Why ResMed's Stock Is in the Red Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Continue Reading Below

What: Shares of ResMed Inc , a global leader in developing treatments for sleep-disorder breathing,fell 15% today after the company announced that SERVE-HF, a Phase III randomized trial, did not meet its primary endpoint.

So what: SERVE-HF was designed to assess whether treating of moderate to severe predominant central sleep apnea with ResMed's Adaptive Servo-Ventilation, or ASV, therapy could reduce mortality and morbidity in patients with symptomatic chronic heart failure alongside current standards of care.

As per a preliminary analysis of the study, the cardiovascular mortality rate in the ASV-treated group was 10 percent per year compared to 7.5 percent per year in the control group, which is a statistically significant 2.5 percent increased risk of cardiovascular mortality.There were no issues associated with the performance of the ASV device in the trial.

Glenn Richards, theCEO of ResMed, affirmed that patient safety is the company's firstpriority, and ResMed is working to understand why these unexpected results was observed. In addition, the company is talking with globalregulatoryauthoritiesto revise the labeling and instructions for theResMedASV device to include a containdication for people with chronic heart failure with left ventricular ejection under a certain level.

Now what:Its important to note that these results were only observed in patients with bothcentral sleep apnea and symptomatic chronic heart failure with reduced ejection fraction. It did not include patients without heart failure, nor patients with obstructive sleep apnea.

Continue Reading Below

Any investor looking to put money to work in the medical device space knows that the risk of unexpectedbad results from clinical trials simply come with the territory. We don't yet know what kind of impact these results may have on ResMed's sales in the future, so I'm personally content to put the stock on the back burner and look elsewhere for places to invest.

The article Why ResMed's Stock Is in the Red Today originally appeared on Fool.com.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.