Perfect. Good afternoon, everyone. It's now afternoon. We've all survived the morning of day one of the William Blair Growth Stock Conference. Appreciate you guys all being out here. My name is Margaret Kaczor Andrew. I'm the research analyst here at William Blair & Company, who covers Edwards Lifesciences. Before we begin, I'm required to inform you that you can obtain a complete list of research disclosures or potential conflicts of interest at williamblair.com. Now, we're very pleased to have Scott Ullem, the CFO, and Mark Wilterding, SVP of IR and FP&A of Edwards. So, guys, thanks for joining. For the folks in the audience, we're gonna do a little bit of a Q&A version of a typical presentation session, so hopefully more active and more interactive and so on. But we'll go through some of the background still of Edwards, what they do, and dive into some of those details. Before maybe we begin, I'll give a little bit of background. Edwards actually helped create the first heart valve replacement technology, about 60 years ago. I'm gonna look at Scott. Is that right? That's right. Okay, perfect. And remains the global leader today still in transcatheter and surgical heart valve technologies. The company continued to innovate on its SAPIEN platform over the years, and now it's that preferred TAVR technology. And they've treated over one million patients to date, and have a nearly a dozen New England Journal of Medicine publications to support the clinical efficacy of the device. But it's more than TAVR and SAVR business. The company has actually entered, in our view, a pretty pivotal moment, in their history, frankly, as they move into transcatheter mitral and tricuspid therapies, or TMTT, so you'll hear us say that, for short. And these guys probably, again, you can correct me if I'm wrong, I think you've probably invested more than anyone else in the space, within those two technologies. Stands to reason. Yeah, I think that's probably true. So it's a toolkit approach, and, you know, we'll go into why the disease state is so difficult to treat, and why there's maybe different types of technologies that will work best for various types of patients. And then the company has a fourth business segment in critical care, which was initially supposed to be spun off at the end of the year. Just yesterday, they were nice enough to announce a new announcement, which was that Becton Dickinson was going to acquire that business for $4.2 billion. At the tail end of that, again, you'll correct me if I'm wrong, but $6 billion or so in cash, probably? Maybe short. Probably less than that- Okay. - because there's a tax liability that goes with the sale. Okay. Regardless, still a lot of billions for investments. So, you know, a lot to talk about here. Again, I know it's a, it's a generalist conference, nature, so, you know, maybe Scott will start a little bigger picture first. If you could give us, some background on kind of the three core segments, ex critical care, so SAVR, TAVR, TMTT, and if you could highlight just the last two or three years and the growth drivers of each, that'd be great. Yeah, sure. And good afternoon, everyone. Thanks for the questions, Margaret. So you're right. So three business units, pro forma for the divestiture of critical care. The first and biggest one is our transcatheter aortic valve replacement business, which is really built on the SAPIEN platform. SAPIEN's a trade name for our TAVR technology. And this technology was originally introduced as a commercial therapy in Europe in 2007, and in the U.S. in 2012. So on the one hand, it's been around for a while. On the other hand, we've just started to scratch the surface of treating this disease, aortic stenosis, using this catheter-based approach. And so it's one of the reasons why it's been growing quickly and why we're optimistic about the continued growth opportunities ahead. TAVR, last year in 2023, was about two-thirds of the business of Edwards Lifesciences. And like I say, there's a lot of growth drivers that we can get into, ranging from new clinical trials, new indications for this therapy and types of patients it can be used for, and new technology as well. The newest business at Edwards Lifesciences is this TMTT business that with therapies designed to treat patients suffering from mitral and tricuspid diseases. And this is a business that in 2023 only represented about 3% of Edwards' sales, but it's also our fastest-growing business. In the first quarter, it grew over 70% this year, and we expect continued very strong growth and contributions from TMTT this year and in the years ahead. The business is really focused on offering therapies to patients that can both repair mitral tricuspid valves or replace mitral tricuspid valves. And it's important to have those different therapeutic alternatives because these diseases present themselves in different forms. So unlike aortic stenosis, where there's really just a one-shot replacement requirement, in mitral and tricuspid, there are more sophisticated requirements to treat all these patients. Then the third business is our surgical structural heart business. And so in this business, we make valves that are implanted through a traditional open chest procedure. And the big growth drivers right now for us are a new aortic replacement valve called INSPIRIS, a new mitral replacement valve called MITRIS, and then we have a new aortic product called Konect, which has been a really important introduction for patients who need a whole aortic root procedure. So, that business is also growing. Sometimes the question is, "Well, geez, isn't that kind of a buggy whip business?" And we've been growing very quickly in surgical structural heart for the same reason why we're growing in other areas, because there are a lot