Medical device maker Kips Bay Medical (NSDQ:KIPS) saw widening losses and sinking sales during its most recent quarter, but the company marked an important win with FDA approval to complete full enrollment in the U.S. arm of a feasibility study.
Kips bay reported losses of $1.5 million, or 9¢ per share, on sales of $27,000 in the 3 months ended Dec. 31, 2012. That’s a 71.3% decrease in sales and a 34.2% increase in losses compared with the same period in 2011, when the company reported $1.1 million in losses, or 7¢ per share, on sales of $94,000.
"The decrease in net sales for the quarter and year-to-date periods was the result of reduced demand from the company’s distributors in southern Europe which are most affected by national budget problems," according to an SEC filing.
The slide affected full-year results as well, where the company reported a 10.3% decrease in sales and a 29.6% increase in losses. For 2012 Kips Bay reported $5.5 million in losses, or 34¢ per share, on sales of $226,000. That compared with $4.3 million in losses, or 27¢ per share, on sales of $252,000.
Kips Bay expects its R&D expenses to "increase slightly" in the year ahead as the company makes progress in clinical studies of its eSVS Mesh external saphenous vein grafts, which have finally gotten the FDA’s full approval to proceed.
The Minneapolis, Minn.-based company is in the midst of a feasibility trial of its eSVS Mesh, evaluating the initial safety and efficacy of the device during coronary artery bypass surgery. The study results will help support Kips Bay’s application for Investigation Device Exemption for a pivotal trial.
Enrollment in the eMESH I clinical trial began in August 2012, and at capacity the study will include up to 120 patients among 8 E.U. and 4 U.S. sites, according to the report. The FDA initially granted only conditional approval for U.S. participation in the eMESH study, permitting staged enrollment starting with 5 patients and 4 U.S. sites. Earlier this month the FDA expanded the permit to full U.S. enrollment of 50 total patients.
"In pursuing our feasibility study, we have met and worked with some tremendously talented and dedicated cardiac surgeons at a number of preeminent cardiac surgery centers in Europe this past year," Kips Bay chairman & CEO Manny Villafaña said in prepared remarks. "But it’s particularly gratifying to finally be working with U.S. cardiac surgeons to study our eSVS Mesh. In the upcoming year, we will focus on completing the enrollment in our feasibility study."
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. Despite recent setback in overseas sales, the progress with the FDA is an important turnaround for Kips Bay.
In September 2011 the FDA issued Kips Bay a non-approvable letter, asking for more information on the eSVS mesh before granting IDE approval for perform pivotal human trials. The FDA had rejected Kips request for permission to add 4 U.S. sites to its ongoing feasibility trials, asking instead for more information on pre-clinical testing design testing for the mesh.
That decision sent KIPS shares plummeting 34% to an new all-time low in a single day.
In November 2012 the FDA granted conditional approval for staged U.S. enrollment in the eMESH I clinical trial, and the federal watchdog agency granted full enrollment on March 7, 2013.
KIPS shares gained 1.6% in yesterday’s trading, closing at $1.27.