Accuray Falls on Recall of CyberKnife Radiosurgery System
Stock Chart for Accuray Inc (ARAY)
Accuray Inc. (ARAY) shares fell the most in seven weeks as U.S. regulators said the company’s CyberKnife robotic radiosurgery system is being recalled for a defect.
Accuray fell 3.5 percent to $4.44 at the close of New York trading, its biggest drop since Feb. 27. The stock has tumbled 31 percent this year, in part because the Sunnyvale, California- based company in January lowered sales projections.
An urgent correction letter was sent March 19 to doctors about the system, affecting 176 units on the market, the Food and Drug Administration said in a notice posted yesterday on its website. The company said the voluntary recall involved two separate components from the Iris Variable Aperature Collimator and the Robocouch patient positioning system.
“The affected parts were manufactured by third-party suppliers and are being removed from the system because they failed to meet our specifications and standards for quality,” Joy Sacmar, vice president of regulatory affairs and quality assurance at Accuray, said in an e-mail. “We have notified impacted customers, and field service personnel have been deployed to apply the corrections.”
CyberKnife provides radiation treatment to cancer patients and accounted for 43 percent of Accuray’s $78 million in sales for the quarter ended in December.
The defect could affect the device’s collimator, which can define the radiation dose delivered during treatment. Iris’s collimator is able to change the size of its opening during treatment to let varying radiation beams through, according to Accuray.
“No known injuries have been reported to date as a result of these issues, and we took the voluntary action to ensure that our product quality and outstanding safety record are maintained,” Sacmar said. “Events such as these are not uncommon in our industry.”
Robotic surgery has been thrust into the spotlight this year as U.S. regulators began probing the safety of machines made by Intuitive Surgical Inc. (ISRG) The outcome of that investigation may sway debate on whether robotic surgeries that are typically promoted as being less invasive are worth the extra cost and potential risk.
Data published in February found that use of Sunnyvale, California-based Intuitive’s robots, priced at $1.5 million each, drives up surgical costs by as much as $2,189 per procedure without reducing complications compared with standard less-invasive procedures. The FDA is surveying surgeons about the safety of the machines, their training and how the robots are used, Bloomberg News reported in March.
Intuitive shares declined less than 1 percent to $507.64.
Accuray said in January it would fire about 13 percent of its workforce after reporting fiscal second-quarter revenue that missed analysts’ estimates and lowering its annual sales projections. The company cited “transitional issues” with its sales force and manufacturing problems that delayed product introductions.
The company in October replaced Chief Executive Officer Euan Thomson with Joshua Levine, who once oversaw the sales of Mentor Corp. and Immucor Inc.
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