Lifecore Biomedical (Chaska, Minnesota) has decided to pursue resolution of a dispute with the FDA through the agency's new Medical Devices Dispute Resolution Panel (MDDRP), making it the first company to request such a hearing. The company expects the panel to convene sometime during 1Q01. The company decided to pursue this action in connection with a PMA application for its ferric hyluranate product, Gynecare Intergel, an adhesion prevention solution. The product has been under evaluation in pivotal human trails since March of 1996. The most recent PMA application was filed in March of 1999 and approved for expedited review in May of that same year. The product was determined to be "not approvable" by a Jan. 12, 2000, recommendation of the General and Plastic Surgery Devices Panel.

Then last June, the company filed a major amendment to the PMA to address the concerns raised in the January panel meeting. After review of the amendment, FDA's Office of Device Evaluation (ODE) determined that, while the results of clinical testing appeared to be encouraging, there was not sufficient information to demonstrate reasonable assurance of safety and effectiveness. The panel specifically cited unusually high rates of infection. Lifecore and its outside experts disagreed with the ODE's scientific findings concerning its product, and they have been in discussion with the FDA concerning the various options for review of ODE's decision.

The company decided to pursue the dispute panel route after consulting with Les Weinstein, ombudsman for the Center for Devices and Radiological Health (CDRH). Weinstein declined comment on the matter, citing his involvement on the group as executive secretary and as the person supplying oversight of its activities.

Lifecore is taking a big chance with this push for resolution. The panel serves as a sort of "court of last resort" for the device industry – the decision that it renders will be final. On the other hand, since the panel votes immediately after the hearing, the company can get instant approval if things go according to plan. The decision that the panel renders will be sent directly to David Fiegal, the director of the CDRH, for ratification.

"I am excited about the prospect of final resolution of this issue after the length of time we have been at this," said Jim Bracke, Lifecore president and CEO, in a conference call announcing the company's intent to go before the panel. "Novel products are often very challenging for a bureaucratic review process, and the FDA wants to make sure that it is doing its best to expedite these matters and give them a fair hearing." Bracke added, "We have been told in our conversations with Les Weinstein that our type of impasse fits the very thing that they have imagined that this dispute panel should rule on." He termed the process as being "fairly brief" and that the company would accept the ruling of the panel, believing it will be the most impartial hearing they will get from the FDA.

The MDDRP consists of eight members: three permanent scientific voting members, two non-voting members representing the medical device industry and consumer interests and three other temporary voting members, chosen for their specialized expertise within the area of dispute. None of the panel members is affiliated with the FDA.

Sulzer responds to hip-implant problems

In the wake of a recall of defective hip replacement devices, Sulzer Orthopedics (Austin, Texas) said in mid-January that it is introducing a series of new cleaning procedures into the manufacturing processes for making the Inter-Op acetabular shells used in its implants. Sulzer Medica, a unit of Sulzer AG (Winterthur, Switzerland), acknowledged that it will have to settle lawsuits in the wake of the recall, but said that it expects $32 million in extraordinary income will cover the impact of those settlements in 2001.

The recall was announced last December, following the discovery of what the company called "an unacceptable level of residue of a mineral oil-based lubricant on the surface of the shells." The problem can result in the prevention of a proper bond between implant and bone, and a number of patient injuries have prompted several lawsuits against the company. The company's statement concerning the new cleaning processes most likely was designed to allay fears about both the hip implants and also its other products. Sulzer said, "Significant testing was conducted which led to the development of the final multi-step cleaning process." It said the number of cases of devices reported loosening now totals 129. "Due to the random nature of the problem, it is difficult to estimate the exact number of patients who may experience loosening of the shells," the company said. It continued to recommend against removal of the implants "unless [patients] exhibit symptoms of loosening."

Andre Buchel, Sulzer Medica CEO, said the company regrets the problem and that it accepts "full responsibility for the recall. We will treat all patients fairly and apologize for any effect the recall may have on patients and their families."

