All right. Good afternoon, everyone. We'll get started. I'm Ryan Weispfenning, Vice President and Head of Investor Relations at Medtronic. Thanks for coming to our Cardiac & Vascular Group investor briefing here at the Transcatheter Cardiovascular Therapeutics Conference in San Francisco. Welcome to those joining us around the world on the webcast. It's good to see another full room here today in San Francisco on what is, I guess, the third and final leg of our North American tour this week. Yes. Thanks for all of you that survived that. For those that missed it, we do have replays available from our robotic-assisted surgery analyst update that was in Hartford on Tuesday and our Restorative Therapies Group NASH investor briefing from yesterday in Chicago. Those are available on our website, investorrelations.medtronic.com. Today's webcast event will also be available for replay at that same site.
For today's event, I want to note that we can make some comments that may be considered forward-looking statements, and actual results might differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC, and we do not undertake to update any forward-looking statement. Today's event is scheduled to last about an hour. I'd like to introduce Mike Coyle, the Executive Vice President, Group President of CVG. Mike will make some introductory remarks and then introduce the rest of the team here that we have at the event today. We'll be happy to take your questions. Mike?
Great. Thank you, Ryan. We have no prepared materials. This will be all Q&A. I thought it would be useful just to start with some introductory comments, mostly as it relates to the fact that what we, or CVG, is pretty much headed in the same direction we talked about at the end of Q1 on the call. Everything is very much in line with what we were discussing at that time. We expect our Q2 to essentially be in line in terms of growth with what we saw in Q1. We expect to see an accelerating growth profile for the business as we head into the second half of the year, principally driven by a very robust pipeline of products, which we'll talk a little bit about.
Also the sort of annualization of a number of headwinds that have been kind of masking growth for the group that will be helpful in terms of our reported growth rates. In terms of that accelerating pipeline, this meeting is important in terms of kicking off some key new product approvals. Obviously, the low-risk labeling indication for TAVR, as well as you saw at the end of last week, we received FDA approval for the Evolut PRO+, which is a significant advancement on each of the size ranges within our TAVR product line in terms of both reduction of profile as well as improvement of PVL, especially in that 34-millimeter size. Nina will be happy to take us through those differences as well.
Heading into Q3, we expect a number of additional important approvals, the LINQ II product, which basically is our first wafer-scale-based device in the insertable loop monitor area, a 5-year battery life that has Bluetooth connectivity and a number of additional sensors that will be embedded into that device for long-term expansion of that segment of our business. In addition, we'll be introducing for the first new ICD high-power platform that we've had in 7 years based on our Polaris chipset. It will also have Bluetooth connectivity, significant improvement in battery life, as well as a number of important therapeutic and diagnostic features, especially related to HF management and atrial fibrillation management. Finally, we expect approval of the IN.PACT Admiral device for the AV fistula indication.
I think you all were able to see at the CIRSE meeting at the end of last month, both the efficacy and safety data that was presented, six-month efficacy and one-year safety data, which basically showed very strong results on efficacy and none of the safety signal that has been the concern on the paclitaxel side at one year. Then as we head into Q4, the Micra AV will become available in the marketplace. In fact, we will be presenting the MARVEL 2 data that looks at AV synchrony with that device at the American Heart Association meeting in November.
We expect the availability of the product itself in the fourth quarter, and obviously that's a meaningful product for us, not only this year but even more so next year as it expands the Micra participation from what essentially is 15% of the market and now allows it to participate in up to 60% of the bradycardia market. As I mentioned on the call at the end of Q1, we now have essentially over 65% unit share in the single-chamber market here in the U.S. and over 80% revenue share. We are very anxious to see this technology expanded into what is essentially a dual-chamber pacing indication. I mentioned the headwinds.
Basically, we've already annualized the accounting change from our Hospital Solutions business for the treatment of flow-through OEM products that was costing us about $10 million-$12 million a quarter in elevated prior year comparisons. That's gone away as of the end of Q1. Of course, a very significant opportunity for us to get our prior year comparables more favorable is the LVAD annualization that takes place at the end of this quarter. The second half of next year, we should be looking at sort of like-to-like comparisons from the UNOS changes that we've talked about and the share shift that occurred with the HeartMate 3 device approval. We also see a more favorable replacement cycle coming forward. We've already begun to see that in a meaningful way in Brady in the last two quarters.
We will now start to see that in the CRT segment, which is the largest replacement revenue driver for us. We are expecting that to become a neutral issue for us in FY 2021, and it should get better as we head here to the end of the year. Finally, on the drug-coated balloon side, obviously the availability of the AVF data that we showed at CIRSE provides additional confidence that the signal that was in paclitaxel has some countervailing facts that we can now begin to talk about. I think probably the more important thing is that it just reinforces this consistent efficacy message that we have seen throughout all of our randomized controlled clinical studies and sets us up for additional data availability from the claims-based analysis that had been done that basically reinforces our belief in the safety of paclitaxel.
Of course, the efficacy benefits are very significant compared to standard balloons. Those are some things that you may want to ask about. Specific to this meeting, we obviously have the low-risk approval as well as the Evolut PRO approval for discussion, but we also are doing a lot of education and training around the expansion of the training for the NCD here in the U.S. On the mitral side, we have a number of important developments relative to both the pipeline on Intrepid as well as the study design for APOLLO, which we can ask Nina to step us through.
