Transcatheter Aortic Valve Replacements Will Gain Wider Adoption
Edwards Lifesciences (EW) received National Coverage Determination from the Center for Medicare and Medicaid studies (CMS) that formalizes transcatheter aortic valve (TAV) reimbursement in those patients deemed to unable to undergo surgical valvular repair. The final NCD applies to FDA approved indications, but appears written to provide flexibility to evolve with scientific evidence. Even discounting a favorable reading of the NCD which suggests that follow-on competitors would possibly have some restrictions, this is still a major boost for the Sapien device. The NCD requires facilities without TAV experience to perform over 1,000 catheterizations per year and over 400 percutaneous coronary interventions per year. This will be met by the top third of the 1,200 hospitals that perform 75% of open valve cases, that are not presently placing TAV's. We expect that while the company will keep on growing and likely obtain coverage eventually for all patients, the stock will continue to show marked volatility relating to any news. Such news includes ongoing development of the Medtronic (MDT) transcatheter system and speculation on the interpretation of the NCD as it pertains to new systems. There will also be the invariable bumps related to more trials, some of which are expected to show varied side effects and responses, which are often seen with new image guided transcatheter techniques. There are multiple trials in progress at this time and such results often have short term impact on the adoption of the device. However, the macro trend in healthcare is towards less invasive procedures and the Sapien places EW firmly in that trend. We expect that EW’s TAV business will expand beyond the 20% of revenues it currently provides to the bottom line. Eventually, even with Medtronic launching their device in the US in the next few years, we anticipate enough market shift towards TAV for continuing growth.
