Q1 2021 Edwards Lifesciences Corp Earnings Call
Greetings and welcome to the Edwards Lifesciences first quarter 2021 results conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
And if anyone should require.
Operator assistance during the conference. Please press Star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to our host.
Mark and Wolfgang Vice President of Investor Relations. Thank you you may begin.
Thank you Diego good afternoon, and thank you for joining US with me on today's call are Mike Michelle I'm, Chairman and Chief Executive Officer, and Scott All of them Chief Financial Officer, just after the close of regular trading Edwards Lifesciences released first quarter 2021 financial results. During today's call management will discuss those results included in the press.
Our release and accompanying financial statements and then use the remaining time for Q&A.
Please note that management will be making forward looking statements that are based on estimates assumptions and projections for you.
These statements include but aren't limited to financial guidance and expectations for longer term growth opportunities regulatory approvals clinical trials litigation reimbursement competitive matters and foreign currency fluctuations.
These statements speak only as of the day on which they were made and Edwards does not undertake any obligation to update them. After today. Additionally, the statements involve risks and uncertainties, including but not limited to those associated with the pandemic the could cause actual results to differ materially information concerning factors that could cause these differences and import.
The products safety information, maybe found in the press release.
And our 2020 annual report on form 10-K, and Edwards the other SEC filings all of which are available on the company's website at Edwards dotcom.
Finally, a quick reminder of that when using terms underlying and adjusted management is referring to non-GAAP financial measures otherwise they are referring to GAAP results reconciliations between GAAP and non-GAAP numbers mentioned during this call are included in today's press release.
With that I'd like to turn the call over to Mike for his comments Mike.
Thank you Mark as we anniversary of our one of your impact of the pandemic and our financial results I'd like to briefly reflect on the current environment and to discuss our 2021 and longer term priorities as the company I'd also like to touch on Edwards response to the pandemic and our efforts to better support our patients employees and the.
Community.
Recall of our sales were dramatically impacted and the and.
And the last few weeks of Q1, 2020 as procedures fell due to Covid disruptions one year later after and extraordinarily difficult global crisis I'm encouraged by the signs of recovery and although we recognize that many people are still struggling around the world. Our sales growth this quarter was better than expect.
The across all product lines.
Although we expect the pandemic will impact the global health care system based on the environment as we exited the quarter, we have continued confidence and our positive for 2021 outlook.
We continue to believe the 2021 will be an important growth year for Edwards with mid teen sales growth highlighting the importance of treating structural heart patients even during this pandemic.
We also anticipate meaningful progress on expanding large underappreciated and under served transcatheter opportunities in 2020 one.
Recently, we were we achieved several important milestones let me mentioned for just last week and Transcatheter aortic valve replacement of Tapper, we received approval to initiate a pivotal trial for patients suffering from moderate aortic stenosis.
Also earlier this month, we received approval to begin treating patients at low surgical risk and Japan with SAPIEN three.
And in Transcatheter, mitral, and tricuspid therapies or T. M. T. T. I'm pleased to announce that the first patients for recently treated with evoke iOS are next generation Transcatheter mitral replacement system also and T. M. T. T. We initiated the trial and two U S pivotal trial for.
For Transcatheter tricuspid replacement.
Looking beyond 2021, we remain confident and our long term strategy and our pipeline of innovative therapies, our patient focused culture drives all of a sudden motivates our employees around the world every day, our R&D targets breakthrough therapies that can create significant value for patients and health systems.
Enabling strong organic sales growth and exceptional shareholder returns.
Despite COVID-19 disruptions, we've continued to invest aggressively for future growth as a reminder, about a third of our research and development of investments today are focused on generating a robust body of guideline change and clinical evidence and although clinical studies slowed during the pandemic, our dedicated clinician partners or <unk>.
Or to accelerate enrollment and this important research regulators have also been supported and addressing the impact of of the pandemic and its impact on political studies.
Finally, I want to provide some perspective on how we've maintained our focus on creating long term value as we navigated the pandemic over the last year, we continued to invest and our people and our infrastructure during a time when widespread uncertainty impacted many families across the globe, we have prioritized pro.
Our employees and have grown our team we enhanced the employee benefits reward of performance and protected incentives. We also moved ahead on expanding Edwards research and production facilities around the world.
We adjusted our agreements to support hospitals as they navigated COVID-19 and Additionally, we provided extra support to the communities where the our employees the live and work and in fact, we recently converted one of our facilities into a mass COVID-19 vaccination site to support the community of 3 million people, where our company is.
Headquartered.
As the company, we expect that Edwards will be position, even stronger and be able to help more patients than ever before and it was.
As the world emerges from the pandemic.
Now turning to our first quarter results, we reported $1.2 billion and sales this quarter up 5% on a constant currency basis from a year ago recall that our guy and guidance assumed Q1 sales would be in line with the first quarter of last year, which was largely unaffected by Covid we were pleased.
And with how sales improved as the quarter progressed.
And tab her first quarter global sales were $792 million up 4% on an underlying basis. The SAPIEN three ultra platform remains differentiated with low complication rates ease of use and significant potential for length of stay efficiency, our average selling prices were still.
And we estimated the global tap of procedure growth was comparable with our growth.
And the U S. Our Q1 tap of sales were flat with fourth quarter and year ago results and we estimate the overall U S procedure growth was comparable.
Consistent with our guidance on the Q4 earnings call in late January Covid stress the global health care system. During the winter months. We are encouraged however, the U S tab of procedures grew as Covid hospitalizations decreased and vaccinations increased during the quarter.
