Greetings, ladies and gentlemen, and welcome to the Edwards Lifesciences Corporation Second Quarter 2021 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference is being recorded.

Thanks a lot, Diego. Good afternoon and thank you for joining us. With me on today's call are Mike Mussallem, Chairman and Chief Executive Officer; and Scott Ullem, Chief Financial Officer. Just after the close of regular trading, Edwards Lifesciences released second quarter 2021 financial results. During today's call, management will discuss those results included in the press release and accompanying financial schedules and then use the remaining time for Q&A. Please note that management will be making forward-looking statements that are based on estimates, assumptions and projections. These statements include, but aren't limited to: financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters and foreign currency fluctuations. These statements speak only as of the date on which they were made, and Edwards does not undertake any obligation to update them after today. Additionally, the statements involve risks and uncertainties, including, but not limited to, those associated with the pandemic that could cause actual results to differ materially. Information concerning factors that could cause these differences and important product safety information may be found in the press release, our 2020 Annual Report on Form 10-K and Edwards' other SEC filings, all of which are available on the Company's website at edwards.com. Finally, a quick reminder that when using terms underlying and adjusted, management is referring to non-GAAP financial measures. Otherwise, they are referring to GAAP results. Reconciliations between GAAP and non-GAAP numbers mentioned during this call are included in today's press release. With that, I'd like to turn the call over to Mike for his comments. Mike?

Thanks, Mark. We were encouraged by the clear signs of recovery during the second quarter. Vaccine adoption in key regions has contributed to an increasing number of patients seeking and, most importantly, receiving treatment. At Edwards, our dedication to providing innovative solutions for people fighting cardiovascular disease around the world motivates our employees every day. We never stopped our aggressive pursuit of breakthrough technologies with the potential to help an even broader group of patients. Last year, we noted that we were in the midst of the onset of this tragic global pandemic. There were more than 20,000 patients around the world who were treated with our SAPIEN valves in that second quarter.

Thanks a lot, Mike. I am pleased with the momentum we experienced as we exited the first quarter, which continued in the second quarter across all of our product lines. While we are expecting some headwinds due to the summer vacation schedule and flare-ups of COVID in various regions, we are optimistic about favorable business conditions for Edwards. Total sales grew 49% year-over-year, as patients increasingly became more confident about pursuing treatment in the second quarter. Of course, the unusually high growth rate also reflects depressed sales in last year’s second quarter due to COVID. Our underlying two-year compounded growth rate in the second quarter was 11%, another indicator that conditions are improving. The much stronger than expected sales performance lifted by unexpectedly high procedure volume fell through to the bottom-line resulting in adjusted earnings per share of $0.64. Based upon our strong start to the year and positive outlook, we are raising our previous sales guidance ranges for 2021. For total Edwards, we now expect sales of $5.2 billion to $5.4 billion, for TAVR $3.4 billion to $3.6 billion, for TMTT $80 million to $100 million, for Surgical Structural Heart $875 million to $925 million, and for Critical Care $800 million to $850 million. Now, regarding second half margins, we are intending to resume a higher rate of spending as commercial activities increase, especially as we continue to build our clinical and field teams to support our planned new product introductions in multiple regions. In addition, we expect growth in research and development expenses as our clinical trial activities increase. The combination of these actions contributes to our more moderated guidance for margins in the second half. We expect our full-year adjusted earnings per share guidance at the high-end of our previous range of $2.07 to $2.27. While public health conditions remain uncertain, we are projecting total sales in the third quarter to grow sequentially to between $1.29 billion and $1.37 billion resulting in adjusted earnings per share of $0.50 to $0.56. Now I will cover additional details of our results. For the second quarter, our adjusted gross profit margin was 75.9%, compared to 74.4% in the same period last year when we experienced lower sales and substantial costs responding to COVID. This increase was also driven by a more profitable product mix, partially offset by a negative impact from foreign exchange. We continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%. Selling, general, and administrative expenses in the second quarter were $374 million or 27.2% of sales, compared to $275 million in the prior year. This increase was primarily driven by personnel-related costs including performance-based compensation, increased commercial activities compared to the COVID impacted prior year, and the strengthening of OUS currencies, primarily the euro. We are planning to see a ramp-up in the expenses noted above in the second half as COVID-related restrictions subside to support continued growth. We continue to expect full-year 2021 SG&A expenses as a percent of sales, excluding special items to be 28% to 29%. Research and development expenses in the quarter grew 24% to $225 million, or 16.4% of sales. This increase was primarily the result of continued investments in our transcatheter innovations including increased clinical trial activity. We are anticipating ramp up expenses in the second half as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT. For the full year 2021, we continue to expect research and development expenses as a percentage of sales to be in the 17% to 18% range... during the second quarter, we recorded a $103 million net reduction in the fair value of our contingent consideration liabilities which benefited earnings per share by $0.14. This gain was excluded from the adjusted earnings per share of $0.64 that I mentioned earlier. This reduction reflects accounting adjustments associated with reduced expectations of making future milestone payments for previous acquisitions. This accounting impact does not impact our 2021 guidance. Turning to taxes, our reported tax rate this quarter was 10.3%. This rate included a larger than expected 590 basis point benefit from the accounting for stock-based compensation. We continue to expect our full year rate in 2021 excluding special items to be between 11% and 15% including an estimated benefit of 5 percentage points from stock-based compensation accounting. Foreign exchange rates increased second quarter reported sales growth by 450 basis points or $29 million, compared to the prior year... Free cash flow for the second quarter was $457 million, defined as cash flow from operating activities of $526 million, less capital spending of $69 million... In the first half of the year, we repurchased 4.9 million shares at an average price of $85. In May, we obtained Board approval to increase our share repurchase authorization and currently have approximately $1.2 billion remaining under the program. We now expect our average diluted shares outstanding for 2021 to be at the lower end of our 630 to 635 million guidance range. And with that, I’ll pass it back to Mike.

