Wright Medical Group, Inc. (WMGI) is continuing with its fight for obtaining pre-market approval (PMA) for its Augment Bone Graft, a bioengineered bone graft for foot and ankle fusion surgeries.
Recently, the global orthopedic device company reached an agreement with the Office of Device Evaluation (:ODE) of the U.S. Food and Drug Administration (:FDA), where ODE will accept a further amendment to the PMA application for Augment Bone Graft in lieu of proceeding with the Dispute Resolution Panel (:DRP), scheduled for the week of May 19, 2014. However, the agreement with ODE is subject to final approval by the FDA appeal authority, which is expected shortly.
The PMA amendment will be submitted on Mar 31, 2014. It will consist of analyses of pre-existing radiographic films of clinical study patients at pre-operative and post-operative situations.
ODE has promised an expeditious review of the PMA amendment and plans to decide on the PMA within 180 days after its submission. Wright Medical Group plans to renew the DRP process if the PMA amendment fails to result in a reversal of ODE’s previous decision of non-approval.
Augment Bone Graft is designed as an alternative to autograft (use of tissue from another part of a patient’s body) in orthopedic surgeries. It is produced by medical device maker BioMimetic, acquired by Wright Medical Group earlier last year for roughly $190 million in cash and stock.
Last year, FDA had issued a “not-approvable letter” in response to the PMA application submitted by Wright Medical Group for Augment Bone Graft, indicating problems with the clinical study.
According to FDA, the clinical study supporting Augment Bone Graft engaged low risk population, who may not have needed either autograft or Augment Bone Graft. FDA suggested that Wright Medical Group may need to execute a new study of Augment Bone Graft with a high-risk population.
Wright Medical Group posted a broader loss of $7.9 million or 17 cents per share for the fourth quarter of 2013 compared with $1.9 million or 5 cents in the same quarter of 2012. However, the loss was narrower than the Zacks Consensus Estimate by a penny.
For full year 2013, Wright Medical Group posted a wider adjusted loss of $25.2 million or 56 cents per share compared with $3.8 million or 10 cents per share in 2012. It is also narrower than the Zacks Consensus Estimate of a loss of 57 cents per share.
Revenues in the quarter went up 16.2% (17% in constant currency) to $67.8 million, exceeding the Zacks Consensus Estimate of $65.0 million. The revenue growth was driven by strong sales of foot and ankles product line.
Revenues in the year grew 13.2% to $242.3 million, higher than the Zacks Consensus Estimate of $239 million, solely driven by higher foot and ankle, and other product line sales.
For 2014, Wright Medical Group expects revenues in the range of $305–$312 million, reflecting a growth of 26 to 29% (including Solana, OrthoPro and Biotech acquisitions) and an organic growth of 13 to 15% (excluding Solana, OrthoPro and Biotech) over 2013. The current Zacks Consensus Estimate is pegged at $305 million.
Currently, the company retains a Zacks Rank #4 (Sell). Some better-ranked medical product stocks include Enzymotec Ltd. (ENZY), Covidien plc (COV), and Stryker Corporation (SYK). Enzymotec carries a Zacks Rank #1 (Strong Buy), while Covidien and Stryker carry a Zacks Rank #2 (Buy).