Outset Medical
(Nasdaq: OM)
announced that it received a warning letter from the FDA related to its Tablo system.
San Jose, California-based Outset previously disclosed an FDA Form 483 in its annual report in February. That FDA form identified four inspectional observations resulting from an inspection concluded on Feb. 10, 2023. From there, Outset provided a response plan on March 3 and completed remediation workstreams to address the observations.
A new warning, dated July 5, raises two additional observations. Outset issued a press release outlining the new warning on July 7. As the markets opened today (July 10), shares of OM fell 14% to $17.60 apiece.
The FDA said certain materials it reviewed on Outset’s website promote continuous renal replacement therapy (CRRT). That modality falls outside the current indications for the Tablo hemodialysis system. Outset said it believes it effectively addressed this concern through labeling and promotional changes already underway.
The second observation asserts that TabloCart with prefiltration requires prior 510(k) clearance for marketing authorization. TabloCart, a Tablo accessory, launched in the third quarter of 2022. Sales have remained immaterial to Outset’s financial results. Outset said it intends to work collaboratively with the FDA to resolve this, with steps potentially including a 510(k) submission.
According to the news release, the FDA’s warning letter does not request the restriction of Tablo’s manufacturing, production or shipment in the U.S. It also does not request the withdrawal of the system from the U.S. market.
Outset said it intends to fully cooperate with the FDA, including a response within 15 business days, to resolve the warning letter. However, the company said it can’t give assurances of the FDA’s satisfaction with the actions it takes in response to the letter and offered no assurances as to the timing of any such resolutions.
Another hurdle to clear for Outset Medical?
In June 2022, Outset put a hold on shipments of the Tablo hemodialysis system for home use. The hold came as a result of a pending FDA review and clearance of a 510(k) submitted for changes made since the Tablo system’s original March 2020 clearance.
A month later, a shareholder lawsuit came forward claiming that the company and executives made false and misleading positive statements leading up to the shipment hold announcement. In August of 2022, the company said that it received the FDA 510(k) clearance and resumed Tablo shipments.
Shortly after the company resumed shipments, a class action securities lawsuit came through against Outset. The plaintiff later voluntarily dismissed that suit.
Despite the issues surrounding Tablo, following the resumption of shipments, Outset’s performance improved. The company secured a $300 million debt financing and landed on Deloitte’s list of fastest-growing companies. It also produced a string of strong financial performances, culminating in a Street-beating first quarter to open 2023.
