Some good publicity. As a new investor, I would be intrigued. The article reminds the reader that the injectables (The subject at hand) comprise 15% of the business, if that.
By SARA GERMANO CONNECT
A small medical company that operates in an unusual niche is scrambling to reassure investors after the Food and Drug Administration raised questions about key products it makes, all of which come from human placenta.
MiMedx Group Inc. MDXG 0.00% produces a number of treatments using amniotic tissue, which it says can treat chronic wounds. The company grinds up amniotic tissue from placenta into an injectable product to treat tendinitis, strains, sprains and other ailments. As of 2012, placenta-based products account for 95% of MiMedx revenue. The company also makes hydrogel- and soluble collagen-based products.
Its shares surged from around $1 at the start of 2012 to a high of $7.73 this summer. But they plunged last week after the FDA posted a letter notifying the company that some of its injectable therapies may violate regulations for human tissue products. The shares currently are down 35% since the FDA's notice went up on its website.
The company's travails have shed light on a little known segment of the medical-products business. A few companies including MiMedx have worked up treatments using amniotic tissue, but the government appears to be taking a closer at whether their processing should force them to be regulated as drugs.
Under FDA rules, human cell and tissue products can be sold without the strict premarket scrutiny drugs face as long as they don't undergo much processing. Some in the industry believe this "minimally manipulated" category presents an opportunity for companies using human tissue to get products into the market more quickly than they could otherwise.
Jeffrey Karp, an associate professor of medicine at Brigham and Women's Hospital and Harvard Medical School who specializes in advanced biomaterials, said he has noticed growing inter
said he has noticed growing interest in developing products under this regulatory regime.
"A lot of groups are now looking at ways of jumping on the minimally manipulated cell and tissue therapy train," he said, particularly those looking to develop products derived from amniotic tissue.
In a letter dated Aug. 28 but posted last week, the FDA raised questions about MiMedx's treatments. The agency told The Wall Street Journal it believes the company's injectables don't qualify as minimally manipulated "due to the manufacturing process which alters the original relevant characteristics of the structural tissue."
The products cited by the FDA letter—which include AmnioFix, AccelShield and EpiFix injectables—use amniotic material that is ground up through a process called micronization so that it can be injected through a needle.
MiMedx Chief Executive Parker H. "Pete" Petit said in an interview Monday that to the company's knowledge, all of its products are in strict regulatory compliance.
The minimally manipulated category falls under what is known as Section 361 of the Public Health Service Act. Products made from other tissues—including skin, bone, ligament, heart valve, among others—can also be sold without strict premarket scrutiny so long as they comply with all of the Section 361 criteria.
A product that doesn't satisfy all of Section 361's requirements is automatically considered to be a drug, which requires intense premarket scrutiny that can include over a decade of expensive research, said C. Randal Mills, chief executive of Osiris Therapeutics, a competitor to MiMedx in the wound-care industry.
"The difference between those two is so enormous," Mr. Mills said. "It is unfortunate there is no middle ground." Osiris makes wound-care products from stem cells, including products made from placenta.
Christopher Bravery, a London-based regulatory consultant for Consulting on Advanced Biologicals, said the concern is product safety risks could arise when a tissue's properties are altered too much.
Mr. Petit, however, dismissed that concern: "Mother Nature did the safety and efficacy trials on this tissue long ago," he said.
All of the placenta MiMedx uses for its products is acquired through donations from mothers delivering healthy babies via caesarean section, coordinated by doctors at participating hospitals. The company then collects amniotic tissue from the placentas for use in its products.
The company held a conference call Thursday to reassure investors. Executives reiterated their guidance for fiscal years 2013 and 2014, and said they have "adequate" cash to manage the company. MiMedx said it was already in the process of working on a resolution with the FDA. The company is currently coordinating a time and place to discuss the letter with the FDA.
MiMedx's amniotic tissue business comes from Surgical Biologics LLC, which the company acquired in 2011.
Mr. Petit said that the company expects its amniotic injectable products to account for about 15% of its 2014 revenue. MiMedx reported revenue of $27.1 million for 2012, up nearly 250% from the year before.
Shares of the company, which were previously traded over the counter, were listed on Nasdaq in April.