On the coronary side, obviously, you just saw the late-breaking clinical trial presentation in regard to the Onyx ONE and 30-day dual antiplatelet therapy, which was very encouraging for what we believe is the most deliverable stent in the marketplace and complements the Telescope guide release that we've now done for treatment in complex PCI. We really like how we're setting up on the coronary side. Finally, as we mentioned on the paclitaxel side, the AVF data really gives us a significant new randomized controlled data set to discuss with FDA, and we do expect that will be supportive of an approval in the timelines that we've talked about. I'm going to turn it over to you guys to ask questions.
Just in terms of who we have up here to answer those questions, obviously, the President of the Coronary and Structural Heart business, Sean Salmon, is here, as is Jason Weidman, who heads up our aortic and peripheral and venous businesses. Within their organizations, as it relates to structural heart, both the TAVR and mitral opportunities, Nina Goodheart. On the coronary side, we have Dave Moeller to answer any questions. Peter Kapetan is the Chief Medical Officer for both of those businesses. As it relates to the peripheral side of the business, we obviously have the opportunity to have Laura Mauri with us who is basically the head of clinical for Medtronic but has been really doing a lot of the heavy lifting, not only for us but for the industry in the treatment of the data analysis around paclitaxel.
Mark Pacyna is the general manager of that business. We will direct your questions to the people who know best, which generally speaking will not be me. Why don't we open it up?
Okay. Yeah. First question, Rick.
I said nothing. Rick Wise, Stifel. Mike, there's so many questions, but just to start off with TAVR, if I could. Low risk, obviously amazing at ACC. My sense over the last few months is maybe it didn't show the dramatic acceleration that some of us thought maybe possibly. I really feel like I'm starting to hear anecdotally from physicians that we're really starting to see that acceleration happen. Are you seeing it? Do you feel like something different is happening? Maybe just as long as you're talking about the market, talk about some of the competitors that are coming and the role and the impact on you, even with all the wonderful data, Evolut PRO+ and everything else. Thank you so much.
Sure. Well, let me actually just turn this over to Nina, then Sean, if you have any additional comments, you can make them as she lives and breathes this every single day.
Every day. I think your comments are very well taken, and I think if you'll recall, as we've talked about low risk, we kept saying that we thought the ramp would be not quite so fast as some other people thought, but that there would be continued education about these patients, understanding of the data. We've been seeing these patients in the low-risk trial and then the continued access trial, so they've been ramping up as we go. I think the market's moving the way we anticipated it would be moving. I also think to your point, and we are hearing it from physicians, that they are seeing now more and more of those patients, and they expect to keep seeing them. I think that's positive.
I just had a couple of conversations this morning with physicians who have said that with all of the discussion around low risk, all of the visibility that low risk has brought, that alone and that awareness is bringing more patients into that funnel as well. I think we're going to continue to see it. I don't think we ever expected the ramp would be quite as steep as we saw with extreme risk and high risk and even intermediate. We know that the list of patients is there. We're seeing them. We believe that it's still under-penetrated in terms of AS. I think we're going to see it continue to grow.
On the competitive side?
On the competitive side, we're continuing to watch the market. I think we feel really good about the position that we have, especially with low risk. We think that the CoreValve technology, given the superior hemodynamics that we've been talking about for quite a while, now, as Mike mentioned, the introduction of PRO+ , puts us in a really good position to address this particular patient population, this younger, more active patient population. We're seeing some trialing, as we would expect with Boston. We're watching to see the data with Portico. We're going to see how that goes. When I look at what this technology offers to patients, I feel good about where we are.
David.
[David Losmore, Stelly]. Nina, just back to you. The Intrepid, just can you update us on sort of the progress of the APOLLO trial when we get into transfemoral? Are we still on pace for transfemoral Intrepid actually here in the near term? The regulatory pathway, frankly, for Intrepid over time? Just related follow-up would be, we understand your replacement strategy, where are you on repair?
Maybe I'll take that first and then go into APOLLO. As we talked about, I think at ACC, we had made the comment that we have made an investment, a significant investment in a repair technology that we think is pretty differentiated. We're watching that closely. We're feeling good about what we're seeing. As we said then, I'll repeat now, we're still early in that, we're not going to talk much about it until we move a little bit further along. We've said from the beginning that if we're going to be leaders in structural heart, which is our goal, we're going to need both a repair and a replacement technology, this whole toolbox that we've continued to talk about. We'll continue to keep you updated as we see a little bit more on that.
In terms of replacement, I think there are a couple of things that are moving forward and we're feeling good about in the mitral space. One is that we have expanded that trial both to Europe and to Japan. We're anticipating seeing patients treated in Europe before the end of the calendar year. We're waiting to see what the enrollments are going to look like for Japan, We're excited now to take essentially what was a U.S. trial and making that a global trial. That's first. The second thing that we are looking at are these MAC patients. We are looking at a registry within the APOLLO trial to really study these MAC patients. There'll be more to come on that.
Dr. Leon is going to talk about that a little bit in his symposia on Saturday, so I don't want to steal a lot of his thunder, but we'll be talking about that. The third piece, I'm trying to remember everything that's happening.
First demand regulatory timing for transfemoral.
Yep. Thank you. Appreciate the prompts. In terms of transfemoral, I'm very pleased to announce that we just got approval this morning from the FDA on our early feasibility trial for transfemoral. We are looking at a trial of about 15 patients. We are in the process of site selection now. We are anticipating that first patient will be treated before the end of the calendar year. I'm not going to put too much more timing around that, very excited to see the fact that we're feeling good about transfemoral. We've submitted that to FDA. They've approved that early feasibility, we'll be moving forward with that.
Any sense on the TF approval timelines with actual U.S. approval for transfemoral?
Well, I think we've got to-
Can you repeat the question?
