(EW) Edwards Lifesciences’ Sapien Transcatheter Heart Valve on Way to Success

Recently, Edwards Lifesciences (EW) presented positive data for its Cohort A of the PARTNER trial at the American College of Cardiology annual conference in New Orleans. The PARTNER trial is evaluating Edwards’ Sapien transcatheter heart valve (THV) in both operable (Cohort A) and inoperable (Cohort B) patients with severe aortic stenosis. It was observed that the study achieved its primary endpoint after one year, indicating that survival of patients treated with Sapien was same as those who underwent open heart surgery.

About 699 patients were included under Cohort A who were randomized equally for either high risk surgery or the Sapien THV. In case of Cohort B, 358 patients were randomized equally for medical management or the Sapien THV. Edwards submitted a pre-market approval (PMA) application for Cohort B to the US Food and Drug Administration (FDA) in October 2010 and expects to submit a PMA for Cohort A during the second quarter of 2011.

Results from Cohort B of the trial also met the primary endpoints and were published in The New England Journal of Medicine. These data are currently under FDA’s review. Edwards anticipates launching Sapien THV (for the treatment of inoperable patients) in the US during the fourth quarter of 2011 and expects sales of approximately $20-$25 million from Sapien.

During the fourth quarter of fiscal 2010, Heart Valve Therapy, the largest segment of Edwards, recorded sales of $226.2 million, up 20.1% compared to the year-ago period. THV sales increased 87.2% compared to the year-ago quarter to $65.3 million with Sapien XT making a strong contribution. Moreover, THV sales doubled on an underlying basis, which included $3-$4 million of incremental stocking orders. With the introduction of Sapien XT, Edwards witnessed a 5%-10% improvement in pricing.

The market for THV is highly competitive with Medtronic (MDT) trying to get its CoreValve approved in the US. Moreover, Boston Scientific (BSX) will also emerge as a competitor in the Percutaneous Aortic Valves segment with its decision to acquire Sadra Medical.

We have a ‘Neutral’ recommendation on Edwards, which also corresponds to a Zacks #3 Rank (hold) in the short-term.

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