Rank: #24 (Last year: #23)
Prior Fiscal: $3.43 Billion
No. of Employees: 12,800
Global Headquarters: Irvine, Calif.
Michael A. Mussallem, Chairman and CEO
Scott B. Ullem, Corp. VP, CFO
Todd J. Brinton, M.D., F.A.C.C., Corp. VP, Advanced Technology and Chief Scientific Officer
Daveen Chopra, Corp. VP, Surgical Structural Heart
John P. McGrath, Ph.D., Corp. VP, Quality, Regulatory, Clinical
Joseph Nuzzolese, Corp. VP, Global Supply Chain
Katie M. Szyman, Corp. VP, Critical Care
Larry L. Wood, Corp. VP, Transcatheter Aortic Valve Replacement
Bernard J. Zovighian, Corp. VP, Transcatheter Mitral & Tricuspid Therapies
The East Coast-West Coast rivalry is American legend. East Coast denizens claim their pizza, universities, and changing seasons reign supreme. West Coast dwellers retort their beaches, laid-back lifestyle, and health-conscious attitudes trump all. Usually, these disputes manifest in playful bantering and ribbing (“Enjoy your earthquakes!” “Oh yeah, well, have fun with your hurricanes!”). On a much less lighthearted tack, anyone following pop culture in the ’90s surely heard of the East Coast-West Coast hip-hop rivalry, which culminated in the infamous drive-by shooting deaths of East Coast rapper Tupac “2Pac” Shakur in September 1996 and Christopher “The Notorious B.I.G.” or “Biggie Smalls” Wallace six months later.
Though the hip-hop feud has long since subsided, life-saving technology became the focus of an East-West dispute a few years ago. The technology breeding all the contention was an innovative, minimally invasive form of cardiac surgery called transcatheter aortic valve replacement, or TAVR. Instead of a risky open-heart procedure, TAVR surgery installs a new aortic valve via a catheter threaded through an adequate blood vessel.
California TAVR pioneer Edwards Lifesciences and Massachusetts TAVR neophyte Boston Scientific began their clash over a German paravalvular sealing technology patent dispute in 2015. Since then, IP conflicts between the two peppered the news, with German, UK, and U.S. TAVR suits spanning 2016 and 2017. The courtroom skirmishes endured throughout 2018.
Edwards added one to the win column last March when the U.S. Patent and Trademark Office (USPTO) decided in its favor in an Inter Partes review of Boston Scientific’s patent 8,992,608 (the ‘608 patent), asserting that Boston Scientific’s claims against Edwards were invalid. The case began in 2016 at Boston Scientific’s behest. Edwards had subsequently asserted three of its own foundational TAVR patents against them, which this ruling did not affect. So, the trial continued.
Boston Scientific notched a win last October in the German courts. There, the District Court of Dusseldorf decided Edwards’ Sapien 3 Ultra device infringed a Boston Scientific subsidiary’s patent, and Boston Scientific had the right to enjoin Edwards from selling Sapien 3 in Germany. Edwards appealed the ruling, but it would not become an issue until the Sapien 3 Ultra won CE mark approval. Boston Scientific would then have to pay $11.5 million to enforce the ruling.
A federal jury made further decisions in the U.S. cases in December. The jury awarded $35 million in damages to Boston Scientific concerning the ‘608 patent, which Edwards expected not to pay due to the USPTO assertion earlier in the year. Edwards’ foundational U.S. Spenser patents were also found to be valid, but not infringed upon by Boston Scientific’s Lotus TAVR devices. At the time, Edwards planned to appeal. The litigation at that point involved multiple patents in several venues, and according to Edwards would “... likely yield court actions over an extended period of time.”
However, with the new year came a change of heart. On Jan. 15, Edwards and Boston Scientific agreed to settle all global disputes, dismissing all pending cases. Both parties agreed not to litigate patent claims concerning current portfolios of TAVR devices, certain mitral valve repair devices, and left atrial appendage closure devices. The price of peace was a one-time $180 million Edwards payment to Boston Scientific.
This will hardly make a dent should Edwards’ epic run of double-digit sales growth continue into next year. The TAVR pioneer celebrated its 60th anniversary last year, amassing $3.81 billion in revenue and ballooning over 11 percent from 2017. The latest successful performance marks 11 straight years of double-digit growth for the company. Most of the income—55 percent—originated from domestic sales. European sales represented 24 percent of proceeds, the Japanese market drew 11 percent of earnings, and the “rest of world” markets garnered the remaining 10 percent.
ANALYST INSIGHTS: As the enviable leader in the TAVR market, it will be interesting to see what Edwards’ next move will be as Medtronic and Boston Scientific try to gain market share in this valuable rapidly growing global market space. On the heels of their Feb. 2019 ($100M) CASMED acquisition of non-invasive brain and tissue oxygenation monitoring technology, it appears M+A will continue to a part of the landscape in the coming years. Whether bolt-on technologies or adjacencies in mitral valve repair, Edwards will look to put some of its cash to work.
