Globus Medical (NYSE:GMED) said the FDA issued a warning letter last month over its MicroFuse bone-growth putty, sending share prices down today on Wall Street.
Audubon, Pa.-based Globus said the Sept. 26 warning letter flagged "deficiencies" in its response to a Form 483 warning the watchdog agency issued after inspecting the medical device company’s Audubon facility in May and June.
"These deficiencies relate to the company’s MicroFuse putty manufactured between Oct. 25, 2012, and Dec. 20, 2012, and mechanical testing of the company’s MicroFuse putty, procedures to control environmental conditions in a clean room at the company’s facility, and internal procedures for medical device reporting. The warning letter does not restrict the company’s ability to manufacture or seek 510(k) clearance of products," Globus said. "The company is currently addressing the deficiencies cited by the FDA in the warning letter and intends to work expeditiously to address each of the outstanding issues. The company believes that the FDA’s concerns set forth in the warning letter can be resolved without a material impact to the company’s financial results. However, the company cannot give any assurances that the FDA will be satisfied with its response to the warning letter or its proposed resolution of the outstanding issues."
Leerink Swann analyst Richard Newitter said in a note to investors today that the warning letter is unlikely to have much of an effect on Globus, because its putty business is so small.
"We estimate MicroFuse comprises <1% of GMED’s total sales, and we would note that biologics has been an area where GMED’s portfolio has been most lacking; thus not a growth driver for the company. In fact, in our view biologics remains very much a future growth opportunity for GMED," Newitter wrote in a note to investors. "Warning letters are never a good thing, but again MicroFuse is not a key product for GMED. We checked in briefly with management, and the company is currently addressing the deficiencies cited by the FDA in the warning letter and intends to work quickly to address the issues."
GMED shares were down 1.2% to $17.50 apiece as of about noon today.
