Edwards Lifesciences Corporation (EW) Earnings Call Transcript & Summary

All right, everybody. Thanks for your patience. I appreciate it. It's great to see so many people in person and online, too. It's an exciting day for Edwards. I'm Mark Wilterding, Head of the Investor Relations department. I'm joined by [ Sydney ] and Linda. And like I said, we really appreciate your time here. We've got about 45 minutes for the session today. It will be a combination of some prepared remarks from the panel you see in front of you as well as some time for Q&A. Before we get into it, I'll just call your attention to the forward-looking statement here. Please just take a second to familiarize yourself with it. It's also available on our website. And so with that, let me turn it over to our CEO, Bernard Zovighian.

Thank you, Mark. Everyone, welcome. Good afternoon. As you know, TCT is always an important -- is it working? TCT is always an important meeting for us. It is a meeting where we can show our commitment to science and evidence. And indeed, today was a big day. It was a big day for patients. It was a big day for the clinical community, and it was a big day for the company. Allow me to -- stepping back 20 years ago. We had a vision to change the practice of medicine for aortic stenosis patients. And after years of research and development, in [ 2007 ], we launched our first SAPIEN platform. At the time, I'm sure you all remember surgery was the standard of care. 2010 was also a big day for patients. It was probably the first as a big day for patients. You remember PARTNER Ib, where TAVR proved to be a viable option for inoperable AS patients. Since then, so in the last 14 years, I want to highlight 3 things. First, we brought extensive research, clinical research, evidence, science comparing TAVR to SAVR [ 8th edition ] Medicine publication, it's a best in class. Two, we had an amazing innovation journey. SAPIEN XT, the second platform, SAPIEN 3, Ultra, Ultra RESILIA, which is today of a preferred TAVR option globally by physicians to treat all of their patients. And three, we learned a lot about the disease. The number of patients that we all thought at the time is way bigger today because of this 14 years of research, 14 years of innovation, 14 years of partnership with the clinical community. And today, we see early TAVR as one of the most critical data set since PARTNER Ib. This is truly about the strategy for disease management, the first study like that for ALS patients. It is a big day for patients and physicians. So physicians will be able to better take care of their patients. It is also a big day for the company. Starting today, we know that the AS opportunity in front of us is way bigger than what we thought of so yesterday. So it is a very exciting day. The entire Edwards team is super excited about the data. I know that we want to have many plans to make sure we educate, train and make sure that your patients are well taken care of. So I am jumping with Larry Wood, our Global Leader of TAVR, Dr. Philippe Généreux, very distinguished international cardiologist and Co-Director of the Structural Heart Program of the Morristown Medical Center in New Jersey, is the PI of the early TAVR. So no one can better speak about the trial, trial design, trial outcome and what that means to the patient. With that, Philippe, please, thank you so much.

