Penumbra, Inc. Securities Fraud Class Action

Case Background:

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 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” for Penumbra, a key source of new revenues.

In mid-2020, however, concerns about the Jet 7 Xtra Flex’s safety began to emerge. On July 27, 2020, Penumbra issued a notice to its U.S. customers and practitioners acknowledging reported instances in which the distal tip of the catheter broke or expanded, carrying a risk of injury or death. The notice warned physicians to exercise caution with Penumbra’s Jet 7 Xtra Flex, and maintained that Penumbra was “committed to product safety and performance” and was “continuing to monitor and investigate these adverse event reports.”  Despite the foregoing, the defendants repeatedly assured investors during the Class Period that the Jet 7 Xtra Flex was “absolutely safe” and “not a product that has any possibility of needing to be recalled,” as Penumbra was taking all necessary steps to protect patients.

The Class Period commences on August 3, 2020, when Penumbra announced its financial results for the second quarter of 2020. On a conference call with analysts conducted the same day, Adam Elsesser, Penumbra’s Chief Executive Officer, was asked about the Jet 7 Xtra Flex MAX, a delivery device that utilizes the Jet 7 Xtra Flex catheter, and responded that Penumbra was “doing some of the work we do with every new product that is cleared to evaluate and make sure it’s all good” and boasted that the device “is exactly what we hoped it would be.”

The truth regarding Jet 7 Xtra Flex’s safety was revealed to the market through a series of disclosures.  First, on September 14, 2020, the Foundation for Financial Journalism (“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 an FDA database that occurred after a surgeon injected an iodine contrast dye into the Jet 7 Xtra Flex.  Following this news, 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.

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 stock to fall from $254.71 on November 23, 2020 to $224.12 on November 25, 2020, a decline of about 12%. Finally on December 15, 2020, after the market closed, 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.  Following this news, Penumbra’s stock price fell by 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.

The complaint alleges that, throughout the Class Period, the defendants failed to disclose to investors that: (1) the Jet 7 Xtra Flex had known design defects that made it unsafe for its normal use; (2) 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) the Jet 7 Xtra Flex was likely to be recalled due to its safety issues; and (4) as a result, Penumbra’s public statements were materially false and misleading at all relevant times.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453; or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.