Wright Medical Group, Inc. announced on September 1, 2015 that the company has finally achieved FDA PMA (premarket application) Approval for its BioMimetic subsidiary’s Augment Bone Graft as an alternative to autograft for ankle and/or hindfoot fusion indications.
It wasn’t an easy process after Wright paid $380 million for BioMimetic in 2013.
First, there was a very contentious FDA orthopedic panel meeting and vote in 2011 and then an 18-page “not approvable” letter from the FDA in 2013 which said the company would have to perform a new clinical study. Finally in 2014, after filing an appeal with the agency’s Dispute Resolution Panel, the company and FDA’s Office of Device Evaluation (ODE) reached an agreement whereby the agency would accept an amendment to the company’s PMA application.
After the amended PMA was submitted, the agency finally approved Augment.
Augment is the first new recombinant protein technology for orthopedics to be approved by the agency in ten years and is only the third PMA approved orthopedic device in 2015. The other PMA approvals this year were for Vertiflex Inc.’s Superion Inter Spinous Spacer and Aesculap Implant System’s activLArtificial Disc.
Robert Palmisano, Wright’s president and CEO, said the approval “underscores the significant effort and perseverance from our clinical trial investigators and Wright’s clinical, regulatory and legal teams to bring the product to market.”
The approval of Augment “marks a capstone achievement that demonstrates the strength of our science and provides a breakthrough therapeutic option as an alternative to autograft in ankle and hindfoot fusion procedures.” The company will begin commercial sale and distribution of graft in the U.S. and believes this product, as well as its PDGF (platelet-derived growth factor) technology platform, “will be important drivers of the long-term growth of our business for years to come, ” continued Palmisano.
Christopher DiGiovanni, M.D., the lead investigator for the product’s pivotal trial and chief of the Foot and Ankle Service in the Department of Orthopaedic Surgery at Massachusetts General Hospital, Harvard Medical School, said the FDA Approval, “provides a valuable new therapeutic healing option as an alternative to autograft in ankle and/or hindfoot fusion procedures, which is especially important since the outcomes of these interventions can at times be complicated by delayed union or non-union.”
Augment
Augment is a blend of calcium phosphate (beta-TCP), bovine collagen and human platelet derived growth factor.
Augment’s beta tri-calcium phosphate is the scaffold upon which bone is expected to grow after surgery. The human platelet derived growth factor (rhPDGF-BB) is the signaling protein that triggers new bone growth in the ankle. The conclusion of Wright’s clinical study was that the matrix plus the biologic accelerated fracture healing and enhanced joint fusion with no evidence of ectopic bone formation (a plus over Medtronic’s Infuse) and no evidence of toxicity.
Augment’s PDGF is created using recombinant DNA technology which is more than two decades old and has been used by spine surgeons and other physicians in hundreds of thousands of patients globally.
PDGF is a naturally occurring protein and one of the primary growth factors released when platelets activate and degranulate in response to injury. PDGF is responsible for triggering a number of cellular events critical to bone growth and healing.
“As an FDA-approved alternative to autograft in ankle and/or hindfoot fusion procedures, Augment offers a clear patient benefit by avoiding secondary surgical sites for the harvest of autograft tissue, which can result in prolonged harvest site pain in some patients, ” stated the company announcement.
Anticipated Sales
The company has guided analysts to expect sales in the U.S. to ramp up gradually during the first six months after launch of the product while hospital value analysis committees review Augment and physicians get educated about its use. Augment’s sales, say analysts, are likely to be in the range of $10 million to $12 million in the first seven to eight months post-approval. Sales will begin in the next several weeks once the company builds inventory and begins to fill up its U.S. distribution network.
FDA Drama
Augment is now ready for the market, but the drama of the FDA road to approval will not soon be forgotten by regulatory staffs at device companies.
Orthopedic panel member Brent Blumenstein, Ph.D., a statistical consultant said Augment’s trial had “no meaning.” Agency staff had also suggested a risk for “potential” cancer formation in patients receiving Augment based on a Black Box warning for a Johnson & Johnson product called Regranex. Augment contains the same PDGF molecule as Regranex. Regranex is FDA approved for use as a foot ulcer treatment.
Right before the panel was about to vote, Sam Lynch, D.M.D., D.M.Sc., founder of BioMimetic made an unscheduled and impassionate presentation to the panel.
