FDA Premarket Approvals: Good Source of Info on Medical Device Companies

Breakthrough developments by MedTech (Medical Device) companies present investment opportunities for those who understand which events to monitor. Filing a Premarket Approval (PMA) application is a major milestone for any MedTech company, much like the filing of a New Drug Application (NDA) for a drug company.

The FDA requires PMA pathway clearance for devices designated as Class 3, which ‘support or sustain human life’ or are of ‘substantial importance in preventing impairment of human health.’ Class 3 devices are therefore generally higher value than Class 1/2 devices, which are used in less critical situations, or are essentially replicas of other approved devices, and undergo the less intensive 510(k) approval pathway.

Although most companies announce PMA filings, few investors track the PMA pipeline. This is likely due in part to the fact that the approval timeline is less transparent than for NDAs, for which PDUFA (approval decision) dates are made public. Some MedTech firms provide PMA clearance guidance for their pending devices, usually no more precise than to a specific quarter. In the absence, of these disclosures, PMA clearance timeframes can be estimated with fair accuracy based on historic review periods, which range on average from 8 – 14 months, but can be longer, especially in cases where the FDA requests additional clinical trials data. T

To estimate the approval impact on a company’s stock price, it is helpful to know the market size and competitive landscape which a device would participate once approved. Also, intuitively, PMA approvals will likely have greater impacts on smaller companies.

Two Recent PMA Clearances:

Company (Ticker)	Class 3 Device	Indication	Approval Date	Return Since Approval
The Female Health Company (FHC)	FC2 Female Condom	Prevention Of Pregnancy/Contraception, Prevention Of Sexually Transmitted Diseases	3/11/2009	38.6%
ATS Medical, Inc (ATSI)	ATS 3f Aortic Bioprosthesis Heart Valve	Aortic Stenosis/Aortic Valve Diseases	10/30/2008	28.0%

Two Potential High-Impact Upcoming PMA Decisions

Company (Ticker)	Class 3 Device	Indication	Approval Date Estimate
STAAR Surgical Company (STAA)	Visian TICL (Toric Implantable Collamer Lens)	Myopia (Nearsightedness) with Astigmatism	Mid-2009 Company Estimate
Hologic, Inc. (HOLX)	Adiana Complete Transcervical Sterilization System	Permanent Birth Control (Female Sterilization) by Occlusion of the Fallopian Tubes	Fiscal 2009 (by end September 2009) Company Estimate

Disclosure: No Positions