Yeah. Oh, I'm sorry. Regulatory approval for transfemoral. I think we've got to get through early feasibility on transfemoral first, right? I think there's a pathway that we're going to have to follow. I think it's too early to talk about timing on that.
The valve form fit function does not change. It's the delivery route.
Right.
You all saw that through the whole TAVR exploration. We moved from site to site, and I'd expect it to be similar.
Thank you.
Vijay.
Thanks, guys. This is Vijay Kumar from Evercore. Mike, maybe one big-picture question for you and a couple of product-related questions. CVG, couple of years ago, you guys were crushing it, and now it is well below corporate. Given that you have this big-picture view of all these products coming through, when do you think CVG will come back in line with corporate or above corporate? Is that a six-month event, 12-month, 24-month event? Then on the product side, I think, one, AVF, what kind of share should we be assuming just given some of the data looked really good. When you think about the APOLLO trial design, do you need to randomize this versus MitraClip, or are you okay with your trial design? Thanks.
Let me start with the first one. Even if you went into Q1, you basically said, "Wipe out those headwinds that are going to get annualized between the accounting change, the LVAD issue, and the issues associated with the drug-coated balloon," we would've been growing at 4%. Those things are going to annualize and become sort of out of the prior year comps. You get the clear view of the overlay of the new products, right? We would articulate the market for cardiovascular to be somewhere 4%-5%. We expect to go back to where we were in terms of being at least in that range, we're obviously targeting with some of these very disruptive technologies to actually take share, which would then get us back to kind of where we were.
We have a lot of confidence about the pipelines. A little lumpier in cardiovascular because of the very long development timelines. We've also skewed our markets to highly disruptive and market-creating opportunities. We haven't even talked about renal denervation getting overlaid on top of that, or mitral for that matter. From my perspective, I have a lot of confidence about the ability for cardiovascular to be at the targeted growth rates for the corporation. Let me turn it over to maybe Mark for the AV fistula discussion.
Sure. Thanks for asking about the AV fistula data. I think the corollary is really good in the SFA, actually. You've got Bard's Lutonix be out in front by a little over a year here on the indication. Within that situation with clinical data that certainly showed, really demonstrated greater efficacy, and you see at the six month, 22% delta between a PTA and the AVF DCB arm. I think it'll take us about 9 to 12 months to get to a place where we feel like we've got our fair share of the market again, and I think that's the same that we saw in the SFA space.
Carla.
For APOLLO, in terms of randomizations, we're continuing to watch the trial really closely. The trial is still enrolling. All of these mitral trials, as you're all seeing, are slow-enrolling trials. I think we have to reset our expectations. These are not TAVR trials. All that being said, we're in active discussions with FDA now about what that comparator should look like. I think we have to remember it's still a transapical device, we have to take that into consideration as well. We're actively in those discussions, looking at what is the right comparator, should the design change, and if it should, when it should. We'll keep you posted as those discussions continue to proceed.
Okay. Let's go to Kristen.
Kristen Stewart from Barclays. I was wondering if we could just talk a little bit about renal denervation. I guess maybe you, Sean.
That would be me.
That would be Sean.
Me and Sean.
Tag team here. Just how should we think about the opportunity and some of the timelines of the data coming out? How to expect the potential, I guess, market commercialization of this, and what would be kind of also the pathway for reimbursement?
Yeah
assuming the data is looking good.
Yep. Yeah. Thank you for that question. It's been a long journey for us. I guess it's been about nine years since we bought Ardian. I think pretty much every company entered the market at that point. Then HTN-3, I think pretty much every company exited at that point. I give Mike and Sean a lot of credit that we're still here. We believed in it, we're still at it, and now we're very close to, I think, a really exciting milestone. We're just a few months away. I think just a few more patients to enroll in the pivotal study, which is the off-med study. We have some confidence that that data will be presented at ACC in March in Chicago. That will be our pivotal data set.
I think we have a clear path and understanding with the FDA in terms of how to get approval, and so we'll submit with the off-med data. We're also conducting the on-med trial. The powered on-med trial, that started a little later, so that's going to take a few more months to get enrolled. We will submit that data as well as a supplement to the FDA. We think, and we believe we can have approval sometime in calendar year 2021. In terms of thinking about the opportunity, I think it might be a little too early to start talking about actual revenue numbers or revenue ramp when we're a couple of years away. I think you all understand the magnitude of the opportunity with the number of hypertension patients.
You've, I think, highlighted probably the biggest potential barrier to adoption or potential impetus being reimbursement. We're working early and hard with both private payers and CMS. Of course, the majority of the patients that we're studying are pre-Medicare age, we're working hard with them. We understand. I think our compendium of clinical data is exactly what they're looking for. It's designed that way, knowing that approval is not the only goal of our clinical trial program.
I think the only thing I'd add to Dave's very clear explanation is that when we get to ACC and the data in hand, that's the right opportunity to help you understand how to shape the opportunity.
The one thing I would add is I think one of the ahas of the whole experience for renal denervation has been just how poor compliance is to medication in this space. I think we're beginning to have the payers as well as FDA see the importance of having a therapy that actually doesn't require patient compliance in order to be effective. That I think is going to be helpful to us both in terms of timing of FDA approval as well as getting reimbursed.
I guess maybe for Nina. The FDA required some of the CT sub-studies for transcatheter valves. When will you guys have some of the results for your study?
We're waiting for the full cohort of CT scans to come in. You'll remember that we started our trial after the Edwards trial. Our anticipation right now is that we'll have those ready to present at ACC.
