St. Jude Medical (STJ): Heart Device Failure Linked to Two Deaths

Shares of St. Jude Medical, Inc. (STJ) were trading down $2.43 (-3%) to $78.85 per share in Tuesday’s premarket after the company issued a warning early this morning that some of its heart devices were at risk of premature battery depletion, which was linked to two deaths.

St. Jude Medical stock had closed at $81.28 per share, up $0.42 or 0.52% in Monday’s regular trading session.

This likely won't spiral out of control

Minnesota based St. Jude Medical Inc. was founded in 1976 to develop bi-leaflet artificial heart valves originally devised at the University of Minnesota in 1972.
The company then went public in February of 1977 with the company’s first artificial heart valve implanted in a human patient in October of that year.

The company has since become a major transnational medical device company with more than 20 main manufacturing and operations facilities worldwide, marketing its products in over 100 countries in the Americas, Europe and Asia.

The company received a $25 billion bid from Abbott Laboratories (ABT) in April.

The warning by St. Jude, which was released earlier today, said that some of the company’s implanted heart devices carried a risk of early battery depletion, which was linked to two patient deaths and may require the replacement of some of the devices.

The letter noted that this type of problem with the lithium batteries that run the devices was rare and could be detected by patients with battery monitoring tools from their homes.

St. Jude said that from 400,000 devices manufactured through May of last year, the company had found 841 implanted cardioverter defibrillators that had lithium clusters which form after the device sends electricity to the heart.
St. Jude Medical (STJ): Heart Device Failure Linked to Two Deaths
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These lithium clusters cause the battery to deplete prematurely, impeding the device from sending electricity to the heart.

Still, St. Jude is doing damage control

In a letter to physicians, St. Jude Vice President of Quality Control Jeff Fecho stated that, “There have been two deaths that have been associated with the loss of defibrillation therapy as a result of premature battery depletion."

The company’s Chief Medical Officer Mark Carlson said in a statement that, “We encourage any patient with questions about their medical device to contact their doctor,” He added that, “While this risk is very small, we have provided doctors with information so that they can discuss the most appropriate course of action for each individual patient”.

St. Jude advised physicians to immediately replace the devices with damaged batteries, but warned against replacing devices which were operating normally due to the potential complications associated with those procedures.

The company launched a website today as a result of the battery issue, where patients could find out which devices were affected.

The news was first disseminated late Monday by short selling firm Muddy Waters that tweeted a copy of the advisory directed at physicians on the issue. St. Jude has denied allegations by Muddy Waters and research firm MedSec Holding Inc. which are currently under investigation for the claims by the U.S. Food and Drug Administration.

St. Jude denied the allegations and is suing both companies, alleging they disseminated the information to influence the company’s stock price.

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Published on Oct 11, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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