Small and medium sized centers play a valuable role and serving patients during the quarter. We continued to activate new centers. This quarter as we have been throughout the pandemic. This demonstrates the clear interests of the many smaller centers to provide the state of the art care for structural heart patients.
Outside the U S and the first quarter, we estimated tab of procedures grew and the low double digits on a year over year basis, and Edwards growth was comparable.
Although we are off to a strong start the slow vaccination progress outside the U S provides uncertainty for the remainder of the year.
Edwards underlying tap of growth in Europe versus the prior year was and the mid single digit range Edwards growth and countries with lower tab of the adoption rates outpace countries, where the therapy is more established although tab of centers, we're more prepared to treat patients patient flow was disrupted due to the region.
The lockdowns and the uncertainty among patients about the urgency of their disease.
Sales growth in Japan, and other countries was strong as they Arctic Sanofi. This remains an immensely undertreated disease, and we remain focused on increasing the availability of the tab of therapy and.
As previously noted we received the approval earlier this month and Japan for SAPIEN, three and patients at low surgical risk.
We anticipate increased treatment rates when reimbursement is approved later this year.
In addition, the geographic expansion of our tavern therapies, we remain dedicated to pursuing indication expansions. Our groundbreaking early tavern trial is focused on patients who have severe aortic stenosis, but without recognize symptoms and who do not meet the current guidelines for valve replacement and we expect enrollment to increase.
<unk> as we and participating sites are motivated to complete enrollment of the trial this year.
I'm also pleased to report that we received FDA approval for a pivotal trial for tavern and moderate ALS patients as we expect enrollment to begin later this year.
Based on recent trials, we're learning and what.
What was once thought of as the benign precursor to severe aortic stenosis may actually be associated with higher rates of morbidity and mortality than previously recognized thus, we believe tavern maybe of future treatment option for these patients.
Separately last week, we received SAPIEN Three's CE Mark approval to begin treating patients with the previously repaired or replaced valve and the pulmonic position.
Looking ahead to the upcoming virtual Euro PCR meeting next month, we expect long term follow up data from our European registry on SAPIEN, three as well as the late breaking clinical trial results on low risk bicuspid patients.
In summary, based on the strength, we saw at the end of the first quarter, we have confidence that the underlying terrible sales will grow and the 15 to 20 per cent range in 2020. One we expect continued near term COVID-19 related regional disruptions and a more normalized second half of the year we.
We remain confident that this large global opportunity will exceed $7 billion by 'twenty, 'twenty, four which implies a compounded annual growth rate and the low double digits.
Turning the T M T T. We're enrolling five pivotal trials across our differentiated portfolio of technologies to support patients suffering from tricuspid and mitral valve disorders, and this quarter, we progressed with the enrollment of our three clasp pivotal trials for Pascal we.
Continue to expect approval for patients with DMR late next year, because it was expected to be the first commercial approval of the Pascal system and the U S.
We've also begun treating patients with evoke T. R. In the Tri son, two randomized pivotal trial in accordance with the Fda's breakthrough pathway designation for this.
Trial will evaluate the safety and effectiveness of the bulk tricuspid valve replacement system for patients with severe tricuspid regurgitation.
In addition, the first patients were recently treated with our next generation Transcatheter mitral replacement system called evokes iOS through the my son study.
The study will evaluate the safety and performance of evoke iOS, which is designed to advance the treatment of patients with mitral regurgitation and with a low profile valve deliberate through a sub of 30 French transfer of Emerald delivery system. We believe our two platform replacement strategy with SAPIEN and M three and even.
He owes strongly positions us to be the leader and treating these underserved patients.
As we expand our body of clinical evidence, we look forward of presenting meaningful data across our portfolio at the upcoming virtual ACC and Euro PCR medical meetings, including multiple late breaking presentations. These include longer term outcomes for transcatheter mitral repair and from our.
Class trial, and the first report of 30 day outcomes with the evoke tricuspid replacement from our Tri sudden study.
Turning to our results first quarter global sales were $60 million driven by continued adoption of our Pascal system and activation of more centers across Europe.
Assuming diminishing COVID-19 related impact we expect the ramp of sales throughout the year, we remain confident and our 2021 sales guidance of $80 million as we advance commercialization staying focused on physician training procedural success and patient outcomes.
Adoption and the favorable real world clinical outcomes remain key drivers to transforming treatment.
In summary, we are making meaningful progress toward our 2021 and milestones and we continue to estimate the global T. M. T T opportunity to reach approximately $3 billion by 'twenty 'twenty five we remain committed to transforming the treatment of patients with mitral and tricuspid valve disease around the world.
And surgical structural heart first quarter 2021 global sales was $213 million increased 7% on the underlying basis over the prior year.
Despite a soft start associated with Covid, we were encouraged by the improvement across the all regions over the course of the quarter.
Notably growth was lifted by of premium products and improve that's declining and Covid cases enabled more hospitals to resume treating surgical structural heart patients.
We remain very encouraged by the steady global adoption of Edwards resilient of tissue valves, including continued adoption of the and spirit resilience aortic surgical valve and we anticipate that adoption will be bolstered by the five year data from our commence clinical trial presented at the recent meeting of the society of thoracic surgery.
This demonstrates the excellent durability of this tissue technology, and we're pleased that and the first quarter. We initially we initiated sales up and spirits and China.