At ACC. Okay. Thank you.
Let's go to Ravi.
Thanks. Ravi [Misra], JPMorgan. Evolut PRO+ was just approved, I think, yesterday for 25% of the market. The 34mm is your first competitive valve with a skirt. Maybe talk about how we should think about the adoption curve there and the competitiveness versus your competitor.
Yeah, Nina thinks a lot about that.
Needless to say, we are extremely excited about the approval and perfect timing to come into TCT with such a strong story. We're now in our fourth generation of CoreValve technology, we continue to evolve based on the needs of the market. We heard pretty clearly from physicians that they like the 34 valve, that they wanted all of the benefits of having that skirt on it on the whole range of sizes. What Pro+ offers us is skirting, if you will, across all ranges and bringing the profile down of the three main sizes. We anticipate seeing further adoption of that 34mm valve. We think some of what was holding us back was not having the skirt on it. It's a very strong valve for us in Europe.
We're expecting that now to come forward and be a stronger valve for us in the U.S. now as well.
Craig, maybe just on drug-coated balloons. On the fiscal 1Q call, you talked about seeing an improvement in the market in July versus June before the FDA panel. Is that a trend you've continued to see throughout the end of summer into fall?
Sure. Just to bring everybody back. When we saw the letter in March, we saw pretty much an immediate drop of almost 50% of the usage and penetration here in the U.S. based on that FDA letter. We did see a trend immediately following the FDA panel where new information was presented, and we continue to see that trend of stabilization of that overall. I think we communicated about a 33% overall drop in penetration, we have seen that stabilize and continue to stabilize here through the fall. We anticipate more of the same as we go forward. It is geographic. I think we've highlighted that. In Japan, we haven't seen much of an impact at all because the Japan physicians and the MHLW have all looked at the Japan data, which doesn't show a signal.
Europe was earlier in terms of a drop. They dropped earlier than the March FDA letter, of course, but then have been fairly consistent and stabilized there as well. In the U.S., we saw significant improvement over the course of between March and the FDA panel, and we see that stabilization continuing.
Great. I would point out there's still a lot of work to be done at the account level to basically share the data as it becomes published. A lot of the things that were shown at the panel meeting have not yet gone into peer-reviewed-
Right
publications like the claims-based analysis, which was very compelling in terms of the large N associated with it. I don't know, Laura, if you have any comments about when we could see some of that.
Yeah, I would agree. I think that this is a trend that's going to continue because much of the data haven't been published. They were presented at the FDA panel. Not all clinicians have processed that information yet. I would say that's true probably affecting both the European physicians as well as the U.S. physicians. The observational data are really compelling. I don't think we'll see any surprises when those are published. They're going to show hundreds of thousands of patients with long-term follow-up and no safety signal in a very well-designed analysis.
Maybe if I could just squeeze in one more. I think the last time we've seen some public sizing on the AV fistula market was when Bard was a standalone company. What's your thoughts on how big that market can be and what you think it is today?
Great question. I think even a number of years ago, we pegged the opportunity there around $300 million worldwide. You have to really think about what is the opportunity there. In the U.S., which is a big portion of that, about a third of procedures, about 30%-33%, are done in the hospital, and the rest are done in office and outpatient settings. The reimbursement, the available market today, is mostly done within the hospital setting. Over time, with better data, with more engagement across the healthcare system, with CMS, et cetera, you can see getting to $300. Today, you and we are all somewhat limited in terms of the addressable market. The reimbursement environment is much more favorable in the hospital.
Let's go to Joshua Jennings.
Thanks. Just a follow-up on paclitaxel-coated devices. You guys got supplemental PMA approval for an updated label. Just wondering if you're concerned that that language around that label could become a headwind in the near term once that's made public, just on the websites, et cetera. Are you comfortable with one year of efficacy and one year safety gaining approval for paclitaxel-coated devices going forward? Do you think the FDA is going to require longer-term safety follow-up data before approval of a paclitaxel-coated device? I have one follow-up.
Sure. Why don't I start with the AVF approval, just to hit that really quickly, because I think we've stated and publicly said that the FDA has asked for not just six months, which is the original primary endpoint, which we reported at CIRSE, but also the one-year data. I think it's very similar that they asked for on the Lutonix BTK device. I think that is the position that we're going into, and we have supplied that. We're right in the middle of that process right now with the FDA, and I think, and Laura, you can comment more, but my view is that they are going to look at the safety and efficacy at one year as the primary determining factor at this point.
Yeah, they may be interested in seeing later follow-up at later stages. In terms of submitting for approval, we believe that one year will be suitable for the FDA.
Remember that this is a very different patient population. It's very sick. At three years, almost 50% of these people are dead, and they have one to three interventions per year. The risk-benefit profile and look is much different than when you're looking at claudicants in the SFA.
Yeah. The other thing I'd point out is the labeling requests by FDA are very interesting from the standpoint that they want to have boilerplate class data in the labeling, but then they want you to supply your own device-specific data on your safety and efficacy. We think this plays well for us because we have very consistent results in all of these vessel beds in multiple randomized controlled clinical studies that basically are very supportive of its safety profile over time, not just at one year, but out to five years. Obviously it really focuses on the efficacy in terms of reduction of target lesion revascularization, which has been extremely consistent for us in the SFA position across our studies and very significant compared to the control group and the AVF data just reinforces that message in a much sicker patient population. Yeah.
I couldn't agree more, but just on the boilerplate language, could that become a headwind for the market?
