MiMedx Group's Management Discusses FDA Untitled Letter And Reiterate Guidance (Transcript)

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 |  About: MiMedx Group Inc. (MDXG)
by: SA Transcripts

MiMedx Group Inc. (NASDAQ:MDXG)

FDA Untitled Letter And Reiterate Guidance

September 05, 2013 11:00 AM ET

Executives

Pete Petit - Chairman and CEO

Bill Taylor - President and COO

Mike Senken - CFO

Analysts

Matt Hewitt - Craig-Hallum Capital Group

Bruce Jackson - Lake Street Capital Markets

Suraj Kalia - Northland Securities

Jon Brock - Stifel

Carlo Casulo - Ascend Capital

Operator

Good day, ladies and gentlemen, and welcome to the MiMedx Conference Call. My name is Clinton and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions)

I’d now like to turn the call over to Pete Petit, please go ahead.

Pete Petit

Thank you, (Clinton). I have with me Bill Taylor, our President and Chief Operating Officer; and Mike Senken, our Chief Financial Officer. We're going to let Mike start the call. Mike?

Mike Senken

Thank you, Pete. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These statements are based upon current beliefs and expectations of our management and are subject to risks and uncertainties.

Actual results may differ materially from those set forth within, contemplated by, or underlying the forward-looking statements based on factors described in this conference call and in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2012 and our most recent 10-Q.

We do not undertake to update or revise any forward-looking statement except as maybe required by the company’s disclosure obligations in filings it makes with the Securities and Exchange Commission under federal securities laws.

With that, I will turn the call back over to Chairman and CEO, Pete Petit.

Pete Petit

Thank you Mike, first let me attempt to put this issue related to our (received) letter from the FDA in perspective. Press release was very specific about the type of letter we received and the conversation we have had with the FDA staff. In that conversation I made it clear that MiMedx has many of the same concerns about the development of the amniotic membrane allografts products as does the FDA. We have seen some violations of the 361 regulations and my years in healthcare made it clear to me that those typed of continued violations will and should cause the FDA to direct individual cases. And if concerns are significant amount to take broader steps and sure that the regulations are being followed.

Since MiMedx is a largest and clear leader in this area, it is in our interest to be certain that this tissue is appropriately regulated. We do not wish to see the very bright future this unique tissue that has been created mother nature become target by improper uses, claims or other mismanagement. Therefore, we are in total agreement with the FDA placing additional scrutiny on these products. Relatively (inaudible) MiMedx conducts their sales related to regulatory matters that would characterize us as conservative. Though the bill pay orders and lot of the decades of experience have us clearly understand the long term benefits of strictly adhering to FDA guidelines and regulations. We take no actions with our critical evaluations, the requirements and criteria with our FDA council, who incidentally was a former FDA staff at time. We also have an FDA consultant view as an executive in the agency for decades.

Now relative to current situation I’ll make following comments. As you know yesterday the FDA posted on its website “untitled letter” that questions the company’s micronized injectable products’ eligibility for marking solely under Section 350, 361 of the Public Health Services Act. FDA issued that letter on August 28, 2013. As explained on the FDA websites and “untitled letter is an initial cost bonds with the regulated industry that sites violations that do not meet to threshold of regulatory significance a way of warning a letter “.

In the letter we will see the FDA believe stated that they believe our micronized injectable products are “More than minimally manipulated” but they did not specify basis for this conclusion. We were concerned it would be potentially misleading to disclose a letter before we fully understood the basis for the conclusions in the letter and we’re able to aptly evaluate the issues and the likely effect of letter on our injectable product offering. Therefore the company has tried to obtain clarification from the FDA.

In our initial conversation with the agency on August 29th, we asked the FDA for a meeting to discuss the untitled letter and (inaudible) a better understanding of their concerns. The agency asked the topic to prepare written response prior to scheduling the meeting. We’ve worked through this response over the Labor Day weekend and are going to respond today and tomorrow.

I’m now going to turn it over to Bill Taylor for some comments. Bill?

