Kips Bay Medical (OTC:KIPS) this week said it might have to consider shutting its doors if a clinical trial of its eSVS surgical mesh doesn’t pan out, after initial results failed to meet a last-ditch bar set in March.
The eSVS mesh is designed to keep vein grafts open during in coronary artery bypass graft surgeries. The device is comprised of a flexible, knitted sleeve that fits around the outside of the vein in order to reduce vessel wall stress and mitigate the potential for vessel injury.
In March Kips Bay turned to founder, chairman & CEO Manny Villafaña and other backers for a private placement worth up to $3.25 million. The deal called for the investors to put the cash up in 4 equal tranches, but not before the Emesh I trial generates 10 angiograms from eSVS-treated patients demonstrating that it’s "advisable for the company to continue with the Emesh I clinical feasibility trial and to continue to pursue marketing approval by the FDA for the eSVS mesh," Kips Bay said in March.
But the company said May 12 that 7 of the newly treated patients "were not patent at the time of their 6-month follow-up angiogram and did not perform as well as the unsupported, or control, SVGs in the trial," according to a regulatory filing.
Although Kips Bay said it will reserve its final decision until "sufficient, meaningful data" comes in, it admitted that the results would have to be "highly compelling" to justify moving forward with a pre-market approval application to the FDA.
"In the meantime, the company intends to evaluate its strategic alternatives," Kips Bay said, including changes to the eSVS device and implant technique, a sale or "an orderly wind-down."
"If the eMesh I clinical feasibility trial is not successful, or if the FDA does not approve an [investigational device exemption] for a pivotal study, the company would be forced to cease operations since it does not have any other products in development," Kips Bay said in the filing. "In addition, the company needs additional financing to continue its operations, and in particular, to complete its eMesh I clinical feasibility trial. If the Company does not receive such additional financing, it would be forced to cease operations."
In September 2011 the FDA issued a non-approvable letter for the device, asking for more information on the eSVS mesh before granting permission for a feasibility study. That approval came in November 2012 and was later expanded. Earlier this month, Kips Bay, which let its listing on the NASDAQ exchange expire last September, said it reached the enrollment goal for the Emesh I feasibility study.
The company slashed its workforce by 38% in January and instituted temporary pay cuts for its officers.
KIPS shares plunged 80.0% to 4¢ apiece yesterday on the news. The stock was trading at 4.5¢ in mid-morning activity today, up 9.2%.