Edwards Lifesciences Corporation (EW) Earnings Call Transcript & Summary

Good morning to those of you in the U.S., including everyone here on campus at Irvine, and welcome to those of you listening from around the world on our video webcast. I'm Mark Wilterding, Vice President of Investor Relations and Treasurer here at Edwards Lifesciences. And on behalf of everyone at the company, I want to welcome you to our 2021 investor conference. We really appreciate you taking the time to learn more about the company today. Leading up to today's events, we solicited input from many of you. And the feedback we received has been incorporated into the agenda, which can be found online in the conference books in front of you here today in Irvine. And so what you'll see is that includes more physician cameos, additional product detail and more time for Q&A, and again, all of which I think will be appreciated and consistent with the feedback that you provided ahead of the meeting. For those of you online, please note that presentation slides will be available on the Edwards Investor Relations website following the conclusion of the prepared remarks and prior to the Q&A. Until then, please feel free to follow along online. Finally, I want to take a minute just to mention the steps we've taken to ensure the safety of our in-room participants. As you can see, for those of you who are here, we are in a 10,000 square foot conference room. We've got plenty of space for all of you appropriately distanced, I think, both in terms of the people in the room and on the stage as you'll see when we start getting into the presentations. Just know that the safety of our employees and our guests is paramount, and we take it very seriously. It remains a top priority. So just 2 additional items for me. Just take a minute to familiarize yourself with the important slide behind me. And during today's event, we'll be making forward-looking statements. It's possible that actual results can differ from our expectations. The company's forward-looking statements speak only as of the date on which they are made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. For more information, please refer to our Investor Relations presentation and our SEC filings. We'll also discuss non-GAAP financial measures regarding our performance. Our SEC filings, along with reconciliations of any non-GAAP financial measures utilized to the most comparable GAAP measures, are available on our website at ir.edwards.com. So with that, thank you, once again, for your interest in Edwards Lifesciences. We really hope you enjoy today's event. And with that, let me hand it over to our Chairman and CEO, Mike Mussallem, for some opening remarks. Mike?

Thanks, Mark. And let me add my warm welcome to all of you joining us here in person as well as those online. It's a real treat for us to be able to tell you our story and appreciate your sincere interest in our company. So I forgot my little clicker here, excuse me. We've got a lot that we're going to cover, and we hope that you enjoy what we have prepared for you. Just to start out, one of the things that I'm most proud of is the culture of our company. And we get this -- we get a lot of feedback from our employees. The centerpiece of our culture is our credo. You can see it on the walls when you walk in, and you'll see it prominently displayed in all of our facilities, and we talk about it. We talk about a lot when I visit with employee groups around the world, it's where we started the conversations. And I could take you through it in detail, but it closes with the most important part, which is helping patients is our life's work, and life is now. And there's an urgency to the work of Edwards Lifesciences, but this focus on patients is an incredible glue across this company, regardless of what kind of job you're in, whether you're sewing a heart valve, or you're in one of the big R&D jobs or everything in between. And it really guides us. And when we go through moments of uncertainty and shock, like we did over the last couple of years with COVID, the culture shines through, and I couldn't be more proud of our employees who put patients first throughout this entire thing. And we stood behind our employees, and our employees stood behind us. So we're very proud of this. And when -- in times of uncertainty, we say just live the credo. It works for us. So let me take you a little bit deeper. The other part of our culture is our aspirations. We're always saying, how do we get this just right? What do we aspire to be? We do aspire to be a global leader that transforms patients' lives through breakthrough medical technologies. I'd like to say that it's easy to say, it's hard to do. It's inspiring for us, how we attract some of the best and the brightest with that kind of goal in mind. It's one of those special things that says, if I'm going to dedicate my life to a particular endeavor, I want to do something important with it. And that's part of our aspiration. We would say we'd like to excel as a trusted partner through our distinguished quality and integrity. And this idea that changing the practice of medicine is a team sport. We cannot do this alone. We need to bring a lot of others along with us. And to be a true trusted partner in that journey and to really be distinguished in terms of the way we behave, we think is an important aspiration for us. We want to foster an inclusive culture where all employees have an opportunity to grow and thrive. And we're pretty vast across the world, and to be able to create that kind of climate is something that we're constantly striving to do. Always opportunities for improvement on that, but really I'm proud that we keep that right in front of us as something that's an important aspiration. We passionately, and I use that word around our employees, passionately engage in the communities where we live and work, and so with the idea that we're going to be givers to our communities, not takers. The people are going to say, "I'm glad Edwards is in the community because they contribute more to our community than they take from, and we're a better community because of it." And we try and be those kind of citizens. And it fits. Our aspiration has been around for a while. It fits very nicely with this whole idea of what kind of a corporate citizen you are. And finally, if we get all those right, then we should deliver exceptional shareholder value. But that's kind of the way we think about it is get the other right, and the shareholder value will follow. And we think it's a formula that works for us, and we continue to strive for these aspirations. Now just to give you Edwards at a glance, if you will. We're so proud of the number of patients' lives that we get a chance to touch, and we're very proud of the fact that almost everything Edwards does, we're in a global leadership position. But at the center of all this is our employees. We're over 15,000 employees at this point. You might see some things there that are kind of interesting. We got a lot of really smart technical people in this company. That really helps us. And we have this very cool sort of mix of very experienced people, but also many people that are newer to the company. Those of you that are on campus, maybe you saw the wall of our champions for life. These are employees that have worked for the company for 30 years or more, and it's extensive. And at the same time, we have all these new, young minds that are joining the company, stretching our thinking and encouraging us to dream big about what's possible in the future. So it makes for a really cool dynamic, and it is global in nature and why I'm excited about what lies ahead. So now let's get into our strategy. We call it our patient-focused innovation strategy. It's different than other companies. It starts with this idea that we're going to pioneer breakthrough technologies. Now pioneering breakthrough technologies sounds really great and really inspirational. It's got a lot of risk associated with, even the best ideas have a lot of things that can go wrong along the way. But it's an inspiring kind of component to our strategy. And we think that it's one that is ultimately the most valuable. We're not saying we're just going to go -- everybody says they innovate, but we're not talking about small innovations. We're talking big, bold, change the practice of medicine kind of innovations. That's core to our strategy. We also know that the practice of medicine does not change unless you show up with big evidence. Yes, it's great that you have this super cool technology or new idea, but why do we know that the new way is better than the old way. And so we know that we're in a very long journey and that we're going to have to lay down evidence to get that practice to change. The other thing we say as a strategy is we like to go first. We like to be the leader. Sounds nice. Actually, it's lower risk if you go second or third and find out what mistakes that others make, but when you go first, there is no road. It's not apparent what's the best way to go. You don't know where the problems are. So it has struggles and challenges and risks associated with it. But the other thing that goes along with it is you learn fast. You learn faster than anybody else. And you're also in the room with the other future decision-makers about how to shape that future course of medical care. And being part of that decision-making process with other thought leaders and actually setting the course is something that we consider a valuable part of our strategy. So how do we manage all that risk associated with pioneering breakthroughs and going first, it's by staying focused. We believe that there are big unmet needs within the patients that we serve. And if we stay singularly focused on those unmet needs, then we can excel at this. And we think, boy, if we were to diversify and to go into other areas, we wouldn't be nearly as capable of doing these bold innovations and going first. So that's how the strategy comes together. We believe that there are large numbers of patients that can be helped. So if we go, oh, boy, maybe that limits the opportunity, we don't think so. We're just scratching the surface in terms of the number of patients that we actually reach today. So we think this is a robust strategy. It's been our strategy for a while, and we have no reason to think that this isn't going to be a very valuable strategy as we move ahead. Just to look backwards on whether it's delivered results. It's done okay. Now the key is that there's a big group of patients that need our innovations. And we're going to talk about that more today. But it is a large group, and we're only reaching a small percentage of the patients that could be helped. What we strive to do are these triple wins. Just think if you could have a new therapy that extended life and was a better quality of life and saved the system money, now that's a winner. That's the triple win. That's what we constantly strive to do. And when we get that right, we get an opportunity to ring the bell. It also gives you a sense for what kind of long-term planners we need to be. When we start out on our journey, it's going to take us years. And so there's no question in our mind, the reason that we're having a successful 2021 is because of the seeds that were planted years and years ago, right? Some a few years ago, some many years ago. And the reason we're going to be successful in the future is the seeds that we're planting today. And so it's the nature of our strategy and why we feel so confident in this as we move ahead. So we're going to talk about a number of things at the conference. We feel proud that we're delivering results in 2021, and we'll go deeper on that. We think 2022 is going to be an exciting year of achievement and not just the numbers but in the milestones we achieved. We're going to talk about how big we think this opportunity is and that it's only getting larger. And finally, you'll get a chance to observe Edwards leadership team that I'm very proud of, and you'd get a chance to hear from a number of those during the course of the day. So just to reflect on '21. It's going to be a year of significant sales growth and earnings growth, and we're pleased to be able to deliver that. But I'm also proud to say that we feel like each 1 of our 4 businesses got stronger and exits 2021 stronger than we entered it. We stayed focused on driving the business. Our employees were incredibly dedicated throughout the course of the year, whether it was people that went into hospitals every day or the people in our global supply chain. They just showed up. They got things done, they achieved their milestones. So across the board, whether it was continued expansion in TAVR or the transformation of technology that's going on in critical care or surgical, moving people to much higher-quality premium products than ever before or the bold agenda of TMTT, we made progress on all those. And while we had a nice year of earnings, what I was pleased of is we made big investments in our future. On the R&D side, on the infrastructure side, we invested big because we plan to have a bright future. And we think we're set up well, and we'll talk more about this as we move ahead. Here we go. So 2022 is going to be a year that we're also going to not only deliver double-digit sales and earnings growth, but deliver on a lot of important milestones. It's -- we've got a lot of plans for ourselves, whether it's what's going to happen in TAVR, pursuing these big, bold expansions of treatment; the new therapies that you're going to see on TMTT; innovations that are just starting to roll out in surgical and critical care also are compelling. We'll talk much more about each of those, but we think '22 is not only going to be a compelling year, where we repeatedly have new launches. We have new data sets that are presented, we have regulatory accomplishments along the way that all set us up for the future that is equally bright. Now when we look ahead, we talked about this idea that there's a large group of underserved patients. We really believe that this is going to grow significantly as we move ahead. If we look at the markets that Edwards serves today, it's probably around $10 billion. By 2028, we think that will approximately double. And it's because each one of our businesses has an opportunity to serve people that are not served today. Big one there is going to be the continued expansion of transcatheter aortic valve therapy. We think although it's been fantastic in the past, we're not nearly where we could be and should be with the treatment of this progressive and deadly disease. TMTT, we're just scratching the surface, these patients really have not had solutions in the past. And this counts on the fact that we're going to be successful with many of our innovations and be able to treat them. And then both in surgical and critical care, we know that we can deliver better care than we ever have in the past, and we've got really exciting, bold innovations to be able to do that. So when you look ahead and say, "Hey, it's been a nice run, but what's the future look like? We feel like we're just getting started. This is why I have so much confidence about the future and why I'm just pumped about what's ahead. So here's what our agenda looks like. You're going to get a chance to hear from each of our leaders of the global business. So Larry Wood, in TAVR; Daveen, in Surgical Structural Heart, Bernard, in Transcatheter Mitral and Tricuspid; Katie, in Critical Care; Scott will update you on our financial outlook, and then we'll close it out and have a chance for a robust Q&A at the end of the conference, and we'll take plenty of time for that. So with that, I just thought that I didn't want to close here without introducing Edwards executive leadership team. This is a group of subject matter experts. I've been doing this for a long time. I've never been around a team more talented and more dedicated than this group. These folks are each world class in terms of what they do, and it's a highly collaborative real team that works together. We have fun together. And hopefully, you'd get a chance to see that yourself. We're highly aligned, when shareholder wins, our team wins as well. That's the way we look at it. And we're motivated to be successful as a team every day. You're going to hear from a number of speakers, but we also have some people in the audience that aren't going to be speaking. Each of the members of the executive leadership team, please stand. If you get a chance to bump into any of these folks and have a conversation with them, please do. All right. And so with that, we're going to start the real meat of the presentation. It's my pleasure to introduce Larry Wood. Larry has been part of creating transcatheter aortic valve therapy from the very beginning, and he has -- he and his team have done a remarkable job. And I know that you're going to love hearing from him, and we all love working with him. And just to start it out, we're going to show a little video that highlights where we've come from. [Presentation]

