Heart-felt trio: Cardiovascular plays

By TheStockAdvisors Feb 26, 2013 6:14PM
By Benjamin Shepherd, Money & Medicine

Although the incidence of heart disease has dropped somewhat over the past few decades, it's still the leading cause of death in the U.S. And substantial time, money and research will continue to be devoted to addressing the underlying biological mechanisms of cardiovascular disease and its progression.

Here's a look at three companies developing treatments for heart-related diseases: Amarin Corp. (AMRN), Cardiovascular Systems (CSII) and Edwards Lifesciences (EW).
Edwards Lifesciences

Edwards Lifesciences makes devices that improve the function of heart valves or can replace them entirely. Its products are used in cardiac bypass and stent procedures.

Until recently, valve replacement necessitated open-heart surgery, which can cost in excess of $100,000 and requires both a lengthy stay in intensive care and a prolonged recovery period.

But Edwards' transcatheter valve can be implanted using minimally invasive surgical techniques -- that require just a two-day hospital stay and can be performed for as little as a third of the cost of open-heart surgery.

Since doctors and hospitals will increasingly see their reimbursement levels tied to outcomes and performance, they'll obviously opt for the best product out there.

And with more patients having insurance coverage, detection of potentially deadly valve-related problems will occur sooner, which means greater demand for Edwards' life-saving products.

Amarin Corp.

Many doctors recommend that patients with high cholesterol increase their intake of omega-3 fatty acids, which can be easily be added to the diet through increased fish consumption or by taking fish oil pills.

However, fish oil pills can be problematic, because many contain high levels of docosahexaenoic acid, which can raise triglyceride levels, interfere with commonly prescribed blood pressure medications or increase bleeding times for patients who take blood thinners.

To address those concerns, Amarin, an Irish pharmaceutical company, has developed a process to make omega-3 fatty acids without significant amounts of docosahexaenoic acid.

The drug is called Vascepa, but the U.S. FDA has only approved it for use by the small number of patients suffering from high triglycerides.

As a result, the company's earnings have yet to get a real boost from this drug. But there are two clinical trials underway that could garner approval for Vascepa to be prescribed to a much larger number of patients.

The results of these trials aren't expected until later this year, but the data released thus far show promise. Granted that's a catalyst for next year's earnings, but it makes the shares' current valuation much more attractive. It also makes the company a potential takeover target, especially if interim data remain positive.

Cardiovascular Systems

Cardiovascular Systems' atherectomy machines use catheters to remove arterial plaques by blasting them into tiny particles that can be carried off by blood without significantly increasing the risk of heart attack or stroke.

Traditional treatments such as a balloon angioplasty risk causing a cardiovascular event, since the debris created can be quite large. It's a rare occurrence but it can happen.

At present, Cardiovascular Systems' atherectomy machines are approved only for treatment of peripheral artery disease, such as blockages in patients' extremities.

But the company's machines are undergoing trials to show that they can be used to safely and effectively treat primary coronary artery disease, or blockages closer to the heart.

The company should present data sometime in April, and the device could receive FDA approval by the end of the year. That approval seems likely, since its atherectomy devices have already demonstrated their superiority over many competing devices.

Similar to Amarin Corp., an FDA approval could significantly boost shares of Cardiovascular Systems.

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