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ResMed Shares Fall Amid Controversial Clinical Trial Failures

ResMed Shares Fall Amid Controversial Clinical Trial Failures
May 14, 2015

Shares of ResMed (ASX:RMD) have plummeted after the company released controversial clinical trial results that failed to reach its primary goals. The dual-listed US-Australian company said on Wednesday that its SERVE-HF trial not only failed to show success, but also put its patients at risk. The trial focused on a particular form of sleep therapy for patients who suffer from both heart failure and central sleep apnoea. The trail failed to use safety precautions to protect the patients from death or complications associated with heart failure.

The trial not only did not protect at risk patients, it further extend the risk of the patients. The trail found that individuals suffering from similar conditions had a 7.5 per cent risk of dying due to complications, whereas similar patients who underwent the controversial therapy had a 10 per cent risk of dying due to complications. ResMed has rushed to put more detailed labelling on its adaptive-servo ventilation treatment (ASV) to warm a sub-set of heart failure patients of the increased risks.

Part of ResMed’s business is making ventilation equipment and masks for people who suffer from sleep apnoea, a disorder that can cause the upper airways to collapse causing snoring and potentially other ailments. However, the company says that only 7 per cent of its total revenue comes from ASV machines, and only 25 per cent of at-risk patients used those machines. Wilson HTM analysts Shane Storey cut his recommendation for the stock all the way from buy to sell, saying “This probably spells the end of this promising growth option which could have added 30 to 35 per cent to long-term earnings.” Shares of RMD have fallen $1.53, or 18.49 per cent, to $6.73 per share around 2:20pm on Thursday. RMD has advanced 23.76 per cent in the last 12 months but as fallen 3.17 per cent so far this year.

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