Dive Brief:

• Edwards Lifesciences intends to match the high it set this year for R&D spending again in 2020, supporting 10 pre- and postmarket studies in its transcatheter mitral and tricuspid therapies (TMTT) business as well as clinical investigations into TAVR's benefits in patients with severe symptoms of aortic stenosis.
• The plans were outlined at an annual investor day Thursday. Edwards' management offered guidance for next year suggesting overall sales between $4.5 billion and $5 billion, nearly a fifth of which is again set to be funneled toward R&D.
• While some Wall Street analysts called this year's growth in mitral and tricuspid "disappointing," Edwards is projecting sales will double to between $50 million and $70 million in 2020. It is Edwards' only segment to fall short of last year's forecasts, with executives anticipating the unit will miss the 2019 $40 million sales target laid out then.

Dive Insight:

With aortic valve replacement poised to remain Edwards' crown jewel, the company is investing heavily in bolstering its technologies addressing mitral and tricuspid valve disease.

The device maker is working on four pivotal studies for its Cardioband, Evoque and Pascal devices, as well as a host of early feasibility and postmarket trials. 

Three of those late-stage tests involve Pascal, while the other is examining using Sapien M3 for mitral valve replacement.

Analysts at Jefferies called Edwards' commentary on mitral "a little disappointing," with management tempering expectations for fourth quarter sales in the unit, in part due to a mid-November recall related to its Pascal mitral valve repair system. That event reportedly halted procedures in Europe for a few weeks.

"The ramp in Europe remains slower than hoped but [Edwards] remains steadfast in its premium price strategy (+10% relative to MitraClip) and expects Pascal's clinical evidence to ultimately justify the price uplift," Jefferies analysts wrote in a note following the event.

And despite all the attention on TAVR, the Jefferies team noted that growth beyond Edwards' TMTT global market estimate of $3 billion by 2024 "should remain significant, with the burden of mitral regurgitation multiples of aortic stenosis."

"Achieving half of the estimated market in 2024 would dwarf most current expectations for [Edwards]: we model $55 [million] in 2020 and $300 [million] in 2022, getting to $1.5 [billion] in 2024 implies more than a doubling every year in between," the analysts said.

At William Blair, analysts also viewed the sector as a big opportunity over the long term. "While the impact of TMTT revenues on total company revenues remains small today, this will be a segment to watch as it represents a large market (and growth) opportunity over time. That said, we believe the company can still remain a double-digit top-line grower for several years driven by its TAVR franchise."

On the TAVR front, in addition to growth driven by expansion into the low-risk patient population and an updated coverage policy from CMS, Edwards is homing in on new populations, both clinically and geographically.

The company's EARLY TAVR trial, set to complete enrollment in 2021, is examining TAVR therapy in patients with asymptomatic severe aortic stenosis. That population, along with patients with moderate symptomatic aortic stenosis, "could meaningfully expand the TAVR opportunity, though admittedly remain long-term goals," analysts at William Blair said.

Key markets like Japan also still "massively underpenetrated," analysts at Stifel wrote following the event. Edwards said Japan's population over the age of 65 is similar to that in the U.S. and Germany. But the number of procedures per million in Japan last year clocked in at just 198, compared to Germany's 1,245 and the U.S.'s 1,272.