Wow. All right. I still get chills when I hear [indiscernible] talk about the advances and what it's meant to patients. And so it's exciting. It's been 10 years since we launched TAVR and -- in the United States. And it is a big milestone, and it's a great time to reflect back a little bit on where we started. When we started, we had a 24-French device. About half of our procedures were done transapically, which is really a surgical procedure. And you look at the outcomes, and they were really impressive, but we were working on strictly inoperable patients when we first got started. You look where we are with SAPIEN 3 now. About 93% of our patients are done transfemorally. And even patients that aren't done transfemorally often can still get an interventional approach to having this done. So the number of patients that require surgery is actually quite small now. So it's amazing advancement with over 600,000 patients treated. You look at the data where we are today. This is the PARTNER I trial, which is obviously very sick patients. And this is the PARTNER III trial. And it's impressive how far the data has come. But what's more impressive is those are the 30-day results versus the 1-year outcomes in PARTNER III. In PARTNER III, 99% of our patients were alive and well at a year, and they were average age of 73-year-old -- 73 years' old at the time of their procedure. So it's been a remarkable journey to see how far this technology has advanced. And it's advanced in ways that are really meaningful. We -- mortality rates have steadily fallen. Stroke rates have steadily fallen. Paravalvular leak has consistently gotten better. And remember, we started in about 20 hospitals in the United States in the original PARTNER trial. And we've expanded now to about 850 hospitals. And there is a lot of concern, especially from the medical societies and from the physician community, as you expanded, you would actually see the results degrade, you'd see all of these results get worse because you'd have less skilled centers and people with less experience and maybe less volume. And what we've been able to show is that we can take this technology, we can take it to these hospitals and we can continue to deliver these outstanding results, which is huge, because it improves access for patients. We have our SAPIEN 3 valve. We've taken mild or moderate or severe paravalvular leak down to less than 1%, and that now accounts for about 92% of our sales globally. So big advancements that we've done and that we're very, very proud of. But other things that really, really matter that we don't talk about as much. Median procedure times now is under an hour. It's about 45 minutes. Next-day discharge is about 80% of our patients go home the next day after having their aortic valve replaced. That was something that was unthinkable a decade ago. 96% of our patients are discharged home. And this is actually a huge issue. One of the things that when we talk to patients, we focus so much in our world on mortality and stroke and these hard clinical endpoints, but when you talk to patients, living independently is one of the most critical things. They're scared about undergoing some procedure and not going back home. They're scaled that they're going to end up in a nursing home, and then they'll never get back out of there. So the fact that 96% of our patients went home to the home they came from is a really big deal. And the fact they did it in a day, and they're up and moving around is amazing. And I got to say, this has been such a multifactorial win. Some of it is the technology for sure. The technology is advanced, and that's gotten better. But the way that physicians have trained on this procedure, the way that they disseminated it, the way that they've shared best practices across the community, the way that regulators have engaged and really enabled a lot of these things to happen, it's really been a win for everybody in this ecosystem, and I couldn't be more proud of our team, but also the clinicians that we interact with, and frankly, the regulators that we've interacted with that have made this all possible. Because if any part of that stakeholder group wasn't on board, I don't think we'd have these kind of outcomes and we'd have these kind of results. I think one of the things that's most remarkable though, this is a study that recently came out that talked about the impact of TAVR on patients. And basically, what it showed was the life expectancy of patients with aortic stenosis has almost doubled during the TAVR era. And that's because more patients are able to get treated, and they're getting spectacular outcomes. And when you think about the impact on society for doing that, it's a really big deal. Now the question always comes up, though, is, yes, but can we afford this as a society? Does this make sense? And there was a lot about that. And I will tell you, a lot of people thought, well, yes, maybe in the really high-risk patients, but when you get into low-risk patients, those patients tend to do really well from surgery. They tend to have shorter length of stay, and it's very difficult for you to demonstrate that this is a cost-effective procedure. We had this data come out at TCT, and it showed we end up in the dominant quadrant, meaning the outcomes are actually better, and it saves the system money. And it's very rare for new technologies to land in that quadrant. Usually, new technologies, they help more people, and it's great, but they also cost more money. In this case, we actually help people, but we can save the system money. So it's really, really a huge win. So where do we go from here? I think when we think about our next-generation TAVR platforms, we think about optimizing valve sizing, especially in complex patients, okay? And that's something that we think about a lot. Expanding durability. Durability has become a bigger and bigger issue. When we were treating 83-year-olds, we didn't think as much about durability. And I think Dr. Thomas said it eloquently last night, we're worried about getting them off the table, we're worried about getting them out of the cath lab. And that's really where long-term durability starts is getting them out of the room. But now we're treating patients who are in their 60s, we're treating bicuspid patients, we're treating much younger patients. So the durability is really, really important. Paravalvular leak. While we haven't -- while we see significant paravalvular leak not that often, we still see some of it, and I think we can do better. I think we can further reduce that even from what we've done on Ultra. And the other thing is sort of this lifetime management issue, which is to further enhance future coronary access. When we were treating 80-year-olds, coronary disease was probably behind them. It was probably something that was in their past. Now when we're treating patients in their 60s, coronary disease may very well be in front of them, which means that we fix aortic stenosis, but we take away future options. That's not a good trade-off for these patients. And so what we have to make sure is that we preserve all of their options for the future, and it really is about this lifetime management of this patient. As it relates to that, I think we're just getting started. I think there's so much innovation that we can still apply to that. So when you look at our portfolio, we have our SAPIEN 3 platform. We have our Ultra platform, which, again, is about 92% of our sales globally. We have our SAPIEN X4 valve, and we're getting ready to start the ALLIANCE trial. We expect the IDE approval before the end of the year, and that's what's going to enable us to begin that trial, and we'll begin enrollment next year. We're very excited about that platform. It's going to have a RESILIA tissue on it. So we think that that's going to be a big enhancement as it relates to durability, but it also has a number of other features that we think are going to be very important for clinicians and patients. But we always have future platforms in development. We have at least 1, usually 2 future platforms in development at any given time. It takes years to develop these platforms and do all the work that's necessary. And as Mike said, our success 5 years from now is based on what we do today, not what we do 5 years from now. So making sure we always have these platforms in development is huge. So we have a short video here of 2 of our physicians Tamim and Dr. Rahul Sharma, and they're going to talk a little bit about the X4 valves and the ALLIANCE trial that we're getting ready to run. [Presentation]

We talk a lot about how much younger our patient has gotten. But look at how much young our principal investigators have gotten. It's really exciting. We're excited to get this trial started. And again, we'll begin -- we expect to get approval before the end of the year, and we'll start that trial next year. So switching gears a little bit from technology to talk about the disease. The way we treat aortic stenosis is different than how we treat any other disease. So Philippe Genereux first started talking about this, or he's at least the first person I heard talk about it. But think about how we treat cancer, think about it in your own personal lives, when you meet someone, or you hear about someone, and they say they have cancer. But the first question you ask them is, what stage? And they say Stage 2. And you say, "Oh, that's good news. We caught it early. We can do things about it." When somebody says, "Oh, Stage 4," you say, "Oh, that's not so great. That's really not good." Aortic stenosis by the way we approach it, we only go after Stage 4. We wait until it gets to Stage 4 before we even think about doing anything about it, but even that's not enough. It has to be Stage 4 and you have to start feeling bad, before we're willing to do anything about it, and that's what the guidelines say. And all of the work we've done, all 3 PARTNER trials, all the work we've done in the last 20 years in this space has all been focused on, in essence, what is Stage 4. It's that in-stage aortic stenosis disease when the person is already at that severe level and they feel bad from the disease. That's where we've been spending all of our time. And we just have to say, does that still make sense? But one of the questions is, how did we get here? Why do we wait so long to treat aortic stenosis, when on the surface, it doesn't seem to make sense? Well, part of the reason is the procedure was open heart surgery. Patients weren't excited about having an open heart surgery. Another key factor in it, though, is the debate between getting a mechanical valve or a tissue valve. If you get a mechanical valve, you're going to take Coumadin. And if you take Coumadin, it's going to restrict your lifestyle, and you're not going to be able to do all the things you used to do. So a lot of patients try to wait, and they want to get a tissue valve, but they want to wait as long as they could to get it in the hopes that the tissue valve would outlive them because if their tissue valve failed at any point, the only way to fix it was a second open heart surgical procedure. Patients don't want to have 1, they certainly don't want to have 2. So it created this whole theme basically of waiting as long as possible before you do that intervention, waiting until the disease is severe and waiting until you feel really sick. And we're just not sure in a modern TAVR era that, that still makes sense. When you look at our PARTNER III data, 99% of our patients are alive and well at a year. We send 80% of the patients home next day. They're being discharged home. Does it really make sense? And is it really benign? Is it really benign that you can go from this moderate disease to severe and not do damage to the rest of your heart? And we don't think it is. We think you're doing damage to your heart during that period of time, much the same way cancer does damage to your body when you're moving from Stage 2 to Stage 3 or to Stage 4. We also have this unique ability to do a TAVR-in-TAVR procedure. So if you get a tissue valve and it fails at some point down the road, it's not a surgery to replace it. It's a second interventional procedure. So we think that this lead opens the door to think about this disease very differently and to treat it very differently. But to do that, we're going to have to bring the evidence. To change guidelines and to change really 60 years of clinical practice, we're going to have to develop the evidence. And I will tell you, when we went to power this trial for EARLY TAVR, and we reviewed all the literature, yes, we can make estimates about what percentage of the population is asymptomatic. But I will tell you, there's no great studies on this because everybody approached it in a slightly different way. And even this issue of symptoms is really hard to ascertain. Patients -- as Dr. Thomas said last night, a patient said he was asymptomatic, but he doesn't walk to the pub anymore. Living within your symptoms doesn't mean you don't have symptoms. It just means you've adapted your lifestyle to where you don't really have them. So a lot of patients say they're asymptomatic, but if you really tested them and you really had them walk up a hill, they actually would have symptoms. So one of the things that we're going to learn from this trial is what percentage of patients are truly asymptomatic, when subjected to a protocolized stress echo, what percentage of patients are truly asymptomatic. And we'll definitively be able to answer that question. We'll also be able to answer the question, how fast do they progress? Does somebody stay asymptomatic for 3 or 4 years and nothing bad happens to them? Or do they progress much more quickly than that? And for the first time, when this data is available, we'll be able to answer that question. We'll also understand, did damage happen during that waiting period? During that latency period, did something bad happen to their heart? This trial, we completed enrollment in this recently, which was a huge milestone for the team. I think we all understand how difficult it was to enroll trials, especially in the COVID environment. I'm very proud that the team met our goal on that. It's a randomized trial. It has a 2-year endpoint. So all we do now is we wait for the patients to go through their 2-year endpoint. I've gotten the question a lot, and so I'll just answer it now. People say, well, is there any chance we're going to get to look at that data sooner? We do not expect to look at that data sooner. When we designed this trial, we debated the endpoint time frame, but it's -- the most important thing is that we have a high-quality study. And if that's going to take a little more time, then we think it's worth it. And we think 2 years was the right time point for that study. So just to talk a little bit more about EARLY TAVR and kind of the basis for it, I have Philippe here, who really is a world expert in this and has really been a leader in thinking about how we should treat this disease. [Presentation]

So even with that trial, though, we're still dealing with severe disease. We're still dealing with this Stage 4. We're still waiting for the disease to get to a severe point before we do anything. We're just asking the question, can we take this whole symptom ascertation thing out of the equation and just focus on the hemodynamic results of the patient rather than having to do this whole gymnastics around symptoms? But the next step in that process is really to look at moderate disease. And does it make sense to let the disease progress from this moderate stage to severe stage? And we think with TAVR and the results that we have now, we're now enabled to go study this in a high-quality way and say whether this makes sense. There's a large study that was done primarily in Australia from Dr. Strange, who we had speak a couple of years ago, I think, at our investor conference. And what he showed in a population study that he did was at least directionally, it appears that moderate patients had a trajectory that's more similar to severe patients than they are to mild patients. And so if that, in fact, turns out to be true, then moderate disease really isn't benign, and we probably shouldn't be waiting for it to progress. So we're embarking on the PROGRESS trial. We got approval for this trial earlier this year. We've already started enrollment in this trial. It's -- again, it's another randomized trial. It's 750 patients. It's going to take us some time to enroll. But we're going to, for the first time ever, really understand what happens to people when they progress from moderate to severe, how fast do they progress from moderate to severe, and what damage is being done to the heart during that period of time. And this trial is definitively going to answer those questions, and we're very excited about it. So I also have Philippe here to talk a little bit about that trial and what he thinks that will mean for patients. [Presentation]

So we're super excited about these trials. And what's going to be nice is at the end of these studies, when we have all this data, think of the body of evidence we're going to have around aortic stenosis that just completely doesn't exist today. Between our series of PARTNER trials, which looked at everything from a risk level perspective; to our EARLY TAVR trial, where we'll be able to really understand symptoms and progression; to the moderate AS trial, where we'll understand the progression for moderate to severe, we're going to be able to combine all that data together, and we should really be able to understand when is the optimal time to intervene for any given patients. And it may not be the same for every patient, but it really does get into this personalized precision medicine that we should be able to deliver. And this body of evidence is going to create the capabilities to really understand that at a level we've never understood it before. And that's one of the things that's really exciting. Now in terms of how many moderate patients are out there, we believe there's 2 patients -- moderate AS patients out there for every severe patient that's out there. Now that doesn't mean every one of them should get an intervention, and we need to run this trial to prove -- run the trial to prove when the right time to intervene is, but it's a large population of patients. And if moderate disease really is doing damage to the heart, then it represents a significant opportunity. So last year, we talked about a lot of milestones at our investor conference, a lot of big things, and we were kind of expecting last year that COVID was going to be kind of in the rearview mirror by this time. And clearly, that didn't really happen. We dealt with COVID much longer than we expected. But I got to tell you, I couldn't be more proud of our team. We put some big milestones out there last year, getting the low-risk approval in Japan and getting reimbursement for that; enrolling the EARLY TAVR trial; the PROGRESS trial, getting that trial approved from FDA and getting it started; getting the IDE for the X4, which we expect to have before year-end; and the Alterra Prestent for our [indiscernible] patients, we also expect to have the FDA approval before the end of the year. So I can't say enough about how well our team executed in a very, very difficult environment to meet milestones that are really, really important for the patients that we serve. So very exciting. I'm very proud of the team. Now we've talked a lot about how do we get patients off the sideline. We only think about 1 in 10 severe aortic stenosis patients gets treated today. And so we know it's a struggle to get them off the sideline. And frankly, COVID did not make that easier. Patients were told to stay home, especially if they were compromised, and almost all aortic stenosis patients are older and compromised. So we've taken a unique step now where, for the first time ever, we decided to go that next step and go a little bit direct-to-consumer. So we've created a commercial to try to go direct to patients, and we'll play that for you now. [Presentation]

It's not branded. It's not a heavy sell on SAPIEN 3. It's not any of those things. People ask a lot, why do we wait so long to do anything direct to consumer? A couple of reasons. One, not inexpensive. But probably the bigger reason is we have deep respect for the physician-patient relationship. And stepping in the middle of that is something that we don't take on lightly. And that's why the whole point of this is really to make patients aware that there's another option and for them to ask their clinician about it and to reengage that conversation, but we're just trying to give patients the knowledge so that they know to ask their doctor about it and just know that the option exists. So we believe the fundamentals of TAVR remain really strong. We see the global TAVR opportunity by 2028 to be around $10 billion. So we continue to see this opportunity grow. And more importantly, we think there's growth drivers beyond that horizon. When we think of things like the PROGRESS trial, the moderate AS trial, that probably doesn't hit in that 2028 window just because of the 2-year endpoint and the time it's going to take to enroll. So we think that this opportunity has legs well beyond that, but we do see this as being a $10 billion opportunity by 2028. So if we turn to 2022, we picked our growth to be in that 12% to 15% range. The headwinds, overall health care spending, there's always pressure on that; and the COVID recovery, there's still some uncertainty there as it relates to the variants, and we're expecting that to stabilize largely. But we think the benefits of TAVR are really strong. And we think they really showed really strong during COVID with the next-day discharge and the other things that we're able to do, and we think those things remain strong. And we were just getting started with low risk in a lot of markets. And so we think that, that continues, especially as COVID begins to wane, and we can get back to a little bit more business as usual. So very excited, very excited about our future. So with that, I'm going to turn it over to my good friend, Daveen Chopra. He runs our Surgical Structural Heart business. He's a great partner for me, and we have a short video to play on his surgical business unit, and then he'll come to the stage and talk about it. Thank you very much. [Presentation]

