St. Jude Medical shares slide 14 pct on FDA report
Nov 21 (Reuters) - Shares of St. Jude Medical tumbled more than 14 percent on Wednesday as an inspection report from U.S. health regulators raised new safety concerns about one of the company's leads that are used with implantable defibrillators, analysts said on Wednesday.
The U.S. Food and Drug Administration released an inspection report saying that design verification activities in one of St. Jude's leads, called Durata, were inadequate. Leads are wires that connect an implantable heart defibrillator to the heart.
St. Jude shares were down $5.08 to $30.63 in midday trading on the New York Stock Exchange.
An earlier generation of Durata, called Riata, was recalled last year because the insulation wore away, exposing wire cables, and there have been concerns that Durata may have the same issues, said Goldman Sachs analyst David Roman.
"The FDA announcement is likely to put further pressure on St. Jude's US Implantable Cardioverter Defibrillator business," Roman said in a research note.
"Should the company's entire U.S. ICD (implantable cardioverter defibrillators) business be implicated, we see the total revenue at risk at $200 million. Further, there will likely be substantial costs associated with remediation. In similar scenarios, it is not uncommon to see remediation costs exceed $100 million," Roman added.
St. Jude declined to comment, saying its communications with regulatory agencies are confidential.
During its Oct. 17 earnings call with analysts, St. Jude management had raised the possibility that it may get a warning letter from the FDA.
"The new disclosures add a new element of risk given that the FDA highlighted quality control processes as a concern," Roman said. (Reporting By Debra Sherman; Editing by Tim Dobbyn)
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