Insulet's OmniPod--Courtesy of Insulet
Insulet ($PODD) said its long-troubled Billerica, MA manufacturing plant is back on track on an earnings call earlier this month--just before the FDA offered details on the OmniPod recalls that were caused by inadequate standards compliance. In July, the company issued a voluntary recall of more than 400,000 OmniPod Insulin Management Systems, which are wearable insulin pumps.
The recall involved 12 product lots in the U.S. and 7 in Europe that were distributed from December 2013 through March 2015. In March, FDA conducted an inspection of the Billerica facilities for which Insulet received a warning letter from the agency.
On a mid-August earnings call, the company said the FDA had reviewed its corrective action and response and identified them as adequate. Insulet has implemented higher standards in its quality control procedures and it doesn't think much of the affected product remains with customers.
"While the product in these lots were manufactured in compliance with our standard operating procedures and met the final acceptance criteria in place at the time, we have since implemented procedures that have set the product quality bar even higher," Insulet President and CEO Patrick Sullivan said on the call.
"We initiated this product replacement proactively and we believe the vast majority of the product is no longer in the field," he added. Sullivan said that he didn't expect to see any adverse impact to the company's ongoing business and operations. In July, to help prevent future quality control issues, Insulet added Michael Spears as VP of Quality, Regulatory and Clinical Affairs. He previously held a similar position at Covidien.
The FDA said the affected OmniPod lots resulted in 90 reports of problems, of which 13 required medical intervention. But no serious injuries or deaths have been reported related to the recalled products.
This recall plagued the launch of the most recent version of the OmniPod. In the next few months, Insulet expects to submit to the FDA for an approval of its next-generation Personal Diabetes Manager (PDM), which controls the OmniPod. It anticipates a 2016 launch for the next-gen PDM.
Insulet is down by 37% in 2015 so far with a share price that has dipped to just below $30 and a market cap of almost $1.7 billion.
At least one analyst is optimistic about the prospects for the wearable insulin pump OmniPod. On the August earnings call, Leerink analyst Danielle Antalffy raised her price target to $44 from $40 a share.
She expects $309 million in 2015 sales, with $393 million in 2016. She expects that Insulet won't reach profitability until 2017, as it ramps up its R&D spending and sales force expansion. On the recent earnings call, Insulet reaffirmed its 2015 revenue guidance of $305 million to $320 million.