Hey, thanks, Scott. So, we are pleased with our performance in the first half of 2021. To serve the many patients suffering from Structural Heart Disease, we never stopped investing in our people, our innovative technologies and our new growth capacity. As patients and clinicians increasingly recognize the significant benefits of transcatheter-based technologies, supported by the substantial body of compelling evidence, we remain optimistic about the long-term growth opportunity. Our foundation of leadership, combined with a robust product pipeline positions us well for continued success. And with that, I will turn the call back over to Mark.

Thank you very much, Mike. Before we open it up for questions, I am excited to announce that our 2021 Investor Conference will take place on Wednesday, December 8th, at our headquarters here in Irvine, California. This event will include updates on our latest technologies, the use of longer-term market potential, as well as our outlook for 2022. Please look for more information on our website next month. With that, we are ready to take questions now, Diego. In order to allow for broad participation, we ask that you please limit the number of questions to one, plus one follow-up. If you have any additional questions, please re-enter the queue and management will answer as many participants as possible during the remainder of the call. Diego?

Thank you. Our first question comes from Bob Hopkins with Bank of America. Please state your question.

Great. Thank you and good afternoon, and congrats on such strong performance across the board. I just have two quick questions on the guidance. First is just on the short-term and some of the comments you made about this quarter. Just curious, you mentioned the backlog dynamic which is not something that you really talked a lot about before. But then a major factor in the quarter, can you quantify that? And any thoughts on what that looks like in Q3 of the back half?

Yes. Thanks, Bob. And, we were pleased with the results. They were broad based. Your observation is correct. We really haven’t talked about this much in the past. Most of our data historically have come from talking to our heart teams really around the world, but especially in the U.S. And when we talk to them, they really don’t note a difference in their backlogs, compared to what they’ve seen in the past. But we believe based on a number of sources, some of anecdotal conversations, some of it what’s going on with other companies like insurers or others in the healthcare space that noted much more patient activity. And we believe that this flow of patients, so patients visiting their primary care physicians. Patients going back to their general cardiologist, their general cardiologist referring them on a heart team, all of the things that we think were potentially delayed that there was a real pick up in the second quarter and because of the rate of treatment being much larger than anything we’ve ever seen in our path, we believe that that’s in there. It’s not based on, we only have heart data, Bob, to quantify how much of that was, but we believe that was a key part of what happened.