Good morning, good morning. It is a real pleasure to be here with you all talking a little bit about the surgical business. My name is Daveen Chopra. As you heard in the video from Drs. [ Acland and Young ], surgical patients are looking for the best technologies out there. Here, at Edwards Surgical Structural Heart, we continue to really understand the unmet needs of those surgical patients and invent those life-saving technologies that are critical, all the time while partnering with the cardiac surgeon. If we start off by first looking at our overall market, we believe that the surgical structural heart market will grow in the mid-single digits to over $2 billion in 2028. What's driving this is a couple of different things. First, we see that across the world, we know that patients are generally aging. In emerging markets, we see increased access to both wealth and awareness of the disease that's helping this tailwind. We saw that during COVID, these life-saving surgeries were prioritized generally across the world. Additionally, we see a big tailwind, as Larry talked about, coming from structural heart disease awareness, diagnosis and referrals to heart team overall. And with that, as patients get to the heart team, there is a certain number of those patients that are best treated surgically. Those patients include patients that are the younger, more active patients, patients whose anatomy or etiology requires a surgical treatment and those patients with heterogeneous disease which when you have to do your surgery, you're treating more than one thing at that time in the heart. We hear from patients all the time that the unmet need they have is to live longer and live a better life. And for us, we think we've helped do that with our transformational innovation, the RESILIA tissue. This is a tissue and a technology that we think has an opportunity to help patients all around the world. So what is the RESILIA tissue? We see that the major way that valves deteriorate over time, tissue valves deteriorate over time is through calcification. What happens is there a gradual increase in calcification as patients get older. What RESILIA does is that essentially through its novel [ cap-in ] mechanism, it effectively stops the formation of that pathway so that calcification never occurs. This is a technology that's actually taken a long time to invent. It didn't happen overnight. We actually started the technological development of this 17 years ago. We started the premarket human clinical trials now over 10 years ago. And now in the post market, we have undertaken over 10 post-market studies that are planning to enroll nearly 5,000 patients to really continue to get that large body of evidence for RESILIA. The data we've seen so far has been impressive. If you look at the 2 premarket studies, they enrolled over 800 patients. We now have 5-year follow-up with those patients. Those patients had 0 structural valve deterioration, or SVD, at 5 years, so a great sign about the promise of RESILIA. With this information, we now see the RESILIA tissue as an evolution of previous leaflet materials. So we've taken this RESILIA tissue and now built 3 different surgical valve platforms across it, across both the aortic and the mitral space. And what the RESILIA tissue does with these platforms, it really allows patients to thrive without the quality-of-life compromises that may come from having a mechanical valve and a life on Coumadin that comes along with that. We've actually seen very strong physician preference for this value proposition and actually very strong patient preference for this value proposition. It's best to demonstrate this value proposition of RESILIA and the INSPIRIS product to actually share the story of Jake Henderson. Jake's the epitome of that patient and what the surgical AVR patient wants to get from their valve. In his late 30s, Jake's a rock climber, a dedicated father, a former nationally ranked swimmer. So when his cardiologists recommended a surgical valve replacement, picking the right valve actually makes all the difference. So let's hear Jake's story. [Presentation]

What a great story of Jake that touches your heart. I love how the RESILIA tissue and the INSPIRIS valve he had helped him get back to his outstanding quality of life. As I said, Jake received the INSPIRIS valve, which was the catalyst of the RESILIA tissue, of our 2 other RESILIA platforms as well that I'll talk about. And for us today, INSPIRIS is the leading surgical aortic valve globally. In addition to having RESILIA tissue, you heard that it also has this VFit technology. What the VFit technology means is that if in the future, you need to have another valve procedure and you want to then have a transcatheter valve-in-valve procedure, you can actually expand the surgical valve with the transcatheter valve to allow you to get the largest possible transcatheter valve in the patient and get the best possible clinical outcome. So it's an amazing feature that helps really line you up in case you need that second procedure in the future. Our second RESILIA technology is our Connect, which is the first and only ready-to-implant tissue aortic valve conduit. And this is really for patients who need not only aortic valve replacement, but also aortic root replacement. So this is a very complex procedure. It's one of those procedures you don't want to have, and the patients unfortunately don't have a transcatheter option. However, this is a subsection of the overall surgical AVR market, which continues to grow very quickly, actually nearly double-digit growth in the subsection of the market growth in the U.S. We launched this product in 2020. We launched this product in 2020 in the U.S., and we've seen physicians have a very rapid uptake of this very exciting innovation. And what we're hearing from physicians is this product really helps streamline their procedures. And what I mean by that is previously before they had this product, they had to take several different products off the shelf that almost helped create their own product in the operating room, while the patient is on pump. And with this product, they're able to reduce the time on pump, streamline the procedure and really help get a better patient outcome. So it's been a very exciting product for both physicians as well as for patients. Our third RESILIA product is our MITRIS mitral valve, which is really designed to improve durability with the higher-pressure mitral valve. We really believe that this product successfully has that improved durability and has increased ease of use. We actually got a chance to launch this product in the first market in the world, Japan, in 2021. We had a chance to work very closely with the Japanese market to actually get Japanese approval first for this product, which is an awesome feat. And within 6 months after launch, this is the leading surgical mitral valve already in Japan. With this exciting clinical results we're seeing so far in Japan, we're excited to launch this product in the U.S. in 2022. We think there's actually a big long-term growth opportunity. If you look globally right now for mitral valve, nearly 60% of the world's surgical mitral valves are mechanical. So for patients, this offers an amazing opportunity. If you look overall at the emerging markets, we believe there's actually a great opportunity for surgery in the emerging markets. As we know, as emerging markets continue to grow, grow in wealth, we see that countries continue to want to spend a greater percent of their GDP on health care. Patients continue to want to look for better solutions. As a result of that, we see that cardiac surgery procedures are actually continuing to grow at a much faster rate in emerging markets, and we see that patients and physicians who would have primarily put in mechanical valves, because that's what's been available are now looking for more premium innovations and are often looking to the Edwards premium tissue innovations as an upgrade to patient care. So for us, we see a great opportunity in emerging markets. Moving for a second beyond actually the aortic or the valve replacement market, and I'll talk about surgical mitral repair for just 1 minute. Surgical mitral repair right now is the standard of care for the low-risk degenerative MR patient, where physicians put in an annuloplasty ring surgically. And this is a group of patients, again, the low-risk degenerative MR patients that we think will continue to be surgical for many years in the future, and it's actually continuing to grow in overall numbers. And it's one of those areas where if you can do the surgery well, you can actually get the patient back on their normal life expectancy. It's amazing. It's awesome for patients. However, we've seen it even in the best centers in the world, having consistent results is very hard to do. So we see that as an opportunity for Edwards. How do we continue to bring new innovation in the surgical mitral repair market where patients can get consistent results no matter what physician they go to or where in the world that they go? And so for that, we've been actually investing in 2 different technologies in the space. One of them is the HARPOON, beating heart mitral valve repair technology that's done transapically in a very minimally invasive approach for a subsection of those DMR patients. Additionally, we're in the development stage of a mitral adjustable repair system that allows -- actually allows you both on- and off-pump adjustability in size of the mitral product. So it allows you to maximize mitral valve coaptation and get the best possible result. So we think these are great 2 future opportunities that we're working on for the surgical mitral repair patient. If you move forward to 2022, we see that we continue to be excited about what's going to happen. We see headwinds of continued TAVR conversion, especially in our developed markets. And as Larry talked about, we're always thinking about COVID recovery and how the world is changing, different variants, et cetera. But we see some really exciting tailwinds where we see that the opportunity for continued adoption of our RESILIA product is a great tailwind potentially for us, along with this continued mechanical-to-tissue conversion that I talked about. So for us, in 2022, we are forecasting underlying growth rates in the mid-single digits and a total revenue range of $870 million to $950 million. So in conclusion, we still continue to believe that the surgical structural heart market will grow mid-single digits for many years in the future, and this includes growth in the surgical AVR market. For us in 2022, we are super excited about the adoption of our transformative innovation with RESILIA. And as you look to the future even beyond RESILIA, we see there's a lot of opportunities to identify those unmet needs in cardiac surgery patients and invest in life-saving technologies. Thank you so much. I'm very excited next to actually call one of my colleagues, Bernard Zovighian from our TMTT. He's going to tell you about all the exciting things going on in TMTT, and it's been a real pleasure to work with Bernard all the time. As he comes on stage, let's learn a little bit about the TMTT business. [Presentation]

Good morning. This video is a great recap to show you how fortunate I feel about being able to build upon the rich history of Edwards Lifesciences, bringing in 60 years of experience in surgical, about 10 years or more in the transcatheter world to mitral and tricuspid. I feel like this is putting us in a very unique position to be able to achieve our vision to transform patient care. And indeed, there are so many patient in need. This disease, mitral and tricuspid, is very prevalent. For instance, in the U.S., there are more than 4 million patients, and only a very small percentage of these patients are treated today, less than 2%. So there are -- these patients are sharing some similarities with the aortic patient, but not necessarily all of them. So think about it, what's similar to aortic patient is they have a very poor quality of life. There is a high mortality rate at 1 year, between 20% and 40% between MR and TR. But unlike aortic patients, they are clinically diverse. And it is why we believe we need a portfolio to treat all of these patients. So by implementing our strategy, our broad strategy, our comprehensive strategy to treat all of these patient, we expect this opportunity to grow from what it is today $1 billion globally to $5 billion in 2028. If you do look at this number, $5 million (sic) [ $5 billion ] might sound a big number, but $5 billion offers only about a 5% adoption. So we believe there are huge opportunity to grow beyond 2028. So if you step back, it is truly the reason why we are making bold investments in TMTT. To change patient care, to change the practice of medicine the same way we did it with TAVR in the last year 10 years. And if by doing so -- we will also, for sure, be a major growth driver for the company in the years to come. Now when you have such a bold vision, it is very important to define how you are going to execute your plan. And for us, in TMTT, it is about a couple of things. One is about focusing on 3 key drivers of success, having a differentiated portfolio, bringing world-class evidence, to change guidelines, to equip physicians to treat their patients, and being able to achieve a real-world outcome, a favorable one, a great one. So that's one. The second one is being able to focus short term and long term. And I have to tell you 2021 gave me great confidence. We are -- we achieved already, or we are on track to achieve everything we committed to in 2021. So let me give you some highlights. We are on track to complete the enrollment of a CLASP IID trial by the end of the year this year. So this puts us on track for a late 2022 U.S. approval for the DMR patient population. We completed the enrollment of a TRISCEND study with EVOQUE Tricuspid. And this is -- to give us all of the evidence to be able to achieve a late '22 approval for EVOQUE in Europe. And we are on track to double our revenue compared to last year and achieve our revised guidance. So I look at this one, for sure, this gives me confidence that we are on track to achieve our vision, and we will keep executing year-over-year until we are there. So we are organizing our presentation is in 2 parts, mitral and tricuspid. So let me start with mitral first. And I want to start with you watching video from one of our true clinical partner, Dr. [indiscernible] [Presentation]

So what we heard from [indiscernible] is that mitral patients are very complex, diverse. This disease is very prevalent and fewer options. And there are 2 big needs, basically, portfolio and more evidence. So let me speak to mitral portfolio starting with PASCAL. We have gained a lot of confidence in this PASCAL platform. We have treated thousands of patients to date, more than 4,500 patients. The majority of them, 3,800, more than that, have been reported by physicians at major medical conventions so far, and very successfully. And many of them, more than 450 patients, have reached a 1-year follow-up or even more. So what we can say is today, a physician can achieve great acute outcome with PASCAL, but together with long-term outcomes. And the 2 randomized studies, so CLASP IID for DMR patient population, CLASP IIF for the FMR patient population, will help close the gap that Dr. [indiscernible] was talking about. Now we are also committed to a rapid cadence of innovation. And I am very pleased, as you have seen in my previous slide about the current generation of PASCAL. It is designed to safely navigate even in challenging anatomy, and we know it is very common for mitral patients. Physicians have the ability to reposition the device many times if they need to, to achieve patient the best patient outcome. That's super important to be able to do that in a safe manner. And this implant is flexible, which is respecting the anatomy of the patient. So all of these key attributes are super important. We are very pleased with the current gen. But at the same time, we know that sometimes TEER can be complex. And with that in mind, we developed in the past couple of years, the next-gen PASCAL, PASCAL PRECISION to elevate efficacy, safety and ease of use of PASCAL, together with enabling a broader adoption of TEER. So being able to treat more patients. We already gained throughout 2021, a clinical experience with PRECISION. We got very positive feedback. And we anticipate that PRECISION is going to have a major impact on the customer experience. But we are not stopping here. Like Larry was talking about, we have also a next gen after PRECISION, and we are ready by next year to start some clinical experience. I'm not ready today to show you what the next gen is going to be, but you can expect next year for me to talk more about it and physician to talk about it from the podium. So again, we believe in this platform very much. Now from a commercial standpoint, we are on track, like I said, for a late '22 approval in the U.S. in the DMR patient population. So let me tell you how we are thinking about the launch. We will bring our 60 years of experience in the space. Our experience from Europe with PASCAL and the 4,500 patients we already treated, we will bring our best technology, PASCAL PRECISION in the U.S. And we will also bring all of the evidence from Class IID. Now from a team standpoint, we are going to build and we are building, as we speak, a team, a dedicated team for the U.S. organization to be able to implement our high-touch model like we have in Europe. And we will be implementing a controlled launch. So what do I mean by control is that we are going to have many ways of site activation across the U.S. We will conduct a comprehensive physician training. We will have physicians screen patients to make sure they can achieve the best outcome. We will support every case. And by the way, that's super important for us, even this year and last year, during COVID in Europe, we were able to support all of the cases, having in mind, again, patient outcome. So talking more about patient outcome, I like you to hear from one of Dr. Xavier's patients. [Presentation]

So as you heard from this patient, Larry, PASCAL can have a big impact. And this is what drives us. this is what drives everyone in TMTT to do what we do. So obviously, given the complexity of this disease, TEER alone. So TEER stands for transcatheter edge-to-edge repair. So TEER is not sufficient in our mind to treat all the patients and unlock this very large market opportunity. So it is why mitral replacement will be an important solution for patients. It will complement PASCAL platform for non-TEER-eligible patients. And yesterday night, Dr. Feldman talked about that. Replacement has the ability to achieve superior efficacy in a very consistent manner. But the big question about replacement has been and is, can replacement achieve TEER safety level? That's a question that physicians are asking themselves for quite some time now. So it is why we decided a long time ago. obviously, informed by a long history in TAVR, and we move -- you remember, I'm sure, from our TEER approach to our transcatheter approach. So we decided a long time ago to forgo invasive devices, invasive concept, like transapical or like large French sizes to focus on developing transfemoral [indiscernible]. The objective is to offer the best of both worlds, the safety of TEER and the efficacy of replacement. Now this kind of undertaking is a big innovation that's very much aligned with what Mike was talking about in his opening, correct? That's a big innovation, that's complex, this is what we love to do, and this is why we are investing in 2 concepts, very different concepts in mitral replacement. One, M3, which is leveraging the well-established SAPIEN platform. And we believe we are on track to have M3, the first sub-30 French transfemoral [indiscernible] commercial device in the main regions. At the same time, we have EVOQUE Eos, which has been specifically designed for the mitral anatomy. And we started our clinical experience already. We are very pleased physicians are super excited. We presented our first data set at TCT this year. So you will hear more update in 2022 about both the platform. So let me now wrap up the mitral section. From a technology standpoint, next year, we are going to start the initial clinical experience of the next-gen PASCAL, the one after PASCAL PRECISION. We are going to expand on our Eos experience, mitral replacement. On the evidence side, we will submit to FDA, the Class IID data in mid-2022, expect presentation of this Class IID data in the second half of 2022 prior to approval. And then we will continue to enroll the CLASP IIF and the ENCIRCLE pivotal studies. Commercially, we expect PRECISION DMR U.S. approval in late 2022. In terms of revenue, we don't expect revenue in 2022. So think about a controlled launch in 2023 and an approval of PASCAL PRECISION in Europe late 2022 also. So as you can see, 2022 will be another year of meaningful progress on the mitral front. So now let me turn to tricuspid. And let's hear from 3 physicians, Professor [ Rudolph ], Professor [indiscernible] from Germany and Dr. Davidson from the U.S. [Presentation]