“Please, ” he pleaded, “judge our product by our clinical evidence, not some other product.” Lynch told the panelists that the company’s recombinant human platelet-derived growth factor (rh-PDGF) had been in clinical use for over five years, in 250, 000 patients as a dental product (sold under the brand name GEM 21S). Furthermore, Lynch pointed out, 600 patients in the U.S., Canada and Europe had already been treated with Augment and not one significant adverse event was ever reported.
The final vote was 12-6 in favor of approving Augment as a safe treatment for ankle surgery.
The panel members spoke publicly about their votes. Panelists and clinicians Glenn Johnson, M.D., and Sam Nasser, M.D., Ph.D., both said they were swayed by Lynch’s summation and were openly critical of the FDA for not presenting the safety record of the company’s dental product. When the panel was discussing adverse reaction definitions, Nassar said he thought the agency came in to the meeting with an agenda. Mark Malkerson, the agency’s representative on the panel, gamely told the panel that the agency would endeavor to do better in the future.
The panel went on to vote 10-8 that Augment for ankle fusion surgery was effective and, finally, voted 10-8 that this PDGF biologic product when used by surgeons in hindfoot and ankle surgery, delivered benefits that outweighed the risks.
But the panel recommendation wasn’t enough for the chastised agency staff which issued the 18-page “not approvable” letter saying the company would have to perform a new clinical study. That’s when Wright Medical’s regulatory staff went to work and worked the appeals process and final approval.
Biggest Pure Play Extremity Supplier
Wright Medical’s FDA victory comes as the company is finalizing a merger with another extremities company, Tornier. Shareholders approved the merger on June 18, 2015. With the merger, the new Wright Medical will be the largest pure play supplier of extremity implants and instruments with sales of $650 million and a double digit sales growth future to, most analysts expect $825-$875 million by 2016.
Extremities is the place to be in orthopedics these days with comparatively less pricing pressure than other orthopedic sectors, a growing backlog of surgeries, high single-digit procedure growth rates and rising levels of implant and instrument innovation.
According to an October 28, 2014 RBC (Royal Bank of Canada) Capital Markets survey, approximately two-thirds of U.S. surgeons said that they have “seen no signs of increasing pure implant pricing pressure in forefoot, midfoot and hindfoot implants and in ankle fusion procedures at their hospital/practice over the past 12 months, which makes foot/ankle one of the few orthopedic markets with little to no pricing pressure.”
Additionally, continued the survey, RBC believes that “mix benefits from continued penetration of higher-priced implants (i.e., hammertoe implants and total ankles) are adding to the overall U.S. foot/ankle market growth. This gives us confidence that the U.S. foot/ankle market can continue growing 10%+ y/y in 2015.”
In addition to Augment, Wright is in the process of launching its Infinity total ankle, which management claims is more bone conserving, easier to implant and more durable long-term relative to other total ankles on the market.
Foot and Ankles’ Fab Five
The merger of Wright with Tornier will mean that five companies (Arthrex, DePuy Synthes, Smith & Nephew, Stryker/SBi and Wright Medical) will have approximately 78% of the foot/ankle market. According to the RBC survey, surgeons also selected the same companies as the companies with the best products and training programs for physicians. About 20% of U.S. surgeons listed SYK/SBi as the manufacturer with the best product/procedure training, followed by DePuy Synthes at about 18% and Arthrex at about 16%, with Wright Medical was #4 on the list at about 14%.
Wall Street Expectations
While the company expects U.S. sales of Augment over the next seven to eight months to be in the range of $10 million to $12 million in an ankle and/or hindfoot fusion procedures market of approximately $300 million, Needham & Company analyst Mike Matson said pricing could limit adoption.
“On one hand, Augment has strong clinical evidence from its pivotal trial to support its use which should help it navigate hospital value committees. On the other hand, we think that Augment is an expensive product with a cost of $2, 500-$3, 000 per procedure (which places it above stem cell bone graft products but below Infuse). Given the price, we think that Augment ends up mostly being limited to higher risk patients including smokers, diabetics, revisions, and/or post-traumatics. As a result, we think a more realistic long-term annual sales target is $100 million (which should still provide a multi-year growth benefit).”
Matson also notes a possible upside, and risk.
There is potential for Augment to be used off-label in other extremities procedures and even other orthopedics procedures such as in spine and trauma. Given Medtronic plc’s issues with Infuse (the last biologic approved by the FDA), it remains to be seen how tightly the company polices Augment use. “We think that it’s in Wright Medical’s interest to try to do what it can to prevent off-label use, ” added Matson.
Given the long and torturous regulatory road and the company’s painful Justice Department deferred prosecution agreement experience a couple of years ago, Matson is probably right.
Wright Medical’s got a good thing going as it is.