All right, guys. So thanks for having me and a very, very exciting day to day for Edwards, but more importantly for us and the patients. I'm going to walk through the study briefly, and then we can add little question. So early TAVR was a prospective, very large, the largest actually prospective multicenter randomized controlled trial evaluating a patient with severe AS and no symptoms among patients aged 65 and above, SDS score of 10 or less, which means that they were patients lower risk, intermediate risk, high risk, all risks were included in this and normal ejection fraction meaning the heart was normal. Patients -- important point is the asymptomatic status of the patient were confirmed with negative stress test, a negative treadmill stress. All patients had to pass a treadmill and to be labeled as asymptomatic, which is -- no trial ever done that. Patients were randomized 1:1 to either transfemoral TAVR with S3 Ultra to clinical surveillance. And the primary endpoint was the primary endpoint of composite outcome, death, stroke or unplanned cardiovascular hospitalization at a minimum of 2 years. That's the primary point that you all saw today. The composite of death, stroke and unplanned cardiovascular hospitalization was 51.2% in the clinical surveillance and 35.1% in the early TAVR group, which was associated at a 50% decrease at the primary endpoint with a number needed to treat. So 6 patients needed to treat to save 1 event at 2 years, which is excellent in medicine. The median follow-up of the trial was almost 4 years. Very important, the granularity of [ how ] patients convert to symptom. The patients that were in the clinical surveillance were followed thoroughly and the conversion to symptom in AVR happen at a medium -- happened in a medium time of 11 months. And it's very important to see that at 6 months already, 26% of the patients need AVR, needed TAVR, 47% at 1 year and more than 70% at 24 months. To put it in perspective, the guideline tell us to follow the patient every 6 to 12 months and already at 12 months it's 50% of the patient that already need an AVR. So we characterize the way the patient in a clinical surveillance convert to symptoms or AVR. So did they convert with no symptom, did they receive an AVR with no symptom? Did they receive an AVR because there was a little bit shortness of breath or fatigue? Or did they had advanced sign or severe sign of heart failure with acute decompensation? And we talk about severe heart failure at 3 or 4 which mean you cannot breath at rest. [indiscernible] passing out, ventricular arrhythmia, fluid in the lung, pulmonary edema. Those are dramatic weight to have a first symptoms. And what we show, which actually dose travel are extremely important for medicine in general is the [ signs of ] symptom at conversion to AVR in the clinical surveillance group were about 40% of the time severe events, in spite of being normal ejection fraction baseline, negative stress test literally 6 months ago. [ Progress of signs and ] symptom is 60% and only 2% converted to AVR when they are adding no symptom, but all of them actually had other reasons to be converted and we can go. So this slide is also very important because the proportion of patients presenting with advanced signs and symptoms was consistent through time, including the early converter. The patient at 6 month that convert to symptoms, which convert to AVR, also present dramatically in 40% of the time -- type of crash and burn scenario. So -- and that was constant trough time showing that the disease progression is very unpredictable. And when the disease hit a lot of times it hit hard. So I think the main conclusion that make no doubt to everyone is that in patients with asymptomatic [ severe aortic stenosis ], a strategy of early TAVR compared to clinical surveillance resulted in a significant reduction in the primary endpoint of death, stroke, unplanned cardiovascular aspiration. We assess this endpoint with multiple variation. We took death, stroke and heart failure only. We took death, stroke and conversion with advanced signs and symptoms and all the different permutations of this endpoint lead to the same conclusion, the reduction of 50% actually of the primary endpoint. Importantly is like when we did this early TAVR, we did early TAVR procedure, it was not associated with an excess mortality of stroke. And this is important. And as a matter of fact, we had a numerically lower stroke with early strategy compared to waiting for symptoms, which is very interesting and we can debate that after. We prevent a clinically meaningful decline in quality of life. In clinical surveillance patients, we subsequently converted to AVR, and we improved some measures of LV, left ventricle and LA left atrium function. So we prevent a decline in quality of life, and we prevent cardiac damage to accumulate, which are all important potentially for long-term mortality. So the clinical indication for the cardiologist and for the community is giving the benefit observed in the lack of harm, early TAVR may be preferred to clinical surveillance in patients with asymptomatic severe AS, especially when combined with the challenges of timely [ centrum ] recognition and prompt treatment in a real-world setting. I think I'm going to stop it here.