So what you heard from these 3 great partner is a common message. Tricuspid is even more complex and more diverse than mitral. And for sure, here, too, need for a portfolio and evidence to treat this patient population. So for a long time, tricuspid has been the forgotten valve. And I am very pleased and proud about all the progress we have made in the last 2 years. And 2021 has been an amazing year in terms of progress. So to date, we treated successfully more than 1,500 patients across our 3 modalities. So Cardioband, PASCAL and EVOQUE. And we are seeing positive long-term data, more than 150 patients have a 1-year follow-up or more. So we are starting to see some data acute and long term. This gives us confidence in our potential to have a significant impact on this patient, even though we all recognize that there is still a lot to learn. And the 2 pivotal randomized study, so CLASP IITR with PASCAL and TRISCEND II with EVOQUE, will provide very important evidence to achieve approval, drive adoption. All of this together will help physicians address this large patient unmet need. And we are innovating, having in mind, all what we learned about the tricuspid valve. This valve is having a dense [indiscernible]. The leaflets are very thin and very fragile, and the imaging is quite of a challenge, and you heard about that yesterday night from Dr. Feldman. So let me start with PASCAL. Our partner physicians are telling us today that the current gen of PASCAL is providing a very powerful solution for tricuspid patients. It is an [indiscernible] implant, which is very helpful, given the fact that the tricuspid leaflet are thin and fragile. They can safely navigate [indiscernible]. It is a flexible one, and we believe that PASCAL PRECISION will provide an even greater confidence to physicians. So now let's turn to EVOQUE. Super exciting. The year 2021 has been an amazing year for this platform. We saw great benefit of our therapy, low-profile design, sub-30 French, we have a wide range of valve sizes, physicians are able to meet -- to treat a very broad patient population. And you know what the early sign of this success is that every time we talk to physicians, they want the device. They call us that they want the device. There is a true excitement on this platform. When we open an account, very typically, the physician, they need some time to find patients, they send us 5, 10, 15, 20 patients, first in a few weeks. So for sure, there is a lot of excitement given the benefit -- the potential benefit of this platform. And all of that led to -- I don't know if you attended or you watched TCT. TCT was kicked off with a live case with EVOQUE. And it was a very calm procedure. You saw that the patient was -- the team -- the physician team was very relaxed. The patient was very calm, too. They achieved a great outcome in about an hour. Later during TCT, Dr. Susheel Kodali who is the PI for TRISCEND, presented 6-month data at a late breaking trial presentation, amazing results. So basically, the efficacy, look at this efficacy, 100% have mild or less TR 6 months. And probably more exciting from a patient standpoint is the more -- significant reduction in mortality, rehospitalization and the quality of life. KCCQ, 27-point improvement. So when we achieved 10 points, we believe it is a huge achievement, 27 points here. So we are very encouraged. We are very excited, like the physician community. At the same time, it is still early. And TRISCEND II pivotal study is going to tell us more about the true benefit of this platform, what patient is going to be eligible, all of that. But yes, excited here. So let me summarize my tricuspid section now. From a technology standpoint, here too, we are going to have initial clinical experience with the next-gen PASCAL, one after PRECISION. And today, I have not spent a lot of time talking about Cardioband. And let me tell you, I have high expectations. Annular reduction in our mind has a very important role to play. It is effective for many patients. It will be an important option. Today, this platform has one issue, one big issue, but one issue. It is way too long. And we are developing the next-gen platform. Next year, we have also to start some initial clinical experience with the next-gen Cardioband. I'm going to talk more during the year next year. With regards to evidence, we are going to continue enrolling in our TRISCEND II pivotal study with EVOQUE, CLASP IITR pivotal study with PASCAL, and you are going to see a number of publication and presentation throughout the year. From a commercial standpoint, we are partnering with regulators in Europe to be able to navigate this new process, MDR process in Europe to be able to achieve CE mark for the EVOQUE platform by the end of the year next year. Now putting mitral and tricuspid together. The range -- the revenue range for next year is between $140 million and $170 million, which is about 80% growth from -- if you put it at the midpoint, after having doubled the revenue this year and achieved our revised guidance. Of course, we could have some headwinds. MDR, we believe MDR is going to be great for patients long term. But like any new regulation, any new process, this may take some time on the part of both companies and regulators to establish this new process. So this is very important for us as we are bringing 2 new therapy next year to Europe. COVID, obviously, we made some assumptions, difficult to predict how the pandemic is going to progress. We see also some potential tailwinds. The European mitral market was soft in Q3, and a more rapid return to solid growth next year can have a positive impact to our revenue. And then the body of evidence continue to expand, mitral, tricuspid, all what we do, all what the physicians are doing, initiated by them. So can this be a bigger tailwind as early as 2022? So nevertheless, 2022 will be another strong year for TMTT. So as I close, let me remind you where we started today. We are very committed to our long-term vision but also to deliver year-over-year like we did this year. I am very pleased about how this year we were able to navigate COVID and still be able to be on track to deliver everything we committed to. You can expect 2022 to be even more impactful of a year, with very important milestones. Late next year, being able to achieve 3 approval, 2 in the U.S. -- no, 1 in the U.S., 2 in Europe, sorry. And a revenue growth of about 80%. So our progress in 2022, in my mind, will set the stage for a stronger 2023 and beyond. I am very proud about the progress we made with all of the TMTT employees, talented people, passionate people. And I feel that we are on track to achieve our vision of leading and transforming care for mitral and tricuspid patients. So thank you so much. It is now my great pleasure to introduce Katie Szyman, who bring a lot of passion to the Critical Care business and has been very successful leading this business. Katie -- before Katie come on stage, let's watch a video to talk about the Critical Care business. [Presentation]

So good morning, everyone. And as the video says, welcome to Critical Care. I'm going to talk to you today about our vision, which is to improve the quality of care for millions of patients every year. And we do it really with 3 key things. One is innovation, the second is evidence, and the third is trying to drive adoption of our technologies. So many people ask how does Critical Care products work? How do you improve the quality of care for patients? And so we thought we'd start today with a video sharing the story of Raul, who is a patient who actually was hospitalized with COVID early during the pandemic. He was in the hospital for 47 days, and he was monitored for most of those days with our technologies. So let's roll the video for Raul. [Presentation]

So we love that tradition of ringing the bell. I don't know if you're -- how close you've been to people in the ICU, but as they get up and walk out, they ring the bell and it's such a fantastic moment to see. So that's really why all of us in Critical Care are so passionate about continuing to improve the quality of care for millions of patients throughout the world. So if you think about Raul, Raul was monitored with our core monitoring technology. So using our arterial line to provide continuous blood pressure information so that the clinicians can give him the care that he needs. As we look to the future of Critical Care, the majority today of our revenues continue to be from that core monitoring business, monitoring millions of patients. When we think about the future, we want to shift that mix more towards smart monitoring. And what we mean by Smart Monitoring is adding advanced analytics so that we can actually improve the care and get patients home to their faster. So the shift to Smart Recovery, what does that actually mean? So if you look at our market size today, it's roughly $1.1 billion. And as we look out over into the future in the next 7 years, we see that growing to $1.8 billion. And you see there that the majority of the growth comes from Smart Monitoring actually growing faster because it's a higher value to clinicians and the hospitals, so it's going to grow faster. How we're going to do it is really by thinking about the 14 million patients today that are just monitored with plain blood pressure monitoring and saying, we think of those 14 million that we could actually add Smart Monitoring and help them get home to their families faster. So today, in terms of Smart Recovery, we believe it's roughly 5% penetrated of the 14 million patients, and we can create 15% to 20% penetration over the next 7 years, and that's going to drive the majority of our growth. So how are we going to do that? Because it's hard to change practice of medicine as we know. So really, technology evidence and adoption, and I'll walk you through each of those 3 key areas. So the first is just let's talk about how our technology is built. So we have our Smart Monitoring platform, which is the HemoSphere. We have algorithms that build on top of that, and then we have the sensor that is directly connected to the patient. And in the future, we're going to wrap all around that our connectivity solution, so let me talk about each of those things a little bit more. So the HemoSphere platform has just been an incredible platform for us. We started rolling it out in 2018, and we started with the Cardiac Smart Recovery, which includes Swan-Ganz, the FloTrac Sensor and the [ 4K ] sensor on it, and so Cardiac Smart Recovery rollout is about 50% complete today. This year, we really started the Non-Cardiac Smart Recovery rollout. And what's included in Non-Smart Recovery is this FloTrac with Acumen IQ, the ForeSight and then our non-invasive ClearSight technology, and we're just starting that rollout here in the future. So about algorithms and sensors, if you kind of take it up a level and say, what are we doing in critical care, we're really smartifying everything. So we've kind of made this word up, but it's really what we're doing and saying. We today do sensors that will connect to the patient and tell you how the patient is doing right now. What we want to do with smartification is to add machine learning, data analytics, and kind of spin it all together and actually then deliver IQ sensors that actually are then able to deliver algorithms that are predictive in nature that can tell the physician, not how the patient is doing today, but how they are going to be doing in the future. So for example, HPI, Hypotension Prediction. We launched that in 2018, and it can tell clinicians up to 15 minutes in advance how their patient is going to be doing. So then let's quickly talk about connectivity. So connectivity is getting all of the data off the HemoSphere up to the cloud through the EMR and back down on to a clinician's cell phone. This is super important for anesthesiologists in particular, because they often supervise 2 to 4 rooms at a time. So let's hear about that from Dr. Michael Scott from U Penn. [Presentation]

So we had approval for the Viewfinder back in July, and I'm super happy to say that we actually monitored the first patient on a clinician's cell phone this week. So believe it or not, it takes time to work with the hospitals, get it all up and running, but we're very excited because we think this is going to really improve care for patients going forward. So talking about clinical evidence. The -- last year, we talked about our MPOG study, where we studied whether using HPI could reduce the duration of hypotension experience during long surgeries. So in a database of 20,000 patients at 11 major academic centers, they found the baseline is roughly 28 minutes. So imagine that you have a 3-hour surgery, and 28 minutes of that surgery, your mean arterial blood pressure is going to be at a dangerously low level below 65. And with the use of HPI in a prospective study, we were able to demonstrate that we could get down to 12 minutes. And we believe that as clinicians get more comfortable with the technology, we could see that coming down even further. And what that's going to do then is as clinicians begin to believe and change their practice then we'll see the shift of our sensors moving more toward Acumen IQ sensors and cuffs. So why does hypotension matter? Why do we care? This is an amazing study that was published in the Lancet in 2019 that showed that if perioperative mortality was to be considered a disease date, it would actually be the third leading cause of death. So there's a lot of things that happened to patients in that 30-day perioperative period, and hypotension is highly associated with a risk of postoperative mortality. And so if we can actually get clinicians to focus on reducing hypotension, we believe that's going to be associated with the reduction in mortality in that 30-day period. And so we are actually going to start a new study, and we just announced this today, that we are -- have enrolled the first patient this past week in the HPI SMART BP study. And what we're going to be studying is not only can we reduce the duration of hypotension during the procedure, but can we actually see if that impacts patient outcomes. And so it's going to be a 1,500-patient study across 20 centers here in the U.S. We anticipate full enrollment by the end of Q3 2023, and we think that's going to show that we can actually impact outcomes. But to hear more about it, we have Kamal Maheshwari from Cleveland Clinic, who's our PI, who's going to speak on about it. [Presentation]

Yes, so we're looking -- normally in our space with monitoring, people don't do a lot of these landmark studies. So this is a really big deal for us to make this investment. What we believe that if we can build the clinical evidence, people will start to adopt more of these predictive technologies because you know how we all are. It's difficult to adopt something unless you truly believe because it means changing how you've always done things, so that's really going to help to enable adoption. So the final area to talk about on adoption is that CMS actually adopted intraoperative hypotension this past year as a quality measure, and the ASA also endorsed the quality measure. And in fact, they're creating a database and when they get the first 200,000 patients in their database, they plan to publish their baseline levels of hypotension. The other thing that we continue to do to help with adoption is to do baseline studies at large IVMs and then get them to compare that when they implement HPI, do they really see a significant improvement in patient care. So we're sort of doing bottoms-up, tops-down, to be honest with you, as you think about adoption. So this next year, we are estimating that we would have growth in the mid-single digits. And you might say, well, you had higher growth this year, so why would it slow down? And it's really because this year, we had a big surge in capital spending coming from hospitals as they release their capital budgets going from 2020, where it was frozen, to 2021 where we saw a big release. And so as we go into next year, we think that won't repeat entirely, so we see our growth going down slightly due to that. We also have plans to discontinue some non-strategic products and that will probably reduce our growth rate by 1% to 2%, and that's allowing us to focus more and more on Smart Recovery. So in summary, I'd just like to say that we are very excited about the impact that we can have with Smart Recovery. We all get up every day excited about the impact that we have on millions of patients around the world, and I guarantee you that the best is yet to come for critical care. Thank you very much. And it's my pleasure now to give you all a break, because I'm sure you're really looking forward to that. We are going to reconvene at 10:25 AM. Thanks, everybody. The bathrooms are back here. There's coffee out there. And if you're online, we'll see you at 10:25 AM. Thanks, everybody. [Break]

