Edwards Lifesciences

EW : NYSE : US$69.27
Target: US$90.00

Edwards Lifesciences manufactures minimally invasive medical devices for the cardiovascular market. Its primary product line is centered on heart valve therapy and includes tissue valves, mechanical valves, and repair products. It has a large offering for critical care, with key products for hemodynamic and pressure monitoring.
All amounts in US$ unless otherwise noted.

Life Sciences — Biomedical Devices and Services
Investment recommendation
We continue to believe that the applicable patient population for TAVI is sizable and believe that EW can grow its global SAPIEN sales to $1B by 2015 ($574M U.S. and $440M OUS). We maintain our BUY rating/$90
PT and recommend investors accumulate shares at current levels.
Investment highlights
 The FDA today approved revised labeling for the SAPIEN THV which removes references to specific access points, thereby allowing surgeons to insert the device via access routes outside of the previously approved transfemoral (TF) and transapical (TA) approaches. Specifically, the revised labeling will allow surgeons to implant the SAPIEN device through a transaortic  TAo) or subclavian route in patients contraindicated for TF delivery.

We  believe today’s announcement satisfies the NCD’s allowance for coverage with evidence development, thus these alternate access routes should be eligible for Medicare reimbursement.
 Our research suggests that TAo could become the preferred non-TF access route given the following two benefits vs. TA: 1) there’s no need to disrupt the apex of the heart, potentially reducing bleeding and vascular complications, and 2) TAo doesn’t require a thoracotomy, which is more painful to the patient. We think the latter is particularly important, as cost-effectiveness data on TA data suggests that the length of stay and post-op rehabilitation may be too long to make TA cost effective. A non-TF access route such as TAo could improve TAVI economics and provide another step in the right direction regarding TAVI’s profitability, which in turn could drive incremental uptake, in our opinion.


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