I can address that to some extent because I think all of the companies have really collaborated with the FDA to try to put this standard boilerplate work together. We do anticipate that every company within the next handful of weeks will get that out into the IFUs and update that. I think as you guys see that information, it won't be any different than what we've already seen from the FDA letter to practitioners here in August. I don't think there will be any new information that will fundamentally change the perception. There's been so much awareness of what's going on today that I don't think this is going to change the dynamic.
The dynamic is still going to be out there as there's two fundamental questions is you've got the consent/liability discussion that everybody's talking about of how do we address that as not just industry, but the societies, the FDA, the entire stakeholders. The second thing is really more about the definition of high risk. You've heard it even over the last couple of days here is that is where the safety risk-benefit discussion is being had at the physician-patient level. That isn't going to change in my perspective based on updating the labeling because it is the same information that's already been made public.
Okay, just one more question on label. Just on Rick's question just about volumes post-approval. Sounds like they're picking up. Just wanted to hone in. You're talking TAVR? For TAVR, sorry. For TAVR, excuse me, yes. Thanks for that clarification. Just are you experiencing with the CoreValve franchise, that Evolut franchise, that your clinicians are
Treating low-risk bicuspid patients because the label there is a precaution. Are those cases being treated for one and then two, when will we see the registry data? Is that next year at TCT? Thanks.
Do you want to talk about bicuspid?
Yeah. We're currently doing two studies, actually, that inform us better about bicuspid patients. We're also looking for those results. Currently, there are patients treated with bicuspid valves, the higher-risk patients, where physicians think that it may have an advantage. Currently, we are not allowed to promote it because we don't have done the studies yet. We're working on those.
This is following the same pattern that we saw in the intermediate group.
Right.
Yeah, we're very confident about that.
We anticipate the precaution to be removed as the studies are completed and the FDA reviews.
Peter, I'll just invite you to expand on this a little bit. Can you talk about where does bicuspid disease show up more prevalently and where do you see an advantage for our product?
Yes. Especially in the bicuspid patients, what is important, you have a lot of calcium in the aortic annulus. I think the chance of an aortic rupture with a self-expandable valve is less than with the balloon-expandable one. I think that's where we have an advantage. The other thing is also the sealing is important. You want to prevent paravalvular leakage, which we think with our PRO+ platform, we will also address that issue. That's another advantage that we may have there. Of course, you want to, let's say, place the valve at the correct height of the annulus. With the PRO+, you can also better address that issue as well.
These patients are younger.
The patients are younger. If you look at the patient population, in the younger patient population, about 40% may have a bicuspid valve, either a fusion of leaflets or a true congenital bicuspid valve. We think there's a large population that we can address with bicuspid valve when we have low-risk approval and bicuspid approval.
I think that's the dynamic advantage.
Just to add, on average, these patients with bicuspid valve aortic stenosis are about 10 years younger than senile calcific aortic stenosis. They're more active patients. It probably matters a lot more, the hemodynamic result that's associated with the valve.
Okay. Let's go to Larry.
Thanks a lot. Larry Biegelsen with Wells Fargo. For Nina and Peter, just the timing of those two bicuspid trials, if you could just tell us those. I actually take two separate questions.
Yeah.
What's the timing?
We've been enrolling in the bicuspid trial. We are just about finished. We're, I would say very, very close to final enrollment. We'll have the follow-up. I'm trying to remember in terms of timing.
Yeah. That's the U.S. study.
Yeah.
At the same time, we're doing a study in Europe for patients with bicuspid valve that's specifically aiming at sizing methodology there. We also hope to complete enrollment this year.
Yeah.
Two TAVR questions for you, Nina. One on market opportunities beyond low risk. How are you thinking about asymptomatic? How are you thinking about symptomatic moderate AS? Secondly, anecdotally, I've heard about some warehousing of patients ahead of the low-risk approval in the U.S. If that's the case, how will you help us think about that when you report your results? Will you kind of break out maybe a one-time benefit from warehousing? Thanks for taking the questions.
Yeah. In terms of warehousing, we hear a little bit of that. I think that physicians have been treating in the two low-risk trials. They've been treating these patients. They then were treating them in the CAS, in the continued access for both programs. I'm not sure just how much warehousing there's been. I think we're going to continue to watch the ramp of that, and we'll see how that goes. I'm sorry, Larry, your other question was?
Indications beyond low risk.
Yeah.
Asymptomatic-
Yeah
severe or moderate-
Yeah
symptomatic moderate AS.
Yes. Yeah, right. Larry's question for those of you who couldn't hear is how we're thinking about what the next indication expansion is going to be. As you would imagine, we're spending a lot of time right now that we've gone through all the risk categories, thinking exactly around that. Where do we go next? We're doing a lot of work to explore symptomatic, asymptomatic, moderate AI, et cetera. We'll be coming forward shortly. We don't have anything specific to say yet, but we're clearly looking at where the next opportunity is going to be.
Maybe if I can add to it, for asymptomatic, it's clear that if you really look at the patients carefully, a lot of those that claim to be asymptomatic are actually symptomatic. When you stress, exercise them, about 60% of those who claim to be asymptomatic are actually symptomatic, so they should get a valve already. Then those 40%, they will become symptomatic during the course of their disease if you follow them closely. I think creating more awareness among cardiologists is already very helpful in this respect. Moderate AS, it's also hard to sometimes identify those patients. They don't have the same symptoms as patients with severe aortic stenosis. They have symptoms that are not that dyspnea and during exercise. That's another thing that we're looking at. Can you really find those patients and start a study in that group?
All right, Joanne.
Thank you. Joanne Wuensch from BMO Capital Markets. Could you remind us what the market opportunity is for the Micra AV?
