NEW YORK (AP) -- Shares of Edwards Lifesciences Corp. jumped Thursday after a regulatory panel recommended approving its Sapien heart valve for more patients.
THE SPARK: On Wednesday, a Food and Drug Administration advisory panel said the Sapien valve should be approved for a larger group of patients. The valve is currently approved for patients who aren't healthy enough to have open-heart surgery. Edwards is asking the FDA to approve it for patients who are healthy enough to have the surgery but still face serious health risks because of age or illnesses like diabetes.
THE BIG PICTURE: The Sapien valve is designed to replace disease aortic valves. Those valves are usually replaced in open-heart surgeries, a serious and invasive procedure many patients can't endure. The Sapien valve is usually inserted into an artery in the leg and then threatened into the heart.
The FDA originally approved the valve in November. Edwards, of Irvine, Calif., currently expects $530 million to $600 million in sales in 2012 because the new approval process has taken longer than it expected.
THE ANALYSIS: William Blair & Co. analyst Ben Andrew said the panel decision was expected, but wrote that the recommendation "keeps Edwards on the path to create and penetrate a multibillion-dollar market." He wrote that over time, growing numbers of Sapien procedure will be preferred by larger numbers of younger patients and their physicians.
He said Sapien expects the FDA to award the new marketing approval in October. Andrew rates Edwards shares at "Outperform" or "Buy."
Brean Murray Carret & Co. analyst Sara Michelmore said the advisory panel took a very positive view of Sapien's effectiveness and quality of life improvement compared to open-heart surgery, and the panelists were willing to accept a potentially increased risk of stroke shortly after the procedure and other issues. Michelmore said the panel believes those risks will decrease as surgeons gain more experience with Sapien.
She said it is not clear how much revenue Edwards will get from Sapien in the near future, and investors and analysts have a wide range of expectations for U.S. sales in 2013. Michelmore rates the stock "Hold."
SHARE ACTION: Edwards Lifesciences shares gained $8.14, or 9 percent, to $98.68 in midday trading. The stock is up 23.5 percent since April 24, when the company reported strong first-quarter results and gave an optimistic forecast for the second quarter.
