The troubled Durata defibrillator lead manufactured by St. Jude Medical Inc. is the subject of a growing number of lawsuits by investors claiming the company downplayed concerns by the Food and Drug Administration over the manufacturing process.
At least three securities lawsuits have been filed in U.S. District Court against St. Jude, and several attorneys and law firms can be found online soliciting clients for additional class-action litigation.
The company's response is standard. "We believe the lawsuits are without merit, and we will vigorously defend against the allegations," said a statement provided by St. Jude spokeswoman Amy Jo Meyer.
Lead wires such as the Durata connect a defibrillator to the heart. The Durata replaced an earlier St. Jude lead called the Riata that also had reliability issues and was recalled in 2011 because the wires were said to break through the insulation. A recent study paid for by rival Medtronic said Durata's insulation could begin to break down after six years in the bloodstream.
The first Durata-related lawsuit was filed earlier this month by a single investor. A second lawsuit was filed on behalf of the Norfolk County [Massachusetts] Retirement System and a third investor suit was filed earlier this week.
The allegations in each are similar. They assert that in a conference call with stock analysts on Oct. 17, St. Jude downplayed an anticipated FDA report regarding manufacturing shortcomings in its California production facility where the Durata was produced.
The FDA report, released publicly on Nov. 20, raised concerns about flaws in testing and oversight in the inspection process at the plant.
On the next trading day, St. Jude's stock declined $4.34 a share, or 12 percent, to $31.37 on volume of 26 million shares compared with normal trading volume of 3.2 million shares.
