St. Jude hit by FDA warning letter on CardioMEMS manufacturing

CardioMEMS's HF System for monitoring heart failure--Courtesy of St. Jude Medical

St. Jude Medical ($STJ) revealed in an SEC filing that it has been hit by a FDA warning letter for nonconformance with the agency's Good Manufacturing Practice regulations at the Atlanta facility that makes the CardioMEMS heart failure monitor.

St. Jude said in the filing that it has provided the FDA with regulator monthly updates since the agency's June inspection of the Atlanta facility and intends to continue to do so. "The Company is in the process of working diligently to completely remediate the FDA's observations for the Atlanta facility and fully integrate this former CardioMEMS stand-alone facility into St. Jude Medical's quality systems," the filing states.

St. Jude said the remediation effort will not materially impact its financial results, CardioMEMS manufacturing, or customer orders of the device.

In the warning letter, the FDA said St. Jude has not "maintained an effective CAPA (corrective and preventive action) system and has not adequately investigated known problems identified through customer complaints, non-conformances, and other sources."

Specifically, the FDA wrote that CAPA investigations for problems like incorrect serial numbers, defects found in coated sensors and returned devices that failed to boot were incomplete and overdue. The letter also says that CardioMEMS' sterilization process needs to be revalidated, according to the company's internal guidelines, and that the device's silicon coating process has not been adequately validated, among other complaints.

The warning letter is significant because it affects a device that is fast gaining adoption. St. Jude estimates that the CardioMEMS will earn $85 million to $90 million in 2015, and Jefferies equity analyst Raj Denhoy has predicted revenues of $286 million in 2017.

In a survey, Denhoy found good satisfaction levels and decent uptake, but said so-so reimbursement and a high administrative burden were inhibiting wholesale adoption.

St. Jude is rolling out a new interface for the display of data from the monitor to make the device more user-friendly and reduce the administrative burden from checking the information on a weekly basis.

The device uses Big Data collected from an implant in the pulmonary artery to enable doctors to more effectively manage medication in real time, thereby reducing severe cases of heart failure that require hospitalization.

- here's the SEC filing and warning letter (PDF)

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