SAN DIEGO–(BUSINESS WIRE)–Robbins Geller Rudman & Dowd LLP announces that purchasers or acquirers of Outset Medical, Inc. (NASDAQ: OM) common stock between September 15, 2020 and June 13, 2022, inclusive (the “Class Period”) have until September 6, 2022 to seek appointment as lead plaintiff in Plymouth County Retirement Association v. Outset Medical, Inc., No. 22-cv-04016 (N.D. Cal.). The Outset Medical class action lawsuit charges Outset Medical and certain of its top executive officers with violations of the Securities Exchange Act of 1934.
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CASE ALLEGATIONS: Outset Medical’s flagship product is the Tablo Hemodialysis System, a dialysis machine that purifies tap water and then artificially purifies and removes toxins from the blood of patients suffering from kidney failure.
Throughout the Class Period, Outset Medical touted that Tablo can “serve as a dialysis clinic on wheels” that had been “cleared by the [U.S.] Food and Drug Administration (FDA) for use in the hospital, clinic or home setting.” However, devices used by non-professionals outside of a clinical setting and that can present serious health consequences like Tablo are subject to heightened scrutiny by the FDA, including post-market surveillance studies. Thus, though cleared by the FDA for sale, Tablo for use in the home setting was subject to additional studies, the results of which could require additional applications for clearance and approvals. And while performing further regulatory studies during the Class Period, Outset Medical assured investors that it was conducting the studies “in accordance with the FDA approved protocol,” which required an appropriate demonstration of “real-world” human testing given that the device would be used at home by non-professionals.
But as the Outset Medical class action lawsuit alleges, undisclosed to investors, Outset Medical continuously made significant changes to Tablo for use in the home setting. The nature of these undisclosed changes: (i) made it likely that the FDA would order Outset Medical to cease all marketing and selling of Tablo for use in the home pending additional applications and approvals; and (ii) prevented Outset Medical from performing the requisite “real-world” human testing on a device cleared for sale, contrary to representations to investors.
On May 4, 2022, Tablo Medical announced disappointing results for the first quarter of 2022, which analysts attributed, among other things, to the untested nature of Tablo in the home setting. On this news, the price of Outset Medical common stock declined more than 40% over the three trading days that followed.
Then, on June 13, 2022, Outset Medical announced that the FDA had forced it to hold all shipments of Tablo for use in the home until Tablo received proper regulatory clearance. During a “Business Update” conference call held that day with analysts, Outset Medical CEO Leslie Trigg acknowledged the “ship hold” had already been in place for weeks before investors were provided this material information. Importantly, CEO Trigg disclosed for the first time that, rather than conducting studies using “real-world data” gathered in the “home environment” as Outset Medical previously stated was required by the FDA, in reality, Outset Medical had “run with a protocol that involves a simulated use environment at a human factors lab.” On this news, the price of Outset Medical stock fell an additional 34%, further damaging investors.
THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Outset Medical common stock during the Class Period to seek appointment as lead plaintiff. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Outset Medical class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Outset Medical class action lawsuit. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff of the Outset Medical class action lawsuit.
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