A California law firm announced this week that it’s representing shareholders of Edwards Lifesciences (NYSE:EW) in a class action lawsuit accusing the company of withholding information and misleading investors about the market for its Sapien transcatheter aortic valve implantation system.
The lawsuit was spurred by Edwards’ revelation on April 23, 2013, that about 20 candidate hospitals had decided to postpone Sapien training and that there was "substantially no backlog of patients awaiting SAPIEN implants," according to the firm of Glancy Binkow & Goldberg LLP. The news send EW shares down 22% by the end of that day.
The lawsuit claims that the medical device giant withheld vital information from shareholders, issuing per-share earning guidance that was way off target.
"Defendants knew but concealed from Edwards Lifesciences’ shareholders during the Class Period that: adoption of SAPIEN was weaker than the company claimed, due to concerns among physicians over the risks and complexity of the procedure for implanting the valve," according to a statement issued by the law firm. "Edwards Lifesciences’ outlook for sales and earnings per share was significantly weaker than the optimistic guidance defendants offered to investors."
The lawsuit is more bad news for Edwards, which recently lost a round in a long-running patent battle with rival TAVI maker and medtech titan Medtronic (NYSE:MDT). A federal judge in California this week declined to rule a pair of Medtronic patents invalid.
The company has also had some good news lately, winning an injunction banning Medtronic from importing its CoreValve TAVI system into Germany and touting new clinical trial data showing that the Sapien system is a safe alternative for redoing cardiac surgery and may lower the death toll among diabetics at high surgical risk.
EW shares were relatively flat in mid-morning trading, down by 0.2% to $70.70 as of about 11:40 a.m.