Okay. Welcome back from the break. The second part of this program is going to be so good. We don't need a video or music or anything, we're just going to dive right in. So you heard how excited we are about the future of Edwards Life Sciences in the presentations earlier this morning. We're also really excited about the opportunity to help improve treatment for patients. We're enthusiastic about the opportunity to create value for shareholders, and we're going to talk about how we intend to do that right now. There are 3 priorities that we think about in terms of financial objectives for Edwards Life Sciences: Strong sales growth, healthy profitability and smart capital allocation. The first and foremost of these is sales growth. And at Edwards, that means organic sales growth that's durable, sustainable and really driven by long-term investments in research and development and advancements of focused breakthrough therapies. In 2021, we've had a good year, better than we guided to at this Investor Conference 1 year ago in December 2020. In fact, the guidance that we gave during our third quarter earnings call in October is unchanged, we are reaffirming it today, that guidance is for sales of $5.2 billion to $5.4 billion or mid or high teens growth rather than mid-teens growth, which we'd originally guided to for this year. And EPS growth of over 20%, so still getting nice leverage out of our P&L. That strength in the business and better than guidance that we provided last year is really reflected in better performance in all 4 of our business units, TAVR, TMTT, Surgical and Critical Care. So turning to 2022. Our expectation, our plan is based upon the assumption that we have a gradual recovery from COVID, and we're assuming no significant impact from new variants. So to make it clear, if we have a longer-than-expected recovery from COVID or if we do have a significant impact from Omicron or any other variants, then that would be a negative to the guidance that we're providing. We're expecting growth across all major regions in 2022. Foreign exchange is going to be a factor. Because of the strengthening of the dollar, especially relative to the euro and the yen, we're expecting that 2022 sales outside of the U.S., when translated in dollars, will be about $120 million lower than they would be at 2021 rates, so that's about 2% of sales. And we expect a pretty high variability quarter-to-quarter in terms of year-over-year growth rates because of the impact that COVID had during the course of 2021. Overall, we're expecting low double-digit sales growth in 2022 to $5.5 billion to $6 billion. So by business units starting with TAVR, we're expecting double-digit growth across all major regions. We are planning on stable average selling prices and competitive positions. Now in 2022, we have another feature to the P&L, which is the expiration of a royalty revenue stream that we've received for many years now. It expires in April. And so instead of the typical $40 million annual run rate, we'll probably book about $12 million into 2022 before that royalty expires. Overall, for TAVR, 12% to 15% growth to $3.7 billion to $4 billion. And TMTT, Bernard talked about his plans to continue to expand PASCAL in Europe, and that will be the biggest driver of commercial revenues in TMTT in 2022. We're looking forward to PASCAL coming to the U.S. and EVOQUE Tricuspid coming to Europe, but those approvals will happen in 2022. The real sales contributions won't start in earnest until 2023. Overall, we expect revenues of $140 million to $170 million for TMTT in 2022. In Surgical Structural Heart, we're planning on the continued adoption of our products based on the RESILIA platform. We're looking forward to the launch of MITRIS, our new mitral valve here in the United States, and a lot of the growth is going to come from this continuing conversion from mechanical to tissue valves. Overall, mid-single-digit growth rate in Surgical to $870 million to $950 million in 2022. And finally, in Critical Care, we're really excited about the acceleration of the adoption of Smart Recovery and the expansion of our hypotension prediction index technology. That, combined with the Launch Viewfinder and other things that are going on in critical care, we believe we'll generate mid-single-digit growth to $820 million to $900 million for critical care in 2022. Okay. So turning to the second financial priority, profitability. Really healthy profitability for us starts with high gross margins that reflect the value that our products provide, also being able to fund expansion that we need to produce our products around the world. And provide flexibility to be able to support the growth in our field force, for example, to support the continued growth in TAVR, for example, building the field force in the U.S. to support the launch in 2023 of PASCAL. So putting some more specificity on that, we expect our gross profit margin in 2022 to be 78% to 79%. This is 2 percentage points higher than our guidance for 2021 of 76% to 77%. Most of that increase, about 75% of that increase in gross margin guidance, is attributable to foreign exchange. I mentioned before that there will be a headwind to sales. We have an option program in place to offset that impact to the top line, and as a result, we'll have hedging revenues that come in at a 100% margin rate that contributes to a higher gross profit margin percentage. We're also going to see some operational efficiencies that make up the rest of that increase in gross margin rate. It will be offset partially by investments that we're continuing to make in manufacturing capacity and the expiration of the TAVR royalty that I mentioned before. In terms of op expenses, we're expecting selling, general and administrative expense as a percentage of sales to be 28% to 30%, and research and development as a percentage of sales of 17% to 18%. On the positive side, the expenses that we incur outside of the U.S. translate into lower dollars as a result of the same FX dynamic as I mentioned before. We are still leveraging our scale, so we're -- as the platform grows, as our global position grows, we get more benefits of the shared administrative and overhead and back office type expenses. We expect a nominal impact from inflation. Certainly, we're seeing the same kinds of headwinds and pressures on wage rates in our production facilities and our salary employee ranks as well, but we expect that those impacts can be managed and it's baked into the guidance that you're seeing right now. On the negative side, which is a little bit of a positive side, we're spending a lot of money getting ready for the TMTT launch in the U.S., and that's showing up in our operating expenses. We're also continuing to invest aggressively in enrolling clinical trials, and there's an expense that comes with that, but we think about it as an investment that's really important to the future of our top line growth opportunities. Okay. So overall, it gets us to an adjusted operating margin of 31% to 34%, up from about 31% in 2021. Again, this reflects the benefit of FX. So if you just take the midpoint of that 31% to 34% range, call it 32.5%, about a percentage point of that is attributable to FX. So on an adjusted basis, it's more like 31% going to 31.5%, if you were to pick numbers in this range for modeling purposes. So in terms of earnings per share, it's going to be a nice growth year for EPS. We expect this year EPS to be the high end of that, $2.07 to $2.27 range. Most of the increase in EPS to $250 million to $265 million is coming from growth and operations improvements, that's $0.29 to $0.36 of the improvement. We do get some of that benefit from FX that falls to the bottom line. It's partially or maybe even more than offset by some of the increasing tax pressure that we expect. Not related to congressional tax act, and we'll talk about that later, but just natural increase in our tax rate, partly because we're expecting less benefit from this ETB or the excess tax benefit we get from the deductibility of option expense. So turning to the third financial priority capital allocation. Our intention is to continue to fund expansion in our production facilities while also being able to fund external investments, and I'll talk a little bit about that in a second. Adjusted free cash flow in 2022, we're expecting to be $1.2 billion to $1.5 billion, up from year-to-date this year, $1.1 billion. But there's an important change that is hitting us in 2022 along with other companies as part of the 2017 Tax Act. On January 1 is the expiration of our ability to deduct all of our research and development expenses for the current year against our current year tax expense. So this doesn't affect our book -- it doesn't affect our book P&L, it is just a tax item. But effectively, we have to defer the benefit of the R&D expense deductions over time rather than getting them all up front, and the impact is about $200 million in 2022. So we invest capital in a number of different places. We've got manufacturing resiliency representing about half of our total capital investment. And the balance is a combination of infrastructure investment and research capacity, like you've seen, for those of you in the room walking around our headquarters campus here, we have a lot of investment that we've made in supporting the growth of Edwards Life Sciences both here and in Israel, as Todd talked about last night and other places around the world. So we have an active business development effort underway. And a lot of the transactions that we do and investments that we make don't ever get reported publicly, but they're an important part of augmenting the activities we have underway internally. And our focus continues to be on structural heart, generally early stage pre-revenue companies and start-up efforts. We do make investments in intellectual property. And ultimately, we really think more carefully about what's a strategic fit for Edwards, then how much cash flow can we put into these acquisitions. We're not intending to change our strategy based upon how much cash flow the company is generating. We're also looking carefully on a regular basis that our product portfolio, and we're discontinuing and getting out of products that are non-strategic or have lower growth potential. So this is just a summary of all the guidance that I've just mentioned, and now I'd like to turn to the longer-term guidance. So between now and 2028, you heard Mike talk about this expansion in the markets that we serve from nearly $10 billion today to nearly $20 billion in 2028, and here's how we get there. TAVR, we expect to go from $5 billion to $10 billion by 2028 and it's driven by really 3 things: greater awareness, label expansion and geographic expansion of the TAVR footprint. And then third, new technologies like X4. For TMTT, the current market opportunity is about $1 billion in size, and we expect that to grow to about $5 billion by 2028. And in the case of Edwards, it's going to be driven by 3 things: the differentiated portfolio of technologies that Bernard talked about, positive clinical results from these different clinical trials that we're enrolling, and the third one is just continuing excellent real-world outcomes from patients who are benefiting from our TMTT therapies. In Surgical, current $1.5 billion market opportunity growing to something like $2 billion by 2028 supported by the adoption of our RESILIA technology for tissue, the mitral opportunity, the introduction of MITRIS in the U.S., for example, and emerging markets with the continuous transition from mechanical valves to tissue valves. And finally, Critical Care, growing from about $1.1 billion today to $2 billion in 2028 lifted by a shift to Smart Monitoring, the artificial intelligence-enabled technologies that Katie mentioned just before the break, and more favorable clinical evidence where we're investing more now than we ever have before in evidence generation to support growth in critical care. So beyond sales, here are some other things to keep in mind and guidance that you can consider for the longer-term P&L for Edwards. We don't give specific numerical guidance, but here are some themes that can help you understand where we're going. Sales you know about. For gross profit, we're going to continue to see the mix benefit of our higher-margin products growing faster than our lower margin products, and that's going to lift our gross margin even as we invest in capacity expansion and even as we bring online new products that typically start at a lower gross margin until we get to higher volumes and scale. In terms of SG&A, we're going to get some leverage out of SG&A, but we're also going to continue to invest in the field force that we have in places around the world to support physicians and to make sure that we are helping deliver the best care possible for patients. For research and development, eventually, the law of big numbers will work to our benefit. But for the foreseeable future, we're going to continue to invest in multiple different clinical trials because that's really the future of Edwards Lifesciences. Remember, our #1 financial priority is strong organic sales growth, and R&D is the big driver of that. Probably the biggest pressure point in our P&L is on taxes. And you've all been following what's happening in Congress. We're following it closely. We do believe that any kind of tax change is probably going to be a headwind to us over time. So far, the discussions underway do not suggest any change for 2022, so it would not be an impact to our 2022 guidance, but it could impact our profitability on the bottom line in the future. At least in a transition, if there's a reset in the tax rate for companies like Edwards. Overall, for earnings per share, we're going to continue to buy back shares to offset dilution and to work down our net shares outstanding over time when we make opportunistic share repurchases. So overall, we're really excited about the future of Edwards. We're excited about the financial plan we have in place and how well integrated it is with our strategy, and we've got a lot of confidence with where the company is going. With that, Mike, over to you for closing comments before we turn to questions and answers.

All right. Thanks, Scott. And Scott is a fantastic partner to me personally and the rest of the ELT and puts us in a great position for us to be poised for success in the future. I'll just do a quick wrap up here. At its essence, our strategy is unchanged. We're really pleased with this strategy. We go in a different direction than many others in MedTech who think that bigger is better. We believe that better is better. And this idea of being singularly focused and going for big bold innovations that change practice and going first is the right way for us to behave. And we got a lot of confidence that when we actually create really meaningful value is when we transform care for these patients that we serve and there sure are a lot of them. 2022, we think, is going to be a big year. You just had a chance to hear the details of that. Of course, it will be nice sales growth and earnings growth, but more importantly, it's all the progress we're making toward our big bold innovation. So it will be a year of continuing to collect and share powerful clinical data. We'll be launching some brand-new things that were never launched in the past. We'll be introducing and trying some things that we've never tried before in 2022. And overall, I think just advancing the state of the art for all the patients that we decide that we're going to serve. You'll hear a lot of milestones that happened during the course of the year and things that happened during meetings, and so we're excited about ahead in the near term and sets us up very well for the long term. I think it's an appropriate time to mention our Board. Our Board is fantastic. They've been a steady hand. It's been extraordinarily supportive of us along the way. This is a group of people that are deeply experienced leaders that really come to a very different perspectives that are helpful to us. They constantly modernize our governance practices to make sure that we're shareholder-friendly, and there's a good listening to all the constituencies that we serve. And they hold us -- on the management team, accountable for our performance to make sure that we deliver in the near term and the long term, consistent with our strategy. And one of the things that I'm most pleased about our Board is they have stayed engaged. At a time when I know a lot of boards have gone virtual and so forth, our Board showed up. We found a way to be able to eat together safely, and we continually engage, and we even visited some sites outside the U.S. together. So I couldn't say enough about this group. Sustainability, we know we all get a chance to talk about, at Edwards, I just want to make clear that sustainability is truly integrated into our culture and into the way that we run the business into our strategy. We don't sit there run the business over here and pursue those long-term goals and then try and be sustainable over here. We try and have it fully integrated so that it is part of the way we run the business. We have the privilege of doing that. We obviously do all the things we can that I just mentioned to have strong governance practices. But separate from that, very socially engaged in all the communities that we engage with and try and be a positive force and a real positive citizen to all those around us. And also, because we're growing and we have a healthy balance sheet and we need new facilities, we're able to create our new facilities that are highly aligned with a positive environment. And so we're pleased with where we're positioned on sustainability. We get recognition for some of what we do, but that's not why we do it. We do it because it just suits us well. And speaking of the social side of things, we're fortunate to be a successful company and to be profitable, and we're very committed to giving back. How we do much of this work through the Edwards Lifesciences foundation. Just as last year, we supported more than 250 charities around the world. We have fabulous charitable partners. The work of the foundation comes in 2 pieces. One is our big signature strategic effort, which we call Every Heartbeat Matters. And we achieved our goal in 2020 and set a new bold goal for 2025 that said we're going to improve the lives of 2.5 million underserved structural heart and critical care patients. So COVID doesn't make this easier, but we've got more than 50 dedicated strategic partners that are helping us pursue this and we continue to be committed. And then the other part is to just support the communities where our employees live and work. And we list on that to our employees and take our cue from them. We did a lot of special efforts, particularly around COVID, but we support all the communities. One of the things that I'm most proud of is that our employees actually get engaged in charitable activities. More than 80% of our employees in the past year did something terrible that they cared about over the past year. I just tell you it's kind of in the DNA of our group to be able to give back, and I'm very proud of that. So just in summary, I am very, very optimistic about the long-term prospects for our company. We're going to create value. Why do I think so? Number one, the patient populations that we serve are underserved. Gee, do we do better than our parents or grandparents in terms of options? Yes. How about what's possible in the future. We think there are huge advancements that are possible with technology for this group of patients. We think that because of the way we've behaved in the past, we've earned a certain amount of credibility and trust, which gives us the ability to think boldly and to go after these big bold innovations and that we're able to have strong partnerships with all the people that are so important for us to do our work, whether it's clinicians or the regulators or the payers or the patients that they can trust us to do our work. We've got a heck of an R&D machine. We have some very, very talented folks that are so committed. They've worked hard through all the challenges along the way, and they are energized by the opportunity for them to do big bold things. And so it gives me a great deal of confidence when I get to look into their eyes. And again, what our strategy is about is not necessarily acquiring the growth, but through our own efforts to generate true organic sales growth that's sustainable. And what makes me probably feel best about the whole thing is the super culture that's right in the center. This patient-focused culture. I want to read one to you because I didn't want to get this question. We do a lot of surveying of employees and ask them about how they feel about various things. One of the questions we ask at Edwards, we consider what's best for patients when making decisions, over 90% positive. So it's the kind of thing that gives me great confidence that we're well positioned for a bright future. So with that, thanks very much for your time. We're going to transition to Q&A. Take about a 5-minute break. We'll put some chairs on the stage, we'll bring up all the speakers, and then we'll jump into it. [Break]

All right. And welcome back, everybody, to the Q&A portion of the investor conference. As Mike mentioned, you can see from your agenda in front of you, we've allotted about an hour for Q&A. So we'll do our best to get to as many of the questions as possible from those of you in the room as well as those of you on the phone. For those of you on the phone, please just make sure you mute your computer audio before asking a question, and please use the dial-in that was included at the bottom of the press release that we issued this morning. At the conclusion of the Q&A session, I'll ask Mike to make some brief closing remarks before signing it off with what I think is a real great patient video that you guys will enjoy. And so with that, let me kick it off and open it up to some questions in the room while our operator, Diego, compiled a list of [ polished ]. Rob, go ahead.

Robbie Marcus, JPMorgan. First off, thanks for being this great event together. It's really helpful. Two questions for me. Maybe first on TMTT. It's really impressive revenue more than doubling for next year or almost doubling. How do you think about the drivers to get there? Because it seems like some of the new product approvals come later in the year. Is it improving sites? Is it trial revenue, something else?

Yes, why don't I start out and then Bernard you can jump in. It's going to primarily be a year of Europe sales next year. So that's where most of the sales are going to come from. So it's going to be the -- primarily the expansion of PASCAL in Europe. Although we do expect to have a U.S. approval by the end of the year for PASCAL, we really haven't modeled much impact for 2022. But Bernard, can provide a little bit more color there now.

Absolutely. So it is going to continue what we are doing in Europe. It is about activating more sites across Europe. We have been doing that in the last couple of years. And we have many more sites that are opening up. And we do that in a very meaningful fashion to make sure that we do it with our high-touch model of that, so site activation, number one. Number 2 is I talk about sort of the market, the Mitral market in Europe in Q3 was softer than expected. And we are expecting that the Mitral market is going to recover next year.