Sales and the U S. Also continue to gain traction with connect resilience and the first pre assembled aortic tissue valve conduit for patients who require replacement of the valve route and the ascending aorta of critical unmet patient need.
Finally, we're pleased to announce that we received regulatory approval with the reimbursement in Japan for our my trusts resilient valve of new mitral valve and incorporating our newest tissue technology yeah.
Yesterday, and Japan, we performed our first commercial cases with this differentiated innovation.
In summary, we have confidence and our first and our full year 2021 underlying sales growth and the high single digit range for surgical structural heart driven by market adoption of our premium technologies. We continue to believe the current 1.8 billion dollar surgical structural heart market will grow and the mid singles.
Digits through 2020 six.
And critical care first quarter sales of $196 million increased 4% on an underlying basis driven by increased sales of technologies for both of the operating room and intensive care units. He must for orders increase those hospital capital spending began to show signs of.
<unk>.
Demand for our products used in high risk of surgeries remains strong and our clear sight noninvasive finger tough use and elective procedures also recovered to near pre COVID-19 levels are true way of disposable pressure monitoring devices used in the ICU remained and demand due to elevated hospitalizations and both of you.
U S and Europe at the beginning of Q1.
We continue to expect full year 2021 underlying sales growth and the high single digit range for critical care. We remain excited about our pipeline of critical care innovations and we as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for the.
Patients and.
And now I'll turn the call over to Scott.
Hey, Thanks, Mike well, we are encouraged by the start to our year. Despite COVID-19 still impacting the global health care system and the first quarter, we were able to post positive year over year sales growth across all of our product lines and regions as our advanced therapies helped the patients globally.
Total sales grew 5% year over year on an underlying basis, which was better than the flat growth. We expected when we gave guidance for the first quarter of back in January.
The stronger than expected sales performance fell through to the bottom line, resulting in adjusted earnings per share of 54 cents, which was 8% higher than the first quarter of 2020.
The improvement and our sales performance during the quarter was choppy, but we exited the quarter and a stronger position and that gives us continued confidence and our outlook for the balance of the year.
Well of macro conditions remain variable across our key geographies, we're projecting total sales and the second quarter to grow sequentially.
Two between 1.25 and $1.33 billion, resulting in adjusted earnings per share of 54 to 60 cents.
As our business continues to rebound from the impact of Covid, we expect sales to strengthen and expenses to grow as travel and clinical trials ramp up.
We are maintaining all of our previous sales guidance ranges for 2020 one.
For total Edwards, we expect sales of 4.9 to $5 $3 billion for cover 3.2 to $3 $6 billion.
For T M T T approximately $80 million.
For surgical structural heart $800 million to $900 million and for critical care.
$725 million to $800 million and based on our first quarter earnings we are raising full year adjusted earnings per share guidance to $2.07 to $2 27 up from $2 to $2 20 search.
So now I'll cover additional details of our results for.
For the first quarter, our adjusted gross profit margin was 76 per cent compared to 76, 7% and the same period last year.
This reduction was driven by a negative impact from foreign exchange and incremental costs associated with responding to COVID-19, partially offset by improved manufacturing efficiencies.
We continue to expect our 2021 adjusted gross profit margin to be between 76 and 77%.
Selling general and administrative expenses and the first quarter were $331 million or 27.2 per cent of sales compared to $308 million and the prior year.
This increase was primarily driven by the strengthening of O U S currencies, primarily the euro and personnel related costs, partially offset by reduced travel spending resulting from COVID-19.
As I mentioned earlier, we anticipate our spending will increase during the year as travel restrictions subside and we resume a more normalized operating environment.
We continue to expect full year 2021 SG&A as a percentage of sales excluding special items to be 28 to 29 per set similar to pre COVID-19 levels.
Research and development expenses, and the quarter grew 10% to $207 million or 17% of sales the.
This increase was primarily the result of continued investments and our Transcatheter innovations.
For the full year 2021 we continue to expect R&D as a percentage of sales to be and the 17% to 18% range similar to pre COVID-19 levels, as we invest and developing new technologies and generating evidence to expand indications for <unk> and T. M. T G.
Turning to taxes, our reported tax rate this quarter was $13 one per cent. This rate included a 290 basis point and benefit from the accounting for stock based compensation. We continue to expect our full year rate in 2020, one excluding special items to be between 11 and 15.
Per cent, including an estimated benefit of four percentage points from stock based compensation accounting.
Foreign exchange rates increased first quarter reported sales growth by 280 basis points of $30 million compared to the prior year at current rates. We now expect an approximate $60 million positive impact or about 1% to full year 2021 sales compared to 2020.
FX rates negatively impacted our first quarter and gross profit margin by 150 basis points compared to the prior year.
Relative to our January guidance FX rates positively impacted our first quarter EPS by about a penny.
Free cash flow for the first quarter was $195 million defined as cash flow from operating activities of $301 million less capital spending of $106 million.
Before turning the call back over to Mike I'll finish with an update on our balance sheet and share repurchase activities. We continue to maintain a strong and flexible balance sheet with approximately $2.1 billion and cash and investments as of March 31st 2021, we repurchased three 6 million shares for three.
$103 million during the first quarter and of approximately $300 million for remaining and our share repurchase authorization. We plan to continue to execute our strategy of offsetting dilution from incentive stock compensation as well as opportunistically, reducing our shares outstanding over time.