Thanks, everybody, for coming today. And as Bernard and Philippe have alluded to, this is a huge day in terms of advancing the science and evidence around the treatment of aortic stenosis. A couple of things that I think are really important nuances of the trial that people -- I don't know that they've put enough time and attention into. The first thing is the quality of the patients' win in this. If you look at the -- these patients, they all underwent a stress test or 90% of them -- over 90% of them had a stress test. So these patients are confirmed to be truly asymptomatic because they were able to pass the stress test. Every one of them, 100% of the patients were in NYHA Class I, their KCCQ scores were 93 and their ejection fractions were 67. So if there was ever a group of patients that should be able to tolerate symptoms or to delay the onset of symptoms, it would be this group. They feel perfect, all are NYHA Class I, and they all have healthy ventricles. So when we designed this trial, one of the big -- only -- there's only a couple of things we didn't know. We didn't know how many patients could pass the stress test, and we had no idea of the rate of progression to symptoms. Other than that, we knew everything. So we put a 2-year endpoint on this trial because we believed in this population, it was going to take a long period of time for people that progressed for symptoms. And so we expected that we maybe see some adverse events that happened. But in this population, it was remarkable to see how quickly and how unpredictably bad things happened. So this was a slide that wasn't in the main podium just for the sake of time, but I think it's incredibly illustrative. As you look at the different curves, these are the reduction in quality of life scores for these patients. So even in patients that crossed over the red line, 0 to 3 months, they had a 15-plus point drop in the KCCQ. Now think about that in the context of device development that we do today. If you make a device and it has a 15% improvement in quality of life, we see that's a major thing. Joanne said from the podium today that anything greater than 10 points is very significant. So these people are having the inverse of that happening. They're having this rapid decline. And I think that, that's really critical that this watchful waiting period is not benign. And I will say that Philippe did a good job of explaining this, but I think the thing that is critically important is this clinical surveillance slide looks terrible. 40% of the people have something very bad happen to them. Now I know there's going to be naysayers and say, yes, but they eventually got their TAVR so it was okay, and they didn't die. But you have to put this in human context. How many of you get a call in the middle of the night from a sibling that said, "Mom woke up, she couldn't breathe and we just took her to the ER." That is the day that you're not going to forget. And that's what's happening to these patients. So this is not a benign thing. You have patients in this group in the red group. They're going in NYHA Class III and IV. They're having their ejection fraction decline less than 50. They're having very bad things happen to and it's happening to them very quickly and it's happening to them very unpredictably. And this is incredibly meaningful as we think about doing these patients. But this is the best clinical surveillance has to offer, and I'll tell you why. The patients to enter into this trial meant they had to have a discussion with a cardiologist and a surgeon. They had to be educated on the aortic stenosis disease. They had to be told that their treatment course would be TAVR and they went and had a CT so that we knew that they were anatomically suitable for TAVR. And so basically, all of the prescreening work had been done. So in this trial, when a patient showed up with symptoms or hospitalization, they were crossed over in an average of 32 days. In the real world, it takes between 150 and 180 days for a patient to go through the entire screening process for TAVR. So you can imagine what would happen if these patients were waiting another 5 or 6 months for treatment in this clinical surveillance arm. And that's a struggle that we have with trials. These patients are closely monitored. They're well educated. They've already agreed to have the procedure because they had to agree to that for randomization. So they were able to move very, very quickly to care and we knew their [ median time ] would be suitable. That can never happen in the real world. And that's one of the things that I think is most powerful about interpreting this data and making sure that we understand how this is going to apply to guideline changes and how it's going to apply to transforming patient care. But -- this primary endpoint is very powerful. I know that people are going to fixate and they're going to say, "Well, you don't show mortality benefit." And it's because in this trial, patients weren't allowed to progress. They were crossed over within 30 days of them presenting with symptoms. And so it wasn't that bad things happened, but we comped them before they die. I do -- I believe, and I can't prove it because the trial wouldn't allow for it because it would have been unethical to do. If we'd have left those patients for another 6 months, more bad things would have happened to them. There's no way that, that would have just stayed benign. So I think these are just really important things to consider. And the other thing is that the stroke rate, we would have never anticipated the stroke rate would be lower in the treatment arm versus the clinical surveillance arm. What most clinicians say, making the case for watchful waiting is there's 2 primary things that they say. The first thing is there's always a risk of doing an intervention. And so a patient is going to pay penalty for that intervention. And the second thing is, I'm starting to clock on valve durability. So I don't -- I want to wait, so I can make that tissue valve last as long as possible. But this just completely destroys that. It completely destroys it because you have half of the -- you have 26% of the patients crossing over at 6 months, and you have half of them crossing at a year. So this valve durability case doesn't really make any sense. And we show that it's actually more dangerous from a stroke perspective to wait than it is to have your early intervention. So there's absolutely no penalty for having an early intervention, and there's tremendous benefit for having an early intervention. And that's why I think this data set is so powerful. So with that, I think we'll take Q&A.

Perfect. Thanks, everyone. We've got about a half hour. So if you have a question, just raise your hand, we'll make sure to get a mic to you. And if you could just limit it to 1 question so we can get to as many as possible. Pito, first question.

Thanks. Congrats on the trial, that was just extraordinary. It's always great to watch doctors just stand up and cheer. I mean -- so stepping back, I mean, just looking at sort of the patient pools in both the patients that are -- with the cardiologists doing watchful waiting also patients actually with the conventional cardiologists kind of your patient pools, kind of size of the market kind of does it expand ? I mean that's sort of -- and it's possible to sort of to model that. But I mean, as we think about sort of how much this expands sort of these patient pools, how do you guys think about within your practice within the doctors you talk to on both those [ 2 buckets ] in terms of the referrals and also kind of within your own patients that are watchful waiting, kind of how do you see that expand?

Philippe, you want to talk about how you see that in your practice? And then I can make some comments about what we learned in the past several years.

