A Cobb County company that makes tissues from donated placentas for wound care and other uses has been served with a letter from the Food and Drug Administration stating the agency believes the company lacks approvals to market the products.
Marietta-based MiMedx said in a news release Wednesday that the company “expressly disagrees” with the FDA’s position and is in talks with the agency to resolve the matter.
The Aug. 28 letter, made public on Wednesday, sent MiMedx shares into a tailspin. The stock price fell nearly two-thirds before rebounding and ending the day under a trading suspension. It closed at $3.85, off 36 percent.
The so-called “Untitled Letter” from the FDA is a less-severe regulatory rebuke than a “Warning Letter,” which could lead to some form of enforcement action if not immediately corrected.
The company’s products are used in a variety of specialities, including sports medicine, ophthalmic and dental care. The company recently released results of a study that found one of its products can help treat inflammation associated with plantar fasciitis, a foot injury.
The amniotic tissue is derived from donated placentas.
MiMedx sells products under its own brand and others. Products listed in the letter include AmnioFix Injectable, AccelShield Injectable and EpiFix Injectable.
The FDA letter to Surgical Biologics, a MiMedx firm, said the company is registered with the FDA to “recover, screen, package, process, store, label and distribute these products.” But the products have been manipulated to an extent that MiMedx would need a “valid biologics license,” a higher level of clearance than it currently has, to market them.
“Such licenses are issued only after a showing of safety and efficacy for the product’s intended use,” the FDA said.
Arnie Friede, a senior food and drug law attorney at Sandler Travis & Rosenberg in Washington, D.C., said the FDA is in essence telling MiMedx that the company is creating a new product, not distributing an existing one, and must adhere to stricter rules.
The FDA, he said, also wants to know more about the safety and efficacy of the amniotic tissues.
MiMedx Chairman and CEO Parker “Pete” Petit and other company officials did not immediately return messages seeking comment.
In the news release, MiMedx’s No. 2 executive, president and chief operating officer Bill Taylor, said the letter surprised the company because the FDA had inspected its facility in July 2012, and one of the purposes of that visit was to “determine the status of the (company’s) AmnioFix injectable product.”
The FDA, he said, collected “advertising, packaging, process procedures and studies conducted related to the product.” Taylor said the company was told the inspection was “classified as NAI, or No Action Indicated.”
The company said it “is very focused on regulatory compliance” and marketed the product only after getting legal advice on FDA regulations.
MiMedx reported net sales of $25.1 million in the first six months of 2013, and a net loss of $2.4 million in that period. That’s compared to sales of $8.6 million and a loss of $1.8 million in the first six months of 2012.
The company reiterated it expects 2013 revenue of $54 million to $60 million, and its 2014 target of $90 million to $110 million. The company said it expects injectable products to account for 15 percent of revenue in 2014.
“Based on other precedents, the company believes it should be able to continue to sell its injectable products, but even if that not the case, management believes it can refocus its resources to achieve its stated revenue goals,” Petit said in the release.