Great. Maybe just a follow-up, Mike, with evidence building around asymptomatic and open the next few years moving more into TMTT and hopefully, over time, moderate. What are you doing to prepare the market in patients for the next 5 years of growth? You're going to need probably a lot more doctors, more capacity at centers, also a lot more awareness and buy-ins. So what are the things you could do today to prepare the market for 5 years from now?

Yes, it's a great question, and we don't have perfect control over that. But one of the things that we can do is to do these big transformative clinical studies. We think if there's something that really gets the attention of clinicians and systems broadly because when we do this transformative work that has that opportunity to be published in prestigious journals and talked about from the podium, it sends a signal to where the growth is going to come from. Our customers around the world, they want to be where the puck is going. And so for them to get a signal of where the growth is going to come from, and we obviously feel that way. But we could see how well the market has reacted to TAVR over the years. We were able to send enough signals that TAVR is improving, it's expanding. And hospitals build capacity be as they said, "Wow, that's a growth opportunity for us." And actually, they know how to operate profitably within that sphere. And so we've been impressed in terms of the way that they've reacted. Do you have anything you want to add to that, Larry?

Yes. Yes, sure. The -- a lot of things that we can do is just help finish share best practices on each other and run programs for how they can be more efficient, moving to concussion and moving to next day is charging, making the procedure really efficient. I mean it takes more time to turn over the room now than it does actually perform the procedure. And we have centers, some of our top programs, they'll do 7 TAVRs in a day. And so it shows you what kind of capability is there when the procedure is predictable, and it worked out well. And...

You're talking about programs like the benchmark.

Like our benchmark program, and we'll run training programs on this. We'll do it at major meetings. And it really helps centers advance even centers that are pretty well optimized they find there's still opportunities for them to get further optimized. And we try to do that to create capacity for ourselves, but we also try to do that to create capacity for Bernard because if his innovations show up, they're going to need that space. But I think we try to talk to hospitals about the importance of training a second team. One of the great things about TAVR is it's really been to be skilled. When we started it, it was the best operator in the hospital was doing TAVR. Now I go to cases and I think I'm going to watch one of the KOLs and he's standing there talking to a fellow or actually talking to me like a fellow does the case, and that's just where the technology has gone. Bernard's kind of more at the front end of that curve where still the highly so people and the complementary imaging is still kind of coming online. And so I feel like we need to do a lot of great capacity for his stuff showing up.

Matt?

Matt Miksic from Credit Suisse. So one for Scott, and I have a follow-up if I could. So on the outlook, if you could talk maybe a little bit about -- you mentioned COVID obviously, it's a big question mark and it will affect the range that you've given. But can you talk maybe a little bit about some of the factors that sort of are contemplated at the high end of your current range and some of the factors maybe at the low end of the range?

Matt, are you referring to '21 or '22?

'22.

Okay.

Yes. So you're right. COVID's a big wildcard. And our guidance is based upon the assumption that we do have this gradual recovery from COVID, but there are no significant interruptions or dislocations resulting from variance. And so if that -- if one of those happens, like it's not a gradual recovery, it's an extended experience with COVID or there's a more significant impact, and that would negatively impact our guidance. If COVID were on this glide path to recover from COVID, which is our plan, our guidance, then the real drivers to the higher of the range are more around adoption of the therapy and therapy in the case of TAVR is relevant to what happens in Europe and the U.S. The therapy in the case of TMTT is going to be, as Mike and Bernard have said, more commercial sales of PASCAL in Europe. And in surgical and critical care, Katie and Daveen talked about the new products that are really helping to drive those sales. So the extent that adoption is faster than we're expecting, then you could see us get to hire into the sales range.

Great. And then a follow-up for Bernard if I could. So you'll have -- we talked a lot about repair in mitral, in TMTT driving next year sales, but you'll have it appears that you're going to have a valve replacement approved focused by the end of next year. I wonder if you could talk a little bit about things like pace of enrollment of those studies and potentially what that tells you at this point about what adoption and interest in that program could look like when you do have a commercial product?

Yes, so a great question for sure. Like I shared with you, we see a lot of excitement. Excitement from the physicians involved in the TRISCEND study and the EVOQUE trial. We see that they are submitting a lot of patients. So we see the cadence of patients being higher than usual. And it is a true testament about the fact that they have no other solutions for these participations and the benefit of this technology, which is achieving with a great outcome, safe with a great efficacy. So that, we see that in a clinical study kind of things from -- when we get to the approval late next year in Europe, we're finishing to put together on the plan. But we are going to do it the way we do things like all the time. High-touch model, we are going to have activated of sites by wave in 2023. So think about a dual launch in 2023 because priority #1 is to make sure, and I think Larry talk about that earlier this morning where he said, look, there is a big value in physician for their first 3, 5, 10, 20 cases have great outcome. So it is not about pace, it is about great outcome from patient #1, from patients 1,000. And this is the way we are going to implement this service launch.

Well, I got some other follow-ups, so I'll wait.

Larry.

Larry Biegelsen, Wells Fargo. Either one on PASCAL, one on early TAVR, so Mike or Bernard on PASCAL. So the price premium are you signaling that you think you'll be able to show superiority in Class IIb? And if you don't show superiority, how much of an impediment do you think a price premium is going to be adoption? And then just for Larry, how are crossovers handled in early TAVR. Do you think that will be -- is there a lot of crossovers that will hurt your ability to show a significant benefit on the hard outcome? And why you think you're going to need a minimum of 2 years on all these patients, the studies that enrolling since 2017, you already have a lot of patients with a lot of accrual?

So Larry, you're best in class in getting 4 questions in 1. So let's start out with PASCAL. And I think you conflated 2 different things. One is do you think you'll have a premium and that you can command the premium and the other is do you think you'll be superior. And we really look at that as 2 different things. Yes, we're operating at a premium and now we powered this trial to be non-inferior. But Bernard, why don't you go deeper on both of them.

That's a good recap. So the trial has been powered ]. And we are expecting that, obviously, and this is what we have in our model. Now when it comes to value, value for us gain means more than that. It is the value of the technology, our high-touch model where we train physicians. We are in the case all the time; we help them screened the patients. And we believe we deliver value from a patient outcome standpoint. So this is why today, we are operating in this price premium in Europe. So that's basically the way we are thinking about it, Larry.

And Larry.

Let me answer. Larry's 1 3-part question. So the ease of crossovers, when a patient is asymptomatic, they're off guideline. And so they're .

What -- just for those that aren't as deep, Larry, why don't you just back up and talk about what the crossover is rather than start into the issue, explain what the question is about?

Sure. So any year we have a trial. We take patients that are being asymptomatic. So they've been subject to the stress echo and they were confirmed to be asymptomatic. Let me randomize 1:1. So half the group goes to TAVR and half the group goes to medical therapy. For the group in medical therapy, there's no indication to treat them because they're truly asymptomatic and so they're off guidelines. Once they become symptomatic, now they're on guideline for therapy, and there's no ethical way that we could say we're going to deny patient therapy just improve a medical point, right? So once they become on guideline, then they cross over, and they get treated. Now in terms of the time it's taken to enroll the trial, we did account for that by making a modification to the sample size. Because we're going to have longer follow-up, we took the sample size, I think, from around 1,100 to 900 or something 1,050 to 900, something in that ballpark. And so we accounted for that a longer enrollment time. But we want to make sure that we capture a significant number of patients. And then frankly, nobody knows how long it's going to take a patient to progress from asymptomatic to symptomatic. The risk of running a trial and saying, "Hey, just open the book for the year and then finding out, oh, shucks, it didn't go the way we thought." You don't get to put the genie back in the bottle and run it for another year and to try to do this trial a second time, so think about what that would be for an undertaking. So I'd rather make the investment up front by putting the 2-year endpoint on it, I think we're going to definitively show whether [ TDA ] systematic works or it does not. And I think there's just more risk if you would have called that high point earlier.

Chris Pasquale?

Chris Pasquale, Guggenheim. One for Bernard and then one for Larry as well. Bernard, I just want to understand the regulatory time line around PASCAL in the U.S. a little better. Did I hear you correctly that the trial has not yet completed enrollment that is on track by the end of the year?

Yes, you're correct. Quite frankly you could be right.

Okay. So we get the enrollment done in the next couple of weeks. You guys are talking about a midyear submission, 6-month follow-up. I mean that's the pretty quick turnaround on the data and approval by year-end is also a pretty quick turnaround for PMA products. So what gives you confidence you can actually get approval 12 months from now?

Yes. So one is, yes, so we are going to complete the enrollment in the next few days. Obviously, we have been running the city for quite some time now. So the team is ready to look at all the data. It is all about bringing the patients for follow-up 6 months and there is a window, correct? It is 6 months, plus or minus a few days, a few weeks. So we are going to do our best to partner with the sites to bring the patient in as fast as we can. We are willing to support them do that. We are also talking to FDA to make sure they know it's coming, and it's on their agenda to be able to give us an approval in 180 days by year.

Yes. But it's also fair to say, Chris, you're right, there's risk involved in this. This is that are a no-brainer. This is an all-success model if things go very well and everybody -- the data falls in place and that everybody is properly motivated, and they have the time and the ability to move quickly.

Okay. And to what you talked about earlier is not in guidance for this year. So they did slip, U.S. sales really in the guidance?

Correct. That's right. That's correct.

And then, Larry, I was hoping you just spend a minute on X4 and what the main benefits are there. And then just to clarify on progress, what patients are looking at them specifically in the past, moderate AS has been combined with heart failure symptoms as the population. It's not clear that that's what you're doing there. So we just led to some insight on the patients there.

Well, good. We've been intentionally vague, so that's good. No. So for X4, I talked about RESILIA platform. For competitive reasons, I'm not going to go into a whole bunch of other things about it, but I try to get you guys concluded where we're going. We think more can be done around [indiscernible] and we think more can be done to really optimize sizing. So patients don't come in 3-millimeter increments like our valves do. And so how do we really optimize valve performance for patients across the size range rather than just in a very specific size range. So I think , the optimal sizing, obviously, we want to preserve a corner access or improve that when there's opportunities to do that. And then the resilience issue around durability, I think, is a big thing. So the progress trial is not like unload. It's moderate AS and it's irrespective of symptoms. But practically a patient has to come in and a get an echo for some reason, which generally means they're going to have some sort of symptoms of some sort. Otherwise, they're -- I don't think most healthy people just wondering and say like getting echo, I'm curious. And so they are coming in for some sort of reason, I suspect we're going to take up some symptoms. But what we didn't want to do is have the hard-core symptom assortation that we have in something like unload, which was a real barrier to enrollment. So we just want to focus that on primarily moderate AS. We know the patient is doing the system for a reason and then we'll randomize them very similarly to EARLY TAVR. The one difference here though from EARLY TAVR is very [indiscernible] crossover. So when a patient goes had severe AS and then they go to symptomatic you have to cross them over because they're now on indication. A patient's symptom is getting worse in the moderate arm. They're still not indicated until they actually become severe. So we're not going to have that same sort of crossover issue. They can become severe and once they become severe, we will have to cross them over, but it's probably going to be a longer process depending on what range of moderate patients as we go up for the trial.

Thanks, Larry. Diego, can you see -- it looks like there are some questions on the phone. Can we go to the phone to see if they're our first caller?

I think we have a question from Vijay Kumar with Evercore ISI.

Guys. Thanks for hosting this. Apologies if I could not make it in person. You guys are looking right there. Mike, maybe a big picture question for you on. Mike, I hear a lot of numbers there. The high level, when you look at the $5 billion TAM by, actually I wouldn't call it TAM, it's not a TAM. I think that's a real aggressive market in 2028. What goes into those numbers? Do you have, obviously, PASCAL is there. Do you have replacement in there as well? Do you have tricuspid in there? And what kind of shares would resume? Should Edwards be 50%, 60% of that market?

Yes. So thanks, Vijay. Yes, it's always kind of difficult here when you're trying to provide guidance that far into the future. But just to give you a sense of what's in our assumptions. Yes, we believe that PASCAL is going to be successful, that's in our assumptions. But again, we're talking about the market, not Edwards, right? But yes, we think that that's going to be successful trials. Yes, we think that replacement products in the mitral and tricuspid areas are going to be approved. And so that's in there. In terms of how much share we get, time will tell. We believe that the technology will advance. It will advance successfully. But in terms of how much share we get, that's really up for you all to estimate now.

And just maybe on this, Mike. Are you -- I think one of the questions investors had was to buy into the Edwards' long-term thesis, we need to bet on Michael? Essentially because Edwards was just saying, look, we will solve mitral, and this is fairly be a risk? Is it what those numbers imply? And if I could one for Larry. I think I heard a similar question on the TAM. Did you say it does not include moderate AS? I just -- if you could clarify on that $10 billion tower number.

Thanks, Vijay. Those are really good questions. So let's just go back. Yes, we believe that we'll have success with replacement in tricuspid and replacement in mitral. Yes, we think that the tier, the edge-to-edge therapy is going to be successful in both tricuspid and in mitral. Some of those approvals are going to come late in the cycle. So it's not like they're going to come in the next couple of years, they'll come closer to 2028, so they'll have more or less moderate impact on 2028. And as Bernard likes to say, we're just getting going in TMTT when we get to 2028. But hopefully, that gives you a sense of what's in there. And Bernard, feel free to add to that. And Larry, why don't you talk a little bit about what's in the TAVR assumptions of $10 billion by 2028?

Yes. I think you said all, right. Basically, the way to think about it is our 5 randomized study by then will be completely finished, presented. So we will have evidence some earlier, some later between now and 2028. Some will have a greater impact. For sure, we are expecting moving from today, which is a clear market to more replacement, tricuspid and mitral by 2028. And this altogether, basically is making this $5 billion.

Yes. On the $10 billion for TAVR. The primary driver is severe symptomatic aortic stenosis patients. That's going to be the primary driver, continuing to expand low risk and some of our global expansion, those are going to be things that primarily drive to that. There is some asymptomatic in that number, but it comes later in that period. But we probably don't think moderate shows up in that time period given it's a 2-year endpoint on the trial and time they'll take to analyze the data and the time it will take to enroll. So that's really more out of scope. That's something that we think is going to be a driver beyond 2028.

But in the core of your question, Vijay, so why should we believe that doesn't Edward have to be successful with their innovations for that to happen? The answer is yes, that's true. We need to be successful. Not an all-success model, but some serious success.

Diego, is there one other on the phone, maybe that we can take the question from?

Yes, we do have a question from Danielle Antalffy with SVB Leerink.

Thank you so much for hosting this event. I actually want to start with critical care, and then I have one follow-up for Bernard on the mitral side of things. But Katie, on critical care, where do you see the key technology advancements from here more specifically? And also curious how you think COVID has maybe changed hospital's appetite to adopt this type of advanced technology.

