The FDA yesterday issued another warning letter about a St. Jude Medical (NYSE:STJ) plant in California, now owned by Abbott (NYSE:ABT), that makes cardiac rhythm management products.
It’s at least the 2nd time the federal safety watchdog has flagged the plant in Sylmar, which makes defibrillators and the Merlin home cardiac monitor. In 2012 the FDA slapped St. Jude with a warning letter over problems with the manufacture of its Durata defibrillator leads; that letter was closed out in July 2014. Abbott paid $25 million earlier this year to acquire St. Jude.
The FDA said inspections at the plant in February turned up issues with the implantable cardiac defibrillators and cardiac resynchronization therapy defibrillators made in Sylmar, stemming from battery problems that surfaced last year. St. Jude warned in October 2016 that there’s a risk that the lithium-based batteries used in its ICDs and CRT-Ds could form “lithium clusters” during high-voltage charging; the clusters could then cause a short circuit and deplete the battery within a day to a few weeks, rendering the device incapable of delivering therapy. There were 841 premature depletion incidents among 398,470 devices (roughly 0.21%), including 2 deaths “associated with the loss of defibrillation therapy as a result of premature battery depletion,” St. Jude said.
The company failed to properly address the lithium bridging issue, sold some affected devices after the problem became known and underestimated the severity of the problem, the FDA said in yesterday’s letter.
The agency also flagged St. Jude for its lack of progress in demonstrating that it’s eliminated cybersecurity vulnerabilities in theMerlin@home software, after a short-seller last year revealed that hackers could access the devices.
An Abbott spokesman told MassDevice.com via email this morning that the company is working to address the issues named in the warning letter.
“At Abbott, patient safety comes first. We have a strong history and commitment to product safety and quality, as demonstrated by our operations across the company. Abbott acquired St. Jude Medical in January 2017; the FDA inspection of the Sylmar facility, formerly run by St. Jude Medical, began on February 7; and we responded to the 483 observations on March 13, describing the corrective actions we are implementing. We take these matters seriously, continue to make progress on our corrective actions, will closely review FDA’s warning letter, and are committed to fully addressing FDA’s concerns,” he said.
In a note to investors this morning, Barclays analyst Matthew Taylor wrote that the warning letter could mean a delay in getting St. Jude’s line of MRI-safe CRM devices on the U.S. market, past the expectation for the 4th quarter of this year.
“While we acknowledge these violations are not positive for the business or sentiment, we do not expect an immediate impact on sales, although we think as ABT pursues resolution of this warning letter, there is a risk that approval of its MRI-safe high voltage devices in the US could be delayed,” Taylor wrote. “It is our understanding that this is the only facility that ABT has producing CRM devices in the US, meaning it could not receive approval of the MRI-safe ICD through another facility, although we note the FDA has some latitude to approve devices from facilities under warning letter. Given the importance of this facility, resolution of the issues in this letter are critical to the health of ABT’s business.”
RBC Capital Markets analyst Glenn Novarro said a delay would redound to the benefit of Abbott’s main CRM rivals, Medtronic (NYSE:MDT) and Boston Scientific (NYSE:BSX).
“These 2 companies stand to benefit in the event Abbott’s approvals are delayed,” Novarro wrote in a note to investors.
Material from Reuters was used in this report.
