ReGen Biologics has filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Delaware. The move is the latest in a saga over whether the FDA should rescind clearance of the company's Menaflex collagen meniscus implant.
The company says in its filing that it will use cash flow from operations and borrowings under the interim financing and debtor-in-possession financing to pay the costs of the bankruptcy proceeding and to provide working capital and financial resources necessary to allow business operations to continue. In addition, ReGen and Sports Medicine Holding Company LLC have agreed to amend the March 11 subscription and security agreement to increase the maximum principal amount of secured notes that the company may issue from $750,000 to $1 million.
Menaflex was cleared in December 2008 after a three-year review under the 510(k) process; however, this clearance came even though the device often failed and required second operations. Last October, the FDA announced that the implant shouldn't have been cleared for marketing. That determination came several months after an FDA panel determined there isn't enough scientific evidence to come to a firm conclusion about Menaflex's benefits.
Late last month, ReGen sharply declined an FDA offer of a hearing regarding the agency's attempts to rescind approval of the implant. The agency did ultimately rescind the clearance. "The company is evaluating its legal and regulatory options toward marketing the Device in the United States and will continue to market the device outside the United States, as it has for over ten years," ReGen says in an SEC filing.
However, Bizmology's Anne Law thinks it will be difficult for the company to pursue legal action and improve its financial situation at the same time.