Edwards Doubles Down on Transcatheter Mitral Valve Therapies

Edwards Lifesciences is buying Valtech Cardio Ltd., which has developed the Cardioband System for transcatheter mitral and tricuspid valve repair.

Edwards Lifesciences has signaled its commitment to the transcatheter mitral valve space by announcing its acquisition of Valtech Cardio Ltd.

Edwards will pay $340 million with a mix of stock and cash for Valtech, according to the company press release. There is also the potential for as much as $350 million in additional payments if certain milestones are reached.

The Israeli company makes the Cardioband System, which enables mitral and tricuspid valve repair using a transcatheter procedure. The device is delivered via the femoral vein and across the septum of the heart. It offers the ability to be customized to each patient's valve, using "a unique segmental deployment," according to the press release. The transseptal mitral repair system secured CE Mark in September 2015 and a CE Mark trial for the tricuspid valve repair indication is underway. The product is not approved in the United States.

The deal is the latest sign of Edwards' focus on the mitral regurgitation patient population. The company, which was named MD+DI's 2016 Medtech Company of the Year, is vying to be the first to commercialize a transcatheter mitral valve replacement product. To that end, Edwards acquired CardiAQ Valve Technologies in 2015. Transcatheter mitral valve repair has also been on the radar for a while—Edwards made a structured investment in transcatheter mitral valve repair company Harpoon Medical in December 2015, with an exclusive option to buy.

"We recognize that physicians will likely need a toolbox of options to treat their patient most effectively," said Michael Mussallem, Edwards' chairman and CEO, in the press release. "We are very pleased with the progress and future prospects of the multiple internal programs we have underway, and we believe the addition of Valtech's talented team and mitral and tricuspid technologies will present even more opportunities to help patients."

Valtech also has an early-stage transseptal mitral valve replacement program, according to the press release. The program will be spun off before the anticipated acquisition closing in early 2017. Edwards will still have the option to purchase that program and intellectual property.

Barclays analyst Matthew Taylor, CFA, wrote in a November 28 research note, "In our view, Cardioband is a good product for repair based on early data and we think the fact that EW [Edwards] is at least temporarily 'letting go' of the Valtech TMVR [transcatheter mitral valve replacement] program is a positive read for EW's internal program."

A new $1 billion share repurchase program has also been authorized for Edwards, in addition to the existing $277 million left from its $750 million share repurchase pgoram authorized in July 2014, according to the press release.

Valtech has received acquisition interest before. In September 2015, HeartWare, a left ventricular assist device maker, announced an agreement to acquire Valtech. A vocal HeartWare shareholder, Engaged Capital, publicly called for the deal to be called off and in January 2016, the companies announced an agreement to terminate the transaction. HeartWare explained in that announcement that the decision was based on a strategy "dedicated to strengthening our existing business to put the company in the best position to take advantage of the significant opportunities within our ventricular assist device (VAD) portfolio," according to president and CEO Doug Godshall. He added, "This decision does not, in any way, reflect a lack of enthusiasm for Valtech or the mitral and tricuspid valve opportunities."

HeartWare was later acquired by Medtronic in a transaction that closed in August 2016.

So who will win the mitral valve device therapy race? It's still too early to tell.

"We think MV [mitral valve] replacement and repair will be important and growing areas in medtech in the future, but it is very early in the life cycle of the mitral indication and difficult to choose winners and losers at this stage," Taylor wrote. "There are many more questions than answers, including what would be considered good outcomes for different devices, and which patients are well indicated for replacement or repair."