of patients who are untreated or undertreated, and a lot of them benefit from surgery or only eligible for surgery, not a catheter-based approach. So that's just a quick rundown. Perfect. So maybe before we dive a little bit deeper, you know, because with the spin-off of critical care will now become more of a structural heart company at heart, no pun intended. So, as you think about the balance sheet that expands now with this move, does it change any thoughts around where you might put investments between those three business franchises? Yes and no. So the no is, we're laser-focused on structural heart. That's our program and always has been our program, with the exception of critical care. So, this is not a change in direction, it's a refocus or a heightened focus on structural heart. The proceeds from the sale of critical care will be used to continue to invest in growth initiatives around aortic, mitral, tricuspid, and pulmonic valves, both internal and external, and we've been very active on the business development front over the years. We typically buy relatively small acquisitions. We typically either make a minority investment in a business, sometimes we'll buy options to acquire a business, and we can exercise those options based upon our view of different milestones that a company has achieved or regulatory approval of a particular product. And so we'll continue to do that, and I think you'll see a continuing deal flow from Edwards, but all in the area of structural heart. Okay. And you know, you mentioned all four valves in the heart, so I'll just kinda double down within that as a category. You know, do you see more of the investments or the opportunity maybe on the mitral and tricuspid side, you know, any of the four that you would kinda call out? 'Cause aortic, I think a lot of people just assume it's a little further penetrated. Yeah, I wouldn't assume that. There's a lot going on in aortic innovation as well. So I think, really, all, all four is really all four. But that's just the valvular side of structural heart disease. There's a non-valvular side of structural heart disease, where we're also making investments. It's an earlier stage, area for us at Edwards. We have one internal program with a therapy called APTURE, and we have investments outside of Edwards in heart failure, which is also structural heart, and an area where you should expect that we're gonna be more active in the years ahead. Okay. So maybe let's, let's, do one more kinda high-level question. It's, it's around the CEO change, which, frankly, a lot of people know at this point, but maybe for this audience. There was a CEO change, a little bit over a year ago from Mike Mussallem, who's been there for many, many a year, to now Bernard. You know, maybe walk us through why, why that change had happened, and as you look at the last year and a half or so, how has the company developed? Yeah. So this was, this is a planned succession process. Our former CEO turned 70 and decided that he was gonna retire. And Bernard Zovighian, who had been at the company for nearly 10 years now, has run two of our four business units at Edwards and has stepped into the role, and it's been about as seamless of a transition as you can imagine. It's one of the benefits of an internal candidate, especially one who's run different businesses within the company. And Bernard had a real hand in really charting the strategy for the company and is now executing it in his different role. But it's gone pretty well. I mean, nothing has really changed in terms of the strategy of the company, the focus of the company, or really the patient orientation of the company. Okay, great. So, you know, maybe let's go back to TAVR. It's a significant portion of the sales today. As we think about the SAPIEN series of valves relative to some of the competitive valves, maybe you can walk us through a high level, you know, from a self-expandable versus a balloon-expandable valve and why that matters. Sure. So you're right, there are two basic varieties of transcatheter valve replacement technologies. One is a self-expanding valve. Edwards had a self-expanding valve program. We decided not to continue it, even though it had the best self-expanding valve clinical trial data of any that had been introduced at that point. Self-expanding valves are a little bit taller in size. Usually, they're made out of Nitinol, which is a memory metal, and so they get deployed, but sometimes they're a little less precise in the position where they can be deployed because this memory metal has a tendency to jump. Edwards is the leader in balloon-expandable technology, where a valve is collapsed onto a balloon, threaded into position in the aortic, in the aortic position, and then a small balloon is inflated to deploy that valve into position. It can be very precise, and has very consistent outcomes as a result. Balloon-expandable is the leading platform around the world. We're the leader in balloon-expandable and have been since the advent of TAVR, really. Yeah. Okay. You know, historically, TAVR has been, you know, this, this wonderful double-digit growth story. COVID maybe disrupted that a little bit in terms of, you know, unfortunately, patient mortality, you know, patients moving through the funnel, and so on. But, you know, if we look at this year, your guidance is for 8%-10% growth, stronger in the back half than in the first half, even, you know, though you have some tougher comps. So maybe walk us through, kind of that dynamic, both pre-COVID, during COVID, and as we look out for guidance this year, what are you, what are you assuming? Yeah. So you're right. I mean, COVID messed up a whole lot of things in our business and— In fact, it we had to pause some clinical trials during COVID just because