Resmed (RMD) shares took a pounding on the ASX yesterday after being sold off in the US in the wake of a poor result from a research trial.
The shares tumbled 19% at one stage, and ended off 18.4% at $6.73.
That was after they plunged 15% in the US market’s time.
The company had announced overnight in the US that its SERVE-HF trial of a particular form of sleep therapy for patients who suffer from both heart failure and central sleep apnoea failed to protect those patients from death or complications associated with heart failure.
In fact, the trial found the risk of dying for those patients was slightly higher (10%), compared with the 7.5 % rate for patients who did not receive the so-called adaptive-servo ventilation treatment.
ResMed said it would change the labelling on the device to warn patients of the higher risk.
RMD 1Y – ResMed slumps on heart failure trial result
The news saw brokers switch, cut or slash their ratings of Resmed.
Citi said Resmed was now a sell, but UBS has maintained its ‘buy’ call.
Citi said the research trial results detailed meant the shares are now only worth around $7.67 since it had incorporated research success into its share price outlook for Resmed.
But UBS re-iterated its ‘buy’ call, since the affected product is just 2% of revenues and it had not incorporated research trial success into its view.
Morningstar said Resmed could now be exposed to compensation claims in the US market with potential litigants arguing the trial results cast doubt on all Resmed treatments.
Resmed said yesterday the poor trial result could affect around 2% of overall revenues, but there was no mention (sensibly) of any compensation issues.
Another broker, Wilson HTM analyst. took the unusual step of cutting his recommendation for ResMed by two notches, from buy to sell, bypassing a neutral rating.
In its statement, Resmed tried to put the best complexion on what was a major shock for the company.
“Patient safety is our first and foremost priority. We have alerted and are working with appropriate global regulatory authorities about the safety signal observed in this study,” said Glenn Richards, M.D., ResMed Chief Medical Officer. “The safety signal in SERVE-HF was observed only with the use of ASV therapy in people who have predominant central sleep apnea and symptomatic chronic heart failure with reduced ejection fraction. We are further analyzing the data to understand why this unexpected result was observed in this trial,” Resmed said yesterday.
"ResMed is working with global regulatory authorities to proactively revise the labels and instructions for use for ResMed ASV devices to include a contraindication for people with symptomatic chronic heart failure (with left ventricular ejection fraction, LVEF, less than or equal to 45 percent). The company is also proactively informing healthcare providers, physicians, and patients of the cardiovascular safety signal observed in SERVE-HF.
"The safety signal observed in SERVE-HF was observed only with ASV therapy in patients with moderate to severe predominant central sleep apnea and symptomatic chronic heart failure with reduced ejection fraction. The study did not include people with central sleep apnea in the absence of heart failure. It is also important to note that SERVE-HF did not include any patients with predominant obstructive sleep apnea, and did not include any other treatment modality such as continuous positive airway pressure (CPAP) or auto-adjusting positive airway pressure (APAP).
"SERVE-HF did not meet its primary endpoint, however this study provides valuable, practice-changing guidance on how to best care for people with chronic heart failure," said Prof. Martin Cowie, M.D., the co-principal investigator of the study and Professor of Cardiology at Imperial College, London. "SERVE-HF was a well-designed and executed study and because of it we now know that ASV therapy should not be used to treat central sleep apnea in people with symptomatic chronic heart failure with reduced ejection fraction.”
