Alere (ALR) Slumps on Potential Triage Products Recall, HHS Subpoena

May 11, 2012 10:03 AM EDT
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Alere Inc. (NYSE: ALR) is getting hit early after issuing the following disclousure in an SEC filing. Shares are down about 15 percent.

From the filing: "In March 2012, Food & Drug Administration, or FDA, began an inspection of our San Diego facility related to our Alere Triage products. During the inspection, the FDA expressed concern about the alignment between certain aspects of our labeling for the Alere Triage products and the quality control release method that had been in effect prior to the inspection. To our knowledge, the FDA has not yet closed the inspection and has not issued any inspectional observations on Form 483. We are continuing to engage in discussions with the FDA regarding the Alere Triage products and have adopted an interim revised release method which we have been shipping against since early April 2012, with plans to further tighten the release method by September 30, 2012. Although the discussions with the FDA are ongoing, we expect that resolution of the issues raised by the FDA will involve a recall of unexpired lots of Alere Triage products that do not satisfy the revised quality control release method set through such resolution. Based on customer order patterns, expected customer inventory levels and the passage of time between March 31, 2012 and the date of any potential recall, we do not believe that the quantity or value of products that were sold on or before March 31, 2012 that may ultimately be returned will be material and, accordingly, we do not believe that any such recall will have a material impact on our results of operations for the quarter ended March 31, 2012. However, because the quality control release methods that we will apply in the future have not been determined, at this time we are unable to determine the scope of any anticipated recall, including the type and number of products that may be returned. Similarly, we are unable to determine the impact on our ability to ship existing inventory of, and continue to manufacture, Alere Triage products that satisfy such release methods. Consequently, we are also unable to determine whether the anticipated recall or the revised release methods will have a material impact on our revenues, results of operations, earnings, cash flows or financial condition.

Despite these uncertainties, we expect that the modifications necessary to meet any interim and final release methods will lead to increased manufacturing costs for these products. We also anticipate that our ability to supply certain Alere Triage meter-based products may be limited, which may adversely affect revenues from sales of these products. For the first quarter of 2012, revenues from Triage cardiology and toxicology products sold in the U.S. totaled approximately $69 million. Of this amount, approximately $18 million related to BNP products that run on the Beckman Coulter automated platforms and which are not impacted by this matter. Of the remainder, approximately $31 million related to BNP, D-dimer and Toxicology tests, and approximately $20 million related to our cardiology panel tests. The interim and final release methods are expected to adversely impact our ability to supply the market with our cardiology panel tests and may also impact our BNP, D-dimer and Toxicology tests. At this time, we are unable to predict the scope or duration of any product shortages that we may encounter. We anticipate that any effort to substantially increase production to satisfy customer demand in the short term will lead to increased manufacturing costs. Our discussions with the FDA are ongoing and actual future results may be different than our current expectations as, summarized above.

Also, in May 2012, we received a subpoena from the Office of Inspector General of the Department of Health and Human Services. The subpoena seeks documents relating primarily to the quality control testing and performance characteristics of Alere Triage products. We are cooperating with the government and are in the process of responding to the subpoena

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RN on 2012-05-13 23:50:26
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I would never want my family members ER MD or cardiologist to go by tn only for any chest pain diagnosis. More info=accurate diagnosis. Higher sensitivity tn only=higher risk treatment that maybe wasn't needed due to false positive from only using one marker.

high sensitive=low specific
AnotherHealthcare Advocate on 2012-05-13 23:28:33
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As with any troponin assay it is only a part of the diagnosis Clinical skills, EKG, and other cardiac markers, and BNP provide valuable information. All good clinicians know this.

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