The Zacks Analyst Blog Highlights:Johnson & Johnson, Zimmer Holdings, Smith & Nephew, General Motors and Toyota Motor

Jul 03, 2012, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, July 3, 2012 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Johnson & Johnson (NYSE: JNJ), Zimmer Holdings (NYSE: ZMH), Smith & Nephew (NYSE: SNN), General Motors Company (NYSE: GM) and Toyota Motor (NYSE: TM).


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Here are highlights from Monday's Analyst Blog:

MoM Hip Implants Under Fire
With metal-on-metal ("MoM") hip arthroplasty systems grappling with several critical issues, the US Food and Drug Administration ("FDA") asked for opinion regarding the risks associated with the device from its advisory panel (Orthopaedic and Rehabilitation Devices Panel) last week. The panel dealt with issues such as failure rates and modes, metal ion testing, imaging methods, local and systemic complications, patient risk factors and considerations for follow-up after surgery.

Latest development
As per reports published in the Associated Press, experts from the 18- member panel were not in favor of using metal-on-metal hip implants. Although the FDA did not consider banning the device from the market, most panelists opined that only in a few cases they would recommend implanting such devices.

The panelists suggested that patients with pain and other symptoms should get regular X-rays and blood testing for their metal levels. However, the accuracy of blood tests and difficulties in interpreting the results remain a major challenge as standard diagnostic kits are not available to test for chromium and other metals. Even patients without any complaints should go for X-rays annually to monitor their implants. 

The agency has also asked manufacturers of MoM total hip replacement ("THR") systems like Johnson & Johnson (NYSE: JNJ), Zimmer Holdings (NYSE: ZMH) and Biomet to conduct long-term, follow-up studies of more than 100 metal-on-metal hips on the US market.

Concerns about MoM Hip Implants
More than 400,000 hip arthroplasty procedures are performed in the US annually. The FDA had earlier noted that MoM replacements have certain specific risks besides the general risks of hip implant systems. Since the metal ball and the metal cup slide against each other during walking or running, some tiny metal particles may wear off of the device and enter into the space around the implant. Moreover, metal ions from the metal implants or from the metal particles may even get into the bloodstream.

Despite several precautions undertaken by orthopedic surgeons to optimize the way in which the ball and socket rub against each other so that fewer wear particles are produced, there is no way to fully avoid the production of metal particles. The reaction to these possible situations is not uniform among the patient population. In some cases, it has been observed that high levels of metal ions in the bloodstream of the patients may adversely affect other parts of the body including the heart, nervous system, and the thyroid gland.

Product recall
In the US, two significant device recalls have taken place for MoM THR systems. The first of which was the voluntary recall (class II) of Durom Acetabular Component ("Durom Cup") by Zimmer Holdings in 2008 because of inadequate instructions for use.  This was followed by the 2010 device recall of ASR total hip systems by DePuy, a unit of Johnson & Johnson, due to higher-than-anticipated revision rates noted from outside-the-US joint registries. While the Durom device is available in the US with more detailed surgical technique instructions and a surgeon training program, the ASR did not return to the market.

Measures undertaken outside the US
In February 2012, the Medicines and Healthcare products Regulatory Agency ("MHRA") – the UK government agency which is responsible for ensuring that medicines and medical devices work and are acceptably safe– increased scrutiny of patients with MoM implant. The agency asked the surgeons that patients with MoM hip replacements with head diameters of 36 mm or more should be monitored annually for the life of the hip replacement. This was done to detect any complication at the earliest so that more complex surgeries could be avoided. The previous advice, issued in April 2010, required monitoring for a minimum of five years after the operation.

This was followed by Health Canada issuing a public health communication to orthopedic surgeons and patients about potential health risks associated with MoM hip implants in May 2012. The agency noted that female patients, patients with increased activity levels, patients who are severely overweight and those with implants in both hips experienced increased risk of adverse local tissue reactions.

In Conclusion
We believe that the various post-market studies currently underway should ultimately benefit the wide patient population. We also doubt whether an extreme step like an overall ban on the use of this technology is good for patients across the board because these implants could come of help to some patients.

Favorable data from Smith & Nephew (NYSE: SNN) on a new study for its Birmingham Hip Resurfacing ("BHR") system announced earlier this year provides a lease of hope for this technology. The study, carried out at the request of the FDA, followed the progress of the first 400 BHR patients in the UK. It was observed that after 10 years, 99% were either satisfied or extremely satisfied with their BHR procedure.

Given the mixed reviews, additional and in-depth study on the use of MoM technology is the call of the hour. Meanwhile, MedTech firms in the replacement niche have to counter yet another looming headwind in an already tight playing field.

GM Recalls Cruze Sedans

General Motors Company's (NYSE: GM) plans to recall 475,418 units of its popular compact Chevrolet Cruze sedans in order to fix a problem with their engine compartment. The recalled vehicles belong to 2011 and 2012 model years and were built at the company's Lordstown plant in Ohio from September 2010 through May 2012.

GM revealed that the engine compartment in the vehicles is capable of catching flammable liquids such as oil or hydraulic fluid and could ignite. As a result, the company has decided to modify the engine shield under the car in order to get rid of the problem.

The recall includes 413,418 units of affected vehicles in the U.S., 61,299 units in Canada and 701 units in Israel. It did not affect vehicles that were not produced at Lordstown because they do not have the same design. However, it may affect 10,000 units of Cruze sedans sold by GM's Australian unit, Holden, who are looking into the issue currently.

GM has not yet received any reports of crashes, injuries or deaths related to the problem. It will begin notify the owners about the recall from mid-July. The fix would take about 30 minutes at the company's dealership.

Cruze is one of the top-selling compact cars of GM in the U.S. due to its better gas mileage. Last year, the company sold 230,000 units of the sedan.

Automotive safety recalls were brought into focus by media after Toyota Motors' (NYSE: TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family.

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