Wright Medical Group ($WMGI) has just submitted a PMA amendment for its Augment bone graft, CEO Robert Palmisano told investors, in what amounts to a compromise with the FDA.
The amendment was submitted about a month later than anticipated, but the delay is insignificant compared to last year's FDA rejection of the bone graft, which sent Wright's shares plummeting.
"We believe the extra time allowed us to work collaboratively with the FDA to gain a more precise understanding of their expectations for the content of the amendment. As previously communicated, we expect the Office of Device Evaluation to issue a determination on whether the PMA is approvable no later than 180 days after this submission date," Palmisano said in a statement describing the company's Q1 2014 earnings.
The amendment will consist "of analyses of pre-existing radiographic films of clinical study patients at pre-operative and post-operative time points," according to a March 10 company statement. The compromise was reached in lieu of proceedings with the FDA Medical Devices Dispute Resolution Panel.
When Wright paid $190 million for France's BioMimetic Therapeutics ($BMTI) in 2013, it was counting on the company's Augment bone graft to pad its sales and pace future growth, and that expectation may to come to fruition after all, though later than expected.
Wright's many machinations--including the acquisition of foot and ankle specialists Solana Surgical and Ortho Pro this year as well as the sale of its hip business in 2013--resulted in a net loss of $30.4 million in the first quarter, compared to a net loss of $8.4 million in Q1 2013.
"As anticipated, we did experience some minor, short-term dissynergies in the U.S. due to these transactions," Palmisano said. Indeed, the net loss included charges of $7.4 million related to transaction costs. But the expenses were offset by a $12.4 million tax benefit related to the sale of its OrthoRecon hip and knee unit to MicroPort Medical for $290 million.
The net loss from continuing operations was $16.6 million excluding those one-off events. On the bright side, net sales were up 26.2%, including 63.4% internationally. They stood at $71.1 million.
The foot and ankle unit contributed $46 million, an increase of 31.1%. It is the new focus of the reformulated orthopedics company. Palmisano said the company has accelerated the launch date of its Infinity Total Ankle System to late in the upcoming second quarter.
Wright's cash, cash equivalents and marketable securities grew by $173.5 million in the quarter, and they stand at $356.6 million, according to the earning's statement. But many view it as an acquisition target in the consolidating orthopedics industry, highlighted by the recent buy of Biomet by Zimmer ($ZMH).
Suitors may wish to wait for the approval (or disapproval) of its PMA, though. The company's potential remains closely tied to the success or failure of its Augment bone graft.
- read the earnings release
Wright commits $126M in two foot-and-ankle device M&A deals
Wright ends an up-and-down year on a high note
FDA rejects Wright's bone graft
Wright selling off hip and knee biz for $290M
Wright looks to turn the page on kickback scandal