Outset Medical
(Nasdaq: OM)
announced today that the FDA says it addressed all issues cited in a 2023 warning letter.
Shares of OM rose nearly 4% to 85¢ apiece after hours shortly after the company made its announcement.
In July 2023, the company announced that it received a warning letter from the FDA related to its Tablo system. The FDA said certain materials it reviewed on Outset’s website promote continuous renal replacement therapy (CRRT). That modality fell outside the listed indications for the Tablo hemodialysis system. Outset said it believes it effectively addressed this concern through labeling and promotional changes already underway.
The FDA said Outset Medical needed to seek 510(k) clearance for its TabloCart with Prefiltration, an accessory for Tablo. By August, the company announced a shipment hold for the accessory while it sought clearance.
Outset Medical began selling the TabloCart with Prefiltration in May 2024, following FDA clearance. However, days later, the company announced cost-reduction efforts that included headcount reductions, continuing the topsy-turvy run.
Today’s announcement, though, enables the company to continue to try and deliver better outcomes in dialysis, its CEO said in a news release.
“A commitment to innovation and the advancement of better outcomes in dialysis remains at the core of Outset, which makes the quality of our products and regulatory compliance essential to our company’s success,” said Leslie Trigg, chair and CEO. “We are pleased to achieve this important milestone and remain vigilant as we work to continuously improve everything we do on behalf of the patients and providers we serve.”
The analysts’ take on the Outset Medical warning letter resolution
BTIG analysts Marie Thibault, Sam Eiber and Alexandra Pang maintain a “Buy” rating for Outset Medical. They also said the resolution removes the regulatory overhang on the company’s stock. Additionally, the company believes its recent $169 million financing should support operations through cash flow breakeven.
“We are pleased to see the formal resolution of OM’s warning letter…,” the analysts wrote. “Looking ahead, with OM’s regulatory headwinds behind them and near-term concerns about cash runway and debt maturity alleviated, the clear priority is for OM to achieve sustained commercial execution.
“We look forward to OM’s Q4 earnings call, scheduled for Wednesday, Feb. 19.”