Average shares outstanding during the first quarter were $631 million down approximately $1 million from the prior quarter. We continue to expect average diluted shares outstanding for 2020, one to be between 630 and $635 million.
So with that I'll pass it back to Mike.
Thanks Scott.
And we remain confident and our long term patient focused strategy and our innovation pipeline.
To serve the many patients suffering from the structural heart disease, we have never stopped investing and our people our innovative technologies and our new growth capacity as a company. We expect that Edwards will be positioned even stronger and then of positioning to help more patients than ever as the world fully emerges from this pandemic so with that.
I'll turn the call back over to Mark Thanks.
Thanks, Mike So Diego with that we're ready to take questions now in order to allow for broad participation. We ask that you. Please limit the number of questions to one plus one follow up if you have additional questions. Please reenter the queue and management will answer as many participants as possible during the remainder of the call Diego.
Thank you.
And if you'd like to queue up for a question simply press star followed by the number one on your telephone keypad. Once again Thats star one on your telephone keypad to queue up for a question of confirmation tone will indicate that your line is and the question queue. You May press. The star key followed by the number two if you would like to remove your question from the queue for participants do you think.
Speaking of equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Bob Hopkins with Bank of America. Please state your question.
Oh, great. Thank you and good afternoon.
One thing that I'd love to get your view on is it kind of stood out in the quarter is the the type of growth rate you guys put up and the first quarter outside the United States, and especially outside the United States and excluding Europe, given some of the numbers you gave us. So I was wondering if you could just talk a little bit more about that and and you know specifically it was true.
Japan, and maybe China really strong and the quarter, Mike just love your take on what happened outside the U S. This quarter with counter.
Yeah, and thanks, Bob Yeah, that's a correct observation and clearly all U S did pull our performance up and the quarter and even though our Europe grew nicely. Most of the this came from Japan and other countries and so of Japan is a pretty significant in size and so it really was a meaningful contributor to growth, but it certainly was.
And that alone you could go across you know.
And many other countries and sort of that normally don't get called out like the Australia was of the careers and these kind of places of the world, where it's Underpenetrated and we just don't.
Have tap of rates, where they should be a really strong growers. Some of that may have been that they were impacted earlier by the pandemic and so the year over year comparisons are a bit stronger, but but but frankly the you know the the numbers were just stop there and we continue to see that therapy grow and those <unk>.
Areas.
China you know, we're very early and that game of was not a meaningful contributor to those results. So it really matter of factor. Okay. And then one quick follow up on that is just was there anything in particular that you think the gave you a better results and in Japan. This quarter and then on Europe I'm. Just curious did did Europe get worse over the course of the quarter of just you know for.
And what happened with Covid or was it pretty stable or did it improve like the U S. Just curious on that yeah. So in Japan and there was no specific thing that drove this you know we've been focused and Japan for many years and actually somewhat disappointed the adoption rates haven't been higher and so this has been a long term and consistent upper.
And it's really nice to just continue to see the adoption of.
We're glad to see this approval for low risk and Japan, and it'll start having some meaning a later on and the year.
And Europe, a it was a it was interesting and it was kind of choppy I would say not consistent across all countries. We still saw the countries that were less penetrated.
Probably have a little bit more growth in those countries that have traditionally been strong and if you looked at of through the course of the quarter. It exited pretty solid I think similar to the overall growth rate of the quarter. So I don't think there was anything notable there Bob great.
Great. Thanks for taking the question very helpful.
Our next question comes from Robbie Marcus with Jpmorgan. Please state your question.
Oh, great and thanks for taking the question and congrats on a good quarter.
Yeah, Mike maybe the the opposite of Bob's question and the U S it'd be great to get a sense of sort of the trends you're seeing how the quarter went and especially with so many of the adult, particularly the 65 and older population now fully vaccinated you know are you starting to.
To see and <unk>.
<unk> and prove there and then maybe I'll just ask the second question upfront.
You know I've heard from a lot of doctors throughout the.
Covid time that the the.
Time from diagnosis to screening to treatment with tap of starting to compress.
Wanted to see if you're seeing that on a company lat-lon. If so is that of durable trend. Thanks.
Okay. So let's talk about the U S. The U S did improve during the course of the quarter and no doubt about it but what we would call of choppy. It wasn't it wasn't straight up and so for example, Ah things were tough in January and February and clearly got better and March although when you got toward the back end of March.
And you had spring break you know you've felt that effect as well, but clearly an upward trend you know I just remember the sort of the roller coaster. The we went on and Robert when we first.
You know put out the tavern estimates of 15% to 20% growth and our December Investor Conference, we were feeling pretty good about it when we got to the end of January and reported Q1, and we were saying well, we're still in that range, but probably one of her a little lower and that range just based on things. We're going and then here are they want and recovered nicely. So we.
Feel confident about the 15% to 20% range going forward. So hopefully that helps you get a sense for the U S. In terms of the the question about is it easier all hospitals are not identical and the way that the screen patients.
And so although some are more efficient and getting more efficient and others are more challenging and you know one of the things that happens when you have COVID-19. So in addition to all of the tests that you run through you also have to do Covid tests before you come into the hospital. So it just becomes the hassle for these patients are in addition to.
Just the the fear factor so I wouldn't say, it's uniform of overall hospitals, and we get a little better, but it's still it's still a battle all the good news is length of stay is coming down and hospitals are clearly improving in that regard and maybe some of that is COVID-19 driven but it seems to be of trend as well.
Great. Thanks for taking the questions.
Yeah.