Okay. Thank you for that. Just curious. And then that kind of feeds into my second question which is also around the guidance for the back half on total revenue. So I think you called for roughly a 3% decline sequentially from what you did in Q2 and then, Q4 being kind of flat with Q2 and I am just curious maybe for Mike or for just Scott, maybe talk about some of the moving parts that went into that guidance. Do you expect a little bit of a decline sequentially and then, Q4 similar to Q2. I might have thought that would have been a little bit higher given the momentum. But just curious about the moving parts you are assuming there.

Yes. I mean, you’ve got it right and I’ll invite Scott to come in and add more color to it. But you are right, we did exit with momentum and it was strong momentum coming out of Q2. But at the same time, we are mindful of the fact that we probably got some help in Q2 from some of these patients coming off the sidelines. Also, all of us are all acutely aware of what’s going on with the pandemic and the recent surge that’s happening and although that hasn’t had a dramatic impact on the healthcare system so far, we think it can have an impact. And so, that’s also baked into our thinking. Q3, we think there is going to be a pronounced seasonality associated with people both in the healthcare system and patients themselves wanting to get away and take a vacation. And so, all those went into our thinking. And I don’t know, Scott if there is much to add to that, but.

No, that’s a good summary. If we would not have exceeded our Q2 sales expectations by as much as we did, you probably would have seen a different sequential trend from Q2 to Q3 as we continue to grow and recover through this pandemic. But we just succeeded Q2 so much that we do think we’ll see some of that seasonality that Mike talked about and then, going back up to a more normalized level of sales when we get into the fourth quarter.

Fair enough. Thank you very much.

Our next question comes from Vijay Kumar with Evercore ISI. Please state your question.

Hey guys. Thanks for taking my question and congrats on a nice print here. Mike, maybe a big picture question, when I look at the guidance here, the beat in the quarter came from TAVR. I think there was some nervousness around slowdown in Asia-Pac, Japan, due to the COVID outbreak. How – when you think about those regions, how those regions normalize? And given U.S. was so strong, it offset that weakness when I look at the guide, what was it? Some concerns around these outbreaks, is that what went into the thought process around TAVR guidance?

Yes. Thanks, Vijay. One of the things you have to be a little bit careful of when you look at growth rates and use that as a way of measuring Q2 is to be a little bit more reflective on what the climate was like in Q2 of last year. So, Japan just didn’t decline as much as the U.S. and Europe last year. And so, while the growth rate looks like less in Japan or it looks like it was less of a performer actually, Japan was doing quite well and grew very nicely. Similarly, Europe didn’t get hit quite as hard in Q2 as the U.S. did – as the U.S. really got hit hard. So, Europe has actually been performing, we think at a pretty high level. Now having said that, you correctly note that, hey, you know, Japan is in a near lockdown in portions or regions. There is portions of Europe that are still troublesome, although there are encouraging signs in Europe as well. I just saw some data this morning that said vaccination rates in Europe are comparable to U.S. vaccination rates. And we know of some places that are under pressure in the U.S. So, we’ve taken all that into account. We’ve provided our guidance. But when we look backward at Q2, we feel like we saw a strength across each of the regions.

That’s helpful, Mike. And then, one maybe on the TAVR portion, Structural Heart. I want to make sure I heard this correctly. Did you say mid singles at growth outlook through 2025? I think there has been some concerns about cannibalization. I am curious, is that a comment on the entire market being up mid-singles or is that most of it for Edwards?

No, so, what we were commenting on was, the total market and we said that that total market, that’s $1.8 billion will grow in the mid-single-digits through 2026. Now that total market is – this total, what we call Surgical Structural Heart, so it’s not just valves. It has more than that in it. What we are trying to signal is that we think that’s still a growth market and that is with the TAVR impact. So, we think TAVR is definitely going to have an impact on surgery during that period of time. But it’s going to grow in spite of that. Okay. We’ve enjoyed some very nice growth for a number of reasons. A lot of it’s built on just the strength of our premium RESILIA platform.

I would just add to that, one of the things that happens when there is a greater awareness of structural heart disease and valvular disease is that more patients are just coming into the system. And many of those patients who have isolated aortic stenosis are great candidates for TAVR. But there are a lot of patients who come into the system who need surgery and it’s one of the reasons why we expect that business to continue to grow.

