St. Jude Medical (NYSE:STJ) said the Durata lead failure that slashed its share price 2 weeks ago was due to external failure, rather than the "inside-out" abrasion found with its recalled Riata leads.
STJ shares closed down 6% after the report of a single incident of wire externalization in 1 of its next-generation Durata defibrillator leads – the same issue the launched the high-profile recall of the Riata leads.
A voluntary physician report submitted to the FDA’s adverse events database said that the Durata’s lead wires wore through their insulation and became exposed. The leads were explanted from the patient.
The defect was discovered during an examination and later confirmed after explantation, according to the report. St. Jude said it sent a senior lead engineer to the Florida hospital where the incident occurred to examine the Durata lead.
"Through our investigation, we have identified that the patient had an additional defibrillation lead that had been capped (and was no longer being used)," according to a press release. "Based upon physical examination, our analysis indicates the damage to the Durata lead is consistent with external abrasion from contact with a calcified, or hardened, heart valve or possibly from lead-to-lead contact. External abrasion is a known cause of failure across all cardiac leads in the industry, which is different from the inside-out abrasion seen with externalized conductors observed in some Riata leads."
STJ shares, which closed down 6.0% at $36.24 June 12, the day the news broke, gained 2.6% to close at $37.90 Friday and were up another 0.4% today, hitting $38.09 as of about 10:30 a.m.
The Street’s knee-jerk reaction to the initial Durata failure report highlights investors’ sensitivities to St. Jude lead problems in light of the ongoing recall of the Durata’s predecessor Riata leads, Canaccord Genuity analyst Jason Mills told Reuters.
The Riata affair began last September with a small Irish study reporting that revision surgeries for the Riata lead were higher than previously reported. A month later, Starks took to the airwaves to inveigh against arch-rival Medtronic (NYSE:MDT) and its alleged attempts to prejudice the market against St. Jude.
Little more than a month after Starks’ diatribe, however, the company was forced to concede that the Riata revision rates were higher than previously reported, and in December 2010 St. Jude yanked the Riata leads off the market, a move the FDA slapped with Class I recall status.
Then, with the online publication in the Heart Rhythm Society’s journal of a study by a prominent cardiologist linking Riata with 22 deaths, things began to get interesting. By late March, St. Jude was disputing the findings of the study, which was conducted by Dr. Robert Hauser. On Friday, April 6, the company asked that the journal retract the story (a request that was summarily rebuffed), and over the course of the following weekend Starks reiterated his accusation that cross-town rival Medtronic was behind a "whisper campaign" against St. Jude.
Medtronic then released its own analysis confirming Hauser’s count of the number of deaths attributable to its own Quattro leads, engendering a swift and unusual response from St. Jude, which published its own tally of the Quattro deaths.
"I can’t recall seeing a more contentious and open dispute between medical device companies in my 19 years working in this field," Ohio cardiologist Dr. Edward Schloss, director of cardiac electrophysiology at the Christ Hospital in Cincinnati, told MassDevice.com.
St. Jude has been busy ever since calming fears about the next-generation Durata leads. The company hosted several events at the Heart Rhythm Society meeting in Boston last month, distancing the Durata leads from their troubled forebears.
In a special, highly attended talk entitled "Should we trust Durata?" Dr. Chuck Love told listeners that "Durata is 85% different from Riata," noting that the Durata device has a more robust coating in place of the Riata’s silicone insulation.