Bill Taylor

Thanks Pete. As we mentioned in the press release, the company was surprised by the letter considering the FDA conducted a directed inspection of our facility in July 2012, I’ll repeat that, that was July 2012, over one year ago. When we express purposes of which was to determine the status of the company’s AmnioFix Injectable Product. The inspection report indicates the information regarding the company’s AmnioFix Injectable Product which was rolled out in August 2011 was collected and forwarded to CBER, which is the Center for Biologics Evaluation and Research for review. The information collected included our advertising, packaging, processing procedures and studies conducted related to the product. Following that inspection the inspector advised us that CBER had completed its review would not be issuing a Form 483 and had no items for discussion, no non-compliance items. And therefore the inspection was classified as NAI or No Action Indicated. The formal establishment inspection report confirming the NAI conclusion then was issued on December 4, 2012. We’ve posted this letter on our website for review.

We of course believe that if there was an issue with the micronized product, it would have been raised at that time. We proceeded in good faith to market the product and the reception has been very gratifying. The physician community came to us and requested a form factor that they believe we’d more effective for treating certain wounds. Physicians are now seeing how well the micronized (amnion) on the works. Also with our 170,000 graphs distributed over company’s life time and about 10% of which were micronized we’ve had zero serious adverse events. On the tissue (world) zero reportable adverse reactions, so those are very key points for us.

I’ll turn back over to Pete.

Pete Petit

Let me summarize briefly here. We committed the FDA staff that we would grab them with an answer to their letter this week and request the meeting. We felt essentially received an untitled letter we would have the time to have our meeting and resolve the differences or opinions. Obviously that was not the case and we were surprised by the letter being posted on the website since most untitled letters are not posted that quickly.

We (inaudible) most informative relative to our obligations for disclosure to obtain clear direction from the agency relative to their concerns about the de-micronization process and be able to clearly explain to shareholder’s implications. So (inaudible) the micronized product being constrained in some fashion even the worst case would not alter our current revenue guidance for 2013 and ’14 we felt it was appropriate to get some additional clarity on the situation by first submitting our letter and obtaining additional input from the FDA.

Unfortunately we’re busy developing the data information for the letter and we’re surprised by the portion of letter on the FDA website. Of course that cost significant disruption in trading of our stock and a lot of discussion about worse cases and some misinformation about our core business. This doesn’t affect the regular tissue allografts, now we apologize for this disruption.

We try to believe there are misunderstandings relative to the micronization process. We will attempt to clear to those issues us with the letter and then face-to-face meeting with FDA staff. As you are somewhat aware, we have invested a substantial amount of capital on the scientific and clinical studies related to our amniotic membrane allografts. We will continue to do so because in order to maintain a leadership position, one must know more than anyone else about the tissue. We hope it will able to unlike FDA staff with our scientific and clinical information. We hope that will help them with instructions that related to our fine work going forward.

We sincerely wish to contribute to the oddly and safe growth with this unique tissue. To put this in further perspective, the current guidance with the company is provided on our 2014 revenue did include revenue associated with our injectable products. That was approximately 15% of revenues. If some for reasons, we will expect you from continue to sell our injectable, we think those lost revenues we made up by the remainder of our current product offerings. Remember we’re becoming the product of choice for advanced wound care. Fortunately, our two major competitors have products that only offered in one size for single use only.

Over the years, this has caused a significant amount of wastage by positions having a total way to access grafts. Those two companies never spent the time or capital to develop on the size grafts consequently our size appropriate grafts are extremely cost effective relative to their grafts and our clinical study show we’re much more effective clinically therefore overtime we will continue to go on a market share as we worked through the current reimbursement issues. So we’re well positioned with our product and the fact that our two competitors have only one size graft and that has caused significant wastage in the healthcare system is very compelling reason for us to continue to gain the market share.

I know you’re going to ask what are our alternatives relatives to prove greatness administrations current position, for us as you can tell, we feel very strong, we have done and everything we could to admit the (inaudible). We obtained an opinion of FDA council prior to marketing our micronized product. We went through a (Australian product) a year ago as Bill described. We had material information that sent to FDA. The letter we received the result of that order in December of 2012 did not restrict us from marketing our micronized products; however, our goal is to see that the FDA staff is thoroughly educated on our processing techniques for our micronized product. It’s the opinion of our scientists and consultants that our allografts in the micronized from still within 361 guidelines.