That’s helpful perspective, Scott. Thank you guys.

Our next question comes from Larry Biegelsen with Wells Fargo. Please state your question.

Good afternoon. Thanks for taking the question and congrats on the nice quarter. Mike, I am glad to hear you talk about the trend you are seeing in your mitral and tricuspid businesses. The $80 million to $100 million guidance for this year, what percent is mitral? What percent is tricuspid? And how significant are clinical sales in that TMTT number?

So, clinical are a portion of it. But it’s minor. I don’t know the exact, Larry. But I would guess it’s in the – maybe it’s in the 10% range of overall sales. The market itself feels like the growth of transcatheter mitral and tricuspid did pick up in the quarter. And so, we see it. It’s still a market that’s driven by mitral more than tricuspid. So, I don’t know if that’s helpful.

No, it’s very helpful. I mean, I just I’d love to hear your thinking about that business beyond 2021. I mean, $80 million to $100 million is a pretty big pick up from what you did in 2020. How do you think about that business going forward? Thanks for taking the question.

Yes, thanks, Larry. Yes, when we said $80 million at the beginning of the year that was about a doubling from last year. So, now we think it will more than double. But I think you know about how we feel about this market. We formed a business unit around it and have an awful lot of really important differentiated innovations going on in this space. So, we have a high confidence level that this is going to be important. It’s a road we are very focused on making sure that we have great outcomes and that’s key to us. We work on having rigorous pivotal trials. We have differentiated therapies and we are working on having great real-world outcomes with our high touch model. We’ve said that we think it’s going to be more than $3 billion by 2025. So it gives you a signal as to what we think where the market is maybe $1 billion in that neighborhood today.

Thanks, Mike.

Our next question comes from Robby Marcus with JPMorgan Chase. Please state your question.

Yes. Nice quarter. Thanks for taking the question. Maybe I can start with some P&L question. Scott, gross margin was a touch light in the quarter. Just maybe walk us through how you get back up to the 76%, 77% guidance through the back part of the year. What gives you the confidence?

Well, it was a touch light, but keep in mind there are a couple of moving pieces. One was, we had about a 180 basis point hit from foreign exchange, primarily due to these hedge contracts where they are downsides and it works opposite of the benefit that we get with the translation of sales from outside of the U.S. But that was more than slumped by 230 basis points from manufacturing efficiencies and lower special COVID expenses than what we had in the second quarter. So, you got FX and manufacturing efficiencies at play and we came in 10 basis points short at the bottom end of our range for the full year gross margin guidance. As we are probably, right now, looking at something that is closer to the lower end of the 76% to 77% range. But it’s probably too early to get more granular than that Robby.

Great. And while we are on the P&L, I’ll use another here. The accounting charge that was a benefit this quarter. I didn’t hear what it was related to. If you don’t mind, just what’s letting us know what it’s tied to. I appreciate it. Thanks a lot.

Sure. Sure. So it was accounting adjustments that were associated with some lower expectations in making future milestone payments connected to some past acquisitions that we’ve done. So, the accounting associated with those is, we evaluate the probabilities and the timing and the assumptions around whether we might make those milestone payments and in this case, we think there is some lower likelihood of some of those. And so, we run it through as a non – or as a GAAP gain, but not something that shows up in our non-GAAP earnings per share.

Okay. Is it any specific deals you can talk to? Or is it just the overall portfolio?

Well, there are two primarily deals where we have earn outs. One is Valtech, which is the parent company of the CARDIOMAN product and the other is Harpoon. And we’ll get into the details beyond that. But those are the two big deals where you’ve got exposure to future milestones and where the expectations for those move up and move down over time and we run those accounting results through the P&L.

Great. Appreciate it. Thanks for taking the questions.

Our next question comes from Pito Chickering with Deutsche Bank. Please state your question.

Good afternoon and thanks for taking my questions. The first one is a question on the growth in new centers versus established centers in 2Q. If you look at into the back half of the year, are there any constraints that the sales people, manufacturing or center capacity could limit that growth?

