NEW YORK (TheStreet) -- Shares of Sunshine Heart (SSH) plummeted 25.98% to $3.96 in morning trading today after the early-stage medical device company temporarily suspended enrollment for a study of its signature C-Pulse system.
The Eden Prairie, MN-based company said it will be taking a "temporary pause" from enrollment in accordance with the study protocol which stipulates: if "more than three of the first twenty subjects pass away for any reason, including non-device related deaths, the company will work with the FDA to discuss a plan to resume enrollment."
To date, of the four reported patient deaths, two have been adjudicated by an independent Clinical Events Committee (CEC) as being non-device related, the company noted.
The FDA has responded to Sunshine Heart's notification and has advised the company to file an IDE supplement that discusses the reasons for the temporary study suspension and a plan for study resumption. A supplement carries up to a 30-day review period by the FDA and the company expects to submit the document by March 16.
"We are confident this matter will be resolved in a very short timeframe. While the current data suggest these incidents are non-device related, we have decided that in the absolute interest of patient safety, having a temporary pause in enrollment is the right course of action while we work with the FDA to discuss the findings. We remain excited by the increasing number of patients who are being presented for study review and are pleased that the screening process for enrollment will continue while we resolve this matter," CEO Dave Rosa said.
The U.S. pivotal study is a prospective, randomized, multi-center, controlled study evaluating the safety and efficacy of the C-Pulse system for the treatment of NYHA Class III and ambulatory Class IV heart failure.
Separately, TheStreet Ratings team rates SUNSHINE HEART INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SUNSHINE HEART INC (SSH) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry average. The net income has decreased by 1.6% when compared to the same quarter one year ago, dropping from -$6.04 million to -$6.13 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, SUNSHINE HEART INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$5.44 million or 29.92% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SUNSHINE HEART INC has marginally lower results.
- SSH's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.38%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Despite the stagnant revenue growth, the company outperformed against the industry average of 0.9%. Since the same quarter one year prior, revenues have remained constant. The stagnant revenue growth has not kept the company from increasing earnings per share.
- You can view the full analysis from the report here: SSH Ratings Report