Our next question comes from Vijay Kumar with Evercore ISI. Please state your question.
Hey, guys. Thanks for taking my question and I had two maybe I'll start with the first and I'm not the guidance here.
Mike on your comments on AR and the 15.
The 20%.
You know in January of up.
Slow and seems seems in a more appropriate and you just beat Q1 average.
At the high and it looks like procedures and come back.
So as I'm thinking are we should we be and looking at the high end of the guide and I think that 15 to 20.
And you still put a finer point on that.
And that's horses last year's guide right. If you look at the actual cap of revenue numbers I mean, and this is more of like a 16th of 26% growth off of actual fiscal 'twenty tab of the numbers.
Yeah, no. Thanks P J.
And we feel pretty good about the fact that we're putting some pretty specific guidance out there and the first place and you know guidance not the that's simple during the age of Covid. You know, we we did we do feel better about it we probably would tend to guide people more towards the middle of the range of Vijay of course, it's possible for it to be higher and.
The lower and this is going to be somewhat dependent on what your perspective is about COVID-19. So even in the even in the U S or certainly across Europe.
If the Covid is more challenging it'll put pressure on our numbers if things go and get all of the vaccinations go nicely and Covid really we start winning the battle and it helps us try and towards the higher and but I you know I feel like Theres pretty balance are in the guidance that we tried to advance.
Understood and then I did have one now and perhaps a more a bigger picture question Mike.
I guess the question they've gotten at the how do your best of mitral because if I can make the thesis Michael is going to be a really big tent of Cam are much bigger and the camera.
At the I guess the question was lucky of had collapsed versus out of Mitra Fr Pacer.
Patient selection matters and then when I look at your trials you have in the two different trials you.
And on the replacement side safety and entry and the Evo is that out of too about the strategy is that that perhaps at Edwards.
Edwards trying to take a portfolio approach are these valves different or Oh, I guess I'm trying to I'm trying to ask how did the Arista as the mitral are we at the point, where we know exactly what patients we need to select and this is just a question of if I claimed before and the micro length of being much larger and tower.
And thanks for that P. J well you can probably get a sense are in.
In terms of how dedicated Edwards is to pursue Transcatheter mitral and tricuspid, we really think it's a big opportunity. We think it's within our reach and we think the time is right for us to go after and and we're going after it with a lot of energy you know we're pursuing it with the toolbox to say, it's derisked would be oversea.
The situation at this point, it's it certainly is not the risk you know theres, a theres leaflet raw of therapy out there right now that has a fair amount of data around it but there is still limited data on replacement limited data and tricuspid and I think each time you see results from these trials and you'll see them actually.
And human use you start to see more and more derisking and more and more clarity and and frankly more clarity on which patients are appropriate for which therapies and I would say that's not fully known at this point, we have some pretty good ideas and maybe we know more of the most because we have so many technologies advance.
And the space, but there's still more to learn and so I'll turn your attention mostly to these big clinical meetings, where there'll be reporting the results from mitral and tricuspid trials to get a sense for us getting a better understanding of the opportunity.
And you start thanks, guys.
Our next question comes from Larry Bagels, and with Wells Fargo. Please state your question.
Good afternoon, and thanks for taking the question.
Mike one on net early caviar, one on the PMT T. I'm, just and early caveat just a clarification, Mike I thought I heard you say earlier that you expect to complete the trial and in 2021, and maybe that's just enrollment, but the clinical trials doctor with just the updated in April. It says the primary end point will be reached in December.
2021. So my question is can you just tell us and and what the status is on enrollment and when we could expect to see the data read out there and I had one follow up yes.
Yes, I'm sorry of if there was a lack of clarity on and what I meant to infer as we're striving to achieve enrollment completion by the end of 2021.
And I've also gotten from my comments that enrollment was a little lighter than we like and Q1 and that anticipates actually the we're gonna have increase the enrollment as the year of goes on and and Covid gets a little bit more under our control. So we're working hard to get there remember that there's a two year endpoint on this trial as of.
Well.
That's helpful. Mike and TMT day can you talk a little bit more you seem to be getting traction nice traction there a little bit more about what you're seeing and the mitral and tricuspid businesses there.
And I don't know, if you're willing to kind of split out mitral and versus tricuspid, but any any color you're willing to provide would be helpful. Thank you for taking the questions.
Yeah. Thanks, Larry Yeah, you know at this point of.
Clearly, there's more sales and mitral and there isn't and tricuspid and try cost, but its pretty new still a I mean, it's been and and I'm pretty impressive ramp and try costs, but we're pleased with what we're seeing we think the opportunities of the nice one but still the opportunity is at least the sales right now is to a great majority.
Related to mitral <unk> you know, there's still more centers that are doing this and so for Edwards and you know actually activating sites is important you know very careful training and trying to make sure that we get great outcomes. Those are all critical success factors, but I don't know if that helps.
Answer your question.
It does thanks for taking it sure.
Our next question comes from Josh Jennings with Cowen. Please state your question.
Oh, hi, good evening, thanks for taking the questions and congrats.
The strong starts for the year.
And I wanted to two questions.
First one just on low risk bicuspid the partner three.
Registry data.
And made public and.
Just wanted to get a sense of from us.
If your team.
And.
And attrition of tab.
And to the low risk bicuspid opportunity.
And with the registry data.
And now.
And the follow up question is just thinking of.
And that the replacement cycle for it.
It's still very early.
And as Youre getting implanted.
And.
