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Why Abiomed Stock Is Falling Today

By Brian Feroldi - Nov 18, 2019 at 12:52PM

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Shares slump after a pair of clinical studies raises new questions about the safety and cost effectiveness of Abiomed's family of heart pumps. Here are the must-know details.

What happened

Shares of Abiomed ( ABMD 4.10% ) dropped about 11% as of 12:39 p.m. EST on Monday. The double-digit plunge is traceable to a pair of clinical studies that were presented over the weekend that raise new questions about the usefulness of the company's Impella heart pumps.

So what

Two research teams presented data over the weekend at the American Heart Association's annual meeting in Philadelphia that questioned the safety and effectiveness of Abiomed's Impella heart pumps.

The studies found that Impella is "associated with an increased risk of death, bleeding, and stroke among patients undergoing angioplasty to reopen clogged arteries."

Physician looking concerned.

Image source: Getty Images.

Specifically, the report showed that about 45% of patients who suffered from cardiogenic shock died during procedures that involved Abiomed's Impella. That was much higher than the 34% of patients whose blood flow was supported by an older technology called an intra-aortic balloon.

The reports also showed that 31% of cardiogenic shock patients treated with Impella had major bleeding, compared with just 16% for patients treated with the balloon.

The researchers also noted that the device ads up to $15,000 to the average hospital price.

Dr. Amit Amin, an assistant professor at the Washington University School of Medicine in St. Louis and the lead researcher for one of the teams, stated, "The associated clinical outcomes did not show any substantial improvement, while costs of hospitalization rose."

Abiomed responded to the criticism by stating that "Impella's safety has been proven by repeated clinical trials, both those required for FDA approval as well as post-approval follow-up trials."

Abiomed's chief medical officer, Dr. Seth Bilazarian, countered by stating, "We demonstrated Impella's safety and efficacy to the FDA using data gained through extensive research."

Traders are knocking down the stock in response to the potential fallout from the damaging reports.

Now what

It's understandable that shares are falling in response to this news. If Impella truly isn't as clinically effective as the intra-aortic balloon, then Abiomed's revenue and profit will likely fall substantially.

However, it's important to note that Dr. Amin warned in the report that "these results were not from clinical trials and therefore could have been influenced by other factors."

As an example, it's possible that doctors used the Impella device on a much sicker patient population that had a very poor prognosis. Dr. Amin admitted that it is "very hard to suss out" whether this factor could have impacted the data.

This report also flies in the face of data that was published from a clinical trial that showed that using Impella reduced serious heart complications by 29% when compared to the intra-aortic balloon pump.

Another study showed that using Impella led to a 22-percentage-point increase in the survival rate among patients suffering from cardiogenic shock.

For investors, it's hard to know what kind of impact this report could have on Abiomed's sales. The company has already been in damage-control mode from a confusing FDA letter that was sent to providers earlier in the year. These studies certainly will only make matters worse.

This report showcases why it can be hard to invest in healthcare stocks like Abiomed. With patients' lives on the line, the medical community needs to constantly ask hard questions about whether new technology is worth it.

Abiomed clearly still has plenty of work left to do to convince skeptics in the medical community that its technology truly is safe and effective.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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