St. Jude Medical's ($STJ) is in the news again, and the company probably wishes the story would just go away. Controversy was starting to fade over the December FDA recall of St. Jude's Riata defibrillator leads, with the next-generation Durata defibrillator leads serving as a reliable, safe replacement intended to put any lingering quality concerns to rest. But an anonymous physician report filed with regulators challenged that safety of Durata wires, too, and in doing so, showed how anxious investors still are about the issue, even when all the facts aren't yet in play.
St. Jude initially stopped selling the Riata leads in December of 2010 over safety concerns, and a subsequent follow-up study lead to the FDA's Class I recall a year later. This, of course, has lead to heightened investor sensitivity over the latest dust-up. As The Wall Street Journal, Bloomberg, Reuters and others reported, the unconfirmed account that a Durata lead wire had frayed and became exposed in a single patient sent the company's stock into a tailspin through much of Tuesday, resulting in a 6% decline to $36.24, based on fears of greater problems ahead such as another product recall. (The wire has since been removed, according to the account.)
Keep in mind an important key word here: "unconfirmed." Goldman Sachs analyst David Roman argued in a note to investors, quoted by Bloomberg, that the anonymous report was highly unusual because it had so many details, and it may not be real. And even if it is, Jeffries & Co. analyst Raj Denhoy, as cited by the news service, pointed out that every defibrillator lead is prone to "some level of failure," and that one lead default doesn't mean that Durata leads are also flawed.
Once such an incident report is filed with the FDA's MAUDE database, as this one was, the FDA typically reviews such a report and evaluates the potential for fraud before posting, an FDA spokeswoman told Bloomberg. The poster can request to remain private.
St. Jude seems to look at this latest issue with more than a note of caution. Company spokeswoman Amy Jo Meyer told FierceMedicalDevices that St. Jude has reviewed the adverse event report, but noted it has not been officially reported to the company, the lead hasn't been returned and that plenty of other details are missing.
"The report indicates that it was filed by physician, but does not provide the device serial number, the name of the physician or the institution, which would enable us to learn more about the circumstances," Meyer said via email. "We are not able to confirm any details based on the event description at this time (but) will make every effort to learn more about this report as quickly as possible. To date, there have been no instances of externalized conductors on a Durata lead reported to St. Jude Medical."
- read the Bloomberg story
- check out the Reuters coverage
- here's the WSJ story (sub. req.)