Philips Shares Tumble After FDA Asks for More Tests on Sleep-Apnea Device

By Adria Calatayud

Shares of Royal Philips fell sharply after the U.S. Food and Drug Administration said it is unsatisfied with the status of the company's recall of devices to treat sleep apnea and asked for additional testing.

At 0841 GMT on Friday, shares in the Dutch health-technology group traded 9.3% lower at EUR16.84.

The FDA doesn't believe the testing and analysis that Philips has shared to date are adequate to fully evaluate the risks posed to users from the recalled devices, Jeff Shuren, director of the agency's Center for Devices and Radiological Health, said.

Philips has agreed with the FDA's recommendations to implement additional testing on certain sleep and respiratory care devices to supplement current test data, a company spokesman said.

"We are still in discussions with the FDA on the details of further testing," the spokesman said.

The FDA update is the latest setback for Philips in its yearslong effort to leave a huge recall of breathing-aid machines behind it.

The recall began in June 2021 after reports that an internal sound-dampening foam could degrade raised health concerns, and has since prompted the company to book extra costs, take a major write-down on the value of the business, and settle a U.S. class-action lawsuit. It has weighed heavily on Philips's share price as well, with its stock having more than halved its value since the issue was discovered.

Additional testing will result in further delays in the process, ING analyst Marc Hesselink said in a note to clients.

Philips concluded that use of its sleep-therapy devices weren't expected to result in appreciable harm to patients' health after conducting extensive testing together with five independent laboratories, the spokesman said.

However, the FDA said it believes additional testing is necessary.

The FDA maintains its recommendations regarding the potential health risks associated with the polyester-based polyurethane foam breakdown in the recalled devices based on currently available information, Shuren said in an online update dated Thursday.

The ING analyst noted the FDA hasn't voiced concerns over the validity of the first tests.

Philips said it has been working cooperatively with the FDA over the past two years and that it shares the same objective as the agency and other regulators to ensure the highest safety standards.

The company last month said the remediation of sleep-therapy devices was nearing completion.

"The device replacement is largely done and Philips agreed on [an] economic loss settlement in the U.S. but we still need to see a consent decree with the FDA as well as the settlement on potential patient harm," ING's Hesselink said.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

October 06, 2023 05:06 ET (09:06 GMT)

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