Extreme FDA Trades on Pending Smallcap Medical Device Decisions

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 |  Includes: BVX, NSPH
by: Mike Havrilla

Below is a sample of extreme FDA trades on pending medical device decisions (510k or PMA filings) among companies with market caps below $150 million (M) which are taken from the BioMedReports.com database of over 200 entries included in the FDA and Clinical Trial Calendars. The FDA does not issue PDUFA decision date deadlines for medical device applications, which consist of the 510(k) and pre-market notification application (PMA) routes. The review period for PMA filings is typically more involved and longer than 510(k) applications. All financial data is taken from Yahoo! Finance on 5/25/09.

1.) Nephros [OTC:NEPH]: Price – $0.14, Market Cap – $5M, Revenue (ttm) – $1.7M, Net Loss – ($5.4M)
The Nephros hemodiafiltration (HDF) system is designed to improve the quality of life for End-Stage Renal Disease (ESRD) patients while addressing the critical financial and clinical needs of the care provider. The Nephros HDF system removes a range of harmful substances more effectively, and with greater capacity, than existing ESRD treatment methods, according to the Company.
The Nephros Dual Stage Ultra-filter (DSU) is the basis for Nephros's line of water filtration products. The patented dual stage cold sterilization ultrafilter has the capability to filter out bacteria and, due to its exceptional filtration levels, filter out many viruses, parasites and biotoxins. Sale of the DSU has begun at several major U.S. medical centers for infection control and has been selected for further development by the U.S. Marine Corps for purification of drinking water by soldiers in the field.
On 11/14/08, Nephros submitted a 510(k) application to the FDA for approval of its HDF products for ESRD in the U.S. market. The application details the Company's OLpur MD220 diafilter and OLpur H2H Hemodiafiltration module. Following its review of the application, the FDA has requested additional information. Nephros replied to the FDA inquiries on 3/13/09. Per FDA guidelines, the FDA has 90 days to review the additional information provided by the Company for an expected decision by Friday 6/12/09 or Monday 6/15/09.
On 10/7/08, Nephros filed a 510(k) application for approval to market DSU filters to dialysis clinics for in-line purification of dialysate water. Following its review of the application, the FDA requested additional information, and Nephros provided a formal response to the agency on 2/24/09. Per FDA guidelines, the FDA has 90 days to review the additional information provided; so a decision from the agency could come as early as Tuesday 5/26/09.
2.) Bovie Medical (AMEX:BVX): Price – $7.40, Market Cap – $126M, Revenue (ttm) – $28.6M, Net Income – $2M
On 3/3/09, BVX announced the filing of a 510(k) pre-market notification application (PMA) for regulatory clearance of its ICON GS electrosurgical generator and handpiece (J-Plasma system). The technology utilizes a gas ionization process producing a stable thin focused beam of ionized gas that can be controlled in a wide range of temperatures and intensities for greater surgical precision which is minimally invasive.
On 5/19/09, BVX announced a 510(k) submission to the FDA seeking pre-market clearance for a laparoscopic SEER device for solid organ resection. The laparoscopic SEER is a line extension of the Saline Enhance Electrosurgical Resection (SEER) device that Bovie launched earlier this year and will address the growing market of minimally invasive liver resection. The laparoscopic SEER allows the surgeon to dissect and achieve hemostasis with a single device resulting in less instrument utilization and fewer instrument changes in a minimally invasive approach.
BVX is also working toward 510(k) filings for its BOSS orthopedic tissue resection device and Polarian vessel sealing technology. Since 510(k) medical device applications do not have firm FDA decision dates, my estimate for responses on the Company's two pending applications would be late 2009 to early 2010.
3.) Nanosphere (NASDAQ:NSPH): Price – $3.65, Market Cap – $81M, Revenue (ttm) – $1M, Net Loss (ttm) – ($36.5M)
In early May, NSPH received FDA clearance for its influenza and respiratory syncytial virus (RSV) test which leaves three 510(k) applications still pending at the FDA with estimated decisions during 2H09, including diagnostic assays for cystic fibrosis and hemochromatosis (a disorder in which excessive amounts of iron are absorbed and accumulate in the body in tissues and organs such as the heart and liver), along with a second generation version of its Verigene System that incorporates automated sample processing.
Disclosure: No positions.