Interview – Edwards looks to tricuspid valves and beyond

In a sector that has seen a great deal of consolidation and diversification of late, one cardiology device company has retained a laser-like focus: Edwards Lifesciences does heart valves and very little else. It is already the industry leader when it comes to catheter-mounted aortic valves – outpacing companies many times its size – and has now turned its sights to transcatheter mitral prostheses.

“We want to be the leader. Not just a participant, but the leader in the mitral space,” the group’s chief executive, Michael Mussallem, tells EP Vantage. So determined is the group to attain this goal that it departed from its usual policy of strongly favouring internal development programmes to buy the transcatheter mitral valve group CardiAQ in July. But this space is becoming extremely competitive, so it is no surprise to see Edwards already looking to the next frontier: tricuspid.

Kind of wild

Transcatheter mitral valves, none of which have yet been approved in Europe or the US, had been a distant second to the hugely successful aortic technologies when Edwards made its move on CardiAQ Valve Technologies. But the acquisition seemed to jump-start interest in this sector, with Abbott, Medtronic and HeartWare all buying mitral valve developers within two months of the deal (Mitralmania continues as HeartWare buys Valtech, September 3, 2015).

“It was kind of wild, wasn’t it?” Mr Mussallem says. He says Edwards jumping first might have encouraged other companies – although bearing in mind the short time between the purchases the other acquirers must already have been looking at this space.

“Possibly because of the success of transcatheter aortic valves, there were many people that said, I don’t want to miss the next big wave.”

Not only was it unusual for Edwards to buy – the group has made only four acquisitions in the last decade, and at $400m CardiAQ was by far the largest – the intriguing aspect was that Edwards already had a similar product of its own.

“We have had our own transcatheter mitral programme inside Edwards for a long time and we have over 20 cases done – probably as much clinical experience as the rest of the field put together,” Mr Mussallem says.

But this in-house valve, Fortis, stumbled in the clinic with a thrombosis signal causing a trial enrolment halt in May. The CardiAQ deal followed this by less than two months, though the company has said it will continue developing Fortis, believing that it and CardiAQ’s technology are complementary.

“We thought we could increase our odds for leadership,” Mr Mussallem says.

Tricuspid

Even though catheter-mounted mitral valves are still in the clinic, with the first approval unlikely to come for a couple of years yet, Edwards is already moving on to look at the final heart valve to be addressed with transcatheter devices – the tricuspid valve.

Asked whether tricuspid technologies might be the subject of the same frenzy as mitral in five or 10 years’ time, Mr Mussallem replied “We think tricuspids are closer than that.”

Edwards is developing a transcatheter tricuspid product, Forma, in-house; results of the first implants in humans will be reported at the Transcatheter Cardiovascular Therapeutics meeting in San Francisco next week. However, Forma is a repair device, not a prosthetic valve.

The transcatheter valves developed for use in the aortic setting are sometimes used off-label to replace tricuspids, but no other devices specifically designed as tricuspid valve replacements are known to be in development, though there are other repair devices.

Interestingly, the company is starting to look beyond valvular disease, Mr Mussallem says. “As you get into the treatment of mitral valves, these patients are also broadly suffering from congestive heart failure. It’s a close adjacency that we’re looking at very closely.” Late last year Edwards invested in CardioKinetix, which has a catheter-based CHF therapy, Parachute; should the current US clinical trial be positive Edwards has the option to purchase CardioKinetix.

Turning point?

It is possible that CardiAQ was a turning point, the first sign of a new acquisitive Edwards. The company will continue to keep up its high rate of investment into R&D – in the coming year Edwards expects to plough around 16% of its revenues back into research – but Mr Mussallem says the CardiAQ buy sends a signal that it is willing to make purchases where necessary.

But he insists that this is motivated solely by the desire to have the very best technology, rather than the kind of scale-building consolidation seen elsewhere in the industry. “We don’t feel that we have to be bigger to be better.”

And what about a trade sale of Edwards itself? A company with an enviable growth rate – EvaluateMedTech forecasts that its sales will grow at an annual rate of 7.4% to reach $3.5bn in 2020, compared with 4.4% for the wider cardiology market – and with a neatly delineated area of expertise, the group has looked pretty acquirable for some time.

Mr Mussallem demurs, saying that the group’s long-term strategy is to remain independent. With Edwards’ shares up 34% over the past year it might be too late for prospective acquirers anyway.

Edwards’ future depends on how its next few technologies play out. Success in the aortic space has set it a high bar for its mitral and tricuspid technologies. It will have to make a splash here too if it is to justify its decision to break with its usual strategy and spend $400m on CardiAQ.

To contact the writer of this story email Elizabeth Cairns in San Diego at [email protected] or follow @LizEPVantage on Twitter