The company currently is facing more than two dozen lawsuits that contend the company did not provide adequate training to surgeons using the system (the company won the first two suits). Several adverse events have been reported to the U.S. Food and Drug Administration (FDA) that describe the system failing mid-surgery. On July 18, Intuitive disclosed that an FDA warning letter had been received and cut its 2013 revenue forecast by more than half, saying sales growth may range from unchanged to 7 percent.
As Intuitive executives apparently expected, made evident by the change in forecast, the FDA warning letter caused company shares to plummet. Intuitive Surgical shares dropped $50.47, or 12 percent, to $371 in late trading. That put the stock on pace for an annual low. The shares rose $5.93 to $421.47 during the day.
Company officials said the warning relates to two problems the FDA observed during an inspection performed during the second quarter, and that the agency has asked it to take additional steps to resolve those concerns. According to officials, Intuitive has already begun the process for addressing the FDA’s concerns.
The company also said it expects continued pressure on U.S. sales of its da Vinci surgical system for the rest of 2013. It disclosed that sales of the system fell during the quarter because of a decline in the U.S. market.
In a conference call last week, Gary S. Guthart, Ph.D., president and CEO of Intuitive, addressed the content of the warning letter. He said the FDA wanted more insight into the procedure by which recalls are classified at the company; and additional information on user input and design of a “particular product” that Guthart declined to name. He also said that the agency intends to return to Intuitive to follow up on recall classification processes.