—Mark Bonifacio, Founder and President, Bonifacio Consulting Services
A surprise to no one, Edwards’ mainstay Transcatheter Heart Valve Therapy (THVT) portfolio took the lion’s share of sales last year. 2018’s $2.29 billion THVT proceeds claimed 61 percent of total revenue, outpacing company sales growth by rising 12.8 percent. The Sapien 3 valve’s strong therapy adoption, particularly in the U.S. and Japan, fueled the THVT segment’s success. As a U.S.-based company, fluctuations in foreign currency exchange rate also worked in Edwards’ favor. The Euro’s strengthening against the U.S. dollar was primarily responsible, increasing net sales by $20 million.
Centera, a self-expanding, repositionable, retrievable transcatheter heart valve delivered through a 14-French, motorized system, gained CE mark approval for high-risk, severe, symptomatic aortic stenosis patients last February. Though this usually correlates with a release in the EU, during May of last year’s EuroPCR Annual Meeting Edwards announced a temporary pause of Centera’s launch as the company sought to modify its delivery system. Leerink Partner analysts indicated that despite the expected return, “our checks indicate that EU physicians are resistant to the price premium EW is seeking for Centera, which dampened enthusiasm for adoption once the launch does resume.”
“For EW, both physicians we spoke with noted that Centera was too cost prohibitive and—despite the interventional cardiologist having been part of the trial—neither would adopt it at their centers,” Leerink analysts wrote in their letter to investors.
Edwards initiated a 1,000-patient U.S.-based pivotal trial for Centera last October to explore its use in medium-risk patients, which also included a bicuspid registry. The company also resumed Centera’s European commercial introduction at that time, after finishing the valve’s planned minor delivery system modifications.
The Sapien 3 Ultra TAVR system obtained CE mark approval last November. Sapien 3 Ultra includes 20, 23, and 26 mm valve sizes, each with a heightened outer skirt to prevent paravalvular leak. Sapien 3 Ultra’s delivery system incorporates a 14-French Axela expandable sheath with a novel “on balloon” design that removes the need for valve alignment during surgery. At the time, Edwards did not launch Sapien 3 Ultra in Germany due to its ongoing IP suit with Boston Scientific. However, its launch there is likely imminent due to this past January’s settlement. Sapien 3 Ultra won FDA approval a month later.
Last April the Cardioband Triscupid Valve Reconstruction System, which Edwards acquired from Valtech Cardio in 2017, was granted a CE mark as the first transcatheter therapy for tricuspid heart valve disease. Like TAVR, it is delivered transfemorally and can be positioned to a patient’s specific anatomy with real-time adjustment.
The Cardioband Tricuspid System features the same design and implant technique as the Cardioband Mitral System. However, last January Edwards recalled the anchors used in the Cardioband mitral valve repair device after a pair of reports claimed the device came loose from surrounding tissue. Edwards asserted a manufacturing tweak was the root of the issue in a letter posted to German regulators. The firm claimed the recalled anchors were not implicated in any deaths and posed no embolization risk, but recommended echocardiographical follow-up between three and six months post-implant for those treated outside of a clinical study protocol between July and December 2017.
Last June, the Centers for Medicare and Medicaid Services (CMS) opened the National Coverage Analysis (NCA) to reconsider TAVR’s 2012 National Coverage Determination. CMS accepted initial public comments through July 27, 2018, and Edwards noted to the press that CMS planned to complete the NCA within a year from then.
The Surgical Heart Valve Therapy (SHVT) business paled in comparison to THVT’s success, its $761.6 million total a 5.6 percent slip from the prior year’s total. U.S. sales return reserves related to Edwards’ conversion to a consignment inventory model for surgical valves was the primary driver for this drop. The Inspiris Resilia valve’s launch in Japan last September, however, may help to offset SHVT’s loss.
The Critical Care Segment’s $674.5 million in proceeds was a 12.2 percent bump from 2017. Domestic sales of the HemoSphere advanced monitoring platform, core hemodynamic products, and enhanced recovery products were mainly responsible for the increase. Foreign currency exchange rate fluctuations again prevailed here, boosting revenue by $5.1 million.
FDA de novo approval and subsequent launch of the Acumen Hypotension Prediction Index (HPI) took place last March. Designated by FDA as an “adjunctive predictive cardiovascular indicator,” Acumen HPI analyzes cardiovascular vital signs to predict future cardiovascular status or events. The HPI indicates the likelihood of a hypotensive event before it arises and alerts the clinician when the HPI exceeds an upper threshold. A secondary screen visually links blood pressure with hemodynamic flow parameters to help identify the root cause of the low blood pressure.
Edwards’ HemoSphere hemodynamic monitoring platform gained FDA clearance for the Acumen suite of intelligent decision-support last December. This nod added Acumen HPI software and the Acumen IQ minimally invasive sensor to the HemoSphere platform, linking pressure and flow parameters with predictive monitoring in one platform.
Last March, Edwards declared it would build a new manufacturing plant for transcatheter heart valve therapy delivery systems in the Mid-West of Ireland. The company hired about 60 people last year to work at the initial site, located in the Shannon Free Zone. Once operational, Edwards expects to employ approximately 600 people.
“This announcement by Edwards Lifesciences that it is establishing a new manufacturing facility in the Mid-West is terrific news for the region and for Ireland,” said Martin Shanahan, CEO of IDA Ireland, who is supporting the project. “The company’s arrival further enhances Ireland’s reputation as a preferred location for leading companies in the life sciences sector. Winning investment for regional locations is a key focus for IDA Ireland and this project is an excellent one to secure for this region.”