Penumbra Catheter Problems Results in Class Action Lawsuit After Jet 7 Xtra Flex Recall
The makers of Penumbra Jet 7 catheters face a class action lawsuit brought by investors, who allege that the manufacturer lied about the value of its products and failed to warn about known problems, which resulted in a massive catheter recall last year.
The FDA issued a letter to healthcare providers warning about problems with Penumbra Jet 7 Xtra Flex catheters in December 2020, following more than 200 adverse event reports and at least 14 deaths that resulted from catastrophic failures.
Among problems reported were cases of vessel damage, hemorrhage, cerebral infarction and other complications after a variety of catheter problems, including ballooning, expansion, rupture or a complete separation that exposed internal support coils near the distal tip region of the Penumbra Jet 7 Xtra Flex.
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In a class action complaint (PDF) filed on January 15, Charles Williams indicates Penumbra, Inc., the company’s CEO Adam Elsesser and the Executive Vice President and the head of global marketing, Gita Berry, should be held liable for violations of federal securities laws.
Williams seeks class action status after the Penumbra catheter recall, to pursue damages on behalf of himself and other investors who purchased common stock between August 3, 2020 and December 15, 2020.
The Jet 7 Xtra Flex catheter was one of Penumbra’s “flagship” products, which was designed to be inserted into an affected artery, navigated to a blood clot and used to suck the clot out of a patient’s body. However, by mid 2020, Williams indicates that Penumbra knew about problems with the catheter, after a distributor in Japan sent a warning to hospitals about catheter failures, and stopped selling the product in the country.
Approximately one month later, on July 27, 2020, Penumbra sent a warning to physicians and other healthcare providers about incidents where the distal tip broke or expanded, which put patients at risk of serious injury or death. However, in a financial report issued in August, the company told investors that the catheter’s performance was “exactly what we hoped it would be.”
“Throughout the Class Period, Defendants continued to make false and/or misleading statements and/or failed to disclose material adverse facts about the Jet 7 Xtra Flex’s safety, as well as the Company’s business, operations, and prospects,” the lawsuit states. “Specifically, Defendants failed to disclose to investors: (1) that the Jet 7 Xtra Flex had known design defects that made it unsafe for its normal use; (2) that Penumbra did not adequately address the risk of the Jet 7 Xtra Flex causing serious injury and deaths, which had in fact already occurred; (3) that the Jet 7 Xtra Flex was likely to be recalled due to its safety issues; and (4) as a result, Penumbra’s public statements as set forth above were materially false and misleading at all relevant times.”
Following the December Penumbra catheter recall, the manufacturer’s stock price fell about nine percent, from $224.02 per share to $204.07 per share overnight, which was a drop of $19.95 per share.
The Penumbra catheter class action lawsuit seeks to pursue damages on behalf of all investors who purchased common stock during after June 2020, which it says was traded at artificially high prices due to the company’s misrepresentations. The lawsuit presents claims that Penumbra and its executive officers violated the Exchange Act and seeks compensatory damages.
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