The FDA decided that it’s still not the case then there are number of alternatives avail to the company. There are precedence and situations of this nature where our Company has been allowed to market their product with laboring changes, all it can run parallel clinical study on the FDA’s BLA regulations. We certainly hope this will be a possibility since there are no known safety issues related to our micronized product and we have a number of clinical studies showing efficacy.

If some for reason the product had to be removed from the marketplace that will be a significant disappointment to approximately 1000 clinicians that have been quite pleased with the results they’ve achieved; however, as I explained earlier management fields like our revenue forecast will remain within a range we’ve provided with our injectable products and that still maintain a substantial and robust revenue growth of the company.

Okay, we will stop there and open the call for questions.

Question & Answer Session

Operator

Thank you, ladies and gentleman. Your question and answer session will now begin. (Operator instructions). Please standby for your first question. Your first question comes from line of Matt Hewitt of Craig-Hallum Capital Group. Please go ahead.

Matt Hewitt - Craig-Hallum Capital Group

For questions and answers and the first one that I have, if the BLA is required could you kind of walk through the process the time that you think that have might require an additional cost to get through that process?

Bill Taylor

Thanks, Matt, it’s a little early to tell right now because frankly if we have to go down that path it will be in consultation with the FDA but our best estimates are that any clinical study we would have to do in that area would probably be in the range of $1 million to $2 million. They should not be the very large scale studies that you’ve seen in earlier areas that’s our best estimates. There is some precedence out there from some other companies that have been allowed to continue marketing while they’re doing a BLA. You can go look at their financial results and they’re in similar ranges that so we expect it in the area that we would have to do the BLA would be in $1 million to $2 million for the studies.

Matt Hewitt - Craig-Hallum Capital Group

Okay and is there something that you could do like some of the other studies that you’ve completed here recently with in three month, six month kind of timeframe or do you think it would drag on longer than that?

Bill Taylor

Well, when you do a study with the L4 BLA or PNA or something like that there is a heavy input from FDA certainly our part we think we have done in very short amount of time probably in that six to nine month timeframe. The part that we would not be in control over the amount of time it takes for the FDA to review our protocol and okay the protocol because they have to be heavily involved in that portion of it before we execute so yes to the part that we control unknown to the parts the FDA controls.

Matt Hewitt - Craig-Hallum Capital Group

Okay as you look at there have been another companies and I realized that this is more untitled letters but if you look at companies over the past couple of years particularly those in the tissue industry that received Form-483s and I realized that that’s a different type of letter but there has been disruptions caused to existing products or the products that are allowed to remain on the shelves. Do you anticipate any pushback from either the payer side or the clinicians using your products regardless of what happens with this. I mean what are you expecting from the doctors that are currently using these products?

Pete Petit

Well first of all the Micronized version of our L graph was created at the request of another physicians who began to ask for something that they could instead of cutting the graph up themselves and things like that they came to us with these requests and we developed our concepts and got our approvals and moved forward. So this was, it came as a request from practicing physicians.

Mike Senken

Well on the payer side currently we don’t, most of our injectable or all of our injectable is either put into a DRG if it’s used surgically or it’s usually cash pay. So there is not really any impact today on the reimbursement of this. So we don’t view that as an issue, and in terms of any pushback from docs we have only had a couple of physician contact us now we have explained the situation at least to the ones we have discussed it with they are satisfied with it and are moving forward as they have been. Obviously if things change with the FDA then they look at it differently so that’s where they are today.

Matt Hewitt - Craig-Hallum Capital Group

Okay and maybe one more for me and then I will jump back in the queue. Does this impact in any way the other form factors for EpiFix and AmnioFix not impacted by the untitled letter both from a standpoint of utilization and reimbursement obviously you are still waiting for (3 MAX) to approve reimbursement. Is there any impact there?

Pete Petit

No.

Mike Senken

Yes the level is very specific to the Micronized there was no indication of anything else so there is no impact there.

Operator

The next question comes from the line of Bruce Jackson of Lake Street Capital Markets. Please go ahead.

Bruce Jackson - Lake Street Capital Markets

Okay now if I understand the letter correctly the FDA is asking about the micronization process used to create the injectable products and although not your lending a style of the minimal manipulation standard so a couple of questions on that topic; First, my understanding is that many other tissue banks are selling Micronized products can you comment on whether your process differs materially from what the other tissues banks are doing?

