Penumbra is a global healthcare company that develops, manufactures and sells innovative medical devices for patients suffering from stroke and other vascular and neurovascular diseases. Until recently, one of the Company’s flagship products was the “Jet 7 Xtra Flex,” an aspiration catheter designed to be inserted into an affected artery, navigated to a blood clot, and used to suck the clot out of the patient’s body. In mid-2020, concerns about the Jet 7 Xtra Flex’s safety began to emerge. Despite these concerns, Penumbra repeatedly assured investors during the Class Period that the Jet 7 Xtra Flex was “absolutely safe,” “exactly what we hoped it would be,” and “not a product that has any possibility of needing to be recalled.” The Company further assured investors that it was taking all necessary steps to protect patients.
As alleged in the Class Action Complaint, these statements and other statements that Defendants made during the Class Period were materially false and misleading in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5. Specifically, the Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose material adverse facts about the Jet 7 Xtra Flex’s safety, as well as the Company’s business, operations, and prospects. Among other things, Defendants failed to disclose to investors: (1) that the Jet 7 Xtra Flex had known design defects that made it unsafe for its normal use; (2) that Penumbra did not adequately address the risk of Jet 7 Xtra Flex causing serious injury and deaths, which had in fact already occurred; (3) that the Jet 7 Xtra Flex was likely to be recalled due to its safety issues; and (4) as a result, Penumbra’s public statements as set forth above were materially false and misleading at all relevant times.
The truth emerged through a series of disclosures that caused Penumbra’s stock price to fall and investors to suffer substantial losses. On December 15, 2020, after the market closed, the Company issued a press release announcing that it was issuing an “urgent” and “voluntary” recall of the Jet 7 Xtra Flex because the catheter “may become susceptible to distal tip damage during use” which could lead to injury or death. In response, Penumbra’s stock price fell 7%, from $188.82 per share on December 15, 2020 to $174.98 per share on December 16, 2020, a decline of $13.84 per share.
The alleged class includes: All persons or entities that purchased or otherwise acquired Penumbra common stock from August 3, 2020 through December 15, 2020, inclusive.