Well, again, the overall pacing market is $3 billion. Is that right?
That is essentially the current market opportunity. We've been playing in 15% of the market. We're going to be playing in 60% of the market. Obviously, the 3x markup relative to a catheter system versus a device implantable system is where we're going to be playing with this generation of device with Micra AV. Obviously, the rest of the market, or at least another 30% of the market, will be available to us with the third generation of the Micra, which actually will have a fixation system that's targeted for the atrium so that the device can pace and sense in the atrium. Once we have that, obviously, we can treat patients who have sinus node dysfunction, and essentially we're then at 90% of the market.
For the small number of patients who have both AV block and have sinus node dysfunction, we have the opportunity longer term to use two devices in a staged procedure.
Thanks. I recognize and appreciate the product pipeline you have ahead of you, but outside of that, macro things that you worry about, Brexit, med device tax, anything odd that you're sort of keeping your eye on that we probably should be aware of also? Thank you.
Let me ask Ryan just to comment on that, since he obviously answers those questions generally for the corporation.
In terms of Brexit, it's something we're watching very closely, but we don't see any potential supply disruptions at this point. It's something we're preparing for. On the med device tax, it is also something that we're watching closely. Obviously, there's bipartisan support, and we get approval. It needs to happen before the end of the calendar year. We're watching that closely and still hopeful that something does get done before the end of the calendar year.
Anything else that I can check before I fall off the short line?
Nothing beyond those two.
Just the usual suspects.
Thank you.
Exactly. Let's go to Steven Lichtman.
Thanks. Steven Lichtman, Oppenheimer. Just one for me on LVAD, Mike. You mentioned, obviously, the anniversary coming up. The slowdown was multifactorial. Can you give us your thoughts on market growth post the anniversary of the slowdown? Are there reasons for optimism the market can accelerate? Anything you can do on share to respond?
Yeah.
Thanks.
I would characterize it this way. Before the events of the UNOS change, the market was growing in the high single digits. When the UNOS change happened, the market last quarter was shrinking mid-single digits. That portion of it, I would ascribe essentially to the bridge transplant penetration reduction. Obviously, we were down close to 50%, and obviously, the rest of it was all share that we ceded, which was meaningful. That has begun to stabilize, and obviously, the ability for us now to focus the discussion on the lateral data that looks at our size advantage, the benefits of atherectomy placement of the device, and then really just getting more data on the long-term performance of both products, HeartMate 3 and our product on this trade-off between stroke and pump thrombosis.
We're keeping a very close eye on especially disabling stroke rates to see if there's some trade-off associated with the benefits that have come for pump thrombosis. Obviously, we have a lot of activity of just essentially getting more effective in delivering our marketing messages into the field based on the data that we have. We've essentially changed over leadership in marketing and sales as well as the general managers themselves in the business to basically drive commercial optimization of the product we have, which we feel the share that it has is not commensurate with the product that we have. That's what we're going to continue to track.
Raj.
Thanks. Raj Denhoy from Jefferies. Maybe, Nina, one for you on the NCD expansion.
Yeah
The new NCD, I should say. You guys have talked about an additional maybe 200 TAVR centers that could come online in the United States. I'm curious if you're still comfortable with that number of 200. Have you started to see some interest in new TAVR centers getting started? A couple of follow-ups we'll maybe start there.
Sure. In terms of the NCD, yes, we have started to see those sites, and we are still comfortable with somewhere in that 200 range. I think we'll see some hospitals that determine that it's just too hard to start a TAVR center. Some probably underestimated the work that needed to be done. We're still comfortable in that approximate 200 range. We sponsored a program yesterday here at TCT in conjunction with CRF that we called the New to TAVR Program. This was a Medtronic-sponsored program where we invited the new-to-TAVR sites for a full-day education program on how do you actually start a TAVR program, how do you understand the clinical data, how do you understand the technology, et cetera. We were at maximum capacity in that meeting. It was like two ballrooms, practically, of people. We had about 35 to 40 sites that were participating.
We invited heart teams to come in. We had a significant number of people who walked in. We had to close the doors because we couldn't take any more people. That gave us, I think, a really good sense that these new sites are very active and very ready to get started. We are absolutely seeing the high interest level in these sites. We're seeing the recognition of the benefits that the CoreValve technology offers. There's a lot of interest, as you would expect, in the low-risk indication. They're also seeing the benefits of the hemodynamics that we offer. I think we're still feeling pretty good about that.
The two follow-ups are, there's been some debate on whether those new centers would have been centers that would have referred previously, right? You're not really going to get that much of an expansion ultimately in the number of cases.
Yeah.
I wonder if you have any comments on that.
And I-
The second one-
Yeah
I'll ask it now, too, and maybe it's what you were just alluding to.
Yeah.
I think, Mike, you've commented about how you guys have designs on maybe taking a disproportionate number of the new centers that come online, in a sense, maybe increasing your share because of getting some more of these new centers to adopt your products. Is that still the case? Are you finding that's a success thing for you as well?
I think as we originally assumed, it was going to be both, right? It was going to be some bleeding, if you will, of the established centers, and now those patients being seen in these new to TAVR centers. We also know that with new sites come new patients. When CMS put the NCD in place, one of the things they thought a lot about, and we had a lot of discussions about, was patient access and patients who were not being seen by some of the centers that were currently operating TAVR programs. We do think there's going to be a significant number of new patients. What we're also seeing, and you're probably hearing about as well, is capacity constraints in some of these larger centers. We've got centers who are talking to us about 6- and 8- and 10- and 12-week backlogs.
