(Reuters) - Edwards Lifesciences Corp (EW.N) 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 valves.
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 growth.
“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 clients.
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 flow.
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 there.
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 (MDT.N), whose transcatheter valve is currently in U.S. clinical trials. Last month, St Jude Medical Inc STJ.N 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