Pete Petit

Yes the actually micronization process that we use is very, very similar if not identical to those tissue banks. Frankly that’s one of the specific questions we have for the FDA it is unclear to us the reason they want to treat this differently that they do bone fascia dermis et cetera. There are a number of those other ones out there as a matter of fact there have been specific TRG statements relative to bone dermis fascia and participation or micronization as being 361 tissue so that is a great question and one that we have not had answer yet from the FDA.

Bruce Jackson - Lake Street Capital Markets

And then my second question is looking at the FDA counsel opinion that you got did they talk about some of the things that served as the basis for their opinion and did they talk to anyone at the FDA prior to putting together that opinion?

Pete Petit

Well to speaking Bruce with anybody at the FDA I don’t know the answer to that question I would assume not but I don’t know the relative to everything else they pulled specific references from the FDA there is actually specific references talking about grinding being acceptable in the 361 product in the regulations they pulled specific statements from the TRG relative to grinding being acceptable et cetera. So again when we look through our letter that we had prior to launching it was very, very detailed very, very well done very thorough so again this is -- we are still trying to decipher what it is the FDA has in their mind.

Bruce Jackson - Lake Street Capital Markets

Okay and last question I know this is my, I mean I have the answer to this or it may require some speculation on your part but why do you think the FDA waited so long after the inspection to send this particular letter?

Pete Petit

Well, let us speculate. First of all, we’re not certain that something else has developed in the mean time this is a rapidly growing and of course with rapid growth in any new area of devices or biological or whatever there is a attention gets a focused on it. So, there may be issues and concerns that FDA staff has that we’re not aware of, we have our own concerns and express those in terms of some of the issues we see where we know that 361 is being validated as far as our legal counsel and where we interpret matters.

So, things could have developed here that don’t quite meet the eye and I always try to get with the FDA staff to benefit about it. They operate in a different world than we do and they do things somewhat differently and we will conduct ourselves (inaudible) professional way to try to understand the motivations behind this and help them with the data and science that we’ve developed to come to conclusion with, we think benefit the overall possibilities and the (outnumbering) allographs as we go forward because we again we have a very a long set of interest be in certain that as much as we’ve developed in this area in terms of capital and commitment and time and effort that this new area is property regulated and perhaps not over regulated but either way things are done in orderly proper fashion. So, I think we have a (inaudible) but it’s just speculation and to try to figure out exactly what’s transferred.

Operator

Thank you. The next question comes from the line of Suraj Kalia of Northland Securities. Please go ahead.

Suraj Kalia - Northland Securities

Pete and Bill, if in fact a BLA is required, my understanding is as part of the whole packet you need some level of manufacturing info, preclinical studies, clinical and finally labeling info. Two parts to this question and forgive me if I missed those in some of your commentary. Let’s assume worst case scenario that FDA doesn’t back down from this BLA requirement. So, how much of this information to the extent that you can share, do you all already possess in terms of preclinical safety studies so on and so forth. And second part of this question let’s say, you do have to go down for a certain labeling would it mean for the (inaudible) or some other indications does it mean separate studies or how should we look upon that?

Pete Petit

Well first all (inaudible) and his staff on our clinical side has put a lot of time and effort and we’ve got lot of funding into developing basic clinical data and of course Dr. (Tom Coop) by chief of scientists has done the same thing on the scientific staff. So we have a great deal of data that we’re in process publishing some of that and some of that we’re holding their sales. So, we have a great deal of data, we have 170,000 graphs out but 10% of those are micronized. So we have a great deal of information and data.

And in the process of doing some other rather creative things, we had meetings frankly with CMS last week and part of the executives that are at this company today we have a background and healthcare information and informatics that’s fairly unique to have a device company on (inaudible) process and that kind of expertise. That means we know how to gather data, collect data pass it and develop information out of it.

So, we’re very much into having some strong data basis and information basis here and we will use that and also I hope that we’re not going to get down and a long lengthy process of having that initially information we don’t have.

