Penumbra, Inc. Class Action Lawsuit
- Company Name
- Penumbra, Inc.
- Stock Symbol
- Class Period
- August 3, 2020 to December 15, 2020
- Northern District of California
The Penumbra, Inc. class action lawsuit charges Penumbra, Inc. and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Penumbra common stock between August 3, 2020 and December 15, 2020, inclusive (the “Class Period”). The Penumbra class action lawsuit was commenced on January 15, 2021 in the Northern District of California and is captioned Williams v. Penumbra, Inc., No. 21-cv-00420.
Penumbra is a global healthcare company that develops, manufactures, and sells medical devices for patients suffering from stroke and other vascular and neurovascular diseases. Until recently, one of Penumbra’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. The Jet 7 Xtra Flex was introduced to the U.S. market in July 2019 and quickly became a “growth driver” and a key source of new revenue for Penumbra.
The Penumbra class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose: (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.
On September 14, 2020, the Foundation for Financial Journalism (the “FFJ”), an independent non-profit news outlet, published an article raising serious questions about the Jet 7 Xtra Flex’s safety profile. The FFJ noted that since being introduced in mid-2019, there were twelve deaths listed in a U.S. Food and Drug Administration (“FDA”) database that occurred after a surgeon injected an iodine contrast dye into the Jet 7 Xtra Flex. The FFJ article also described how Penumbra’s 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.
Then, 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’s stock price to fall approximately 12% from November 23, 2020 to November 25, 2020.
Thereafter, on December 8, 2020, the securities research firm Quintessential Capital Management (“QCM”) issued a report questioning the validity and independence of the scientific research supporting the Jet 7 Xtra Flex’s safety, and accusing Penumbra of using a fake author to publish studies regarding the purported safety and efficacy of its products. In response, Penumbra’s stock price fell an additional 9%.
Finally, on December 15, 2020, Penumbra issued a press release announcing that it was issuing an “urgent” 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. On a conference call held the same day, Penumbra’s CEO acknowledged that the product’s design “ma[de] the catheter susceptible to failure in certain scenarios” and that Penumbra’s “steps to ensure the safe use of the product . . . were not able to fully address the risks.” In response, Penumbra’s stock price fell 7%, further damaging investors.
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