GI Dynamics has lost the right to sell its Type 2 diabetes and obesity device in the European Union. SGS, the notified body for EndoBarrier, pulled the CE Certificate of Conformity over the weekend in response to nonconformity to medical device quality management system standards.
That withdrawal means GI can no longer put the CE mark on its product or sell it in the EU. GI is talking with SGS to “clarify certain procedural and substantive matters” before deciding with its advisors on a path forward. An appeal of the decision is one option. In the meantime, EndoBarrier, a nonsurgical alternative to a gastric bypass, is shut out of what could be a major market.
GI ran into regulatory problems in Europe in 2014 when its notified body suspended commercial shipments of EndoBarrier. Shipments resumed two months later after a review of GI’s vigilance and reporting systems, plus a change to the device’s indications for use.
That put GI back on track in the EU. But the Australian device company was derailed again in May when SGS suspended its CE mark. The notified body took the action after identifying areas of nonconformance with ISO standards for medical device quality management systems. GI has spent the past six months trying to fix the problems but has now run out of time.
The 2014 and 2017 run-ins with the EU notified body bookend a period in which GI has faced regulatory problems around the world. In 2015, GI scrapped a pivotal trial in the U.S. after cases of bacterial liver infections prompted the FDA to place a hold on enrollment in the study. The next year, EndoBarrier lost its Australian listing after GI failed to show compliance with regulatory requirements.
GI tried to arrest the slide by hiring a chief compliance officer and tasking him with “engaging with regulatory bodies in a more open and constructive manner.” At the time of the suspension of the CE mark, GI CEO Scott Schorer said the company had made “significant progress” in improving its quality management system since making the hire and taking other actions.
The latest setback wiped 16% off GI’s share price. The value of the stock has fallen by more than 90% over the past five years.