FDA Approves Medtronic's CoreValve Heart Device -- 2nd Update

By Joseph Walker 

Medtronic Inc. received U.S. regulatory approval to sell its minimally invasive heart valve technology, called CoreValve, for patients too frail for traditional surgery, the medical device maker said on Friday.

The U.S. Food and Drug Administration granted approval for CoreValve, used to replace damaged aortic valves, three months earlier than Medtronic had previously forecast. The approval allows the Minneapolis-based company to begin competing against rival Edwards Lifesciences Corp., whose similar device, called the Sapien, was first approved in the U.S. in 2011. The Sapien has since been approved for patients, including those who are eligible for surgery, but who are considered at high risk for complications.

The CoreValve is approved for patients who are too sick or frail to undergo open-heart surgery for severe aortic stenosis, a narrowing of the aorta that blocks the flow of blood into the body, leaving patients at a high risk for stroke and death. In a clinical trial, patients receiving the device had a 25.5% rate of death or major stroke after one year, compared with an estimated rate of 43% had the patients received medication therapy.

The technology, called transcatheter aortic valve replacement--or TAVR--is used to implant new valves through a catheter tube inserted into a patient's artery. It is a less-invasive method compared with open surgery, which can be traumatic. However, open surgery is still considered the safest and most effective option for patients who can withstand it because of TAVR's increased risk of stroke and other complications. The introduction of the CoreValve, which comes in different sizes than the Sapien, will provide patients with more choices, doctors said.

TAVR devices, which have been available in Europe for several years, are considered by industry analysts to be a major new source of sales growth for heart-device makers whose bread-and-butter product lines, including pacemakers and implantable defibrillators, have come under pricing pressure from insurers. Medtronic estimates that roughly 100,000 people in the U.S. have severe, symptomatic aortic stenosis, and about a third of those are at an extreme risk from surgery, said Rhonda Robb, Medtronic vice president for catheter based therapies. The company projects that the world-wide market could grow to between $2 billion and $2.5 billion annually by 2020 if further clinical studies expand regulatory approvals to less-sick patients, said Ms. Robb.

"A lot needs to happen to have that estimate be realized," she said.

So far, though, the U.S. market hasn't grown as quickly as Edwards and others had expected because of strict payment-reimbursement guidelines implemented by Medicare, which require hospitals to document that patients aren't good candidates for surgery. The procedure, which costs upward of $30,000 per procedure, is also a money loser for many hospitals since Medicare typically doesn't provide extra reimbursement beyond what it pays for surgery.

The world-wide market for transcatheter aortic valves was $1.1 billion last year, of which Edwards controlled about 65%; Medtronic had about 31% of the market, according to estimates by Jefferies LLC. Medtronic and Edwards have been locked in a legal dispute over patents for the technology, with a federal jury ordering Medtronic to pay $394 million in damages to Edwards for violating the company's intellectual property. Medtronic plans to appeal the verdict.

Edwards is seeking a preliminary injunction that would bar Medtronic from selling CoreValve in the U.S., but such a ruling is considered unlikely by analysts. Medtronic said that it would begin selling the device immediately. There are about 45 medical centers that have experience with the devices through clinical trials, and Medtronic will begin training new centers over the next 12 to 18 months, said Ms. Robb.

Medtronic will charge about the same for CoreValve as Edwards does for its own product, said John Liddicoat, president of Medtronic's structural heart division, in an interview. He acknowledged that concerns about the profitability of TAVR "are real" for some hospitals, depending on where they're located. The company plans to present data related to the procedure's cost-effectiveness at an upcoming medical meeting, he said, and the company will also work with hospitals to help them determine when and in which patients to use the procedure.

Shares of Edwards Lifesciences fell 5.4% to $68.75 in afternoon trading on the New York Stock Exchange, with investors surmising that the early approval will allow Medtronic to take even more market share away from Edwards than previously estimated. The stock is down 24.8% over the past 12 months, hurt by disappointing U.S. sales of the Sapien. The company estimates that world-wide TAVR sales will be in a range of $700 million to $820 million in 2014.

Write to Joseph Walker at [e-mail]

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