Dive Brief:

• Edwards Lifesciences credited strong clinical trial results from its Partner 3 study, which supported an expanded FDA indication in August for its Sapien 3 valve, for a 26% jump in sales of its transcatheter aortic valve replacement devices in the third quarter, increasing to $700 million.
• The heart valve maker on Wednesday raised its earnings outlook for the year due to the surge in demand for Sapien 3, but cautioned that a return to low-double-digit TAVR procedure growth is likely next year. The company continues to believe TAVR represents a $7 billion opportunity in 2024.
• Edwards also provided an update on its study assessing TAVR in patients with severe aortic stenosis who haven't reported symptoms, saying it now expects to complete enrollment in that trial in 2021 rather than 2020.

Dive Insight:

CEO Mike Mussallem, speaking to analysts on Thursday's earnings call, attributed the company’s outperformance in the quarter to an "unexpected bolus of TAVR treatments" that followed the release of the Partner 3 clinical data. Those results unveiled in March showed Edwards' less-invasive catheter-based procedure was superior to surgical valve replacement in patients at low risk for complication from the traditional open heart approach.

Edwards' U.S. TAVR procedures swelled by 30% in the third quarter compared to the same period last year after the treatment earned an expanded indication from FDA and became available to the broader group of low-risk patients. "We think that stimulated patients and educated physicians [increased awareness], and that combination started patients moving through the system," Mussallem said on the call.

The Irvine, California-based device maker reported overall sales climbed 21% to $1.1 billion in the third quarter. Net income rose to $274.7 million, or $1.30 a share, from $225.9 million, or $1.06 a share, a year ago.

The company boosted its full-year adjusted earnings outlook to a range of $5.50 to $5.65 a share from its previous forecast of $5.20 to $5.40 a share. But Mussallem said he expects the brisk TAVR procedure growth rate will moderate to a low-double-digit pace next year, a prediction that was met with skepticism from some analysts on the call.

For example, William Blair analyst Margaret Kaczor, noting the company beat Wall Street estimates on revenue and profit, wrote to investors after the earnings release that Edwards was likely being prudently conservative in forecasting TAVR sales would pull back after the rapid rise in adoption.

"Given the strength of the clinical data, still-low penetration into the marketplace, and easing of barriers to adoption, we believe that the low-risk opportunity is one that Edwards should continue to benefit from over the next several years," the analyst wrote.

Edwards is studying the Sapien valve in a new population of asymptomatic patients for whom it hopes to win an expanded indication. Mussallem on the earnings call said enrollment in that study taking place at 65 sites has been slower than initially anticipated, with completion now targeted for the 2021 timeframe.

The company also is gradually rolling out its Pascal mitral valve repair device in Europe, where a decision to use a premium pricing strategy has limited the number of sites adopting the technology, Mussallem said. Edwards is currently enrolling patients in U.S. pivotal trials for the device, which will compete with Abbott’s MitraClip.

Jefferies called the commentary on mitral "disappointing." That division saw $10 million in sales in the quarter, but the company took back a prior $40 million estimate for the full year.

Edwards' third quarter sales in the surgical structural heart sector rose 10.5% from the prior year, driven by uptake of its Inspiris Resilia aortic valve.