physicians were laser-focused on treating or being prepared to treat COVID patients. But that's all ancient history now. We're back into a new normal operating environment, and our business is growing nicely. For TAVR, it's a pretty exciting time in TAVR right now. We've got our newest product, which is, it's called SAPIEN 3 Ultra RESILIA. The RESILIA part is reference to a tissue technology that Edwards researched and invented and then ran an extensive clinical trial on, and we recently read out the 7-year results in the COMMENCE clinical trial, demonstrating that this tissue treatment had real benefits in terms of extending the durability and the longevity of the tissue on these valves. Bioprosthetic valves, like, transcatheter valves, end up having a defined lifespan, because typically there's coagulation and calcification of the leaflets. This RESILIA tissue treatment reduces the risk or defends the tissue from that calcification. So we're pretty excited about introducing that. We just got approval recently in Europe as well, so it's- we're introducing it in the U.S. We're just now starting the introduction in Europe, and so we think it's a really nice next step in the evolution of this technology. We've also got a number of clinical trials underway right now. Well, let me step back for a second. When we first designed the clinical trials for TAVR, it was relative to an established and safe and effective alternative, which was traditional open-heart surgery, which has been around for decades. But as a result of there being an established procedure, the original clinical trial guideline was to reserve TAVR just for patients who were too sick or too risk of death from getting open-heart surgery. And over the last 10-15 years, we've gradually been testing those parameters and demonstrating that TAVR is actually safe and effective, and in fact, in some cases, statistically superior to open-heart surgery. And so, we've got multiple clinical trials still underway, still advancing the eligibility of this therapy for different patients based upon clinical trial results. One of the results that's gonna read out later this year at a big medical conference called TCT is the results of a study showing what happens with patients who get TAVR, who started with severe aortic stenosis but without symptoms. Because today, TAVR is reserved only for patients who show symptoms of this severe disease, which is sort of bizarre when you think about it. There aren't any other diseases where the therapy is... Once you demonstrate that you have the disease, and this is a disease, by the way, aortic stenosis, which has about a 50% mortality rate after two years, that you have to demonstrate that you also have symptoms in order to get the therapy. So this trial is taking on that presumption, and we believe, we're hopeful, will show signs that lead to an indication expansion so that any patient with severe AS can get TAVR. There's another trial reading out in two years, it actually enrolled much quicker than we thought, which is studying TAVR in patients who have a moderate form of aortic stenosis. So aortic stenosis is a progressive disease. It starts out mild, then moderate, then severe. We think there's rationale to think to believe that some patients who have just a moderate form of the disease would benefit from earlier intervention, rather than waiting until it turns severe, waiting for the heart to remodel to accommodate the disease. And so that could be another growth driver in the years ahead. Okay. So, you know, three growth drivers mentioned, next generation products, S3 UR, I'm just gonna call it simply the RESILIA product, but S3 UR. Two, you've got the EARLY TAVR data that's coming out in TCT, which will be for asymptomatic patients as well. And then you've got the PROGRESS trial, which is the one that you were mentioning on moderate. But maybe we break that, all three of those down. So S3 UR, with the thought process that the lifetime of the valve is frankly better because of the lack of calcification, you did launch that with a price premium. Maybe talk about how the market receptivity has been to that price premium on the market, both in Europe as well as the U.S. Yeah. Well, we're still early days in Europe, so it's probably premature to speculate about pricing there. But in the U.S., yeah, it did come with a price premium. You know, it's a different product. It's got enhanced functionality, and so we thought it was appropriate. S3 UR now represents over 50% of our SAPIEN sales in the U.S., if that's any indication. So people like it? I think it's been received well, and like I say, it's got a lot of clinical evidence backing it up. Yeah. Our business is largely driven by rigorous scientific data supporting the therapies, both the efficacy of the therapies and the safety of these technologies. How long would you expect to sell both the older generation valve and the newer generation valve? You know, we've been talking about that internally, and we don't have an answer yet. For the time being, we're gonna maintain supply for both SAPIEN 3, SAPIEN 3 Ultra, and SAPIEN 3 Ultra RESILIA. Okay. So then going to kind of the second pillar of growth, let's call it, which is the EARLY TAVR data coming out at TCT later this year, how should we think about the potential guideline changes that could stem on the back of that? And, you know, with some of the earlier datasets that we had seen was some creep, right? And, so maybe before reimbursement comes on, you saw, you know, lower risk data come out, and you suddenly saw some extra usage, maybe of patients earlier in their care. Is that something that you would anticipate here as well? Well, Mark, you wanna comment on- Sure. EARLY TAVR results on this year? Yeah. Yeah, absolutely. Thanks for the