien 3 valve’s launch across a number of regions—it was introduced to the United States in July 2015, and Japan in March 2016. And in January 2016, Sapien 3 was granted FDA approval for an investigational device exemption (IDE) study enrolling elderly severe, symptomatic aortic stenosis patients with low risk of mortality during surgical aortic valve replacement. The PARTNER III trial began in Q2 of 2016.
The THVT division was further bolstered by a March FDA-approved label expansion of the Sapien XT transcatheter heart valve for adult and pediatric patients requiring pulmonic valve replacement. The procedure was opened to both adult and pediatric patients suffering from either a narrowed pulmonary valve or moderate to severe pulmonary regurgitation as a result of congenital heart disease.
In November, Edwards acquired an entirely new product line in the THVT business with the $340 million purchase of Israel-based Valtech Cardio. Valtech’s Cardioband System is used for transcatheter repair of the mitral and tricuspid valves. It integrates a reconstruction implant (similar to a surgical annuloplasty mitral valve device), with the less invasive transcatheter approach. The system features segmental deployment that conforms to the patient’s annular geometry, addressing the requirements of patients with mitral valve regurgitation. Cardioband (also known as a transseptal mitral repair system) received CE mark approval in 2015, and is currently undergoing a trial initiated in late 2016 for the tricuspid application of a similar version, intended to reduce tricuspid regurgitation.
“As we continue to pursue multiple therapies to address the diverse needs of patients affected by heart valve disease, we saw an important opportunity to incorporate Valtech’s technologies into our comprehensive heart valve repair and replacement portfolio,” said Edwards chairman and CEO Michael Mussallem. “We recognize that physicians will likely need a toolbox of options to treat their patients most effectively. We are very pleased with the progress and future prospects of the multiple internal programs we have underway, and we believe the addition of Valtech’s team and mitral and tricuspid technologies will present even more opportunities to help patients.”
The acquisition of Valtech was finalized on Jan. 23, 2017.
ANALYST INSIGHTS: Competing with Medtronic in some of its core markets, Edwards has continued to surprise and impress with its continued revenue and earnings growth. It’s acquisition of Valtech Cardio emphasizes Edwards understands it needs to be aggressive in M&A to continue to grow in the long-term. The question is, “What’s next on its target list?”
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
Edwards’ Surgical Heart Valve Therapy (SHVT) business did not fare nearly as well as THVT in 2016. SHVT sales dropped 5 percent to $775 million mainly due to lower U.S. aortic tissue valve sales as Sapien 3 revenue increased, and diminished international mitral valve sales resulting from supply constraints in Europe and the “Rest of World” region.
However, the SHVT division added new products to both the U.S. and European markets in 2016. The Intuity Elite rapid deployment valve won FDA approval in August for surgical aortic valve replacement. Intuity Elite was built on Edwards’ Perimount tissue valve platform and incorporates transcatheter heart valve designs, facilitating minimally invasive surgery and streamlining complex aortic valve replacements. The Inspiris Resilia aortic valve gained CE mark clearance in September 2016. The valve is built on Resilia tissue, which utilizes integrity preservation technology that protects tissue and provides anti-calcification properties with sustained hemodynamic performance.
The Critical Care division, which encompasses Edwards’ hemodynamic monitoring systems used to measure a patient’s heart function and fluid status in surgical and intensive care settings, rose 6 percent from the year prior with 2016 sales of $560 million. The gains were stimulated by strong global sales of enhanced surgical recovery products, higher Rest of World region revenues in core hemodynamic products, and expanded U.S. hardware sales.
An October 2016 CE mark approval of Edwards’ Acumen Hypotension Probability Indicator (HPI) added to the Critical Care portfolio. Part of the Edwards Acumen decision-support software suite with the minimally invasive FloTrac IQ sensor, the technology alerts clinicians to potential hypotension (abnormally low blood pressure) in surgical and critical care patients before it occurs. Acumen HPI underwent a targeted commercial release in Europe in 2016.
In May 2016, a federal jury in Boston returned a verdict in favor of CardiAQ (which Edwards acquired in 2015) in a lawsuit against a former service provider, Neovasc. The jury found Neovasc had breached the non-disclosure agreement between the parties, stole CardiAQ’s trade secrets, and violated its duty of honest performance to CardiAQ.
Neovasc had been hired by CardiAQ in 2009 to provide tissue processing and valve assembly services for its transcatheter mitral valve replacement (TMVR) program, which was covered under a non-disclosure agreement. While working for CardiAQ, Neovasc commenced its own TMVR program, failing to alert CardiAQ. After discovery of a Neovasc patent publication in 2011, CardiAQ began the litigation in 2014. In addition to the verdict, $70 million was awarded in damages to CardiAQ for trade secret misappropriation.
However, Edwards was embroiled in litigation of its own in 2016. In 2015, Boston Scientific Corp. claimed that Edwards’ Sapien 3 heart valve infringed on certain claims of a Boston Scientific German national patent related to paravalvular sealing technology. Another patent was added to the proceedings in February 2016, and a similar infringement action was filed in Paris in April. The complaints sought unspecified money damages and injunctive relief.