By Mary Vanac
After more than a year of review, the Food & Drug Administration cleared Steris Corp.’s (NYSE:STE) System 1E next-generation liquid chemical sterilizing system.
The Mentor, Ohio-based maker of health and life sciences technologies hopes to deliver the first System 1Es by the quarter ending Sept. 30. Until then, it will continue working with the FDA to resolve the “violating device” status of its first-generation System 1, which Steris no longer makes but is supporting with supplies, parts and service during a transition period yet to be negotiated with the federal watchdog. In early February, the FDA changed its December recommendation, suggesting that hospitals and other health care facilities replace their System 1s with alternatives within 18 months.
The market approval of the new device removes at least some of the financial uncertainty posed by the nearly two-year disagreement over System 1.
“We are pleased that the agency cleared System 1E for marketing,” president and CEO Walt Rosebrough said in prepared remarks (PDF). “This is good news for our customers, and we look forward to working with them as they continue their transition to acceptable alternative technologies. We remain committed to the outstanding level of service that our customers have come to expect from Steris.”
The System 1E clearance is good news for Steris investors, too. The FDA issued a Dec. 3 safety alert warning that the company had changed System 1 so much since its 1988 launch that the regulator could no longer call it an approved device. Since then, Steris shares have lost 22 percent, bottoming at $26.08 per share Feb. 1 before rebounding to $33.96 April 6.
In early February, Steris reported higher operating profits and a modest increase in revenue for its fiscal third quarter. But the company also said future profits were unclear because it had been unable to resolve the FDA’s problems with System 1, whose supplies, parts and service typically account for 10 percent of the company’s revenues each year.
Like its predecessor, the newly approved System 1E is used by healthcare facilities to sterilize medical instruments, such as endoscopes, which cannot be sterilized with heat.