And the taverns.
And maybe even past 2024.
Mike do you mind, just frame and what needs to be done clinically.
Average.
Into the place.
Average sits today, thanks for taking the questions.
Yeah.
Thanks, Josh So let me take a shot at the so.
Overall, you know, we're we're pleased with our bicuspid data I don't have anything of specific breakout to share with you. We routinely treat a lot of bicuspid patients and I think well it'll be interesting is what we mentioned that of the upcoming meeting I believe it's a euro PCR youre going to see a report of.
The pretty significant registry of patients that are bicuspid patients sort of been treated with.
With Transcatheter technologies, so that should be and interesting data point and and help give you. Some good insight. That's just here within the next couple of months.
In terms of where we are and the the journey for tavern and tavern versus tavern and Salver. You know you hear of clinicians talking much more about how do I plan of lifetime therapy, right, what should be for a given patient given their age given their disease what true.
It would be the first treatment what might be the second should it be surgery first half for a second <unk> and surgery done another tower and all of that and that's a that's a very active discussion and I think there's been some really strong evidence that says tavern <unk> tap of as good as well as to have her in sabra. So those of both proven to be <unk>.
The options and so now it's trying to sort through for any given patient a what's the best therapy and if it's out of the podium pretty regularly and I think we're on a pretty steep learning curve in that regard.
Great. Thank you.
Our next question comes from Cecilia furlong with Morgan Stanley. Please state your question.
Great. Thanks for taking the question I guess I wanted to start off with TNT T again, and and just really.
And expanding in Europe, and you think about the 80 million in 2020, one and really what's coming from the further account penetration versus the kind of expansion and you factor that into your guidance.
Yeah. Thanks Sylvia.
And the short answer is I'm not sure clearly more sites is an important component here Ah I also know that there's an increase within the existing sites, but probably site expansion is the the biggest part of that if you were to just.
Got the pick one versus the other given the outcomes.
Yeah.
Okay, great. Thank you and I can say and I did want to turn back to Taiwan, and Japan, and just what you're seeing there and really just ahead of the best reimbursement if that has changed dynamics in terms of just interest, especially is and that's what you've seen historically and and not being kind of the driver of recent strength.
And thank you.
Yeah. Thanks, Yeah, you know, we believe that clinicians and the environment in general is pretty disciplined and Japan and that clinicians do treat two approved guidelines and so we don't think that there's a lot of our low risk that's in the curve.
The numbers and so we expect that to be a positive boost having said that and.
As we've talked about before treatment rates and Japan are compared to where they should be or just low. There's you know almost as many elderly and Japan is there are and the United States, but its still a dramatically less treated so we still have work to do other still a potentially a lot of upside there were pleased to see the growth rates, but.
Where we're not pleased at the penetration rates yet.
Okay. Thank you Mike sure.
Yeah.
Our next question comes from Matt and mix It with credit Suisse. Please state your question.
Hi, Thanks, so much and for taking the question, so I'm, hoping and Mike.
You could shed some light on the couple of the dynamics that we get questions about often and and how they potentially affecting the growth of the.
Agribusiness.
Globally and especially.
And especially in the U S. The.
The two things and I'll keep it the one question or are first the idea that tab of somehow benefitted during the Covid. This idea of a preference for camera all of their server driven by length of stay and then potentially maybe that rolls back towards.
Towards Denver overtime somewhat and then the second is sort.
And of what you'd contemplate it and in terms of Ah you gained an awful lot of share a fair amount of share from your largest competitor over the past year and a half or so.
And how much you contemplated sort of having to feed that back in.
And maybe what you've seen on that front, so far and is it.
And as to what you've assumed.
Yeah, well, thanks, Matt So a couple of things I mean, clearly we've heard clinicians and hospitals talk a lot about their focus on length of stay and about how helpful. It is if they don't have to utilize the ICU or have patients that stay in the hospital, having said that I would say that.
If you were to take the U S mix for example of tavern versus south of our during the pandemic. That's remained relatively flat there really are and we haven't seen tavern versus silver or vice versa advantage very much during the pandemic, it's been pretty stable and you know and so it's.
It's difficult to know if.
And if that's COVID-19 related or if it's just the sign of the times, but that that's the observation and.
Go ahead.
The Okay, you and you also asked the also the second part of the question was about share yeah, and all we we feel pretty good about our competitive position. We're really pleased with the performance of SAPIEN three ultra it's it's demonstrated not only to be easy to use but.
Low complication rates and its length of stay has been remarkable and people who have really been able of calling on it during the pandemic I don't know anything that's going to change that you know we continue to be aggressive innovators and we will continue to advance the state of the art, but we've got a lot of positive feedback from clinicians.
Fair enough. Thanks.
Our next question comes from Joanne Wuensch with Citibank. Please state your question.
Oh good evening, thanks for taking the question and.
Nice quarter.
And it's the way to quantify backlog of patients that have cut off of procedure during COVID-19.
Yeah, Thanks, Joanne and that's a tough one we do think about that a lot you know in general we don't think that there's a significant backlog of patients are clearly it's the variable across centers there might be some centers actually that have some but we don't think of that.
And more of what we found during the pandemic is that at the same time, when when centers have of capacity problem and and and it impacts their implants. It also tends to impact their screening. So you don't necessarily get this backlog built up they tend to move more or less and parallel so it's not one day.
It tends to drive a big backlog.
Yeah.