question, Margaret. So we're looking forward to that data. It'll be presented, as you mentioned earlier, later this year at TCT, the last week of October. In terms of the question you asked, I don't think it's happening on a wide scale. There may be some instances of it, but by and large, we like to think that physicians are using this product on label and to treat patients who have symptoms as opposed to those who are asymptomatic. In terms of, you know, the questions we're trying to answer coming out of this trial, Scott touched on it a little bit, but basically looking at how quickly do asymptomatic patients progress to being symptomatic, and how much better off are they being treated sooner rather than later? And so those are the two kinda areas of focus for us. You know, indication expansion is something that we're looking forward to, but it doesn't happen overnight. It will take favorable outcomes of this trial, and, you know, again, we'll have more to share later this year. For the folks in the audience, I'm not sure you had sized that as a population, so maybe you can add some of that background as well. I think they're trying to play with the mic in the back. Oh, thanks. You're talking about- This might be okay. Yeah. - the asymptomatic population? The asymptomatic, yeah. Well, you know, it's, it's a little bit difficult to put a beat on it. We used to think that there may be as many asymptomatic patients as there are symptomatic patients, but we're estimating within the prevalence pool what that could look like. There are probably more symptomatic patients now, partly because there's greater awareness of the disease, but there's still a you know, a good chunk of patients who have severe AS, but do not have symptoms or can't associate the symptoms with the disease. Okay. That's helpful. And so, you know, one of the interesting parts for me in med tech and folks that have heard me talk before or on Monday, we had a presentation as well. Asymptomatic is one of, I think, the futures of healthcare in general, huh? And it's actually a pretty big component, I would say, of the growth of medical technology companies such as yourself. So just big picture for me: do you agree with a statement like that? And, you know, what kind of structural changes do you need in the marketplace to drive asymptomatic care? Because most patients, frankly, if you don't have symptoms, you're not going in for care anyways. Well, it's especially true for elderly patients, and most of the patients who we treat are elderly. If you're an 80-year-old who has severe aortic stenosis, you might have other things that are slowing you down as well. So it's tough to associate and say, "Geez, are you lower in energy? Do you feel faint? Do you just not have a get-up-and-go than you used to?" Have a patient say, "Yeah, and it's because of my aortic stenosis." Nobody knows that. So getting to a point where you can actually diagnose quantitatively the disease is really the holy grail. I think everything from wearables to better hospital diagnostic technology is gonna help these patients get the care that they need. Okay. That's helpful. Yeah, and then, you know, as we talk about PROGRESS, yeah, I know it's still, you know, two years away as we think about a readout in 2026, but maybe size that up for us as well. And then, you know, just from a, again, a high-level perspective, if you think about someone earlier in the disease state, why would they, you know, need a transcatheter technology versus just, you know, doing a more surgical case? Right. Is it age? What's the characteristics that lead to that? Yeah, a couple questions in there. One is, the size of the population. We think there are at least two times as many patients with moderate aortic stenosis as there are with severe aortic stenosis, so it's a big opportunity. That doesn't mean that all patients with moderate AS should get their heart valve replaced, but that's one of the things that we're studying, is: When is intervention appropriate? In terms of, surgery versus TAVR, you know, there's been, for a long time, some speculation that surgical valves may be more durable than transcatheter valves, and therefore, for younger patients who will likely live longer, maybe they should get surgery. It's unclear that that's the case, and Edwards is a leader in both surgical valves and transcatheter valves, so we've studied this a lot and care deeply about the durability of our valves. In testing and clinical trial results that we've seen, there's not demonstrable difference between the two, and the tissue is the same, which, as I mentioned before, is really the primary cause of, of valve, of valves reaching end of life. So I don't know that, moderates are more likely to get surgery than they are transcatheter, but that's one of the things that we need to understand better and we'll have a better view on when we get to 2026 when this trial reads out. Do you have a sense even of those that are moderate? Some of them may, in fact, be older, right? For sure. No, that's exactly right. The disease progresses at a different rate. Some patients can stay moderate for a long time. Other patients progress rapidly from moderate through severe to risky mortality. So we've spent a lot of time on TAVR, which is the aortic valve. Obviously, huge market, huge part of your revenues, but TMTT, the mitral and tricuspid area, is kind of the next frontier, the great frontier, whatever you wanna call it. Maybe again, high level for us, why is mitral and tricuspid such a more difficult valve to treat, valves to treat, relative to aortic, why it's taken so long? Well, I think, one, one is, it's just new. I mean, the journey for mitral and tricuspid is just beginning in a lot of ways, whereas with aortic valve replacements, it's been