Dive Brief:

• Edwards Lifesciences is projecting mid-teens global sales growth across the company in 2021, totaling between $4.9 billion and $5.3 billion, executives said during a Thursday investor event. Next year's growth will be fueled by a smaller COVID-19 hit compared to 2020, and a projected return to double-digit sales growth for its transcatheter aortic valve replacement business.
• The forecast comes as the coronavirus pandemic continues to cut into multiple business lines. CFO Scott Ullem said that the current surge of COVID-19 cases across the U.S. will result in a more significant pandemic-related hit in the fourth quarter than what was expected in the third quarter, with sales growth being flat year over year as opposed to the approximately 3.7% growth projected during last quarter's earnings call.
• Wall Street analysts called the 2021 guidance in line with expectations even with a potentially slow start to 2021. Investors seemed skeptical as Edwards' stock price was down by over 2.5% early Friday.

Dive Insight:

Edwards' success in 2021 will be dependent on a bounce-back for its TAVR business, which is by far its largest business line and suffered throughout the year due to hospitals limiting elective procedures. The company projects TAVR global sales to fall between a range of $3.2 billion and $3.6 billion next year, which is an underlying growth of 15% to 20%.

SVB Leerink analysts were confident that TAVR procedures can return during rising COVID-19 cases because of how severe aortic stenosis is for patients.

"We continue to believe there is significant upside potential to this 2021 guidance — as TAVR remains one of the procedure types that is least elective and fastest to recover, regardless of how COVID dynamics unfold from here," the analysts wrote. ​

The company projects TAVR business will be helped by further adoption of elective procedures overall, a recent approval for Sapien 3 in high-risk patients in China, and an approval for low-risk patients in Japan, which is expected at the end of 2021. Edwards also plans to start clinical trials for its next-generation TAVR valve Sapien X4 by the end of the year.

J.P. Morgan analysts wrote that while some could see Edwards' TAVR projections as aggressive, the starting point is reasonable due to the "emergent nature of aortic stenosis and how (relatively) well TAVR volumes have held up this year, and [we] believe a 2Q-4Q recovery next year is a reasonable assumption."

Edwards still projects the global TAVR market to grow to about $7 billion by 2024. However, Jefferies analysts forecast a slightly higher mark of $8 billion by 2024 and sees Edwards raising its projection in the future.

"What gives us confidence is that the company's outlook requires growth to slow to the low double digits (if not lower) over the next four years," the analysts wrote. "Given efforts to expand indications, new geographies, and with the therapy massively under-penetrated, we just don't see growth tailing off." 

The TAVR space rearranged when Boston Scientific shut down its Lotus Edge program last month, leaving Edwards and Medtronic as primary rivals in the market in coming years. Executives did not comment specifically about how much business Edwards can capture from Boston Scientific due to Lotus' small market presence but said that the exit was built into their guidance.

Larry Wood, Edwards' corporate vice president for TAVR, said that rather than compete over market share Edwards would focus on growing patient numbers by targeting underserved patient groups, such as asymptomatic patients and moderate-risk patients.

However, gaining ground in the TAVR market will first take a comeback of sorts for Edwards' TAVR business. By year's end, the company expects TAVR sales to hit the higher end of a minus 5% to positive 5% range, compared to 21% sales growth last year.

Wood said that after procedures dropped in March and April amid a shutdown of elective care, the company has not yet recovered to pre-pandemic levels. Furthermore, Edwards is seeing dips in procedures in the fourth quarter as hospitals are, once again, limiting elective care.

"Things have gotten, it feels like, more difficult from a COVID perspective, even since what we projected in October. We've seen a fall-off and we felt it globally, but it's probably more predominant in the U.S.," CEO Michael Mussallem said. "We expect the winter to be a tough one from a COVID perspective, but we're optimistic of coming out the back end of it."

Ullem said that a recovery in 2021 will be dependent on three outcomes: "First, the COVID impact lessens as we come out of the winter, consistent with normal influenza seasonality. Second, that effective vaccine becomes widely available by mid-2021. And finally, we believe hospitals are continuing to improve their ability to treat non-COVID patients who need care for structural heart conditions such as aortic stenosis."​

Edwards also forecasted its transcatheter mitral and tricuspid therapies business to double in 2021 to about $80 million in global sales, driven by further adoption of the Pascal systems for mitral and tricuspid repair.

Despite being the company's smallest business line, multiple analysts highlighted that business because of the market's potential to grow to $3 billion by 2025. However, J.P. Morgan analysts cautioned that while the market holds opportunities, long-term challenges include "significant competition for clinical trial enrollment and adoption of novel TMTT therapies remains generally slow."