Regen Biologics files for bankruptcy

April 11, 2011 by MassDevice staff

Embattled ReGen Biologics Inc. files voluntary petitions for Chapter 11 bankruptcy protection and announces a $1 million private placement from one of its largest investors.

FDA, ReGen Biologics

ReGen Biologics Inc. (PINK:RGBO) filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Delaware.

The embattled maker of the Menaflex knee implant said in regulatory filings that the bankruptcy petition includes the company's wholly-owned subsidiary RBio Inc., but not its wholly-owned Swiss subsidiary, ReGen Biologics AG. The company will use cash flow from operations and proceeds from a loan it received from one of its largest institutional shareholders to pay the bills while it goes through the bankruptcy process.

ReGen said it raised $1 million through a private placement deal with the Sports Medicine Holding Company LLC, a division of Ivy Healthcare Capital II L.P., one of its largest shareholders. The private placement comes in the form of senior secured notes due August 31, which carry a 12 percent annual interest rate.

The bankruptcy filing adds yet another layer to the ReGen story, featuring a protracted and public battle with the FDA for nearly two years that has captured the attention of the medical device industry. Last week, the FDA rescinded its 2008 510(k) clearance of the Menaflex device, a bio-absorbable mesh implant designed to encourage the re-growth of damaged knee cartilage. The rescission means Hackensack, N.J.-based ReGen has to keep the device off the U.S. market until it can prove its safety and effectiveness to the FDA's satisfaction.

ReGen wasn't shy about voicing its displeasure over the rescission, with CEO Gerald Bisbee calling it "totally unbelievable."

The FDA said it wants ReGen to "discuss the appropriate marketing pathway for the device and what data it would need to provide a reasonable assurance of safety and effectiveness," five years after the company began the 510(k) application process.

ReGen has sunk $30 million into meeting requirements set by the FDA's Center for Devices & Radiological Health, according to Bisbee, "only to have the agency reverse decisions made by previous CDRH officials by stating that they were in error with no substantial evidence that is true."

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