Mike Senken

I haven’t looked at the checklist of all the information that BLAs are required yet. As you can imagine been fairly busy here last few days. So, what’s based on what I do know, I would say that we have the line chair of the information that would be necessary. One of my questions would be the relative to the clinical studies their requirements would they accept the study we’ve already done, will they have new requirements that we’d have to do some incremental study that would assume that they’re going to want at least one incremental study beyond what we have now relative to the labeling, I could envision a labeling claims relative to the addressing information and scoring and enhancing the natural wound healing of Tendons, wounds for like tendenosis or tendonitis which may get us something for both elbows and (inaudible) or they may want us to go in a little bit more specific for areas like (inaudible) without entering into the conversations with them its little hard for us to speculate it but we think we could probably put together rational argument where we could do maybe a couple of studies and have a little bit wider range of uses in different locations if it went to that. But again, hopefully it doesn’t get to that level.

Suraj Kalia - Northland Securities

Fair enough. Bill and Pete again just so that we're all on the same page, one of the criteria as I remember for section 361 is Homologous in terms of altering the properties of the original craft. So we use the term called micronization and just from an engineering perspective I just look at PURION and there is ion and I look at micronization, it just tells or at least can give wrong connotations that there are some sort of manipulation going. So what I heard you say correctly is that regarding EpiFix and the AmnioFix non-injectable there is no other manipulation per say that can get wrapped under this letter of future letter. Is that an accurate understanding?

Mike Senken

Well I guess from our standpoint we feel that what we're doing with micronization as many other manufacturers of bone, skin et cetera, is still minimal manipulation. The structural component in amnion tissues as well a lot of these other tissues are really on the micro level. You are talking the extracellular matrix that has component in it that are extremely small. I mean if you look at a diagram that shows the scale our smallest micronized pieces 25 microns by 25 micros and the level which the ECM functions is something like 1/1000th of that size. So we're not disrupting the extracellular matrix in a way that would affect the structural nature of the tissue. So I guess it's still a little bit of mystery to as to where they are coming from.

Pete Petit

As far as the (inaudible) we have no indications from them that they are concerned, but believe me we get to have a visit with them we'll thoroughly get that, in fact we had asked for a meeting about a month or so ago with the FDA to see if (we were able) to discuss with them some of our future product concepts. And again to ask some of those kind of questions. So we will be much more informed after our meeting with them and we will report, necessarily report the shareholders results of that meeting as soon as they are clear.

Suraj Kalia - Northland Securities

Fair enough. One final question Pete for you and maybe this is an unfair question. We know about Axigen the letter that they got, I believe it was 2010. I think if memory shows me correctly KCIs Graftjacket also received a letter in the yesteryears, I am speaking from memory so forgive me if I am wrong here. I guess can you contrast specifically timelines at least based on what you guys know. How your process went through the FDA and what we should we make out of that vis-à-vis MiMedx?

Pete Petit

Okay we're little more familiar with Axigen than the KCI situation. Again I will remind you we have shift over 170,000 of our (inaudible) and almost 18,000 of our injectables. So we have a database that Axigen did not have and was very small company at the time was a very small clinical base out there. So I think we're much better prepared data wise and information wise than Axigen wise or again I know the CEO and she did a very capable job but I think we're just a much larger company better prepared to support FDA information requirements and data requirements. So hopefully we'll move this thing along at a fairly rapid from our side.

Are there any other questions?

Operator

The next question comes from the line of Bill Plovanic of Canaccord. Please go ahead.

Unidentified Analyst

This is actually Kyle in for Bill. I appreciate you taking the question this morning. So I guess kind of just to play out the last question but asking more broadly. You have spoken a lot about presidents in similar situations in the past that you are going to draw on for the process moving forward. Two part question; one, can you point us to one of this historical situations for maybe similar company so we can look at it and get a better idea of the timeline and how this resolution process works. And then two, obviously you are in the early stages of the communications with the agency. Sounds that you got the letter, you are going to respond to the letter today or tomorrow and then that will hopefully lead to a face to face meeting.

Can you just kind of map out how you see the timeline working from here and out and what we can expect just so that we can kind of frame this picture to understand if it's moving forward, how, the speed that it's moving and then your resolution goes after that face to face meeting?

