On August 28, 2013, the FDA sent an unwelcome and surprising letter to Georgia-based allograft supplier MiMedx Group, Inc., informing them that one of their allograft products, EpiFix, did not meet the requirements for an allograft and therefore was being sold without the required FDA clearance or approval.
The letter, otherwise known as an “Untitled Letter”, said the following:
“The FDA is contacting these other distributors under separate cover. These products include: AmnioFix™ Injectable, AccelShield™ Injectable (Accel Spine), — (b)(4) ———————————-, and EpiFix ™ Injectable, all of which are intended for use, among other things, in reducing inflammation and scar tissue formation, as well as for enhancing wound healing of soft tissues. These micronized amniotic/chorionic-based products are manufactured by — (b) (4) ——- dehydrated composite amnion and chorion tissue, and then having the end user re-suspend them in normal saline for injection into soft tissues. Injectable amniotic/chorionic-based products are human cells, tissues, and cellular and tissue-based products (HCT/Ps) as defined in 21 CFR 1271.3(d). However, these products are HCT/Ps that do not meet all of the criteria in 21 CFR 1271.10(a) and therefore are not regulated solely under section 361 of the Public Health Service Act (PHS Act) and the regulations in 21 CFR Part 1271. Specifically, the products do not meet the minimal manipulation criterion set forth in 21 CFR 1271.3(f) (1) due to the micronization process which alters the original relevant characteristics of the structural tissue, relating to the tissue’s utility for reconstruction, repair or replacement. As a result, your HCT/Ps are drugs as defined under section 201(g) of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. 321(g)] and biological products as defined in section 351(i) of the PHS Act [42 U.S.C. 262(i)].”
In other words, MiMedx’s micronized and injectable versions of its allograft placental tissues which are sold under several brand names including AmnioFix, AccelShield and EpiFix, did not meet the requirement of minimal manipulation because, during processing, MiMedx had “micronized” the tissues. Micronizing the tissue, said the FDA, altered their original structural characteristics enough to push them from the allograft designation into a drug and biologics regulatory category.
MiMedx, a public company, was literally crushed in the marketplace when the letter was disclosed. Its stock, which had been trading at $6.06 per share (about $600 million market value) before the letter, collapsed to an intra-day trading low of $1.81 before closing at $3.85 per share ($370 million market value).
CEO Pete Petit and President Bill Taylor immediately scheduled a conference call to explain the FDA letter and to reassure investors. They came out swinging. The letter was a surprise, they said. Based on guidance from their internal FDA experts they believed they were in full compliance.
Furthermore, said Petit, MiMedx is the market leader and is trying to set the highest standard with respect to FDA regulations—as opposed to other suppliers of amniotic tissue forms. “We have seen some violations of the 361 regulations [by other firms] and my years in healthcare have made it clear to me that those types of continued violations will and should cause the FDA to direct individual cases. And if concerns are significant, to then take broader steps and ensure that the regulations are being followed.”
Importantly, Petit noted, the letter did not meet the threshold of regulatory significance in the manner of a Warning Letter.
According the FDA, the agency uses Warning Letters for violations that may lead to enforcement action if they are not promptly and adequately corrected. FDA uses Untitled Letters for violations that are not as significant as those that trigger Warning Letters. Unlike a Warning Letter, an Untitled Letter does not include a statement warning that failure to promptly correct a violation may result in an enforcement action.
Finally, Bill Taylor mentioned that he and his staff would be meeting with the FDA and working to find a resolution. In the final analysis, he said, it may all be resolved with labeling changes.
Doubts Persist
Petit and Taylor are long-time healthcare company executives, but first time human tissue processors. Indeed, Pete Petit is known for both his exemplary management skills and his aggressive style.
Will the FDA see “micronizing” in the same manner as Petit and Taylor? As Taylor pointed out in his conference call with Wall Street, other products are “micronized” including human skin (Cymetra) and bone. Although in the case of Cymetra, the micronized allograft skin is injected into skin so the homologous requirement seems to be met. In the case of allograft bone, the material is typically used to augment bone in the recipient.
In addition, management made it clear that the products affected by this FDA letter were a minor part of their business (about 15% of sales) and even if they had to stop commercializing them, it would not change their sales and earnings guidance for 2013.
The market, however, remains skeptical. At last count, the number of law firms soliciting plaintiffs to sue MiMedx was about eight, although the final number may well hit double digits.
From our perspective, we would not want to bet against Petit and Taylor. Eventually and sooner or later, they will get these issues resolved and put to bed.
There are thousands of veterans like myself with rotting limbs and enduring pain for years while trying to maintain a “normal” family life and a productive influence upon society. I received an Epifix alloggraft at the Phoenix VA wound center one week ago. Today, 35% of my wound is almost back to what can be considered normal. I have no more “severe and constant” pain. I can walk with a normal stride and I no longer need continous narcotic intervention to to mask my pain. To the FDA – do what you must but get it out to us! ASAP!