Yes, thanks. We feel like this quarter we saw broad growth across all size centers. And so, I think that’s most noteworthy. Maybe even more than we have seen in the past real strength from some of the big centers. We continued to add centers this quarter. I would say, it was kind of a normal addition kind of what we’ve been adding right along. We are probably at an 800 plus level in terms of centers right now. And so, that’s going to be probably a diminishing importance. But the ones that we are adding now are quite small centers and don’t really have a material impact on our results.

Okay. And the question for your margins, you were talking about investments in clinical trials at mid-teens going forward this year. But I look as you are increasing those investments. I am just curious sort of what changed in the last 90 days to increase those investments?

You are talking about clinical trials?

Yes, so, we’ve got multiple pivotal underway right now. Five in TMTT and then we got other ones in TAVR and surgical and as we continue to enroll patients, those clinical trial expenses increase. Keep in mind, we incur expenses at 2.1 at the point of treatment. But then secondly, we follow these patients a lot of times out to ten years. And so, we got this increasing and recurring clinical expense that is part of our strategy. We are trying to build a robust body of clinical evidence and it’s an important part of how we are intending to grow the top-line over time.

And I’ll add to that, Pito, although things definitely picked up in Q2 in terms of clinical trial activities, it could go even faster in the future and so that’s what we anticipate.

Great. Thanks so much.

Our next question comes from Matt Miksic with Credit Suisse. Please state your question.

Hey. Great. Thanks so much for taking the question. So, maybe a follow-up to Pito’s question around centers. I know just that TDT some of the information you had up around the meeting included some comments on the number of interventional centers around the world – I mean, around the country that had chatter that we are also performing TAVR. And the reason I ask is, is that, in the past, you talked about there is sneaking up on maybe 850 centers in the U.S. and not really going to go to 1,100, 1,200 centers as we have cardiac surgery. But there is sort of comparing the number of centers that are doing stenting but not TAVR seems a little bit like a new way of highlighting the underpenetrated nature of the adoption. I am just wondering if you could speak a little bit about that if it’s reading that right or where you are exactly in that curve? And then, I have one follow-up.

Yes, thanks, Matt. Yes, I am sorry, if we weren’t clear on that. I mean, we have been – I think pretty consistent since the new NCD was approved a few years that we thought this was going to head toward around 850 centers, that continues to be our belief. Nothing has really changed in that regard and it’s probably constrained by the way that the NCD is written. We probably argue that it might have been larger, but it is what it is. And so, that’s where it is. But I really wouldn’t focus overly on number of centers. For example, in the U.S., when you think about what the potential is for TAVR, because the real issue is patients coming off the sidelines. There are many patients with severe AS that for one reason or another don’t get diagnosed or don’t ever make it to a heart team and treatment. And that is going to be the key to the – really the growth of TAVR overall. And we are fortunate to have a great procedure that has terrific results and we are making progress on encouraging patients to come back. Now, it’s a challenge, obviously with COVID, because those same patients that are vulnerable to COVID are those that are – have very similar characteristics of severe AS patients. But it’s a real opportunity. And the other thing that we find is, there is much conversation about health disparities these days. That’s true in spades for severe aortic stenosis patients. There are real health disparities. And so, as the overall system looks to tackle that, we think that’s a bit of a tailwind to our efforts.

Excellent. And just – you mentioned that you are growing similar pace to the volumes in the various regions that you are – we are operating in. Any thoughts that are contemplation of share eating or share loss. You had some significant gains in the past year and a half for a variety of reasons. And so, anything changing on the share front?

Yes, so, we are – that’s always very difficult to measure at this point in time and that’s one that you get a chance to look back on after everyone has reported and you get a chance to see the PBT registry. It’s not truly our key focus. Most of our growth really comes from these patients coming into the system rather than any sort of changes in share. But as we say, we really think that those positions were stable in the quarter.

Great. Thank you, Mike.

Our next question comes from Cecilia Furlong with Morgan Stanley. Please state your question.

Hey. Good afternoon and thanks for taking the questions. Mike, I wanted to start with TMTT. Just really, what you were able to do in 2Q in terms of being able to access new sites, open new sites and then as you contemplate that 80 to 100 for the year, will it factor in some – a new site opening versus just continued penetration in your existing sites?