Thank you and ease of follow up question and kind of curious what your sort of thing in terms of the kind of trial. It sounds as if you've restarted and many of them are they back to what I would call sort of a normalized run rate in terms of the moment and thanks.
Yeah. Thanks, Joanne Yeah, you know, we never officially stopped any clinical trials are they were clearly slower and the first quarter.
And so that was that was that was the factor you know I actually interestingly enough of the class two day trial actually enroll pretty nicely and the second quarter. So it wasn't uniform, but I'd say most of our trials were impacted where you know where we think that the clinicians and we're working with they're eager to get.
Back at it to say we're back at pre Covid rates I think it would be an overstatement, but I think we should start building back up again and as we mentioned and I think the regulators have been pretty good of thought partners and us as we try and you know really react to the what Covid has done to clinical trials.
Thank you.
Yeah.
Our next question comes from Danielle and healthy with SBB Leerink and please state your question.
Hey, good afternoon, everyone. Thanks, so much for taking the question Mike.
A question and one question for you and first time.
Japan, So you've talked a lot about how Japan has sort of I don't know of underperformed your internal expectations is the right way to think about it and.
And what is going on there and what is Edwards like what's going to change and the tight and a meaningful way and Japan, and then again and just one quick.
Yeah. Thanks, you know Danielle it's a it's multifaceted and Japan in terms of what's going on we think there needs to be more centers and Japan amongst other things because in many cases ah patients like the stay with within their their own.
Region to get treated and we don't have tab of our centers and all regions are there still is some pretty high requirements for tower centers to begin in Japan, and they actually have to be cleared by and external panel and so if it's not just between us and the clinicians and you know.
And we were hoping that low risk it has the possibility of being a catalyst.
To be able to help us along the way and maybe maybe simplify the journey for clinicians and patients.
Okay. That's helpful and then I'm Pascal.
Essentially coming next year with that late 2020. Two you asked what can you talk about as far as of the learnings and Europe as you're opening new centers.
As you progress in Europe and I appreciate.
But how's your progress and in Europe, giving you sort of a blueprint for what you might how you might approach the U S mail.
And maybe talk a little bit about that thanks.
Thanks, so much.
Sure, Yeah, you're right, Joe and naturally we're learning quite a bit in.
In Europe as you might imagine what we stay focused on and I think we've been pretty vocal about this is trying to maintain a are really of I'll call. It a high touch model. So we stay very close to the clinicians try and help make sure that they have terrific outcomes that are very well trained and that they get incredible results and we think we.
Can't do anything more important than that to really drive the the the the adoption of the therapy on a long term basis, we're optimistic about the U S. It's very large even though things of that Ben we had nice growth in Europe. The pandemic doesn't make it easy and you can imagine are the biggest.
The user of this technology is Germany, and the when Germany goes through tough times it doesn't make it so easy so we're a bit dependent on this but we're gonna apply much of the same strategy and the U S. The we apply it in Europe.
Thank you.
Our next question comes from Anthony Petrone with Jefferies. Please state your question.
Thanks, Congratulations strong start to the year I'll ask two questions and I'll ask upfront. The the first one would be on early tab or for for asymptomatic patients and just.
Wondering if you could provide some high level comments on and sort of the latest view on the asymptomatic opportunity and.
And once we sort of get there and the next year or so with data of how how influential.
And then the the findings from the study will be and opening up asymptomatic and then on existing U S centers, maybe just the refresh on where the average average tab of our volumes are today and when you think about fewer hospital in days.
How how significant of the driver could that be to average utilization and.
The average utilization number thanks.
So let me start with the asymptomatic trial of the early tab of trial are we think this is a really important trial one of the obstacles for patients to be treated as they could have severe aortic stenosis and if there's uncertainty whether they have some of them.
And then they are not treated because that's what guidelines and say that you know assessing and identifying symptoms is a very sketchy game, that's subject to a lot of misinterpretation and so if we took that requirement out of the equation, we think it would be very meaningful.
And you could simply take some echo measurements and said hey, this patient out of superiority the doses and that drives treatment that simplifies the diagnosis dramatically. It would make a big difference. So we think that's important for the second question I didn't fully understand your mind, Anthony saying that again.
Sure when you look at the average U S volumes in U S. Tab for centers today is there a number where average utilization is just in terms of monthly surgical volumes and when you think of fewer hospital in days and as a driver because that had the potential to move that average utilization number higher.
Okay. So we you know we've seen new hospitals come into the system and that's been that's helped with growth we feel like hospitals have the ability to add capacity. If that's really underlying your question and that they do that quite well they can do it by adding days they can do.
It by adding clinicians and we've we've found them routinely able to do it and not really be of big burden to them and so it is clearly helpful. When the length of stay is shorter but some of it is their own practices. You know if theyre able to do for example of multiple towers and a day that really helps.
If they're able to discharge patient fast and faster that helps and all of those are improving.
And also I would just say generally their desire to be able to increase capacity. So it's where we're getting into a place where travelers becoming far more predictable than it had been in the past and that really helps hospitals ability to plan.
Okay. Thanks again.
Our next question comes from Adam Nadir with Piper Sandler. Please state your question.
Hey, guys. Thanks for taking the questions and congrats on the nice start to the year, maybe just sticking with the capacity theme I wanted to ask you about new U S tab for centers and kind of where we are today.
There was a lot of optimism and 2019 with the new NCD that that would span of couple of hundred and you'd have or centers. You know of COVID-19 has obviously been impactful abate.