Yes. So thanks for the question. So when do we see future innovations around algorithms? So it's algorithm development, it's all about getting the data. So getting those baseline data sets helps us develop new algorithms to solve future problems, right? So the first one that's coming out beyond hypotension prediction is assisted fluid management. And assisted fluid management is a predictive indicator that recommends to clinicians when patients need fluid. So that will be coming out in 2022. We're also working on algorithms around our hypertension, so looking at the opposite end of hypotension. And so really, we think it's unlimited, the things that we can help with. But to your question, during COVID, really, everyone kind of goes back to basics. And we saw everybody just going to basically put blood pressure monitoring. And as you saw in the example of Raul, just trying to ring the bell to get patients up and home to their families. Where they use the advanced and smart monitoring is mostly in cardiac surgery or cardiac ICU or in the longer, high-risk noncardiac surgery and the noncardiac ICU. And so to the extent that those procedures are coming back to normal again, over time, that's where you're going to see the growth.

So Katie, when you've talked about it in the past, you talked about the positives that have come to think that critical care had to do to help during COVID but also some of the drags. Do you want to describe that a little bit?

Yes. So we saw some increase in demand for capital and mostly significant increase in demand for our basic DTCs. So what you see for us is if COVID surges, there's more of an increase in the core monitoring business, but then because procedures go down, then the smart monitoring come down, so it balances itself out a little bit. Over time, we're seeing actually a more stable, higher usage of our basic pressure monitoring. And then we're seeing regular procedures come back. And so smart monitoring is starting to come back to growth again.

Got it. Okay. And then just one quick follow-up for Bernard and back to the guidance for TMTT for 2022. Is there any more color you can give as far as you mentioned bridging us from '21 to '22 is going to be activating new sites? Like how many new sites are going to be activated? Any color you can give to give some comfort around the big jump there that you guys expect to see? And are these going to be competitive sites? Are you opening new sites entirely? Just a little more color there would be super helpful.

So think about in the last couple of years, where we have been deploying ourselves while we started in Germany, and we have activated a lot of sites in Germany. We still have a way to go in Germany to activate more sites again because we go by quarter and we see how many sites that we can open. We also deploy ourselves in many countries outside of Germany, but we have not yet reached what we can do. So I would say that we are opening a certain amount of sites by quarter. We see that even in Q4, despite all of these COVID happening right now, we are still very active in opening new sites in Germany and outside of Germany. And we are going to accelerate basically the site activation in Europe next year. It is one of the major drivers of expansion next year in April.

Okay. Great. Thanks for the questions. Maybe we'll tun this back in room then and see if there are any additional questions here. It looks like we're just going down the road. Joanne Wuensch, please.

It's Joanne from Citibank. I want to clarify a couple of things on PASCAL, if that's okay. Are you assuming that a panel meeting will be needed in the United States?

No, we are not assuming that we will have a panel meeting. The trial is a randomized trial against MiCLASP. So we are not assuming for a device in the second after MiCLASP have a panel meeting. So no panel meeting.

No panel meeting. Reimbursement will be in place when you get launched?

Reimbursement will be in place with the current DRG in place today in the U.S.

Okay. And then a question in surgical heart valves. Talking a little bit more about headwinds as sort of TAVR takes off, not take off, continues to take off. How do you think about incorporating that into your market assumptions?

Definitely. Thanks for the question. Across our major markets, we continue to assume the ratio in the developed world, especially if we continue to assume that the ratio of TAVR to TAVR continues to increase kind of based on where that health care system is in that ratio and patient care, which patients are getting a TAVR and which patients need a TAVR. So we have that built into our model. So it's obviously that have to a greater extent than we're assuming that would be a headwind to our model next year.

So Daveen, why don't you give a little bit more color on that? So when we see these major approvals, you see sort of TAVR versus TAVR surge to some extent. You see it happen in different race around the world. When you go big picture, do you think that aortic -- surgical aortic will shrink? Or do you think they'll grow? And if so, why?

Yes. So there's 2 different factors you can always imagine, right? The AVR market, overall aortic valve replacements are growing at a great rate, right? And within there, you see this conversion of TAVR and SAVR. So we now reached the point, especially in the marketplace in the U.S., where the low risk indication has been around for a couple of years and there's been a bit of conversion where we see the surgical market for AVR continuing to grow. How much it grows, part of that depends on the overall TAVR/SAVR kind of conversion. So we've probably seen last year Larry's group got a great indication reimbursement for the low-risk indication in Japan that the TAVR/SAVR ratio started staying there, which still put a little bit of a headwind to our business even though we're still slightly growing in the surgical market as well there.

But just to build on that, when we try to say TAVR, and there are a lot of emerging markets, they didn't even adopt tissue valves yet. They're still using mechanical valves. So in places that's still using mechanical valves, they're probably going to go through process of converting to tissue, and then TAVR is going to be further down the road. And so I think a lot of those emerging markets, there's the right opportunities for surgery to do that mechanical and tissue conversion.

And part of the pyramid for those mechanical valves is huge, and that's a great opportunity for a premium innovation. Thanks, Joanne. Anthony?

Anthony Petrone from Jefferies. One on the $10 billion TAVR outlook, and this dovetails on the discussion last night. What is in there for the percentage capture in the severe symptomatic category? Specifically, that $10 billion, I think last night, you suggested 10% to 15% referral rate. So if you do that math, it really sees that if you put a total available mark on it, it's about $68 billion. So what is actually in it for the severe symptomatic capture rate? And then I have a follow-up on CapEx relating to this for Scott.

Yes. Well, it'd be kind of a doubling of the penetration rate. But if you look at the penetration right now, it's still quite low. We're still probably in the low teens as it relates to the penetration rates. So even if we double it, and this was all severe symptomatic AF and you double it, you're still going to be in the low 20s -- low to mid-20s, which still feels like a pretty low penetration rate for this severe symptomatic.

Including the U.S. number, which is the highest number in the world. Globally the other markets that 10% to 15% is actually a lower number. So there's even more opportunity.

Yes. Daveen and I spent a lot of time looking at the total opportunity because we want to make sure we don't double count, right? So we create one model that we both live within, and it really does change depending on where you are in the world. And so we quote the U.S. a lot because it's the largest opportunity. But even in the U.S., the treatment rates are really disappointing very low when you consider how deadly the disease is.

So the follow-up would be if you consider early TAVR and then the PROGRESS initiatives in moderate, and now you have a DTC campaign that may be, I think, across all global markets, they would try to tell you would eventually need a growth CapEx cycle, right, in the 2028 horizon. And so if you really do unlock, let's say, kind of the 5% of severe symptomatic will that require a growth CapEx cycle in that 2020 horizon?

Well, we've been going through a growth CapEx cycle. So you're right. And what translated into is a combination of building new facilities and expanding the capacity of our existing facilities to grow things like retooling, LEAN initiatives and the like. So we're going to continue to invest in both valve plants as well as delivery system production facilities around the world. Our objective is to really have a pretty broad footprint and to have redundancy in various different regions of the world to account for potential supply chain interruptions, potential regulatory interruptions, et cetera. So we're going to continue to invest in facilities.

And I just might add to that. We're not an overly capital-intensive business. And you can tell just by looking at our -- the amount of capital spending that we have on a traditional basis. And when you talk about things like doing TV commercial, we're just kind of experimenting with, I would say, at this stage, it's probably not a capital expenditure. That's going to put pressure on our SG&A rate. And it's why we don't necessarily project ahead and say we're going to get a lot of leverage because some of those costs, even as the business grows, are going to grow.

Thanks for the question, Anthony. Maybe a couple more in room, and then we'll go back to the phone and then back in the room. Jayson?

Jayson Bedford from Raymond James. I'll ask the token COVID question. It's amazing it took this long, but you've referred to COVID as a headwind in every segment but Critical Care, but -- and I know this is a dynamic situation. But at some point, COVID from a year-over-year growth perspective, I think, becomes a tailwind. So maybe can you talk to the COVID-related headwinds that you're seeing in the market today and maybe just touch on the thought of tapping a backlog of patients?

Do you want to go?

Well, I think we can all chime in, but I'll start. We can hardly wait until COVID is a tailwind. I think we all can. But for now, the headwind is basically tied to various different hotspots. We've seen it in Europe as recently as just the second half of the last month. We've seen it in how it relates to the hospital staffing challenges. And so we're going to work through this and try to be nimble and be prepared for whatever comes our way. But we are expecting that we're going to be living with COVID, especially as we get into the early part of 2022.

Yes. And I think maybe that's the point, when we give our forecast for 2022, we assume that, yes, it's a headwind, but it'll be a gradual recovery from COVID and that we won't have any of these sharp impacts come from a dramatic variant, for example, that came through. If that's wrong, then we'd be too optimistic in our '22. But also, as Scott says, we're just -- when we're thinking about calendarizing the year, probably more pressure in the front of the year than the back. Just knowing that it's still winter, and we're still -- the system is still dealing with COVID and the variants that we're dealing with today and with the idea that it's likely to get better, at least that's in our assumptions as the year goes on.

Comments on the backlog? Or is that even worth mentioning?

No. It's worth mentioning, and it is there. It's a good point. So for those that aren't closer to this, in Q2 of 2021, we saw a real boost in our sales. And we feel like there was a portion of that, that was clearing of a backlog of TAVR patients, and we've felt it in the U.S. and maybe, even more broadly, globally. Could that happen again? Yes, it could happen again. We hesitate to predict it but we're certainly not feeling it at the moment. And we haven't put big numbers in our forecast related to that.

Okay. And just on PASCAL commercialization, do you think adoption in the U.S. will be impacted by a more narrow label versus your competitor out there? And I realize you're also building a separate team for PASCAL, but can you talk about the potential synergies, selling synergies with your TAVR team? Do you think that's a factor as well?

Yes. Bernard, do you want to go?

Yes. Absolutely. For PASCAL we need a DMR approval. So we will be.

So you might want to spend a second just explaining DMR.

Yes. [indiscernible] mitral regurgitation is one segment of the entire mitral patient segment. It is less than FMR, functional. And we will be selling all the units as DMR, this is where we will get the approval. So we are -- again, the year 2023 will be a control launch for us. We are going to think about -- we are going to start with a few types, I don't know yet how many, but think about we have about 75 in our clinical study today. So probably we have a good target to start with. And then we will expand throughout the year. In terms of synergy with Larry organization, we are talking a lot. Larry and I are talking every day, sometimes multiple days. Our different people are talking on a regular basis. But I think dedication is superimportant. This is the only way to have a high-touch model. This is the only way to do the things the way we want to do it -- to bring value to physicians and achieve an outcome. So yes, we've seen [indiscernible], but we are not going to obviously sell both together. The 2 teams are going to have different objectives.

Yes. I think it's a really good point, and Larry, you can build on this as well. But remember, when we launched TMTT, we could have leveraged the best transcatheter aortic valve team in the world in our opinion. But we said you know what, that opportunity is so big, we want that team to stay focused and tricuspid, and mitral and catheter valve is such a big opportunity, we want a dedicated team. That's we went after it. We know when we get approval in the U.S., it'll just be the degenerative patients, but we're in it for the long run. Bernard has a trial going through functional patients. And so that will come at some point. But we're -- it will progress over time.

Ironically, there were more procedural synergies 8 year ago. 8 years ago, we were doing all of our patients [indiscernible] in the middle of the procedure. Our people are doing echo. We were using echo for sizing and for approaches and those things, and our procedures take a couple of hours -- this procedures will take a couple of hours. It was much more similar. Now if you look at where TAVR is, it's a 45-minute procedure particularly under fluoro, you know a patient can get diagnosed under echo, but all of the sizing is all done on CT. It's just very, very different than what's happening in the micro procedures. And like we have -- our whole goal is how do we get the stat procedure, how to do 5 in a day and do them in one setting and do them very efficiently. And the mitral technologies just aren't at that place now where they can do that kind of stacking. And so I think it's pretty different. I think our focus teams really driving each thing makes the most sense. Now there are a lot of synergies, though, in terms of how do we share account information, how do we share physician interest [indiscernible] interest in this. And so we go to Bernard, and sometimes we go to Daveen. The 3 of us all -- we ignore Katie, but the 3 of us all work close together.

I don't think anybody is going to ignore Katie, right?

But it's more important if you think about the forces at the field, right? The coordination that happens on the ground was [indiscernible] separate primary customers. But the coordination between mine and Larry's reorganization in the U.S. now happens down the field where reps are talking to each other, managers are talking to each other, how to approach account, who's the right person you have to go to for different things, and that's just important. And I think that the synergy we all have in structural heart will stay.

And I care about Katie, but actually, we work really closely with Katie as well because we're desperate to understand that any of the algorithmic work she's doing could be predictive of AF. So Katie and I work really closely together and say, hey, is there some way to move away from echo diagnosis? And so we pretty much the 4 of us spend a tremendous amount of time together in different ways and just trying to figure out how we can all partner together to make this thing go.

Jayson, thanks. Brandon?

Brandon Vazquez from William Blair. It seems like one of the main growth drivers at this point for TAVR is going to be kind of getting these patients into the funnel. And that's just step one -- step two is maybe sort of even getting them in front of their heart failure team. We have 1 or 2 slides on this kind of dynamic. I feel like maybe you guys could have probably done an entire session on just this dynamic. Could we just spend a few minutes talking about that? What are the efforts you guys are investing in? Are you increasing those efforts or those investments as we're getting to kind of the next leg of patients?

Yes. We're certainly increasing those efforts. We focus a lot on digital. We focus a lot on social media, we focus a lot on our presence on the Internet and how do we reach out to people, how do we make people more aware of the disease and also where can they find a heart team. When a patient goes through the traditional pathway, if you will, of going to their GP and getting referred to a cardiologist and maybe getting diagnosed and running through, it makes the average patients more than like 6 months from the time that they first get diagnosed or the time they actually get their procedure. And when you have a disease that is deadly, that's just really not good. So part of what we're trying to do is how do we jump over that a little bit and how do we get patients going more directly to their heart team? I mean what a patient ultimately wants is they want to see one of our heart teams that has the surgical options, the mitral options, the TAVR options and really diagnose the patient and say what's best for them. And so we really try to push the heart team concept part, and we try to push patients to seek out a heart team where they can get all the options for them. And not every patient is a TAVR patient. There are some patients that are better served than surgery. And I think products like KONECT is an excellent example of that, and you might have AI and group pathology. They come in asking about TAVR because they may be heard about it, but they're not a good candidate for it. And so it's a great place for a handoff. And this is just the stuff we continue to drive at and continue to do that, but that's again why we work closely together. We're -- the competing commercial was a big step for us. We thought about it deeply. We talked about it deeply, and we just felt it was the right time for us to do this. And I think it's going to take us a while to figure out how effective that is. But we're just committed in one way or the other. And if something doesn't work, we just move on to the next thing, and we're just going to keep going until we get these patients off the sideline and get them the care they need and deserve.

And then one other one maybe on international. I think a couple of years ago in the 2019 Analyst Day, we spent a lot of time talking about the underpenetrated market in TAVR within international key markets. We didn't talk too much about it today. We can appreciate COVID kind of made that a little difficult. But where do we kind of sit with international penetration today, is it still underpenetrated relative to the U.S.? And how big of an opportunity is there for investment there to set that up?

Yes. So I'll start here, and I encourage others to do jump in here. Clearly, there's an underpenetration outside the U.S. compared to the U.S. U.S. is the most penetrated, and we complain about how little the U.S. is penetrated, and it's far bigger opportunity outside the U.S. It seems as though it primarily correlates to where they are in terms of the growth of their own economy. So GDP per capita kind of matters. And we almost see as GDP capita increase healthcare, spending increases and the adoption of our technologies increases along with it. So we still tend to see Europe and Japan being bigger -- the biggest users of our technology outside the U.S. But the emerging markets, although they're still smaller, are the ones that are growing the fastest. And even mature technologies like the ones that Katie and Daveen are managing, there's still big growth opportunities. And so feel free to add in.

