Small Incision, Big Opportunity

Edwards Lifesciences’ artificial aortic valve technology opens the way for innovative heart surgery, which promises to reduce costs, as well as patient recovery time.

March 2020

The Rolling Stones announced in April 2019 that they were postponing their North American tour due to front man Mick Jagger’s heart surgery.

The 76-year-old’s procedure brought to the general public’s attention a hugely promising, minimally invasive surgical innovation that was already well known in the medical community. The procedure, called transcatheter aortic valve replacement (TAVR), promises to reduce costs and improve outcomes for the hundreds of thousands of patients globally who need to replace the valve responsible for keeping blood flowing from the heart to the entire body.

As adoption of the procedure grows, we expect leading artificial-valve maker Edwards Lifesciences to remain the primary beneficiary.

The TAVR Advantage

While Stones fans were learning about TAVR, medical professionals were scouring the results of the latest major clinical trial of Edwards Lifesciences’ SAPIEN 3 TAVR valve. Like previous trials, this March 2019 trial concluded that using the device even in the healthiest patients can produce results superior to traditional open-heart surgical aortic valve replacement—findings reported in the New York Times as “remarkable.”1

Roughly one in eight people age 75 or older suffers from moderate to severe aortic stenosis, a progressive narrowing of the aortic valve that may ultimately require aortic valve replacement. For decades, the standard treatment was highly invasive open-heart surgery, a lengthy hospital stay, and a recovery time of as much as six months.

By contrast, a doctor performing TAVR snakes a catheter through a small incision in the patient’s leg and up an artery to the heart, and then inserts a replacement aortic valve. The procedure can be performed with local anesthetic; patients often head home in less than 48 hours and resume normal activities within a week.

A Growing Opportunity

This ability to lead an industry through such important—indeed, literally life-altering—change is precisely what originally led us to consider Edwards a leading growth business. We believe that the use of minimally invasive technologies is a major secular trend in healthcare.

In our original investment case, our analysts anticipated that TAVR could radically transform treatment for severe aortic stenosis, the most common reason for aortic valve replacement. Our projection then was that TAVR would account for nine out of 10 aortic valve replacements within a decade. The FDA initially approved TAVR only for high-risk patients, who aren’t good candidates for open-heart surgery. But the agency has steadily expanded the population of eligible patients over time. Following the most recent clinical data, the FDA made TAVR accessible to the roughly 40 percent of severe aortic stenosis patients in August 2019.

We originally projected that an expanding clinical population for TAVR treatment could double the transcatheter aortic valve market to $3 billion a year by 2019. Growth has surpassed our expectations, hitting $4 billion in 2018 and we expect it to double to $8 billion by 2025. Edwards Lifesciences controlled about 60% of that market.2 We believe the company’s market position, steady management, leading clinical evidence, and singular focus on minimally invasive valves give it a clear competitive advantage. We think this will enable it to capture half of all new spending on transcatheter aortic valves and maintain its status as the dominant player in the market.

And Edwards Lifesciences doesn’t stop there. It’s developing minimally invasive technologies for other life-threatening heart valve diseases, including mitral regurgitation (valve leakiness). Edwards also is working on two mitral replacement technologies that we believe are more promising than those being developed by competitors. While some believe mitral replacement will always be a secondary option to mitral repair, we believe it will become the standard of care in this market in the long term. What’s more, we expect Edwards’ mitral replacement technologies to help the firm capture a leading position in this market.

COVID-19 has deferred clinical trials and medical procedures globally, which could result in a period of slower growth before Edwards’ next-generation procedures gain traction. However, the sad truth is that aortic stenosis is more lethal than most cancers—with a 50 percent death rate after two years—so we have confidence that TAVR will recover faster than other medical procedures. Indeed, COVID could accelerate the shift toward minimally invasive procedures such as TAVR because they require shorter hospital stays and can even be performed in outpatient facilities.

As for Mick Jagger, a video he posted a few weeks after his TAVR procedure shows the singer rehearsing his aerobic dance moves in a studio. A few weeks after that, the Stones kicked off their summer tour in Chicago. Mick was center stage, right where he belongs.


2 March 2019.


The business profiled is one of the longest-held common health care businesses in the Sands Capital Select Growth and Global Growth strategies. The company represents one current holding in each strategy.

The views expressed are the opinion of Sands Capital Management and are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. The views expressed were current as of the date indicated and are subject to change. Past performance is not indicative of future results. A company’s fundamentals or earnings growth is no guarantee that its share price will increase. Forward earnings projections are not predictors of stock price or investment performance, and do not represent past performance.  The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. There is no assurance that any security will continue to be owned by Sands Capital Management. You should not assume that any investment is or will be profitable. All company logos and website images are used for illustrative purposes only and were obtained directly from the company websites. Company logos and website images are trademarks or registered trademarks of their respective owners and use of a logo does not imply any connection between Sands Capital and the company. GIPS® Reports and additional disclosures for the related composites may be found in the Sands Capital GIPS Report.


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