Just wondering if we're starting to see some green shoots again and and new centers open up or are we just not quite there yet and then I had a follow up thanks, yeah. Thanks, Adam I Hope your follow up is for Scott all of them. He's got lowly over here without any questions, but let me get to your question.
Yeah, we're probably approaching something around 800 centers in the U S. A and you know it's interesting.
Even during the pandemic are theres been an increase each quarter, maybe 10 to 20 centers.
Per quarter and so it's it's gradually increase we'd been impressed that centers of actually come online during the pandemic with tells you about their desire to be able to bring the type of treatment to the structural heart patients. So we've we've been doing nicely I think of the time of the NCD. We thought the number might go to 850, we really don't have any update on that.
At this point so maybe that gives you a sense of where we are.
And that's really helpful. Mike Thanks for that and apologies the Scott, but one follow up on the fabric.
And the pipeline I'm, just it's been a little bit.
The of time here I think since you've gotten and update on.
And the safety and explore program. So just wondering if there is any new developments you can share there and is that something you still plan I think you're planning to move that the pivotal trial at some point in 'twenty, one and so is that still the case and just when will we learn more about.
The feature set and product design and thanks, so much.
Yeah. Thanks, Yeah at this point it out and we're not prepared the share more.
About the the feature set of the product line, we are still expecting the beginning of clinical trial in 2020, one and and you know I think maybe even from a bigger picture of perspective, although we're really pleased with where we are on top of we're just not going to stop innovating. Our we continue to find opportunities for us to improve this.
There are P and make it better for patients and and we're just gonna stay relentless in that regard.
Thank you.
Our next question comes from Matt Taylor with UBS. Please state your question.
Hi, maybe I'll try and get Scott and law.
And I'm wondering with the slightly but you had better than expected growth across the product lines in Q1 and.
And you basically raised guidance by the beat for the year, but I'm just curious at least from a high level of standpoint are you feeling better about the year now that you had.
And then one card turned over here one quarter under the belt and and why not raise guidance more than out of an abundance of caution or have things gotten worse to the point, where you don't feel comfortable doing that yet.
Well look we're pleased with what happened and the first quarter. Both in terms of sales and how much of that fell right through to the bottom line, but just to take it back remember at our Investor Conference in December where we laid out guidance for all of 2021, we said it was assuming three things and that was that we get through the winter months debt.
The vaccinations get widely administered and that hospitals remain open and.
And when we got to January and our earnings call in late January It felt pretty bad I mean, and we felt like things you'd probably on the margin gotten worse not better since our Investor conference, but here. We are now having seen the results of the first quarter and we're feeling positive and and still confident about the guidance that we laid out originally in December.
Yeah, we think it's gonna be choppy.
It has been choppy and the first quarter. Although there are certainly signs of strength and it's the reason why we still feel confident of the guidance, we've laid out for the second quarter and.
And reiterating the guidance for the full year.
Okay, great well thanks Scott.
Yes.
Our next question comes from Peter Chickering with Deutsche Bank. Please state your question.
Thanks, guys for fitting me in here and one for Mike One for Scott Firstly from Mike as the World begins to recover post Covid I'm curious if you're seeing any changes with any of referral channels you talked about smaller centers outperforming larger centers have you seen of local of dogs.
Dogs helped drive increased diagnosis of patients within their markets.
Yeah. Thanks, Pedro you know and I think it's not fair to say, the we've really seen meaningful changes and the referral centers one of the things we have seen though is and then we just hear of this anecdotally the patients maybe are less likely to travel long distances to of center of excellence and they're more likely to want to stay local.
And their centers and so that's probably been in there to some extent, probably driven and some of the behavior of during the pandemic.
Okay Fair enough and then and then for Scott.
And I.
Get the costs will increase as travel and conference is begin to pick up again as revenues begin to recovery here, but if you can quantify how much travel conferences will generally impact the expenses throughout the year.
And we're not going to breakdown of travel versus the other expenses, but know that there are a couple of different drivers of our expectation that expenses increase one is just actual travel and people out and the field too is you know more training more time going and person to society meetings to the extent that those start.
Becoming more and person.
And then of course on the clinical trials and were expecting the clinical trial and enrollment will continue to increase that's the number that shows up and our research and development expense line item on our income statement, so those or at least some of the pieces that will be influencing our overall expense ramp and the rest of the 2021.
Oh, great. Thanks, so much.
Yeah.
Our next question comes from Jason Bedford with Raymond James Please state your question.
Hey, good afternoon, and thanks for taking the question no one's asked about the strength and surgical and I realize there's the comp dynamic, but I can't remember the last time surgical grew faster than the towers. So just a couple of questions on that can we assume most of the strength was from international markets, where there are any.
Stocking orders that impacted growth and.
And you also mentioned growth was helped by premium products any way to parse out procedure growth versus dollar growth. Thanks.
Yeah. So.
A few things one is you're you're right surgical and rates dropped pretty precipitously and late March so some of that is the comparable.
That should go into account, but actually the U S was quite strong it certainly was comparable if not slightly stronger than the global rates and so I.
I think of the.
It certainly was broad globally, but the U S was good and I don't know if that.
And then up answering the question. Thanks.
Thank you.
That's all the time, we have for questions today, I'll turn the floor back to management for closing remarks.
Okay, well, thanks, all very much for your continued interest and other and Edwards and Scott and Mark and I welcome any additional questions by telephone.
To you Mark.
Thank you.
This concludes today's conference.
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