PEN: The Blind Eyes

We are short Penumbra Inc (NYSE: PEN)

IMPORTANT – Please read this Disclaimer in its entirety before continuing to read our research opinion.  The information set forth in this report does not constitute a recommendation to buy or sell any security. This report represents the opinion of the author as of the date of this report. This report contains certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential,” “outlook,” “forecast,” “plan” and other similar terms. All are subject to various factors, any or all of which could cause actual events to differ materially from projected events. This report is based upon information reasonably available to the author and obtained from sources the author believes to be reliable; however, such information and sources cannot be guaranteed as to their accuracy or completeness. The author makes no representation as to the accuracy or completeness of the information set forth in this report and undertakes no duty to update its contents. The author encourages all readers to do their own due diligence.

You should assume that as of the publication date of his reports and research, Marcus Aurelius and possibly any companies affiliated with him and their members, partners, employees, consultants, clients and/or investors (the “Marcus Aurelius Affiliates”) have a short position in the stock (and/or options, swaps, and other derivatives related to the stock) and bonds of Penumbra. They therefore stand to realize significant gains in the event that the prices of either equity or debt securities of Penumbra decline.  Marcus Aurelius and the Marcus Aurelius Affiliates intend to continue transactions in the securities of Penumbra for an indefinite period after his first report on a subject company at any time hereafter regardless of initial position and the views stated in Marcus Aurelius’ research.  Marcus Aurelius will not update any report or information on this website to reflect such positions or changes in such positions.

Please note that Marcus Aurelius, the author of this report, and the “Marcus Aurelius Affiliates” are not in any way associated with Aurelius Capital Management, LP, a private investment firm based in New York, and any affiliates of or funds managed by the latter company.

You should assume that all persons and entities referenced in lawsuits, criminal information, and government actions have denied the allegations referenced herein.  You should also assume that various persons identified in the contents of criminal information or civil complaints were not individually charged with any crime or otherwise named as a defendant.

We are short Penumbra Inc (NYSE: PEN)

We believe that Penumbra’s defective Jet 7 Xtra Flex catheter, which caused at least 18 patient deaths before the FDA announced an urgent recall on December 15th, is not just a matter of “bad luck” but instead symptomatic of more pervasive rot.  This report reveals, for example, how Penumbra has repeatedly engaged a small Tennessee entity as the “independent” core lab used to adjudicate many of Penumbra’s clinical studies since at least 2013 even though it is registered to the wife of a Penumbra scientific author and site investigator, a former school vaccine coordinator.  We believe Penumbra’s clinical trials are contaminated by the involvement of other actors accused of accepting large bribes and participating in sham clinical trials orchestrated by EV3, a company that pled guilty in 2018 to a federal criminal charge related to selling defective medical devices that harmed patients.  Lead investigators and authors for Penumbra trials have previously been accused of receiving kickbacks through bogus consulting agreements with EV3 or working as investigators for sham clinical trials in the past.

These new findings only amplify our concerns about the integrity of Penumbra and its CEO, Adam Elsesser, who, for months, downplayed mounting evidence that Penumbra’s JET 7 Xtra Flex catheter was malfunctioning despite growing numbers of patient deaths (see reports by QCM Funds and Roddy Boyd for more background).  Indeed, just one week after Penumbra halted its own stock to respond to short sellers, the FDA announced an urgent recall of Penumbra’s JET 7 Xtra Flex on December 15 “based on the risk of unexpected death”.  Because Penumbra’s malfunctioning devices have cost lives, we believe patients, physicians, and investors deserve complete transparency into Penumbra’s clinical trials for all products and call on the company to immediately disclose a complete list of all the core labs and consultants who have been involved in every trial that Penumbra has sponsored, collaborated on, or otherwise funded since inception along with a complete list of the specific payments made to these entities since inception.  This list should include all payments to entities registered to both physicians and their family members.

We now believe the Xtra Flex debacle is symptomatic of corrosion that likely has infected most aspects of Penumbra’s business. Indeed, multiple former employees we spoke to described CEO Elsesser as a micro-manager who has created a toxic, almost maniacal, working environment rife with cronyism and nepotism that has increasingly caused talented people to flee. The fundamental problem, in our opinion, is that Penumbra simply cannot be trusted by investors or patients.

Background on the Alleged EV3 Fraud

Four Qui Tam suits filed against EV3 (which was acquired by Covidien in 2010, now Medtronic, and referred to collectively in this report as “EV3”) detail various fraudulent schemes that allegedly occurred in various years prior to 2016, including kickbacks disguised under a “proctor” program and engineering sham clinical trials.  Numerous doctors identified in these lawsuits, some of whom are named in this report, have migrated to work with Penumbra. Qui Tam documents are available here:

  • Qui Tam 1 (U.S. District Court, Central District of California, Case 2:17-cv-1903-SVW-SS): Document 1, Document 2, Document 3
  • Qui Tam 2: (U.S. District Court Massachusetts 1:10-cv-11822-RGS)
  • Qui Tam 3: (U.S. District Court, Central District of California, Case 8:15-cv-01796-AG-JCG) Document 1, Document 2
  • Qui Tam 4: (U.S. District Court Northern District of Illinois, Case 3:15-cv-0091-VC)

We note that none of the doctors referenced in this report have been criminally indicted or otherwise charged in civil lawsuits and it should also be assumed that all the doctors have denied all of the allegations described in the qui tam suits.  

