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The heart valve rockstar

Investing newsroom
Ashley Gardyne, Senior Portfolio Manager — International Shares

Ashley Gardyne
Senior Portfolio Manager — International Shares | Email Ashley »

17 April, 2019

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There were two newsworthy developments for our portfolio company Edwards Lifesciences over the last month. Firstly, its breakthrough transcatheter aortic heart valve received some great clinical trial results, and secondly, Mick Jagger’s successful heart surgery provided this new technology with some well-deserved publicity.

Mick Jagger's heart surgery tweet

We have held Edwards in the International Growth Fund for the last two years and it is a great example of the type of business we are looking for at Fisher Funds. It has a leading market position, a long growth runway, and management has significant skin in the game.

Edwards is the leading manufacturer of replacement heart valves for patients with a condition called aortic stenosis, a potentially fatal condition affecting millions of people globally. Edwards pioneered a new type of valve that is implanted with a catheter (without open-heart surgery) and often allows patients to leave hospital the next day. This is obviously preferable from the patient’s perspective, but it can also save hospitals money due to shorter patient visits and fewer complications. It is also great for Rolling Stones fans and should mean a swift recovery for Mick Jagger.

While initially restricted to severely ill patients, Edwards had a vision of this becoming standard of care for all patients. This vision came closer to reality in March following the conclusion of a clinical trial demonstrating that this minimally invasive technique is superior to surgery for all patients, and opens up a large new patient group and avenue for growth.

Edward's aortic heart valve and catheter

We have always been impressed with the long-term focus of Edwards’ management team. By investing more in research and development than competitors it has continually extended its growth runway and strengthened its competitive position. Beyond its products for the aortic valve, Edwards continues to develop new devices to repair the tricuspid and mitral heart valves, which are still largely treated through open-heart surgery. We also like that management is heavily invested in the company, with CEO Michael Mussallem holding over US$170 million worth of Edwards shares.  

We had the opportunity invest in Edwards two years ago when the market became despondent with a short-term slowdown in sales growth, rather than focusing on the large long-term opportunity. Edwards’ share price has more than doubled since then and we believe this provides a good example of how the market occasionally provides opportunities to investors willing to look through short-term noise.

While recent developments have been good news for Edwards' investors, it is perhaps even better news for Rolling Stones fans - with Mick Jagger potentially back out on tour in the US in June.



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