* Projects 2013 EPS up 25 percent, above expectations
* Less-invasive heart valves to drive sales growth
* More competitors on horizon in Europe
* Shares up more than 6 percent in afternoon
(Adds analyst comment, updates share price)
By Susan Kelly
Dec 4 Edwards Lifesciences Corp on
Tuesday projected strong profit and sales growth in 2013, led by
its Sapien artificial heart valve, which is implanted in a
less-invasive procedure than traditional open-heart surgery.
The company's shares were up 6.3 percent at $92 on Tuesday
afternoon on the New York Stock Exchange.
Edwards pioneered the so-called transcatheter heart valve,
launching the product in late 2011, but U.S. sales ramped up
more slowly than expected because of regulatory delays in
approving an expanded indication for the device for patients who
were less ill.
In October, Edwards won approval for Sapien in those
patients, who are eligible for surgery but still high-risk, and
gained approval for a second delivery approach involving an
incision through the ribs. The initial product launch included
only inoperable patients, for whom the valves were threaded to
the heart from the femoral artery in the leg.
Analysts believe the approval for a wider group of eligible
patients could double the size of the market for transcatheter
Edwards Chief Executive Michael Mussallem, speaking to
investors, said the expanded potential market for Sapien,
additional delivery technique and a national coverage decision
from the Medicare program for the elderly would drive sales
"Overall, the U.S. launch is largely very much on track,"
Mussallem said in remarks that were webcast.
The company had lowered its 2012 sales forecast in October
to reflect the slower-than-expected transcatheter valve rollout.
S&P Capital analyst Phillip Seligman raised his forecast for
Edwards' 2013 sales based on Edwards' new projections.
"We are particularly encouraged by Edwards' expectation of a
strong transcatheter aortic valve sales recovery in the U.S.
following (third-quarter) softness," Seligman wrote in a note to
Patients who receive replacement heart valves have aortic
valve stenosis, a condition in which calcium deposits clog the
valve and reduce blood flow, often leading to heart failure or
cardiac arrest. A replacement valve helps restore normal blood
RIVAL HEART VALVES
Edwards, which released the outlook in conjunction with its
annual investor conference at its headquarters in Irvine,
California, said it expects global sales of its transcatheter
heart valve to reach $710 million to $790 million in 2013. Of
that, U.S. sales are projected at $390 million to $440 million.
The company forecast 2013 earnings per share, excluding
special items, of $3.21 to $3.31, an increase of more than 25
percent over projected 2012 earnings. It expects total sales
next year of $2.1 billion to $2.2 billion.
Analysts had expected earnings of $3.21 a share on sales of
and $2.13 billion, according to Thomson Reuters I/B/E/S.
"We believe the strong 2013 financial guidance bodes well
for Edwards' outlook, especially with the company's history of
guiding conservatively at the start of the year and raising
guidance as the year progresses," Wells Fargo Securities analyst
Larry Biegelsen said.
J.P. Morgan analyst Michael Weinstein, noting that the
outlook slightly exceeded Wall Street expectations, said the
forecast could be aggressive, given ongoing macroeconomic
challenges in Europe and the likelihood of increased competition
Mussallem acknowledged that more competitors are preparing
to launch rival heart valves in Europe and said the economic
slowdown has put pressure on pricing. But he said patient demand
for the product is strong.
Transcatheter valves offer an alternative to open-heart
surgery in which the patient's breastbone is cut open and the
heart temporarily stopped. Doctors expect minimally invasive
valves will eventually become the standard of care.
Among Edwards' competitors in Europe are Medtronic Inc
, whose transcatheter valve is currently in U.S. clinical
trials. Last month, St Jude Medical Inc also won
approval from European health regulators to sell a transcatheter
aortic heart valve.
Edwards said its outlook includes the impact of the medical
device excise tax and investments in the launch of its Sapien
transcatheter heart valve in Japan. The company will also
continue its level of investment in research and development at
about 15 percent of sales.
A next-generation version of the Sapien valve could be
launched in Europe by the end of next year, Edwards said.
(Additional reporting by Pallavi Ail in Bangalore; editing by
John Walace, Jeffrey Benkoe, Matthew Lewis and Bernard Orr)