St. Jude Medical (NYSE:STJ) has long asserted that its Durata ICD lead, irrespective of the fact that it is similar in design to the defective Riata leads, is safe for patients.
Now, two Wall Street analysts have taken widely contrasting stances related to Durata and the risk it poses for the Minnesota medical device maker.
In a research note on Friday, as reported by Associated Press, Citi Investment Research analyst Matthew Dodds painted a negative picture.
“We believe the risk of Durata being removed from the market in the next 12 months is much higher than the Street believes,” he wrote.
While Dodds maintained a “sell” rating on St. Jude stock, he lowered his price target to $32 per share from $39.
Meanwhile, on Oct. 29, Morgan Stanley analyst David Lewis downgraded St. Jude to “equal weight” from “overweight,” and also lowered the price target — from $52 to around $42. However, Durata was not a factor that tipped the scale. In fact, Lewis doesn’t consider Durata to be a problem and described the risks as largely having “faded” and not likely to “materialize.”
While Citi’s Dodds is holding a self-admitted contrarian view — note that his price target is $10 lower than what Lewis describes as his “base case” for “$42 — ultimately it may be up to doctors to determine the fate of the Durata.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
At least one prominent cardiologist — Dr. Robert Hauser with the Minneapolis Heart Institute — has previously voiced concern over the Durata and advises other doctors to consider leads from Medtronic and Boston Scientific that have good track records in cardiac procedures.
The U.S. Food and Drug Administration is also keeping a close eye on Durata data. In August, the FDA ordered St. Jude Medical to conduct a three-year postmarketing surveillance study of the leads.
[Photo Credit: FreeDigitalPhotos user Stuart Miles]