Yes. And that's why I think we highlighted and we talked a little bit about it, at least in surgical-led opportunity. Again, 60% the world of mitral valves are mechanical primarily coming from emerging market. Huge opportunity to help those patients out with premium tissue technologies. I think we continue to be excited about it. And I think as Mike says, we can see, especially in self-pay markets, as you see country get wealthier people are living longer, the first thing they do is they say "How can I spend some more in health care? How can I live a longer, better life. " And you see their awareness of disease and their willingness to spend go off and generally, our Edwards technologies just go along with that very well.

And even Europe, and Europe is not homogeneous. The penetration rates in Germany are very different than the penetration rates in the U.K. There's still a tremendous opportunity even when you look at Greater Europe to improve these penetration rates. And I think we look at that -- Japan is still a rich opportunity, I think. And we're just getting started at low risk. We got the low-risk approval right at the middle of COVID. And so I just think there's a lot of international expansion that's still out in front of us.

Brandon, thanks for the questions. It looks like we've got a few more online here. Maybe we could transition back to the phones before coming back in room and closing out with a couple of more questions there. So go ahead if you're ready.

And our next question comes from Matt Taylor with UBS.

So I wanted to ask, one, I think it's really for Scott and maybe others can jump in. Just on the assumptions for next year. I totally get the gradual COVID recovery. I think that makes sense to start out with. I was wondering if you could give us some thoughts on the big hot topics of staffing and supply chain. It sounds like you're relatively sanguine about supply chain. So I just wanted some more detail there in terms of inflation impact. And then staffing is something a lot of clients are concerned about, and I was hoping you could provide some insights as to how you think that could resolve, if COVID cases go down, do you think that largely resolves the staffing issues? Or could you see some friction in the hospitals ability to deliver care next year?

Well, so I'll tackle those questions and leave the staffing for hospital issues to somebody else. [indiscernible] is a relative situation. In 2020, we ended up incurring a lot of additional expense, keeping our plants open, keeping our employees safe, keeping our supply chains resilient, supporting our suppliers. And so those expenses actually come down during the course of 2021. And we're getting back to a more normalized expense environment for global supply chain, which is why we're not feeling as much of an increase as we hear other companies talk about. So it's not to say there's not an impact. There's definitely headwinds. There's wage pressure. There are materials, price pressures, but it's really pretty manageable at this point and has baked into that guidance that we gave of 78% to 79% gross margins.

I'll just pile on a little bit. I'm extremely proud of our global supply chain. They've done a remarkable job of continuing to maintain supply during all kinds of challenges. And a lot of it is not only their commitment to patients, but also the fact that this -- that group has been very forward-leaning from a strategic point of view. They have built resilience in advance so that we were able to handle some of the shocks that we took on. And as Scott said, it's a better situation right now. But if you were to actually get in there with the supply chain guys, they're fighting fires every day. They're constantly fighting price increases or disruptions to technology and find a way to maneuver through it. So it's been impressive thus far, and it really hasn't shown up in our financials. Now the other part of your question is related to hospital staffing. We hear about that a lot from our customers. But maybe some of you guys want to comment on that. Yes.

From just a surgical standpoint, obviously, I think that's the #1 thing I hear from my customers in the U.S. and Europe more recently. And I think at least as we saw during COVID that surgeries were - life-saving surgeries were generally prioritized. So I think there are always some hits here or there. Everyone -- it's an overview of [indiscernible] for everyone. Everyone's got, and they're kind of going, putting mouth across the board. In general, with chemosurgery, that, yes, there's some hits here or there. But across the board, they make it happen, but it's tight, it's very tight. They feel the pressure. They're waiting for the person to get out of the ICU so that our patients can go to the ICU so they can finish the surgery and get another one in, but it's definitely top of mind. And there is hoping that as we move out of COVID, there's more optimism that we'll get to more staffing model, normal models. But anyone else want to comment.

A lot of hospitals -- I think I know have been frustrated, whether it's vaccine or whether it's just people that stepping out of the field is causing pressure. And I know hospitals are super active about trying to figure out how to back fill these physicians. I know one of my hospitals that they had 35 nurses, and they're all going through their training program now trying to backfill. So I know they've been really aggressive on trying to solve this. And it's not the first time we've seen the pendulums swing. I mean -- how long ago was it, maybe 8,10 years ago, there was a real nursing shortage, and it was a bit constrained then a lot of nursing candidates came through, it took a little time to fill, but it backfilled again and it took care of itself. And I think one positive is I think nurses have been underpaid for a long time. And I think there's probably going to be a little bit of a reset to nursing pay. And I think that's probably a little bit of a positive to come out of this. But I think staffing, I don't know exactly when, but I think it'll return.

Thanks for the question. Diego, it looks like we've got a couple more on the phone. Maybe take those 2 next.

Our next question comes from Adam Maeder with Piper Sandler.

The first one for me is on TMTT, and Michael, up here specifically time line for the CLASP IID study and DMR are pretty clear cut. I think it's been well discussed at this meeting. But I didn't hear much on a CLASP IIF or FMR. So I was hoping you guys could share just a little bit more on the trial progress there or just a broad stroke as how we should be thinking about U.S. commercial rotation, and then I have a follow-up.

Thanks. So what we did last year when -- or last year or maybe 18 months ago, when COVID hit is we look at all of our studies, and we prioritize it on the study. So we said, look, the CLASP IID was the most important for us -- to be able to bring the study along. So we talked to all of our clinical sites around the nation and for revenue to prioritize the study, and we did that well. They did that well with [indiscernible]. So IIF and maybe III are not on the top priority study. Right now, we are changing a little bit priority as we speak given the fact that IID is very close to be completed. So in terms of -- so obviously, IIF has been impacted. IID has been impacted because of this reason. But we see now an acceleration. We are seeing acceleration each year on these 2 studies. So I'm not ready to comment on exactly the time line, whether we are going to complete these 2 studies, but this is basically where we are here.

For the follow-up, just wanted to ask about China and the opportunity for TAVR there. I think you've had an approval now for high-risk patients for about 18 months or so. So just latest update today, how do you think about the future revenue ramp in the coming years and then what is contemplated in that $10 billion TAVR market estimate for 2028 for China.

So I can start, Larry, and then you can jump into some specifics. The good news about China, a very big market and potentially a big market opportunity. What's been tough is getting our approval last year is that we are trying to launch during COVID. And as you can imagine, there is exactly zero travel into China. And so our ability to bring KOLs in or even visit ourselves has been beyond limited. It just hasn't been possible. So -- but we're really not overly concerned about the short term. We're more focused on the long term there. We think China is going to be a nice opportunity. But when you consider how big TAVR is at this point and how big TAVR is likely to be in 2028, that's probably still small compared to the bulk of where the sales and sales growth is going to come from.

I mean I think China is going to be important long term, and one's going to be short term and one's going to be long term. Who knows? But you know the opportunity is there. You have to establish your footprint. You have to establish your brand. We need to really establish our premium brand there. And as any increases, we want to make sure we get our fair share of that. But it's a very different market than in other places we compete. We have local Chinese competitors who frankly don't follow the same regulatory process than we do. We don't deal with that really anywhere else in the world. And it's largely self-pay, which also is a different dynamic, and there's a distributor aspect to it. So it's very different. But I think what we're really focused on right now is kind of like what Bernard talked about when bringing his therapies forward is how do we make sure patients get an amazing experience, how we'd bring our high-touch model there, how do we establish our brand as we are the premium TAVR product in the region and make sure that we establish that and that would drive demand and patients who want the best know who to ask for it. And I think that's our focus right now, so its a much bigger focus on that because we think those are long-term drivers than focus on short-term revenue growth, which I think would maybe drive us to do different things that I don't think would be strategic over the long haul.

Adam, thanks again for the question. Diego, maybe one more on the phone, and then we'll come back in room.

Our next question comes from Rick Wise with Stifel.

Larry, just to kick it off, a question for you. You sort of touched on this in passing just a moment ago. Sort of at the end of your comments, you indicated that you -- I think your quote was we're just getting started with low risk in many markets. Japan I think is one. But maybe help us better understand the comment, is it geographic? Is it still in the U.S.? And maybe help us think about the current penetration of low risk and especially the growth contribution to your near- to medium-term growth outlook.

Sure. Well, Japan is probably the single biggest opportunity for low risk. And Japan is different than other places we've been. Most places, we started inoperable and then we went high risk and we went intermediate risk and we did low risk, and there was just sort of this gradual step down. And in Japan, we went right from high risk to low risk. So it's a different step and kind of requires a little bit of a different education model. But we think having low risk just -- let me just step back. This whole risk scheme is a regulatory artifact. It's not something that makes any sense to the patients. When you talk to an AS patient regardless of their age you say "if you don't get your valve fixed, you're going to die. " And then they go, okay, well, can I get TAVR? And they go, no, you can't, you're low risk. I thought you're just going to die. Well, yes, you're going to die. You're high risk for AS, but you're low risk of dying from surgery. That's really what a low risk means. It doesn't mean they're low risk of dying, it just means they are low risk of dying from surgery. So now that we don't have that risking there in these markets, people can just talk about, anatomically, what's the best solution for you. And it really just changes the conversation rather than this artificial risk algorithm that we applied. So that's part of it. But even when you look across Europe, remember, getting the approval in a lot of markets doesn't give you reimbursement. And getting approval about reimbursement is fascinating, but not terribly productive. So we continue to see reimbursement expanding. We continue to see those things expand, and that's what going to still drive some places in Europe. And then there's just a lot of international destinations where low risk is still terribly underpenetrated. They're still operating pretty much in the high and intermediate risk.

You know what, I was thinking about is remember, the comment from [Phillip Gennaro] I think it is [Dr. Phillip Gennaro] who is involved in a lot of the new technologies we're talking about. It's funny the way that adoption has somewhat lagged the actual approvals.

Yes. No, it's a great point when we talk about getting intermediate risk approval and how important that was for an immediate risk, but it was probably even more important for high risk because people -- when you do high-risk indication, people were debating surgery or TAVR and high risk. Once you got the intermediate risk, it almost killed the debate at high risk. And so as you get that next approval, what it does is it just sort of aims the discussion on whatever the previous approval was, and that's probably one of the biggest benefits you get from expanding these indications that I thought it was a really smart point and obviously coming smarter than us.

Obviously, Rick.

Thanks for the question, Rick. Let's come back in room. I understand there's 2 people who like to catch. So let me go to Suraj next from Oppenheimer, please.

Suraj Kalia, Oppenheimer. Mike, one question for you, and I'll throw in one for Larry. So Mike, one of the topics that has been on TAVR that has been discussed is about access in equity, socioeconomic and race and whatnot. When you look at $10 billion for 2028, where does access figure into that picture? And Larry, if I could quickly throw in a question for you. Yes, you were weighed on the ALLIANCE, and it gives the mind thinking. If it's going to be on personalized medicine, right, you can think about a wider standard deviation protocol, patient characteristics in hindsight. What is the ultimate goal for X4 and ALLIANCE? Is it incremental benefits of what we are seeing today, increase in patients? If you could just kind of give us some tangential goalpost to start thinking about.

So the question of access for some of those underserved populations is a complex one, but let me just try and get to the bottom line. In TAVR, like many other parts of medicine, it's a real problem. There really is an access issue. We find there our underserved communities that just don't get access to the technology. As we -- as this market more or less doubles between now and 2028, we will make some nice progress in that regard. We will not have resolved the problem, but we will have been able to reach a much greater group, and it is a key part of our focus.

Yes. Just touching on that because it's just become a little bit of a personal passion of mine. When you look at the penetration rates or the adoption rates of TAVR in white communities, the line -- that's really what's driving the curve. When you look at community of color, it's almost flat. And it's really, really disappointing to see how poor the adoption rates are. And it's multi-factorial. We try to run the study where we really focus on centers that wouldn't have otherwise had access to TAVR. We put those centers in the community. We did [indiscernible] we could do it. And we thought, hey, we'll give away valves. We'll open up these hospitals. We'll solve the problem. And we had a very difficult time enrolling that, and it's just so much more multi-factorial than just pre-valves or having a hospital nearby. It's how patients move through the system. And so I was just on a program last weekend where we're talking to local communities, communities of color, of how do we make this information available and how do we leverage churches and barbershops and all sort of places where communities of color get a lot of their trust and information. And it's just -- it's so disappointing that we've made such slow progress in this area for technology that is so helpful to patients. And so it's a scenario we continue to focus on, but it's complicated. And we're just going to keep swinging away at it and find out a way to solve it because what's going on just fundamentally is not okay.

I know we're running short of time here. The second question, can you repeat it, please?

Yes, the X4, yes, the question on the X4. I think it all works in concert. When I talk about the personalized medicine, part of that is the valve technology itself, but part of it is what we're going to do with early TAVR and what we're going to do with PROGRESS. So when you think long term, having an algorithm where you could put all the patient characteristics in and then, say, for you, this is the right time to intervene and this is the right way to do it, and I think that's really what we're trying to drive, but that's a long-term play. That's not something that's going to happen overnight or even in the next year or so. But we think the valve technology can be part of helping to enable that.

Okay. An hour of Q&A goes quickly. Maybe time for one more. And I would just remind you, for those of you who are able to stay, we'll have a lunch hosted with management right after this. So you can ask your questions then. Chris, I know we've heard from you already. So I wanted to just try it around a little bit more. How about Cecilia from Morgan Stanley?

Cecilia Furlong from Morgan Stanley. I'll just ask you a quick question, but wanted to ask a little bit about your thoughts on longer-term R&D investments. You talked about Cardioband being a focus for redesign going forward, but you talked also historically about heart failure, and that's been an area you've looked at. So just curious if you think about kind of the longer-term TMTT heart failure opportunity, both what you're looking at today and longer term, just the optimal portfolio as you invest going forward?

Yes. So maybe 2 different questions in there. Are you more questioning what the rate might be or more what the area of focus for R&D might be?

Really more of the focus.

Yes. Thanks for that. Yes. We've got the treasure of just having a target-rich environment. And so when you hear Larry talk about how much ground there is to cover in TAVR, it says, wow, we need to continue to invest because we know that's a winner. When you think about what Bernard is working on here in terms of unlocking therapies or transcatheter, mitral and tricuspid, we're just getting started. If you think about what Katie is doing to transform Critical Care medicine with technology or what Daveen is doing to offer some great solutions for people that are underserved today, those are all big. And at the same time, we've got teams looking at this giant population of heart failure that says, wow, look, biggest expense item, biggest killer, maybe there's -- that's a natural adjacency. So we, as an executive team, spent a lot of time talking exactly that. I can't really project where we're going to go out. We try and make right decisions along the way. But you know we're long-term planners and always thinking about that.

Sometimes we fight about it any less.

All right. So I think we'll wrap things up at this point. Thank you so much for joining us. We never like to end the session without reminding all of ourselves why we're here and the impact that we have on patients until -- let's run that video right now. And again, thanks for your interest in Edwards Lifesciences. [Presentation]