GI Dynamics (ASX:GID) said yesterday that its notified body in Europe withdrew its certification for CE Mark approval for its EndoBarrier device, meaning the company can no longer sell the obesity and diabetes treatment in the European Union.

CEO Scott Schorer told MassDevice.com today during a telephone interview that Boston-based GID passed an intensive, week-long inspection of its quality management system and was taken by surprise when SGS United Kingdom said Nov. 11 that it would withdraw the CE Mark effective Nov. 12. When the potential CE Mark suspension was announced in May the company said it would have six months to regain compliance.

“We went through the annual ISO audit of our quality management system in May 2017. We subsequently went through a re-inspection, not only of the observations made in May but an expanded inspection to full ISO certification, as you would for a startup, and expanded the scope of inspection significantly from one-and-a-half days to almost seven days and we passed with only one minor observation,” Schorer told us today. “We think that the date’s wrong, it should be Nov. 17. We are trying to communicate with SGS to resolve this and provide information that we know satisfies SGS’s concerns.”

Schorer also said the company is working on winning an investigational device exemption from the FDA and hopes to have it in hand during the first quarter next year.

“In parallel to cleaning up our entire quality management system and passing the ISO 13485 inspection, we’ve been working to get our filing together with FDA,” he said. “It would be ironic that while losing our CE Mark – for what we consider to be not the right reason at all and we disagree with the finding and the conclusions drawn – it would be ironic that while that’s happening we would be moving forward in the U.S.”

Schorer, a medical device veteran with stints as an executive or advisor at a raft of companies under his belt, has made a number of changes at GI Dynamics since taking over in March 2016. Brought on after a higher-than-expected rate of liver abscesses forced the halt of a clinical trial in 2015, it wasn’t long before he instituted a 30% cut to the workforce in an effort to cut the company’s cash burn as it pursues FDA approval for the EndoBarrier.

The changes also included a reboot for the C-suite; Schorer tapped former Oxigene and HemaSure finance chief Jim Murphy to be CFO and recruited ex-Johnson & Johnson (NYSE:JNJ) and Covidien exec Brian Callahan as chief compliance officer. In May he told us that the new management team, knowing it had a long list of compliance issues to address right off the bat, initially focused on the highest-priority items – patient safety and data integrity.

“We got all that working, essentially for the first time,” he said at the time, noting that the notified body’s observations concerned older “documents in the [quality] system we just haven’t had a chance to clean up yet.”

“Despite all the issues, the product has produced phenomenal data. There’s nothing like it, there’s nothing on the horizon like it,” Schorer said today.

GID shares closed down -16.7% at A4¢ (about 3¢) today in Australia.

($1 = A$1.30874)