much more tried and true and understood for decades. And it's reflected in the treatment rates. So right now- On the surgical side, mm-hmm, sorry to interrupt. And, uh- It's hard- ... just on the surgical side. Yeah, exactly, not even catheter-based. But just to give you a sense of treatment rates for aortic stenosis, something like, in the U.S., 12 or 13-ish% of patients with the disease actually get treated, which is relatively low for a disease with as high a mortality rate as we're talking about with severe AS. For mitral regurgitation and tricuspid valve regurgitation, the treatment rates are even lower. Three-ish% for MR and less than 1% for tricuspid regurgitation. So huge opportunity, and that's one of the reasons why we've been investing so aggressively after this. Not just in TMTT, but in surgical as well. I mentioned that one of our new valves in surgical structural heart is a mitral replacement valve using this RESILIA tissue. Okay. If there are questions in the audience, feel free to ask them, 'cause I always try to do that in the last five minutes, just in case, but we will have a broader breakout later. So, you know, the two most successful products, let's call it, within TMTT for you guys so far have been PASCAL as well as EVOQUE. So walk us through why those products can address the disease better maybe than historical technologies have been able to. Sure. So you hit on it before, Margaret. You made a good point, which is, historically, there just hasn't been that much surgical intervention to treat mitral regurgitation and tricuspid regurgitation. One of the reasons is because the diseases are not as well understood. You know, aortic stenosis is aortic stenosis. Mitral regurgitation is either degenerative mitral regurgitation or functional mitral regurgitation. There's a problem with the leaflets or the chordae or the papillary muscles that control the mitral valve. So it's a, it's a much more complicated disease state that physicians are just now better understanding, and we're delivering, we're delivering therapies to, to go to help support that journey. I think that one of the exciting things about tricuspid replacement is that this is a valve that is oftentimes referred to as the forgotten valve by physicians, and yet tricuspid regurgitation is a brutal disease. People who suffer from TR have dramatic swelling in their legs. It's a painful disease. They're in and out of the hospital regularly, like monthly or every other month, and it really just is debilitating from a lifestyle standpoint. So here we come with EVOQUE, which has just gotten commercialized in Europe last year, in the US earlier this year, and it is a life changer for patients who get EVOQUE. I mean, they literally go from, being immobile and, in pain to two weeks after procedure, being able to walk down the hallway to go see their doctor for the follow-up appointment, and it's just amazing. Procedure takes about an hour. Patients are very stable. It's a beating heart procedure, so, the patient, there's no sternotomy, there's no stopping, there's no, all the things that go along with typical open heart surgery, and, it's one of the reasons we're so enthusiastic about it. For mitral and tricuspid, there's a repair technology called transcatheter edge-to-edge repair, or TEER is the acronym, and there are two competitors, really, Edwards and, and another company that's been the leader for, several years. We're excited about TEER because there are a lot of patients who benefit from TEER in a way that they would not benefit from a full replacement, so TEER is the only option. It's safe, it's effective, and the recent clinical trial data that Edwards has generated suggests that our PASCAL therapy is really top-notch in terms of safety and efficacy, and we've seen it in the real world as well. We've now got a business that's thriving in Europe. We just got approval to launch PASCAL for patients with degenerative mitral regurgitation in the U.S. We're active in Japan as well, so early stages, but we've seen, you know, in the first quarter, for example, over 70% growth, largely driven by PASCAL. And, you know, I'd be remiss to not point out the fact that you guys have raised guidance twice on the back of TMTT, already, just in the early, you know, quarters of launch, let's call it. You know, can you give us a sense, especially with EVOQUE, maybe that's a new technology within the space? What are you hearing from clinicians, and can you even give us a sense of what% growth or sales that could be by year-end? All right. Sure. So we're not gonna get into sales forecast for EVOQUE, but we can tell you what we're hearing from physicians, which is similar to what we heard from physicians while we were enrolling the clinical trial. It was a trial called TRISCEND II. The trial enrolled much faster than we expected, and that's oftentimes an early indicator for what the commercial experience will be like for a therapy, and it's been just that. I mean, ever since we got the approval, there's been much more demand for launching EVOQUE programs at hospitals than we're able to support right now. So we're going as quickly as we can at training new sites, getting operators comfortable with the procedure, making sure that operators and the imagers who participate in these procedures are working well. And so we're pretty optimistic about how this is gonna make contributions to Edwards, not just in 2024, but in 2025 and beyond. Again, remember, the forgotten valve has very rare intervention. Now, here's a chance where, with a very straightforward procedure, these patients can get the treatment that they need. Perfect. Well, really appreciate your, your guys' time. We will have a breakout in the Adler room upstairs. Thanks, guys. Thanks, Margaret. Thanks, everyone.