Penumbra Shares Tumble on Catheter Recall

The FDA says it received over 200 reports associated with Penumbra's catheter, including 'deaths, serious injuries, and malfunctions.'
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Penumbra  (PEN) - Get Report shares slumped Wednesday after the medical device maker said it is recalling its specialized catheter that was linked to the deaths of several stroke patients.

Shares of the Alameda, California-based company were down 11.03% to $169.56 on Wednesday morning.

Penumbra said it is recalling the JET 7 Reperfusion Catheter Xtra Flex "because the catheter may become susceptible to distal tip damage during use." 

Distal tip damage in conjunction with pressurization or contrast injection may result in potential vessel damage, and subsequent patient injury or death, according to the company.

"All users should stop using this device, and facilities should remove these devices from inventory, " the U.S. Food & Drug Administration said in a letter to health care providers alerting them to the recall. 

The FDA said it had received over 200 medical device reports associated with the JET 7 Xtra Flex catheter, including deaths, serious injuries and malfunctions. 

Twenty of the reports, the FDA said, "describe 14 unique patient deaths, which include reports from different reporting sources for a single adverse event."

Other reports describe serious patient injury such as vessel damage, hemorrhage and cerebral infarction, the FDA said.

Device failures include ballooning, expansion, rupture, breakage or complete separation, and exposure of internal support coils near the distal tip region of the catheter, according to the FDA.

Several analysts have subsequently cut their price targets for Penumbra shares, including Citi analyst Joanne Wuensch, who lowered her price target to $255 from $270. 

Wuensch, who keeps a buy rating on the stock, said in an investors note that the "worst case scenario just happened, which should provide a clearing event" for Penumbra, according to the Fly.

Wells Fargo analyst Larry Biegelsen cut his price target on Penumbra to $215 from $265 while keeping an overweight rating on the shares.

Earlier this month, short-seller Quintessential Capital Management said the scientific literature produced by the medical-device maker appeared to be authored by a "fake character."

"This fraudulent character appears to have been fabricated by management in a reckless attempt to hide its involvement with critical research produced with significant undisclosed conflict of interest,” the report says.

Penumbra told CNBC that the claims made in the report were "baseless."