Absolutely. So I think there's 3 buckets of patients that will come Monday morning to me. The first one is the trial patient, the one with severe OUS, no symptoms, no OUS, yes. Read this and you ended up saying, "Hey, that's me." I can give a number, if you want, Larry will criticize me, maybe it's not enough. It's too much, I don't know, but let's pretend between 20% to 40% growth for those numbers. Okay. The real patients that fit the trial, okay? Why? Because they live with the referring doctor and the referring doctor told to them. And they say that, "You're fine, you don't have symptoms." And he's going to see the New England is like, okay, I'm going to refer now. I almost have no choice. The second bucket of patients are the ones that have severe OUS and have mild symptoms. They have like fatigue, but it's fatigue. It's like it's okay, it's age and blah blah. This bucket is on -- it's very hard to put a number on because they are probably the ones that are undertreated. They make -- they are part of the 40%, 50% [ that don't ] treat patient because when you query database, like a [indiscernible] [ card to gear ] or whatever, they are there and the [ at class ] [ class indication ], they're not treated. Why? Because their symptoms not severe enough. So those [ Cromwell ] Curve are so important because they're in the yellow zone, and they're not treated yet. So this bucket can clearly explore the volume in a TAVR program. The third bucket is the patient that are -- AS is hard to diagnose by echo, okay? Echo done in other hospitals, 10, 15 minutes is screening, it's moderate to severe, okay, I'll see you in 1 year or 2 years. And then when they come to see me, we take 1.5 hours and we find severe, right? So this trial will show, okay, maybe I don't want to miss the year now. So you're going to have moderate to severe or moderate, they're going to refer to us to be better stratify. So those 3 buckets for me will probably flood actually the office in different proportions that we're going to learn. And I would say the characteristic of early TAVR is it's not only 1 risk strata. We know P3 great, but it's only low risk. It's 30% of the market, whatever the number is. P2A [ 20 meters ] only, P1 high-risk, extreme risk. This is all risks. This is everyone. This is 55 and above, period. So I think this has the potential to -- I don't say double, triple whatever because I'm not an analyst, and I'm not [ Larry ] but I will say clinically was seen in flux patient because from that day that we queried echo, there is a lot of patients there. And there's a halo effect where we're going to start to see that's going to legitimize all the other patients that were not referred, that were a patient typical of the trial. They were like already having symptoms, fatigue, blah blah. So -- the growth will be there, for sure. And if I have to put a number, I said it's going to be minimum, minimum 20%, 30% at minimum. And that's me trying to be an analyst here, but.

Thank you. Thank you, Philippe. So let me add a couple of things. I'll see if Larry wants to add a couple of things, too. When we look at our learning in the space, what we have seen is the more we learn, the more the TAVR adoption increased, the more innovation we brought to the space, the more evidence part, we have seen that the opportunity was getting larger and larger in the last 10 years. There is -- in my mind, a few things here for sure. Right now with this data, the opportunity is bigger, larger. It is going to take some time. We are going to see early adopters, and then we will have to see the guideline changes, NCD or these kind of things, and this all these kind of things it takes time. The good thing about taking time is we are going to see a multiyear of opportunity ahead of us. Like we had in the last 10 years, and we are projecting over the next in our future here. So it is a great thing for a patient. It is a great thing for the field. It is a great thing for us as a company. Larry, you want to add...

Just a couple of things. One of the things that the trial showed is that 1 in 5 patients can't pass a stress test. So 1 in 5 patients that is told very symptomatic truly are not asymptomatic. And so that, I think, shines a light on this. I think the other thing is the guidelines, as most people interpret them, say, annual follow-up is adequate. Well, this data completely destroys the idea that you could follow these people annually and adequately make sure that you were finding their symptoms or finding any of those things. And so I think it absolutely destroys that. I think those are going to be powerful things as we start taking on guidelines and as we start taking on some of the other challenges and education ahead of us. Nobody can argue with the slide that shows the red-yellow breakdown of these patients and the rapid progression of symptoms and bad things happening to these patients. And I think those things are going to be transformative. I was speaking to physicians today, and they were already saying, this is going to change the conversation I have with a patient. I can't just send them out of my office and tell them I'll see you in a year and you'll be fine.

David Roman from Goldman Sachs. You talked a lot about in the presentation today about the impact of this being a randomized controlled study, so each cohort being very well managed. But maybe you could take us into kind of the real-world setting and help us think about how this impacts workflow in the general cardiologist who spends what, 8 minutes per patient, maybe as they're going through a visit. So help us think through the patient visit into the general cardiologists to when they show up at a center like yours, for example?