Yes. No, it is a key part of our growth strategy. So, that’s a correct observation. We have been involved in a lot of physician training. We have a high touch model. So we are there and we really help make sure that when people start up, they start up the right way. I think at this point, we are in double-digit countries, more than ten countries across Europe and are opening centers in all those places. And so, a significant increase to our team and, of course, a lot of rigor in terms of trying to back that up.

Okay. Thank you. And just on Japan, as well. Off of the recent traction, just thinking about reimbursement heading into 2022, just the growth drivers you’ve seen recently, but how you are thinking about really opening these centers in that region going forward in 2022 and new centers really being the growth driver as you look forward over the next few years?

Yes. Thanks. I think, I think we talk about it every time that we are speaking to you that there is a really significant undertreatment in Japan, maybe at such a large elderly population that their treatment rates should be much higher and there are number of structural issues that span in the way of Japan getting that done and we try and become students of that and we are making some progress. Adding new centers is important and valuable. One of the things that I think may not be clear to most as we’ve only had a high surgical risk indication up until now. And so, we are going to jump to a low surgical risk indication. And once that reimbursement comes in place, which happens this quarter or we expect to happen this quarter. That’s when there should be some real reaction from clinicians and in terms of treating these patients. So, we look forward to adding these new centers and – but we are also mindful of just COVID in Japan. So, it’s one we are very positive about in the long-term. But a little uncertain in the short-term.

Okay. Thank you.

Our next question comes from Travis Steed with Barclays. Please go ahead.

Hey, thanks for taking the question. I got one longer term question on margins. You are spending a lot down in R&D and SG&A, but also have a lot of investments in front of you. So, just curious how you think longer term, how you balance the spending versus margin expansion?

So, longer term, we do think we are going to continue to get some benefits from scale and we think about margins, I guess, in all three areas, gross margin, R&D, SG&A. On the gross margin line, you’ve seen us expand gross margins. And even as we have invested a lot into our physical footprint of production facilities around the world, we are getting more and more efficient as our volumes increase. And so that’s going to continue to be helpful, I think. On the R&D side, we are going to continue to invest heavily. And that may not in the short-term be a source for additional leverage. But longer term we do think revenues are going to outpace operating expenses including SG&A where we are getting more benefits of scale in our administrative, some of our back-office functions can support a bigger business around the globe. And so, we think we’ve got opportunities to over time incrementally expand the operating margin.

Alright. That’s helpful. On the international business, I don’t know if you’ve mentioned any update on China and how that’s going. I notice Medtronics filed a study today in TAVR for their device in China. So, curious if there is any update on China and are you looking at other markets to move into as well, longer term?

Yes. So, for us, China was in terms of – THV was a minor contributor to sales in the quarter. It actually did very nicely in Critical Care and Surgical Heart Valves. But we are still launching there. We’ve got a very deliberate and methodical approach that’s aimed at having great patient outcomes. And so, we are going to be looking at this as a long-term opportunity or an intermediate to long-term opportunity then we are going to try and take it from that perspective. It doesn’t help right now that – some of us can’t travel to China. And so, those kind of things tend to be obstacles, but overall team that’s out there executing.

Great. Thanks for taking the question.

Our next question comes from Josh Jennings with Cowen. Please go ahead.

Hi. Good evening. Thanks for taking the question. Mike, I was hoping to just start get an understanding of your comments around patient backlog in TAVR or checks with some physician experts are anecdotal, but they are relying that when they clear their patients, most of their they one even said they can’t find a patient that’s saying that they delayed their procedure because of COVID. And so, is your backlog, when you talk about primary care physician offices. Is this just the incidence in 2020 that these patients that were not diagnosed are now coming back to the channel and there are just more patients with aortic stenosis that have not been diagnosed yet and kind of getting diagnosed whether it’s primary care physicians or general cardiologists and then moving to the channel. Is that the primary thrust of your backlog comment?

We think so. The risk of over simplifying, yes, indeed, we believe that during COVID, people were more fearful of COVID and entering the system with COVID than they were concerned about their AS in many cases. We even had some clinicians tell us, when patients are home and they are not very active, they may not even demonstrate some of the symptoms they might have if they were more active. But we do hear that they are coming back now. It’s been again, anecdotal. So, I am a little hesitant to say that we know exactly where that’s coming from, Josh. So, for example, we had one physician at a leading that tells you things that the patients that are coming back now are sicker than they were before and that will show up in the numbers. But again, totally anecdotal one all, but we’ve heard enough of this that we believe that their patients that are coming back into the system and we saw the kind of a surge in the second quarter.