They don't have the hybrid OR rooms. They don't have the capacity in their institutions to take on some of these patients. Some of those patients now will be seen sooner, in some of these new to TAVR sites. I think like most things, it's going to be a combination, and we're going to have to watch it closely. We're absolutely seeing interest, and we're seeing new patients that we don't think would've been seen before.
Just to be clear on the comment about differential share opportunity. When the original sites were opened, Edwards was training those sites, right? Because they were the only ones with an approved product in the U.S. Now, as these new centers open, they basically have access to both companies' technology and training opportunities. We would expect there to be more of a splitting in that market versus what we saw in the first centers that were brought up to speed by Edwards on their own without our presence in the labs. That's the only point I was trying to make.
Let's go to Matt Taylor.
Hi, Matt Taylor from UBS. Just for completeness, I guess I wanted to ask Mike, about the CRM business and ICDs. You mentioned the replacement dynamics are going to turn in your favor. Could you help us understand the timing and magnitude of that first? Secondly, just the pathway for high power. What are some enhancements that you can make over the next year or two to move back to a stronger share gain position? Remind us on the timing of some of the combination systems and other things that you've talked about longer term.
Sure. The implantables business, we actually have been in a good position relative to initial implant share capture. We're running high single-digit growth in initial implants on the Brady side of the business. On the high-power side, it's roughly flat, slight increase, low single-digit year-over-year growth in initial implants in a market that we would say is down 2%-3%. We actually do quite well on the initial implants just based on the offerings that we have today. The opportunity that we see going forward on the high-power side is that we now will be able to move to getting the patient more interactive with the management of their disease via the Bluetooth connectivity that we have for the device. Some improvements in battery longevity, which, obviously are well-received among our customer base.
Probably most importantly, we've been making significant advancements in terms of the algorithms within our devices to be purposeful in managing atrial fibrillation monitoring as well as therapy in that the ability to use the reactive ATP feature to actually continuously monitor the atrial fibrillation rhythm. Then when we see that it has slowed to a certain degree, we can actually turn on ATP and actually convert the patient out. I know this firsthand because my mother has one of these devices, and I was able to actually look at her, this actually happened in her as a patient on the Brady side. Those will be ported over onto the tachy side. Heart failure management features of our devices. They carry a wealth of diagnostic capability, in terms of day and nighttime, heart rate variability, impedance measurements within the heart.
We have the presence of atrial arrhythmias detected accurately, the % of CRT pacing. These things are actually predictive of decompensation events and we will have now both the algorithms as well as the connectivity to be able to take advantage of those algorithms. In addition, we now have the only active fixation lead for CRT that has now been released and is a differentiating aspect of our product getting a price premium in the marketplace. All of these things we think will already take what is essentially an initial implant share advantage and at least continue it and perhaps accelerate it. Of course, the real opportunity for us is to actually now not have all of that masked by replacement cycle. We are already at a point where essentially we've neutralized the replacement cycle on the Brady side of the business.
Where we sit in terms of the high-power side of the business is that CRT is now rapidly moving out of that window where we had the replacement cycle. That's important because CRT, half the devices that go in for CRT are replacement devices. That will be the big one. Obviously, dual chamber and single chamber happen at different rates, and we are going to see standard ICDs actually getting a little worse, but it'll be overwhelmed in a sense by the CRT and the Brady advantages. As last year, there were many, many, many tens of millions of dollars in prior year headwind that we had, we expect it to go neutral next year in FY21. That was not included in my 4% number, when I talked about what our Q1 growth would've been without the three headwinds that I referenced.
Just a second one on stent market and dynamics there maybe for Sean. Can you just talk about some new entrants and some pricing pressure that we've seen in the market? What's your ability to hold share with Onyx? Does this data help you? Can you actually grow that business?
Yeah.
We have been, and I'll invite Dave to comment, but we have been gaining share in the U.S. and around the world. An important thing to know about the U.S. market is it's roughly 20% of the world market. The growth of opportunity exists with the globalization of the therapy for one. I think the strategy that Dave's been embarking on is giving returns on all markets. Maybe I'll invite him to describe that a little bit.
If you just look at the drug-eluting stent market, Sean's right. Not just in the United States but around the world, we've been slowly gaining share, probably more rapidly in the United States. I certainly think this Onyx ONE data is a tailwind. I think it will absolutely help. I think some people think about it, will it be a class effect? I think you have to run the trial. I think there's a lot of questions about stent design and about polymer, and we've proven it. I do think that'll be a tailwind for market share. It continues to be a challenging ASP environment. While PCIs continue to grow globally at a pretty attractive rate, particularly driven by complex PCI, the ASP erosion in the stent market has been a real headwind.
As we diversify and get into more of the ancillary kind of complex PCI types of devices, there is plenty of growth to be had in those markets.
It's important to recognize those data for Onyx ONE. 40% of the market would be considered high-bleeding risk patients. This was really the first time it's been studied, at least head-to-head, for stents. We view it as a real opportunity to get the message out on what we believe is the best deliverable stent now having this clinical advantage as well.
Thank you. Let's go to Bob Hopkins in the back right.
Hi, thanks. Bob Hopkins from BofA. Just a couple of quick questions. First, for Nina, can you just remind us how many active TAVR centers there are in the U.S. today? Just because I'm wondering where we're going to when we add 200 or so. For Mike, I was wondering back on Micra AV. When I look at what you've done in single-chamber pacing with Micra, and consider the price and make some share assumptions, I've come up to a roughly incremental U.S. market opportunity for Medtronic of maybe $400 million plus. If you could let me know if I'm wildly off, that would be much appreciated. I've got one more, but I'll wait for the other two. Thank you.
