(EW) Edwards Lifesciences Earns FDA OK on Trial Enrollment

Recently, Edwards Lifesciences Corporation (EW) received conditional approval from the US Food and Drug Administration for enrollment of a certain group of patients in the PARTNER II trial. The trial is studying the company’s next-generation Sapien XT transcatheter heart valve (THV).

Under the new cohort (PARTNER II Cohort A) of the trial, patients (up to 2,000) with severe, symptomatic aortic valve stenosis, who are at higher risk of traditional open heart surgery, will be enrolled. They will be randomized to undergo either surgery or receive transcatheter valve replacement with Sapien XT (delivered either transfemorally or transapically). The primary endpoints will be a combination of mortality rate and major stroke at two years while valve performance and quality-of-life will be considered as secondary endpoints.

The first cohort of the trial (PARTNER II Cohort B) will study up to 600 inoperable patients with severe, symptomatic aortic stenosis who will be randomized equally to receive Sapien XT with the NovaFlex transfemoral delivery system versus Sapien with the RetroFlex 3 delivery system. The company received conditional IDE approval from the FDA for cohort B in February 2011. Enrollment is currently ongoing (350 inoperable patients already enrolled) and is expected to get over by the end of 2011. Data from this study will be used to support approval of Sapien XT in the US.

Although Sapien XT is yet to receive approval in the US, it had received a CE Mark in March 2010. During the most recent quarter, THV sales increased 69.1% to $82.6 million. The robust growth was primarily driven by strong procedure growth. Transapical sales, aided by the new 29 mm valve, comprised nearly half of total commercial transcatheter valve revenue.

Our Take

The THV segment will witness significant growth going ahead with the recent US approval of Sapien. Although Sapien is approved in many countries outside the US, Edwards is the first company to receive approval for a transcatheter device (thus avoiding the need for open-heart surgery) in the US. The company expects sales of approximately $20?$25 million during the first three months of launch and $150?$250 million in the first full year.

In Europe, Edwards operates in a highly competitive environment with the strong presence of CoreValve from Medtronic (MDT). Moreover, Boston Scientific (BSX) is also working to enter the THV market banking on the acquisition of Sadra Medical.

We currently have a Neutral recommendation on Edwards, in line with its peers. The stock carries a short-term Zacks #3 Rank (Hold).

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