Medtronic (NYSE:MDT) announced today that it received an FDA warning letter after an inspection of its Diabetes Business.
The company received the letter on Dec. 9 for its Northridge, California facility — the Medtronic Diabetes Business headquarters — following an inspection that concluded in July 2021.
FDA’s warning letter to Medtronic focused on the inadequacy of specific medical device quality system requirements at the Northridge facility, with the areas of risk assessment, corrective and preventive action, complaint handling, device recalls and the reporting of adverse events all under scrutiny.
Shares of MDT were down more than 6% at $104.29 per share in morning trading today on the back of the news of the FDA letter. The company’s shares finished the day down 6% in total at $104.94 per share. Rivals in the diabetes space closed the day with heightened prices, including Insulet (up 5.4% at $269 per share), Dexcom (up 1.1% at $541.29 per share) and most notably Tandem Diabetes Care, which shot up 10.5% at $144.34 per share.
According to a Medtronic news release, the inspection was related to recalls of its MiniMed 600 series insulin infusion pump and a remote controller device for MiniMed 508 and Paradigm pumps. Medtronic first warned of safety problems with the MiniMed 600 pumps in November 2019. The recall initially involved 322,005 MiniMed 630G and MiniMed 670G pumps in the U.S.
In October, the company expanded the Class I recall to replace all MiniMed 600 series insulin pumps that contain the clear container ring, bringing the total tally of devices recalled in the U.S. to 463,464.
Medtronic said it will apply resources from across the company and utilize external experts as it implements a range of corrective actions and process improvements related to the FDA letter. The company is not recommending any action by patients or their healthcare providers as a result of the letter.
“We are committed to fully resolving all observations as effectively and quickly as possible. Nothing is more important to us than providing the highest quality products to people living with diabetes,” EVP & President of Medtronic’s Diabetes Business Sean Salmon said in the release. “Every day, millions of people living with diabetes around the world rely on the innovations we deliver, and Medtronic remains deeply committed to ensuring their safety and well-being.”
Truist analysts David Rescott and Samuel Brodovsky wrote that Medtronic’s Diabetes business “has been a drag” as the company has lost share in the segment with gaps in its portfolio, including the U.S. launch of the MiniMed 780G insulin pumps and fingerstick-free Guardian Sensor 4 (currently under FDA review). Those launches were set to aid the segment in turning around its losses, but potential delays would put pressure on that effort.
“While we were disappointed by the news today, we are optimistic in the company’s ability to drive operating leverage under the existing environment, though [we] think investors will need to see execution across the portfolio & pipeline before shares recover,” the analysts wrote.