Alleged Participants in Sham EV3 Clinical Trials Appear to Have Migrated to Penumbra

One of ways that EV3 allegedly tampered with clinical trials is by paying kickbacks to the “independent” core lab adjudicators. Akin to referees, Imaging Core labs are used in clinical trials to gather and analyze the images received from the various testing sites and evaluate the results.  Having an independent core lab is therefore critical to maintaining the integrity of a clinical trial so that imaging results can be interpreted consistently and without bias.

We discovered that Penumbra has repeatedly retained a small Knoxville, Tennessee entity named Oculus Imaging, LLC, as the purported independent core lab for many of Penumbra’s clinical trials over the past decade.   Oculus was founded by a large Penumbra customer and a paid consultant, Dr. Britton K. Woodward (AKA “Keith” or “BK”), and is currently registered in corporate documents to Dr. Woodward’s wife, a former school vaccine coordinator. We could only find two additional people listed as Oculus employees on Linkedin and our investigator confirmed Oculus is currently operating out of a small office with approximately four desks located above a town theatre in Knoxville, Tennessee (pictured below). This stands in sharp contrast to large companies, such as Bioclinica, who are leaders in the core lab adjudication industry.

The mere presence of Oculus in Penumbra trials is highly problematic, in our opinion, because Qui Tam 1 specifically alleges that EV3 sought to bias a clinical trial by engaging Oculus while paying “substantial kickbacks” to Dr. Woodward “designed to influence clinical trial outcomes and the FDA approval process”.  Woodward allegedly received more than $250,000 in payments from EV3 from 2013-2015 while acting as an EV3 “proctor” and speaker and, in addition, “During the same time, Dr. Woodward’s companies received more than $380,000 from Defendants [EV3] for the ostensible purposes of performing core image lab services”.  The Qui Tam concluded that the involvement of Oculus in EV3’s trials was “disturbing, improper, and unethical” and that “the results of the study could have been compromised and endangered patients if the study is relied upon by the FDA”:

Source: selections from Qui Tam 1.

Two direct witnesses we spoke to stated that Oculus Imaging has acted as the core lab for at least five of Penumbra’s clinical trials that they were involved with since 2013, including at least one trial that is ongoing. We believe Oculus has likely been involved in more Penumbra trials than these individuals directly observed and note, for example, that the protocol documents of a trial co-funded by Penumbra named ASTROH (here) specifically name Oculus as providing imaging services along with another physician (below).  One of the witnesses explained that Dr. Woodward would personally adjudicate the images on behalf of Oculus for certain Penumbra trials while, in other instances, Woodward would also engage other doctors who typically had pre-existing relationships with Penumbra to assist with the adjudications.

We seriously doubt the independence of Oculus considering the extensive business entanglements between Dr. Woodward, entities registered to his wife, and Penumbra. First, Woodward is a paid Penumbra consultant and three former Penumbra employees we spoke to confirmed that Woodward is a large Penumbra customer. Second, Woodward himself has co-authored clinical trials sponsored by Penumbra (here, here,) and has repeatedly participated as a site contact or principal investigator of Penumbra trials (example here).  Third, we believe Penumbra has likely made payments to a second company registered to Dr. Woodward’s wife named AngioSuite, LLC, which appears to produce an App for clinicians. The AngioSuite App has only five reviews on the itunes store and the linked website ( has been deleted as of this writing. However, archived versions of the website on the waybackmachine reveal that AngioSuite named Penumbra as one of Angiosuite’s corporate sponsors in prior years (below).  Although Penumbra disclosed paying Dr. Woodward $30k in 2019 General Payments, mostly for consulting fees, the entries we reviewed do not mention Oculus or AngioSuite and disclaim that a third party received the payments (see here).

We believe Oculus is likely just the tip of the iceberg because multiple other doctors who allegedly participated in sham EV3 trials, such as SWIFT Prime and STRATIS, also appear to have migrated to Penumbra. Examples of doctors involved in SWIFT PRIME now performing research touted by Penumbra include:

Dr. Adnan Siddiqui

Siddiqui was a leader of Penumbra’s COMPASS trial and has co-authored other studies involving Penumbra (here, here), and was quoted in this 2018 Penumbra press release alongside CEO Adam Elsesser.

Siddiqui was identified in Qui Tam 3 which referenced “significant issues” and “abysmal performance”:

Qui Tam 3 alleges that patients at Siddiqui’s Buffalo site were placed at risk due to eligibility deviations:

Dr. Raul Noguiera

Nogueira was the principal investigator on Penumbra’s 3D Separator Trial, a study touted by Siddiqui and Penumbra:


Qui Tam 3 alleges that Nogueira, who was a SWIFT PRIME site investigator, was selected to become a “core lab” consultant by EV3 on a European trial even though Nogueira “did not have any radiologists on staff to perform the services”:

Qui Tam 3 also alleged that Nogueira and Siddiqui received $450 per hour in exchange for “very little work”:

Penumbra Should Immediately Disclose a Complete List of All Core Labs and Consultants

We are aware of multiple other doctors involved in Penumbra’s clinical trials that allegedly received large bribes from EV3 and/or participated in sham clinical trials.  We are also aware of at least one other conflicted doctor was has acted as the independent adjudicator on a Penumbra clinical trial.

We call on Penumbra to immediately disclose a complete list of all the core labs and consultants who have been involved in every trial that Penumbra has sponsored, collaborated on, or otherwise funded since inception along with a complete list of the specific payments made to these entities since inception.  This list should include all payments to business entities owned by physicians or their wives and family members.

All investors are encouraged to conduct their own due diligence into these factors.