Edwards Commits Over $1.5B Toward M&A in JulyEdwards Commits Over $1.5B Toward M&A in July

Edwards Lifesciences is making it rain in July by spending the dog days of summer on dealmaking. The structural heart valve company has dropped over $1.5 billion on upfront capital commitments toward M&A: Affluent Medical (€15 million stake, about $16.3 million); Innovalve Bio Medical ($300 million); and now Endotronix and JenaValve (about $1.2 billion combined).

The most recent M&A activity coincided with Edwards' second-quarter earnings and was overshadowed by a sales miss, guidance cut, and lower-than-expected growth in transcatheter aortic valve replacement (TAVR).

CEO Bernard Zovighian said during the company's earnings call this week that the JenaValve and Endotronix acquisitions provide an expanded opportunity in new therapeutic areas to address the unmet needs of aortic regurgitation (AR) and heart failure patients.

JenaValve has pioneered a transcatheter treatment of AR, a deadly disease that impacts more than 100,000 patients in the United States alone and is largely untreated today, Zovighian said. He noted that the company anticipates FDA approval of the JenaValve Trilogy Heart Valve System in late 2025, which will represent the first approved therapy for patients suffering from AR.

"Edwards will invest to accelerate development of this novel technology to enable earlier patient access," he said. "As the pioneers in valve innovation, we believe we are best positioned to lead this next frontier of aortic valve disease treatment. We expect this to be the beginning of a long-term iterative strategy similar to TAVR."

As for Endotronix, Edwards made its first investment in the company back in 2016 and is already familiar with the technology, the opportunity, and the employees.

"Many structural heart patients Edwards serves today also suffer from heart failure with limited options," Zovighian said. "This acquisition will expand Edwards structural heart portfolio into a new therapeutic area to address the large unmet needs of patients suffering from heart failure, which we believe has a significant long-term growth opportunity."

Last month, FDA approved Cordella, an implantable preliminary artillery pressure sensor that Endotronix designed to measure the leading indicator of congestion. That approval followed the publication of a successful U.S. pivotal trial.

Is Edwards Lifesciences building a Rolodex of patients?

While Endotronix has interesting clinical data on its side, the strategic appeal for Edwards Lifesciences might be less obvious.

"How do you see this fitting into the business overall? Because my understanding was that probably this would be initially used for fine-tuning medication management, right?" Patrick Wood, an analyst at Morgan Stanley, asked Zovighian during the call. "Is this more about building the Rolodex of patients, so that you know them a little bit better further downstream when it comes to a transcatheter approach?"

Zovighian said the patients were indeed a factor in the decision to get into that field because Edwards sees "very largely the patient population needs."

Heart failure is one of, if not the largest driver of healthcare spending in the United States, the CEO noted.

"We have known the company for a long time. We were an investor in the company. We believe that they have very unique technology, differentiated technology," Zovighian said. "As a matter of fact, they received a broad label from FDA last month. There is an NCD ongoing right now, so we see that as a big opportunity, a natural progression for us."

As for a clear strategy around the asset, the CEO said it is a bit early for that. The transaction is expected to close in the third quarter, however, and Edwards expects to provide investors with a "full deep dive on the strategy for Endotronix" in December.

"We believe that many of these heart failure patients are patients we are serving and treating today with our valve technologies. So it is in our space," he said. "So, we are super-excited about it. We see this one as a great opportunity, a great long-term opportunity to expand our reach as a company."