Despite Sales Disappointments, Edwards Still Sees Long-Term WinsDespite Sales Disappointments, Edwards Still Sees Long-Term Wins

Edwards Lifesciences global sales were below expectations. With the slow Q1 activity, the firm has lowered its sales guidance for 2013, Mike Mussallem told investors in Edwards LifeSciences quarterly earnings call, held April 23, 2013. “We expect our transcatheter heart valve (THV) global sales to grow 25-30%.”

Mussallem cited the evolving hospital and global economics, including foreign exchange rates, austerity measures in southern Europe, the device tax, and reimbursements for physicians among the multiple reasons for the company’s disappointing first quarter. In addition, he said that as the company enters the transcatheter market, 20 cites that had planned to be trained in the technology postponed their involvement, although none of them have walked away from the technology. As he has said before, Mussallem noted the steep learning curve for adopting THV technology.

Despite the lowered sales expectations, Mussallem was quick to point out that Edwards has no plans to revise it’s ambitious and aggressive R&D campaign. CFO, Tom Abate noted that Edwards spends and will continue to spend 16% of the companies sales on R&D. Clinical trials take up the lion’s share of that money, with the rest allocated to continuing pipeline development, as well as advanced development. “We’re excited about the prospects to generate future sales,” Mussallem said.

Further, Mussallem reiterated that the company expects to have a mitral valve first-in-man before the end of 2013. “We’ve set relatively high hurdles for ourselves, but this is a big deal for our company and for patients.”

Mussallem also pointed out Edwards patent win against Medtronic on THV in 2012, noting that Edwards will continue to pursue patent infringements. He also said that Edwards has received its R&D tax credit, but that it was applied to Q4 2012.

Mussalem continues to believe that the long-term goals of Edwards will be realized, despite the Q1 setbacks. “The need for transcatheter technology is not going away.”

Particularly, Musallem was encouraged by the cohort results released during ACC last December, which showed that Sapien’s outcomes after three years were comparable to open-heart patients. He also pointed out that additional clinical trials are underway to show improved safety of the technology.

“We are long-run guys,” Mussallem said.

--Heather Thompson

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