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Edwards' Sapien XT Now in Japan

Zacks Equity Research

Recently, Edwards Lifesciences Corporation (EW) gained regulatory clearance from the Japanese Ministry of Health, Labor and Welfare (:MHLW) for its Sapien XT valve. The company is also working to gain reimbursement approval from MHLW for Sapien XT in the country by the end of 2013.

This makes Sapien XT the foremost commercially available transcatheter aortic heart valve in Japan. Edwards plans to begin the complete launch of the product following the reimbursement approval. The launch should bolster the company’s foothold in the country.

The Japanese approval was based on the affirmative data from commercial as well as clinical trials. The clinical data demonstrated benefits of the company’s low-profile Sapien XT valve. Edwards is also optimistic about positive patient outcomes for individuals who are unfit for surgical aortic valve replacement.

Other Updates on Sapien XT

While Sapien XT is still under regulatory review in the U.S., it is the leading transcatheter aortic heart valve in the European market. Positive data from post-approval studies across Europe continues to demonstrate the clinical competency of the Sapien XT valve. Meanwhile, the company continues to enroll patients in the intermediate risk cohort (Cohort A) of The Partner II Trial in the U.S. The enrollment is expected to round off by mid-2013.

With plans to submit Cohort B clinical results from The Partner II Trial for the U.S. Food and Drug Administration (:FDA) approval shortly, Edwards envisages the U.S. approval to come through in 2014.

Our Take

According to the conference call in the last quarter, management does not expect any major impact from the Japanese approval of Sapien XT on 2013 sales. Nonetheless, the approval is a material upside for Edwards after a flurry of setbacks.

Thus far, Edwards has witnessed a challenging year with first-quarter results lagging its expectations as well as the Zacks Consensus Estimate. The company faced several headwinds such as lower procedural growth, sales decline in Southern Europe, low utilization rates and inventory problems in China among others.

Despite the looming headwinds, we believe that the transcatheter aortic valves offer the most promising opportunities in the cardiac device space for Edwards. Further, the company continues to demonstrate expertise in product development with stellar pipeline visibility.

Product approvals in high-focus markets should leverage Edwards’ growth profile. We also believe that the transcatheter heart valve (:THV) product group has the potential to lead sales and earnings over the long haul.

Currently, the stock carries a Zacks Rank #2 (Buy). We are also positive about other Zacks Rank #1 (Strong Buy) stocks such as Natus Medical Inc. (BABY) and Haemonetics Corporation (HAE). CryoLife Inc. (CRY), carrying a Zacks Rank #2 (Buy), also warrants a look.


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