The FDA slapped St. Jude Medical Inc.’s (NYSE:STJ) Riata with a Class I recall after the company said the defibrillator leads failed more frequently than previously reported.
Two patients died and another suffered a serious injury when surgeons attempted to extract the leads, the company said. Another patient died and a fifth was seriously injured, both with compromised Riata leads, but the "externalized conductors" were not found to be responsible, St. Jude added. The Class I status is the federal watchdog agency’s most serious category, reserved for products with a potential risk of serious injury or death.
"Externalized conductors" refers to lead wires poking through their insulation, potentially delivering unwanted shocks to patients. The St. Paul, Minn.-based med-tech titan announced last week that the leads were more prone to "insulation abrasion" than it had reported in the past.
The company issued a physician advisory letter late last month warning that Riata has had a 0.63% failure rate over the last 9 years. The new figure was based on returns and complaints about the devices, a method that St. Jude acknowledged as known to underestimate the true failure rate.
News of the higher failure rate led Jeffries analyst Raj Denhoy to downgrade St. Jude from “buy” to “hold” on concerns that Riata will have a continued negative impact on sales through 2012. Denhoy also lowered his price target for STJ stock to $38 from $40 in a research note to investors earlier this week.
Insulation abrasion occurs when the lead’s wires poke through their insulation. The risks of insulation abrasion aren’t fully understood, according to St. Jude, but the malfunction can cause an interruption in the cables’ ability to sense rhythm problems in the heart, possibly preventing needed shock therapy or causing unwanted shocks to a patient’s heart.
St. Jude stopped selling Riata last year after it reported a 0.47% rate of insulation abrasion after 9 years, but didn’t recall the leads.
STJ shares lost 14% this month, closing at $38.53 on Dec. 1, and going for $33.15 in mid-morning trading today.
There are about 79,000 affected leads still active in patients in the U.S., according to a press release. The med-tech giant is conducing a prospective study on the long-term performance of its leads with enrollment beginning this month.