Lead Plaintiff Deadline: 03/15/2021
SUMMARY OF CASE:
A securities class action has been filed against Penumbra, Inc. (PEN) on behalf of all persons or entities who purchased or otherwise acquired Penumbra common stock between August 3, 2020 through December 15, 2020. This case has been filed in the USDC – N.D.CA.
Penumbra is a global healthcare company that develops, manufactures and sells innovative medical devices for patients suffering from stroke and other vascular and neurovascular diseases. Until recently, one of the Company’s flagship products was the “Jet 7 Xtra Flex,” an aspiration catheter designed to be inserted into an affected artery, navigated to a blood clot, and used to suck the clot out of the patient’s body. In mid-2020, concerns about the Jet 7 Xtra Flex’s safety began to emerge. Despite these concerns, Penumbra repeatedly assured investors during the Class Period that the Jet 7 Xtra Flex was “absolutely safe,” “exactly what we hoped it would be,” and “not a product that has any possibility of needing to be recalled.” The Company further assured investors that it was taking all necessary steps to protect patients.
As alleged in the Class Action Complaint, these statements and other statements that Defendants made during the Class Period were materially false and misleading in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5. Specifically, the Complaint alleges that Defendants made 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. Among other things, 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 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.
The truth emerged through a series of disclosures that caused Penumbra’s stock price to fall and investors to suffer substantial losses. On September 14, 2020, the Foundation for Financial Journalism, an independent non-profit news outlet, published an article raising serious issues about the Jet 7 Xtra Flex’s safety profile, citing twelve deaths reported to the FDA that occurred after a surgeon injected an iodine contrast dye into the Jet 7 Xtra Flex, and claiming that warnings against using the product with contrast dye and non-Penumbra products did little to address the Jet 7 Xtra Flex’s safety issues. In response, Penumbra’s stock price fell by nearly 3%, from $199.43 per share on September 13, 2020 to $193.66 per share on September 14, 2020, a decline of $5.77 per share.
On November 9, 2020, the securities research firm Quintessential Capital Management (“QCM”) released a presentation concerning Penumbra and the safety of the Jet 7 Xtra Flex. Titled “Penumbra and Its Killer Catheter,” QCM’s report detailed injuries and deaths resulting from product malfunctions, and accused Penumbra of a “seemingly blatant disregard for patients’ lives” and essentially “blaming doctors” for the devices’ design defects.
On November 23, 2020, an article was published in the Journal of NeuroInterventional Surgery presenting the cases of three patients who suffered as a result of Jet 7 Xtra Flex device malfunctions, including two fatalities. As this report became more widely circulated, it caused Penumbra stock to fall from $254.71 on November 23, 2020, to $224.12 on November 25, 2020, a decline of about 12%.
On December 8, 2020, QCM issued another report reiterating its prior assertions and disclosing additional facts about the Jet 7 Xtra Flex’s safety issues. In particular, QCM’s second report questioned the validity and independence of the scientific research supporting the Jet 7 Xtra Flex’s safety, and accusing the Company of using a fake author to publish studies regarding the purported safety and efficacy of its products. In response, Penumbra’s stock price declined by 9%, falling from $224.02 per share on December 7, 2020 to $204.07 per share on December 8, 2020, a decline of $19.95 per share.
Finally, on December 15, 2020, after the market closed, the Company issued a press release announcing that it was issuing an “urgent” and “voluntary” recall of the Jet 7 Xtra Flex because the catheter “may become susceptible to distal tip damage during use” which could lead to injury or death. In response, Penumbra’s stock price fell 7%, from $188.82 per share on December 15, 2020 to $174.98 per share on December 16, 2020, a decline of $13.84 per share.