Well, you're right. So the early TAVR was a state of hypervigilance, it was not even clean surveillance with hypervigilance. You have the trial every year follow-up, you have 6 to 12 months, but the cardiologists, you have a research nurse, they were like -- was like hawk they're little up and pushing boom, the [ advertisers ]. So -- is it reproducible in reality? No, that means the patient will do worse than that. So this is [ where this even ] mortality would show. So typically in practice, so what happened is you see a patient with severe AS, no symptom and the patient, oh, normal OES, no symptoms, see you in 1 year. There's no stress test. People don't do that, okay? This is 15% penetration in U.S. Second, we don't do a cat scan can to see if TAVR is doable or not, okay? They just say, I'm going to -- we're going to cross that bridge when we arrive there when you have symptoms. So then you lose a lot of patients like that because within the year, there's people have died, there are people that like me come to the ER 40% of the time. And then you want to do a cat scan, you need to do your [ contracts ] the kidney damage, you can't. They spend longer time in the hospital for the prescreening, they need [ peak ] remove. They need everything they need to be ready, then they get the TAVR and they stay longer. So the cost effectiveness of a way -- watchful waiting is terrible for the health system. So we -- of course, we're going to run this [ manages ], but the strategy of the, hey, put your ducks in a row, you have moderate AS because the game is going to moderate AS, by the way, [ CVRS ], it's over. So moderate AS, you need to send a patient, first of all, confirm it's not severe because half of them are severe, by the way. And then when you confirm, you do a cat scan. Are you a TAVR candidate or no? Then okay. Now you want to go on a cruise for 2 weeks, fine, but when you come back, we're going to do this. So we're going to plan with a patient. You're going to have an elective surgery, you hit -- need to be changed elective. You're not going to wait for the fracture. We're going to wait for default, which is dramatic, which the sustains double, triple. So that's what we're going to come to light. So in real world this is what we see. The watchful waiting strategy is associated with longer lengths of stay in the hospital, I need to squeeze the patient in, I do 10 TAVR on Monday and now I need to add an [ 11 1 ], people [ on a hat ] then go in on Tuesday and the length of stay is long, and this is why we have more stroke, why we have more infections during the observation. So it's more complex on the health care system to wait for symptom. It is better to be reactive. So right now, we're very, very -- better to be proactive. Right now, we're very reactive. It's fine, when we cross that bridge it will happen and bad things happened. The wait is not an option anymore. It's going to be why you want to wait? The guideline when you can look at this and we spoke with them a little bit, what is the list of pro for intervention. There isn't list a proof for waiting. No one is able to find you one argument. That's what going to happen. We're going to wait for what? Because I'm scared? But that's fine. But -- so I think there's not a lot of pro other than the durability argument, which is completely destroyed by the data, the natural history that at 1 year, you have 50% a quarter, 2 years, 70%. So if you're 65 years old, 2 years is nothing over 30 years of life expectancy. So I would say that right now, it's chaos. The way we do medicine is chaos. You wait for the crash and burn scenario. It's better to land the plane when there's still fuel in the gas tank and not crash and burn.

Yes. I'd say just to add to that, the other compelling thing that this demand is a discussion about prioritization of your AS patients. As centers struggle with workflow and they're like, I have all these different therapies coming in, and I'm trying to figure out who I have to treat first. This is a very compelling story for why you need to treat your AS patients first, why they need to be prioritized because they don't wait well.

Chris.

Chris Pasquale Nephron. Larry, just to pick up on that point, we've talked a lot about capacity constraints over the last few months. Now we're talking about the TAM potentially expanding. So how do we think about the ability of centers to handle an influx of patients if that materializes.

Yes. I think it's a great question, and it's one that we're going to be working through, obviously, more in the coming months. I think one of the things that hospitals wonder about when they think about investing or they think about adding capacity is, am I seeing a bolus of patients? Or am I going to see a long-term shift in the number of patients that are coming in for a particular therapy? And I think it's just a bolus I might -- I may wait before investing or hiring staff or doing those sorts of things. I know definitively that this is the new normal, and this is what's coming ahead of me, I think hospitals are much more likely to invest, and they're much more likely to address that. But maybe Philippe, you can talk about how you guys see this at Morristown.