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Edwards Lifesciences rises on heart valve views

Shares of Edwards Lifesciences Corp. advanced Thursday after the company said it believes its Sapien heart valve will be approved soon.

THE SPARK: The Irvine, Calif., company reported its third-quarter results after the market closed on Wednesday. Its profit and revenue were about in line with analyst estimates, and Chairman and CEO Michael Mussallem said the company expects approval of Sapien "any day." The Food and Drug Administration is expected to make a decision on the valve soon, but a panelist who advised the FDA on Sapien recently said the valve won't be approved until April.

THE BIG PICTURE: Sapien is designed to replace diseased aortic heart valves. It is designed to be threaded to the aorta through an artery in the leg and then moved up to the aorta, where it can act in place of the damaged valves. Aortic valves are typically replaced through open heart surgery, and the Sapien procedure would be an alternative for patients who are too sick or too old to endure that procedure.

The valve is on the market in Europe. Edwards is seeking approval to market Sapien for patients who can't have open heart surgery, and it hopes to get approval to market it for patients who could survive open heart surgery but prefer an alternative procedure.

An FDA panel said in July that Sapien should be approved. However, on Monday, cardiologist Dr. Jeffrey Borer said at a medical meeting that the valve won't be approved until April. Edwards said Wednesday that a delay in approval would hurt its results, but said it expects the FDA to clear Sapien soon and backed its sales forecasts. The company says it expects $20 million to $25 million in Sapien revenue in the first three months after approval, and $150 million to $250 million in sales in the first full year.

THE ANALYSIS: Jefferies & Co. analyst Raj Denhoy said he thinks the FDA will approve Sapien in early November, around the time of a cardiovascular conference that will last from Nov. 7 to 11.

"Management remains highly confident in Sapien approval imminently," he said. "A longer-than-expected regulatory review period appears to simply be a consequence of a notoriously slow agency where delays have become the norm."

Denhoy maintained a "Buy" rating on Edwards shares. He cut his price target to $92 per share from $103 to reflect the regulatory and commercial risks facing Sapien.

SHARE ACTION: Edwards stock rose $4.21, or 6.2 percent, to $72 in afternoon trading. The shares have declined as investors waited for more news about Sapien and as concerns about the global economy put pressure on stocks. Edwards shares are down 23.8 percent since the FDA reviewers posted their opinions on the heart valve in July.