High-flying medical device maker Inamed's
Problems started early this month when Dr. Thomas Whalen, chairman of the advisory panel that approved silicone breast implants, wrote the Food and Drug Administration (FDA) commissioner saying he had "very strong reservations" about the approval. He asked the FDA to disregard the panel's vote.
"Long-term safety, the concern that prompted the removal from the market eleven years ago, was clearly not demonstrated, and to approve this device poses threats to women that are clearly unknown," Dr. Whalen wrote.
The disclosure of this letter earlier this month sent Inamed stock down $10.06 in one day to $77.79. Since then, the stock has recovered somewhat and currently trades at $81.00 a share.
On November 17, Dr. Sidney Wolfe, a doctor who attended the advisory panel meeting, sent a letter to the commissioner of the FDA asking for an FDA review of a voting member of the advisory panel. Dr. Wolfe asked the FDA not to approve the implants until his concerns were investigated. This development, however, didn't have a noticeable impact on the stock.
It's been just over a month since I wrote about the FDA advisory panel's 9-to-6 vote approving Inamed's silicone breast implant. At that time, I said, "Then there's always the risk the FDA will not green-light its advisory panel's recommendation. High-profile women's groups and others are still trying to prevent approval." Now you can add a couple more items to the list of approval risks.
Prior to 1992, when silicone implants were outlawed, they were manufactured by Baxter
At 40 times trailing earnings and a current market capitalization of $1.9 billion, Inamed isn't cheap. A full 55% of Inamed's sales come from saline breast implants. With silicone gel implants outselling saline 9-to-1 in Europe, silicone was thought to be the gel that would send Inamed higher. Now that that future's in doubt, the upside looks limited -- especially since the stock is up 260% year-to-date.
You can e-mail W.D. Crotty at firstname.lastname@example.org. He'll be hanging around the Inamed discussion board to talk about the fate of Inamed's silicone gel implants and other issues. For a 30-day free trial to the discussion boards, click here.