Analysts: St. Jude at risk for Durata recall

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Growing concern over St. Jude Medical's Durata ICD leads have two analysts worried the devices might get recalled--courtesy of St. Jude Medical

St. Jude Medical ($STJ) has pulled out all the stops to distance its Durata defibrillator leads from their off-the-market predecessors, Riata, but growing concerns over their manufacturing and longevity have led two analysts to speculate that another recall may not be far off.

This week's warning letter over the plant where Durata is manufactured did little to quell fears of a repeat recall, and Citi analyst Matthew Dodds told the Associated Press it's the "next step in a process that looks ominous for St. Jude." Dodds figures a Durata recall is likely this year and is advising investors away from the devicemaker.

Cowen & Co. analyst Josh Jennings was less bullish, but he told the AP there's reason for worry that the FDA will eventually look down on Durata as not substantially safer than its forebear, and the warning letter certainly doesn't help.

St. Jude is no stranger to analyst alarm and shareholder angst, but the mounting woe over Durata goes beyond the quotidian problems of a large devicemaker. In the warning letter, the FDA says it won't approve PMAs or export requests for devices from the Sylmar, CA, facility until St. Jude rectifies the problems cited, and the company is facing a lawsuit from shareholders who say St. Jude knowingly withheld information when it disclosed the FDA's scolding without mentioning Durata.

On top of all that, a Medtronic-sponsored study found that Durata's polymer insulation--the fix that sets it apart from Riata--may not be all it's cracked up to be, saying the polymer could break up in the body within 6 years. St. Jude is defending itself, however, questioning the study's science and pointing to a 5-year survival rate of 98.7% for Durata.

But first things first: St. Jude says it is taking the FDA's warning letter seriously and will address all of the agency's critiques without interrupting customer orders from the California plant.

- read the AP story

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