|Edwards Lifesciences CEO Michael Mussallem|
Edwards Lifesciences ($EW) has received a warning letter from the FDA over problems at the company's Utah facility, and the agency will hold off approval of some devices until Edwards rectifies the issues.
In a February inspection, the FDA cited issues with Edwards' design, corrective actions and packaging in its Cardiac Surgery Systems business, which manufactures cannulae, cardioplegia catheters and other surgical tools.
Edwards will respond to the FDA's letter within the 15 business days allotted, a spokeswoman said, and the company doesn't know how long it will take to get out from under the agency's restrictions. Whenever that happens, Edwards doesn't expect the warning letter to have any impact on its expected 30% growth and $750 million in sales for the year.
"We are committed to thoroughly addressing the issues identified with the quality systems for our CSS devices and have already initiated responses to address FDA's observations," CEO Michael Mussallem said in a statement. "Our first priority is delivering quality, life-saving devices to patients."
The good news is that the warning letter and its attendant restrictions have no effect on Sapien, Edwards' banner transcatheter heart valve. The company is working through the FDA approval process for Sapien XT, a sleeker iteration of the market-leading device, and has its sights set on launching a third-generation Sapien overseas.
The line of valves accounted for about 35% of Edwards' total sales last quarter, and, as Leerink pointed out in an investor note, as long as Sapien stays in the FDA's good graces, Edwards should have no trouble meeting its earnings projections.
The company is still crawling its way out of some shareholder ire after it scaled back the 2013 forecast by about 5% in April. The company's shares plummeted from $82.81 on April 23 to Wednesday's close price of $64.22, and Edwards approved a $750 million buyback program this month to bolster confidence, with Mussallem pitching in $5 million of his own.
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