KeraVision reduces work force 75%

In its second major cutback of staff in three months, KeraVision (Fremont, California) said in mid-January that it is reducing its staff by three-fourths, or a total of 38 employees, including "most senior management positions." A maker of micro-thin prescription inserts, called Intacs, for correcting lower levels of myopia, KeraVision last November said it was cutting back its workforce by 64 people, which at the time was a 60% reduction. With this latest cutback, the company now has what it termed "a focused core" of 12 employees.

In its statement, the company called the latest reductions part of a strategy "to conserve cash and allow product development activities to continue," saying that it will continue to supply the Intacs devices to its physician customers. In both the November and January announcement of cutbacks, KeraVision said that test marketing of the Intacs inserts has been successful. But, according to the statement, "Unfortunately, KeraVision has not been able to raise the additional cash needed to continue or expand the test market program."

Thomas Loarie, chairman and CEO of KeraVision, told BBI that he feels "very positive about our product and technology. The difficulties that we've incurred are in creating awareness of our product."

Inamed sales down, Reich resigns

Inamed (Santa Barbara, California), a maker of surgical and medical devices used in plastic and reconstructive surgery, last month reported that its 4Q00 earnings will come in below expectations because of reduced sales and that its president and co-chief executive, Liana Reich, is resigning. Inamed reported expected quarterly sales of $58 million, compared to its previous guidance of from $61 million to $67 million. Earnings will now be $2 to $2.10 a share, down from previous estimates of $2.25 to $2.75 a share. Overall sales for 2001, Inamed said, will be from $255 million to $265 million, compared to its previous prediction of $270 million to $295 million.

News of new financings

UTI (Collegeville, Pennsylvania), a medical device parts maker, has filed to raise as much as $115 million in an initial public offering of its stock. The firm did not say in its preliminary prospectus with the Securities and Exchange Commission how many common shares it plans to offer or the price per share. The company designs and manufactures components and their subassembly and finished medical devices. Its customer list includes Boston Scientific, Guidant, Johnson & Johnson, Medtronic, Smith & Nephew and Stryker. "Our objective is to provide medical device companies with a comprehensive outsourcing solution that includes designing, engineering and manufacturing their specialized, high precision medical devices," UTI said in the prospectus. The money raised from the offering will be used for debt repayment and general corporate purposes, according to its SEC filing. The company, which will change its name to UTI from MDMI Holdings prior to the IPO, has operations in seven states, Germany and Great Britain, as well as a facility being developed in Ireland.

Songbird Hearing (Cranbury, New Jersey), maker of what it says is the world's first disposable hearing aid, has raised $45 million in its fourth round of equity financing. This round was led by Investor AB through its wholly owned subsidiary, Investor Growth Capital, a health care, information technology and telecommunications private equity and venture capital investment group. Songbird's disposable hearing aid is targeted to the approximately 60 million hearing-impaired persons in North America, Europe and Japan who have not yet purchased a hearing aid but would benefit from doing so. Fred Fritz, CEO of Songbird Hearing, said, "This infusion of capital will help to complete the national introduction of our first product, to begin international distribution, to expand our production capacity and to continue future product development."

SurgiLight (Orlando, Florida) has concluded an agreement to provide the company with up to $30 million of standby equity based financing from an unidentified institutional investor. The deal provides SurgiLight with the right, but not the obligation, to issue shares when it wishes over the next 18 months, subject to certain monthly maximum and minimum amounts up to a maximum of $30 million. The draw-downs are subject to the filing of a registration statement with the Securities and Exchange Commission covering the resale of the shares. Pricing will be based on the volume weighted average price of the company's stock during the investment period. SurgiLight is involved in the development of ultraviolet lasers, new infrared technologies, and scanning lasers for presbyopia reversal.

Nexell Therapeutics (Irvine, California) said it has entered into a definitive agreement with Acqua Wellington North American Equities Fund for equity financing covering the sale of up to $25 million of the company's common stock over the next 22 months. This financing will be made pursuant to an effective shelf registration previously filed by Nexell with the Securities and Exchange Commission. These shares may be sold to Acqua Wellington, at Nexell's discretion, at a discount to market price at the time of sale. The company said it intends to use proceeds from the offering for general corporate purposes. Nexell's stem cell selection, cell culture and expansion, cell storage, and in vitro tumor diagnostic products are available in world markets.