Updated from Jan. 26
shares were getting roughed up Friday, a day after the company said regulators sent it a warning letter related to its quality-control measures.
With about an hour left in the trading day, the stock was down $1.55, or 6.7%, to $21.60. Volume was four times its daily average for the last three months.
Also potentially weighing on the shares was word from
, the device maker Boston's set to acquire, that its quarterly results fell below Wall Street's estimates.
The Natick, Mass., company said after the close of trading Thursday that it received two notices from U.S. regulators, one of which was a warning letter regarding the "procedures, processes and timeliness" of its corporate quality-management system.
In general, the warning letter says that recent Food and Drug Administration inspections at three of its facilities "each revealed serious regulatory problems involving your medical devices." The letter goes on to tell Boston's management that a corrective-action plan relating to three prior warning letters issued in May and August of last year was inadequate.
The good news for Boston is that the second letter from the FDA said an examination of the manufacturing practices at its Galway, Ireland, facility didn't uncover any problems.
As for the warning letter, it "expresses concerns about the company's quality systems at six facilities, as well as recent recalls, rather than any specific product performance issues," Boston Scientific said. The company added that the warning letter doesn't prevent the continued distribution of products referenced by the agency, including the Taxus system.
just last month, Guidant received a follow-up warning letter from the FDA saying its St. Paul, Minn., plant failed to meet quality standards. Guidant, of course, has had an entirely separate set of problems, having been stung by a series of recalls in the second half of last year that covered thousands of the company's heart devices.
The FDA letter to Boston, however, focuses on issues related to the review, analysis and reporting of product complaints. The FDA doesn't plan to advise hospitals to discontinue using the products mentioned in the letter, Boston said.
A copy of the letter is available on the FDA's Web site, and it follows three previous warnings to Boston regarding "the failure of your organization to have an adequate quality-management system."
"Each of these warning letters identified serious, systemic problems with your overall corporate quality-management systems," the FDA's most recent letter stated. The agency requested that Boston Scientific contact its New England District Office to schedule a prompt meeting, saying "it is necessary to take action on this matter now."
Boston said it plans to meet with the FDA next week to discuss the issues raised in the warning letter.
"Although we are pleased with the result of the inspection of our largest plant, we have clearly not done enough to resolve the issues raised by the FDA last year," said Jim Tobin, president and chief executive of Boston Scientific. "We are confident we have addressed many of these issues, but others have not yet been fully resolved. We will work closely with the FDA to resolve these outstanding issues, and we believe we are on track to do so promptly."
Boston won a duel with
Johnson & Johnson
for the right to merge with Indianapolis-based Guidant, and will buy the company for around $27 billion, or $80 a share.