Wright Medical (NSDQ:WMGI) officials said the FDA has agreed to hold a dispute resolution panel for the orthopedic company’s Augment Bone Graft product, which was denied approval by the agency in August.
The news, as well as results from the company’s 3rd quarter, preceded a 4% jump in WMGI shares, which closed at $27.62 Tuesday night.
The FDA panel will give the Arlington, Tenn.-based orthopedic company a chance to persuade the FDA to reverse its prior ruling, which denied approval mostly on grounds that Wright’s clinical trials enrolled the wrong patients.
On August 6 the FDA sent Wright a letter expressing concern that "the population enrolled was predominantly low risk and, therefore, may not have warranted the use of either autograft or Augment Bone Graft" and that "it will be necessary to perform a new clinical study that evaluates the use of Augment Bone Graft as a substitute for autograft in hindfoot and ankle fusion procedures in a well-defined high-risk target population, where the use of autograft would be clinically warranted."
On October 31, Wright Medical officials received a letter from FDA’s deputy director for science, Dr. William Maisel, giving the company a chance at appeal. Robert Palmisano, president and chief executive officer of Wright Medical applauded the development.
"We appreciate the FDA’s willingness to grant our request to convene a Dispute Resolution Panel in connection with our appeal of the not approvable decision for Augment Bone Graft," Palmisano said in prepared remarks."We look forward to working with the FDA to schedule the panel meeting as soon as possible.”
Wright acquired the Augment technology from BioMimetic Therapeutics in November 2012 for $190 million in cash plus another $190 million in possible milestone payments.
The company this week also reported heavy losses during the 3rd quarter of 2013. Wright posted a $130 million net loss on sales of $57.6 million during the 3 month period ended September 30, a dramatic increase from a $5.3 million loss on $50.9 million the company reported during the same period a year ago.
However, the bulk of those losses came from accounting write-offs on its balance sheet, including a $137.9 million net non-cash charge "associated with the write-down to fair value of assets and liabilities associated with the BioMimetic acquisition, and a $3.2 million charge associated with noncancelable inventory purchase commitments, following the receipt of the not approvable letter from the FDA associated with the PMA application for Augment Bone Graft," Wright officials wrote.
The company also took an $11.2 million transition charge associated with the sale of the company’s knee and hip business, which it divested in a $290 million deal with Hong Kong-based MicroPort Scientific (HK:0853).