Changes to software failed to satisfy U.S. FDA. Acquisition by Abbott still uncertain.
Alere is voluntarily withdrawing a device that tests the blood of patients who take blood thinners, after reports of inaccurate results. The global withdrawal of the INRatio and InRatio2 PT/INR systems throws Alere another potential curve ball when it comes to its plan to be acquired by Abbott Laboratories.
One patient died and others were hospitalized following such readings by the company's INRatio and InRatio2 PT/INR systems, according to FDA data. A company investigation, performed in collaboration with FDA, indicated software failures within the system, which was designed to detect how long it takes blood to clot.
Alere expects to take a $70 million to $90 million hit over the product withdrawal this year. It reported sales of $16.3 million for the system during the nine months ended September 30, 2015.
Abbott spokesperson Scott Stoffel told Bloomberg that the company is disappointed, but hasn't made any decisions about the proposed purchase of Alere based on news of the product withdrawal.
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Analysts said they expect Alere to file some unspecified financial information with the SEC later this week, Bloomberg reported. Shortly after Abbott announced its plan to acquire Alere for $6 billion, Alere revealed that it had received a grand jury subpoena from U.S. Department of Justice, related to its sales practices for 2013 through 2015 in Asia, Africa, and Latin America, and to matters related to the U.S. Foreign Corrupt Practices Act.
Alere has delayed filing its 2015 financial report with the SEC. Abbott offered to break off the deal, but Alere's directors turned down the offer.
Abbott, which announced in April that it would acquire St. Jude Medical, hasn't said how the INRatio systems' withdrawal announcement may affect its purchase of Alere.
"Abbott is seeking to better understand this withdrawal as part of its ongoing review of financial and other information to ensure that all outstanding issues at Alere are clearly understood, including its delayed financial statements and the criminal grand jury subpoena alleging violations of the Foreign Corrupt Practices Act," Stoffel, the Abbott spokesman, said in a statement to Bloomberg.
Analyst Mark Massaro of Canaccord Genuity in Boston, said Alere's decision to withdraw the device should not affect its acquisition by Abbott, according to Bloomberg. Abbott announced the deal in February, saying that it intended to acquire Alere for $56 in cash per share. In April, Abbott said it would buy St. Jude Medical for $25 billion, and that it had the wherewithal to complete both deals.
Alere's stock price fell to $38.43 on Tuesday, but has since begun to recover.
Alere said in a statement that in December 2014, it told customers that "patients with certain medical conditions should not be tested" with the INRatio system. The company said that it reported its device concerns to FDA, conducted an internal investigation, and changed the software.
Alere also said it reported on the software changes to FDA in late 2015, but said the agency was not satisfied, and advised Alere to withdraw the system.
The patient who died suffered a "major brain bleed" six hours after entering a hospital ICU in February 2016, according to the FDA adverse event report. The patient had had blood tested by a laboratory the day before his death, but did not receive the results that day, and took his normal dosage of the blood-thinner Coumadin that evening.
When the lab results came back with an inr reading of 8.0--indicating that his blood was clotting more slowly than desired--the patient, whose normal reading was 2.0 to 3.0, was advised to not take his Coumadin that evening.
A home health nurse tested the patient's blood on the INRatio system the following day, with result of 1.7, which she questioned, given her observations of the patient. About an hour later, another blood test on "an unspecified point of care monitor" showed a result higher than 8.0. Alere concluded that the monitor "continued to meet all functional testing specifications" and said the nurse's blood-drawing technique might have caused the 1.7 result. The matter is still under investigation, according to FDA.
Nancy Crotti is a contributor to Qmed.
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[Image courtesy of Alere]