I'll start with the number of TAVR centers. Widely quoted has been there's been about 600, 610 TAVR centers, somewhere in that range. We've said that adding that 200 gets to about 800 TAVR centers.
Just on the Micra AV, I think what you've described is simply the math, right? In terms of given that percentage of the market and that markup, what it would look like. I do think you have to think about penetration rate into that segment. There were essentially no meaningful trade-offs to be made in the single-chamber segment to go with a Micra versus an implantable, pocket-based system. As you move into the dual-chamber side of things, there are more trade-offs you have to think about in terms of the sort of diagnostic Bluetooth connectivity that we have with an Azure device isn't available in a Micra dual-chamber device if you have concerns, for example, about active management of atrial fibrillation. Obviously, as the patient progresses in disease, a dual-chamber system can deal with anything that happens.
With the Micra, you have to believe in the pipeline, if you will, what's going to come down the pipe in terms of the additional product areas. I would say there's probably going to be less of an overall penetration rate into dual-chamber or, if you will, the AV block patient population. It still is going to be extremely meaningful in terms of driving double-digit growth in pacing for us.
Okay. One last one for Nina, again, back on mitral. Over the last couple of years, doctors have been pretty negative on TA approach. You guys are gathering a lot of data now. Two quick things. One, what's the soonest you could have TA approach Intrepid approved in the United States? Is there a reason to believe that despite all the negativism, that that might be a decent opportunity for Medtronic?
Yeah, it's a really interesting question. We're still, again, as we've said, we're early in the trial. It's really hard to project out when we'll be completed. There's some thinking around whether or not we would bring a transapical device. We continue to get guidance from our physicians about whether or not it makes sense to bring the current transapical device to market, or do we wait for the transfemoral device. I think we'll wait and see how the TF experience goes with early feasibility. We'll wait to see whether or not that can be put into the APOLLO trial. I think there's a lot of moving parts here still before we can make any firm comments on timing.
Jason.
Just a couple quick unrelated questions. On LINQ II, it seems like there's now in-office reimbursement for ICMs. Have you seen any impact on the growth in that market or your business, or do you expect one? Secondly, just where do you stand on LAA?
On the first question, we actually think the availability of LINQ II is really important for exactly what you're talking about, where the in-office reimbursement has now been made available for LINQ, but it is, of course, at a lower rate than what we see in the in-hospital use of the product. That has been exploited to some extent by competitors who've come in with lower price points associated with their product, which we have been reluctant to follow because we have 85% market share, right?
With the availability of LINQ II, it's taking battery life from three years to five years in comparison to the two-year battery life that we see with competitive devices. We now can segregate on pricing using the old LINQ and the new LINQ to basically turn that old LINQ into more of a syncope device, if you will, and target it at that segment. We think we can actually recapture share that we've ceded because it didn't make sense for us financially to go price down to go get it. There's an opportunity here that we think we can play those price points more effectively because we have two devices that are both superior to what we view as competitive offerings, and then optimize pricing for those particular indications and those areas for use. Your second question was?
LAA.
LAA. It's an interesting space from our perspective. It obviously fits with significant core competencies we have, not only within our Structural Heart business, but within our atrial fibrillation business in terms of the management of patients over the lifetime of their disease. If we see such an opportunity, and we can do it with reaching our financial hurdles for acquisition, we certainly would look at an inorganic play in that space. It continues to be high on our list of areas to evaluate.
Come back to Kristen.
Kristen Stewart from Barclays. I guess, kind of following that last note, just thinking on a strategic level, how do you think about just the portfolio and also just opportunities for inorganic opportunities from a technology perspective? Just thinking about the landscape, are there a lot of things out there? Are assets really highly priced? Just with the change in management from leadership, do you expect there to be a change in strategy? Just how are you feeling about the overall objectives from the top and whatnot?
I think we've long been committed to having a balanced investment portfolio of internal R&D and external acquisition. To your point, return on invested capital tends to be a whole lot better with the stuff that comes out of our pipeline versus what we acquire. On the other hand, we have extraordinarily valuable assets in the field, that putting product into the hands of those people tends to give us a really nice return. There are places like the structural heart area, as we just talked about, that we think there are multiple sort of open segments for us to play in, where we have not only field presence, but we also have the ability to exploit technology core competencies, manufacturing core competencies, that's going to be high on our list.
In the peripheral area, especially the venous area, there are significant sort of opportunities for us to actually put in product into the bag that actually drives value there as well. Even in the aortic space, we see opportunities to basically take what is the industry-leading footprint for a field of highly skilled individuals and put in a bolt-on product into those areas. It's also true that there are very few segments where we don't play across cardiovascular. We also have to weigh that against opportunities within other groups of Medtronic who have other opportunities for bolt-on products that actually are, in many cases, more reasonably priced. We're constantly, as an executive committee, talking about those trade-offs.
We'll go to the last question with Peter.
Thanks, folks. Peter Min here. A question on the Japanese TAVR market. What size is that market today? What market share do you guys think that Medtronic has? As you think about that in the next three years, what approvals have you done to expand the market out going forward?
Japan's a very strong market for us, as you would imagine. We have recently brought in Evolut PRO in the TAV and SAV indication, we're continuing to see high growth in that market. We'll continue, we think, to see high growth in that market based on the product portfolio that we have there. A strong market that's going to be worthy of more investment.
Time flies.
Yeah. Thanks, everyone. Thanks to all of you for joining. We'll end there. Thank you.