Shares of Edwards Lifesciences Corp. (NYSE:EW) continued to slide on Wall Street for the second straight day, despite positive earnings and a favorable FDA panel vote that should clear the way for the company to launch the Sapien transcatheter heart valve in the U.S..
During mid-day trading on The Street, shares of the Irvine, Calif.-based company were trading around $78.50 per share, down nearly 5 percent from yesterday’s closing price of $82.55 and down 9 percent from the closing price of $87.53 on July 20.
It isn’t apparent what is causing the sell off; Edwards beat The Street’s expectations during Q2, increasing top line performance by 18 percent to $431.2 million during the three month period ended on June 30, 2011, compared to $365.2 million during the same period last year.
Net income was essentially flat at $58.1 million, compared to $57.5 million for the same period last year.
The company also reaffirmed previous guidance of total sales of $1.66 to $1.74 billion and net income growth of 11 percent to 13 percent, excluding special items.
The robust earnings news comes on the heels of a positive FDA panel vote by nine members of the FDA’s circulatory system devices advisory panel on Wednesday. The panel said the benefits of the Sapien transcatheter heart valve outweighed the risks, with one member of the committee abstaining. The panel vote means EW could win pre-market approval for the device as soon as the end of the summer (the FDA is not bound by its advisory panels’ recommendations, but usually follows their guidance).
On a conference call with investors, Edwards CEO Michael Mussallem said the company is optimistic that it will meet its mid-fall release of the Sapien valve in the U.S.
“We still feel good about that,” he said. “It’s hard to predict but we had a strong panel and we feel like that’s still a reasonable estimate.”
He added that the company expects Sapien to bring in about $20 to $25 million in sales during its first quarter on the market in the U.S. and about $150 to $200 million during the first year.
In documents released ahead of the FDA panel hearing, reviewers said Sapien “substantially increases survival and improves patient function beginning at 30 days and thereafter, compared to best medical management” for patients suffering from aortic stenosis who are not candidates for conventional open-heart aortic valve replacement surgery.
Although the device performed well in clinical trials, the reviewers highlighted data showing that patients receiving the heart valve suffered a higher rate of stroke than the current standard of care. In clinical trials, incidents of neurologic events, including strokes, essentially doubled after 30 days and one year. In addition, the reviewers noted that patients who received transcatheter valve replacement had “more frequent vascular complications.”
Mussallem told investors that there was, “no doubt” that the stroke concern was an issue, but that “no one is more committed to resolve than we are.”
In other EW news, Bank of America Merrill Lynch reitterated its “neutral” rating on shares of EW with a price target of $99 per share.