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Edwards Lifesciences CEO Explains Why He Bought CardiAQ

Edwards Lifesciences is developing its own transcatheter mitral valve replacement device, so why did it decide to go out and acquire another TMVR company?

Edwards Lifesciences has a transcatheter mitral valve replacement program in the works with it Fortis valve.

It has endured bumps on the road with a temporarily paused feasibility trial but recently received FDA approval to go ahead, said Michael Mussallem, CEO of Edwards Lifesciences, in the company's second-quarter earnings call on Tuesday. By Mussallem's own admission, he is happy with the progress of the company's internal TMVR program.

Yet, earlier this month, Edwards announced it will pay up to $400 million to buy a rival in that arena - CardiAQ Valve Technologies. Why? It's a question that came up from analysts in the company's earnings call.

One analyst asked Mussallem to place the CardiAQ acquisition in the context of the California company's purchase of Percutaneous Valve Technologies in 2004 that brought what later became the Sapien TAVR valve to Edwards at a time when Edwards had its own internal TAVR product in development. 

"Can you help us understand the similarities and differences between how you look at PVT versus CardiAQ?" asked David Roman, an analyst with Goldman Sachs, according to a transcript of the call from Seeking Alpha.

Here's how Mussallem responded [the answer is slightly edited]:

It's a great question, David. Just to contrast, back in the early days, we were pretty proud of our own transcatheter aortic program at the time when we bought PVT. Even though I think now people look back and say, 'Wow, PVT was the leading program.' If you ask our internal team, they were pretty proud of what we were doing then as well. So these are always tough cultural moves when you go ahead and do something outside that you have going inside.

In the case of CardiAQ, there are a couple of things that we really like. We like their design. We like the fact that it is a different approach than Fortis, so it gives us another option for how to attach the mitral valve. We also were really attracted to the idea that they had a single valve with multiple delivery systems. We think this can be very helpful when you are going through these long regulatory process and generating clinical data. Once you have that valve data, it often times can be relevant regardless of the delivery approach. And so that's very attractive to us.

So those were some of the driving forces behind it. 

While Mussallem touched on the key attributes of the technology that made the deal attractive, he did not mention the people behind CardiAQ other than casually referring to the team at CardiAQ and Edwards's own TMVR development team as talented.

But in fact Rob Michiels, the CEO of CardiAQ, was president and chief operating officer of CoreValve, which Medtronic bought in 2009, and is the competing TAVR device to Edwards' Sapien.

Medtronic has a TMVR program as well, but that appears to lag behind where CardiAQ is. The latter is known to be the only TMVR company that has implanted the valve using both the transfemoral (where the device is snaked through the femoral artery in the leg) and the transapical (where the device is delivered using the apex of the heart) approach. Medtronic has implanted its device in animals, according to Joanne Wuensch, an analyst with BMO Capital Markets. There are several other companies also trying to develop a TMVR device that aims to treat mitral valve regurgitation, which occurs when the mitral valve doesn’t close properly leading blood to leak into the left ventricle.

In the earnings call, Mussallem also revealed that Edwards has some internal programs to develop products that can help to repair the mitral valve instead of simply replacing it. 

"There probably will be some combination of replacement and repair technologies that will make sense and we really have a strategic imperative for ourselves to be a leader in this space," he said. 

Arundhati Parmar is senior editor at MD+DI. Reach her at [email protected] and on Twitter @aparmarbb  

 

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