Thanks for that. And maybe just one quick follow-up on a similar topic. There is stronger adoption of handheld ultrasound technologies, more technologies coming into play. Are there any enabling technologies that will enhance or accelerate the diagnosis of these undiagnosed aortic stenosis patients in the primary care office or the general cardiologist offices giving you some optimism about the deeper penetration of TAVR resume forward here? Thanks. Thanks for taking the questions.

Yes. Thank you. We think there is a host of technologies that are still pretty early and we’ve been backers of some of these that could really help with the diagnosis of valvular disease. There is, it comes from many directions and we think as the world digitizes and there is more handheld devices, and there is more ability to bounce signals off the cloud, whether it’s EKGs or stethoscopes or and handheld devices of all sort, especially that can listen to heart sounds that this is going to be enhanced. I’ll avoid doing a commercial for any particular companies, but there are numbers that are pursuing this exact thing and we think it’s a very helpful sort of megatrend for us.

Great. Thanks a lot.

Sure.

Our next question comes from Anthony Petrone with Jefferies. Please go ahead.

Great. Congrats on a quarter. Hope everyone is well. Two quick ones. One would be just on the competitive dynamics in Europe in particular and just maybe a quick update on the pricing dynamics there just given that the environment is a little bit more richer with competitors in that region of the world. And then, the second would be, on the $7 billion global TAVR outlook, that figure has not factored in asymptomatic. So, just wondering taking the temperature here on asymptomatic latest thoughts on size that opportunity and how that market opportunity can be untapped over time? Thanks.

Yes. Thanks. Well, I am sure that everybody, Anthony, gets a chance to track what’s going on with the various companies that are engaged in TAVR. In general, in Europe, there is a pretty full complement of competitors. It seems there was that the two leading companies probably account to close to 85% of the volume in Europe. So it gives you a bit of a sense, I don’t know if that’s exactly helpful for what you are looking for. Was there more, let’s see, that’s $7 billion opportunity, you are right. It has very little asymptomatic in it. We have a big early TAVR trial that’s going on right now. And you also heard that we initiated a trial of patients with moderate AS. Those are not in that number. So, I tried to cover it in our general remarks. The $7 billion in 2025, we don’t see as sort of at the top of some curve. This has the potential to grow significantly more, particularly if we can demonstrate the value of TAVR for these patients that today have – or not really indicated and we think these trials have the potential to do that.

Thanks again.

Our next question comes from Joanne Wuensch with Citi. Please state your question.

Thank you for taking the question and a nice quarter. Two quick questions. If PASCAL is approved in the United States by the end of next year, does that mean data at ACC?

Yes. We don’t have great visibility as to when we are going to see data. Certainly, we are going to see it sometime next year. But I am not sure what medium we are going to see that. It’s too early for us to be able to judge it. But what we think from a timing perspective is that, we should have that approval by the end of next year, which means we are probably launching and then you could see it in the numbers in 2023.

And I think that the TMTT numbers in outside the United States is inching up nicely. Is there anything that you are learning from that process or from that launch that will make it easier to bring it into the United States? And thank you.

Yes. Thanks, Joanne. So, obviously, we have learned a lot from those experiences and as we mentioned, we have a high touch model. So we are in every case. So, we get the chance to learn about that on a regular basis. We are highly focused not necessarily on just trying to drive sales, but to make sure that we get great results and we’ve been really pleased so far that we’ve had differentiated outcomes. And that’s base to focus, because we are in this for the long run. We know that these patients today could be served better and we are striving to do exactly that.

Thank you.

Our next question comes from Danielle Antalffy with SVB Leerink. Please state your question.

Hi. Good afternoon, everyone. Thanks so much for taking the question. Just – and congrats on a good quarter. Just a follow-up to Josh’s question on the backlog. I guess, Mike, I am just curious, previously you talked about this knocking a backlog type of market given the high mortality rate for these patients if they don’t get treated. So, I guess, I am curious about the increased level of confidence that there is a backlog, first of all. And second of all, is it really about low-risk patients and if you have a sense of whether you are treating a higher percentage of low-risk patients right now. Any color you can give on the patient mix that gives you conviction that this is a backlog work down versus just strong underlying volume?

