Shareholders of Abiomed (NSDQ:ABMD) filed a lawsuit seeking class action status, accusing the medical device company of inflating its share price with falsely rosy predictions for its flagship Impella 2.5 heart pump.
The lawsuit, filed Nov. 16 in the U.S. District Court for Massachusetts, accuses Danvers, Mass.-based Abiomed, CEO Michael Minogue and CFO Robert Bowen of misleading investors about problems with the FDA over its marketing of the Impella 2.5 device, according to court documents.
The FDA sent a warning letter to Abiomed in January 2010, according to the documents, " informing Abiomed that its promotional and marketing materials were making claims about the Impella 2.5 that were inappropriate and not supported for its intended use."
“No disclosure of this letter was made to Abiomed’s shareholders at the time," according to the lawsuit.
The federal watchdog agency followed up with another warning in June 2011, saying a review of Abiomed’s advertising, product labels and website "indicate that Abiomed is making claims that we stated were inappropriate in a January 28, 2010, letter to your firm" about its Impella Recover LP 2.5 cardiac assist device.
"These claims represent a major modification to both the intended use and the indications for use of the device," according to the letter.
Abiomed spokeswoman Aimee Maillet at the time told MassDevice.com that the FDA’s letter addressed promotional materials the company used in 2010 and has since dropped.
"We are working with the FDA to address the issues, but have since ceased the specific promotional items from 2010," Maillet wrote in an email. "We are working with the FDA to ensure all of our promotional materials comply with the agency moving forward."
But earlier this month Abiomed revealed that the U.S. Justice Dept. opened a probe into its Impella 2.5 marketing, sending shares down more than 30% in a single day.
"As a direct and proximate result of defendants’ false and misleading statements and omissions of material facts, the company’s stock value has dropped dramatically and plaintiffs and other class members have suffered significant damages," according to the shareholders’ lawsuit.
Abiomed said it "believes that the allegations are without merit," according to a press release.
"Abiomed plans to vigorously defend itself against the allegations. Abiomed’s policy is not to discuss pending litigation," according to the release.
Abiomed won 510(k) clearance for the Impella 2.5, which is inserted via catheter into the heart to help it function, "for ‘partial circulatory support using an extracorporeal bypass control unit, for periods up to 6 hours. It is also intended to be used to provide partial circulatory support (for periods up to 6 hours) during procedures not requiring cardiopulmonary bypass. The Impella Recover LP 2.5 also provides pressure measurements which are useful in determining intravascular pressure,’" according to the 2nd warning letter sent last year.
But the company allegedly touted the device for uses outside that clearance, specifically for comparing the Impella to treatment with an intra-aortic balloon pump, which the agency said it warned Abiomed not to do in the January letter.
The FDA also chastised the company for claiming that the device helps improve hemodynamics and cardiac output in heart attack patients, thereby reducing mortality rates.
"Both of these indications would need to be supported with an appropriately designed clinical study performed under an Investigational Device Exemption," the agency wrote.