Sure. And again, Dan, we are trying to share with you our best thinking on what we believe. We believe that this occurred upstream, part of what was driving our comments in the past and you are exactly right. We’ve said, hey, AS patients don’t score very well and we think that’s true. But remember, we said there were 10,000 patients treated in – I mean, 20,000 patients treated in Q2 and 30,000 this Q2. So, big difference and so, all those 10,000 patients all come. It doesn’t take very many to move numbers like they moved in Q2. So, we believe that it’s patients across all risk levels. Even I think, people sometimes don’t understand the low-risk patients are quite old in many cases. And so, it’s not just simply the newer indication. It’s broadly that these patients that were elderly and had risk of COVID were hesitant to enter the system. We believe that they are more likely when signs of optimism really reaches a peak in the second quarter to reenter the system and be treated. And that we got some lift out of that. But we don’t have perfect visibility on that. So, I can’t be more quantitative.

No, that’s helpful. Thanks, Mike. That’s it for me.

Yes.

Our next question comes from Chris Pasquale with Guggenheim. Please state your question.

Thanks. Two related to clinical trials and such a big part of the pipeline story today. First, just to piggyback on Joanne’s question. Has CLASP 2d completed enrollment yet, because it would seem like that would have to happen soon to make a spring meeting?

Yes. Thanks. You know what, we don’t share the details of exactly where we are on that. But we do feel like we have a fair amount of visibility into the pipeline. We’ve been progressing really well, feel like we are on track to have our enrollment in place and to be able to make our submissions, so that we could have an end of year next year approval.

Okay. And then, you touched, Mike, a little bit earlier, but there is a lot of overlap between the patients you guys are treating in many of these studies and those that were most impacted by COVID. Do you have any concern about COVID in reducing noise into these studies that could complicate interpretation of the data down the road? Just curious how you are thinking about that. If you are doing anything to try and head that off?

Yes. Chris, that’s a good observation. Yes, we are concerned about that. Especially those studies where rehospitalization or hospitalization is measured as an indicator in both the controlled group and the test group, those things can definitely get affected by, during a moment like a COVID outbreak. So, it is of concern. It’s very much on FDA’s radar screen and I am sure all companies that do trials that have those sort of end play. Our PIs are all about it. And then, the good news is, between our principal investigators and the FDA, people are cognizant of it and are working together to try and deal with those variabilities.

Thanks.

Thank you. Our next question comes from Matt Taylor with UBS. Please state your question.

Hi. Thank you for taking the questions and congrats on the quarter. Again just want to see if I could get more specificities from you on regions that you are operating in that aren’t doing so well. You mentioned there is some in Europe and some concerns in Japan and APAC. Just want to think about how we should view them improving or getting worse in Q3 versus Q2. Could you give us any insight into that?

Yes. I mean, what happens is, to get really discrete and go country-by-country might be misleading, because we would get into countries that are pretty small, but might not make a difference. We tend to look at it in terms of the U.S. in total, Europe in total, Japan, as a region and then the rest of the world. When we look at each of those discretely, even though each one has its hotspots. So, for example, you know very well where those hotspots are in the U.S. The places that are vulnerable to low growth. But the U.S. in total, looks quite positive. The same thing in Europe. There are countries, some of the Nordic countries, we can – I can go on to greater specifics that are struggling more. But overall, Europe is doing pretty well. They performed at a high level in the second quarter. Japan, in a lockdown, but then at the same time they have the approval for low risk and we have optimism about the future. So, each of these is positive. But even the rest of the world has put very nice growth. So, we don’t have a hotspot that probably affects a major region. More of those are going to be smaller in their nature, if that makes sense, Matt.

Yes. That’s good color. Thanks so much.

Thank you. And that’s at the end of today’s Question-and-Answer Session. I will now turn it back to management for closing remarks.

Okay. Well, thanks all for your continued interest in Edwards. Scott and Mark and I welcome any additional questions by telephone.

Thank you. This concludes today's conference. All parties may disconnect. Have a great day.