Mike Senken

Well Kyle first of all I think it's in the FDA's interest as well as ours to get this matter resolved. We probably end up with a lot more day-to-day issues that may do over it but at same time but you don’t like to have concerns have expressed drag out. So around here we have a culture that moves things along pretty quickly. So we will tend to these matters quickly and move this along.

The Axigen situation took some length of time but I (concentrate) more in terms of the probably company was towards we are and not the databases we have and the information we have. So I think this will move along if Bill Taylor and Pete Petit and they do it fairly robust clip. Now it doesn’t mean that the FDA is going to move same clip that we like to move out but we will try to facilitate things any way we can.

Pete Petit

Yes, we’re going to predict the speed at which the FDA will respond and we’ll obviously do all parties quickly as we can obviously very responsibly and thoroughly and we’ll encourage them to respond within reasonable time frame. But we can’t answer on their behalf so we’ll everything we can to give them the information they need to make and inform decision and as quickly as possible but beyond that we can’t tell you that’s going to be resolved in two or three weeks or two or three months.

Unidentified Analyst

Right, I absolutely understand I guess I am just trying to understand. So after they have that formal meeting you provide the FDA with information and then they go back and then make the final decision as to whether or not this is minimally manipulated or how?

Pete Petit

Our regulatory council said that it will be a little bit more of a back and forth process and simply the way you describe is that there will likely to be some dialog back and forth before something is ultimately decided. Now we can’t guarantee that, but that’s what we’re been told.

Unidentified Analyst

Great, and then I guess one final question is sounds like you’re going to continue selling the product in the meantime while this process is going on. Are there any time lines that or is there the time period where if it’s not resolved you’ll not able to continue selling the product? Is it one year, two years or can you just continue selling the product as it is until there is a formal decision from the FDA?

Bill Taylor

Until the FDA gives us specific direction that’s where we are and we don’t I think they will respect the situation to the point where we’ll have our meeting we’ll discuss it, we’ll agree to be on certain items, we’ll disagree perhaps on others but we’ll reach a conclusion. And once those conclusions to reached, then we’ll know where we’re going. Again we as a corporate entity feel very strongly about the attributes of this tissue obviously and hope for the FDA will agree that there is some strong clinical properties with the material and don’t want to keep the material off the market but do want to be certain and it’s regulated properly and labeled properly to use it properly and with all those kinds of issues (Audio Gap).

Unidentified Analyst

Great, that’s all I’ve got. Thank you very much for taking the questions.

Bill Taylor

Thanks Kyle.

Operator

Thank you. The next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Matt Hewitt - Craig-Hallum

One follow up from me. Is it safe to assume that because of the additional steps in the manufacturing process that the injectables have a slightly lower gross margin? And under worst case scenario where you are or the FDA requested you stop selling the product even if it’s for just a short period that we would actually see further uptick in your gross margins?

Bill Taylor

I would simply say that our margins are probably roughly equivalent for various reasons therefore additional work in the micronization process but our margins, cost of goods on the products all probably within reason same.

Matt Hewitt - Craig-Hallum

Okay, all right. Thank you.

Pete Petit

Thanks Matt.

Operator

Thank you. The next question comes from Jon Brock with Stifel. Please go ahead.

Jon Brock - Stifel

Great, thanks and good morning guys. Maybe just one or two quick ones, the first one is just as you work on resolution on the injectable product with the FDA, do you guys reallocation any sales efforts in the near term? And just in regards to the reps and where they’re spending, how they’re spending their time?

Bill Taylor

Well, until we have some indications in terms of what the FDA really would like us to do it’s pretty much been is as usual. But we have now a sales force that’s very well scattered across the U.S. , very versatile and will shift resources around if necessary.

Pete Petit

Well, and I’ll throw in there just recall that the majority of our sales force that we have on the street right now really focus more on membrane applications as opposed to injectable. We have very few people that are primarily focused in that area. So it’s going to have minimal effect on our current sales force.

Jon Brock - Stifel

Okay, great. And last one just from a management and resource standpoint and you mentioned all the efforts in the past several days, does anything changed with your hopes of getting the remaining (3 MAX) on Board before the end of the year or you able to sort of decouple that into the reimbursement team and there is still moving full speed ahead on the (MAX) that remained? Thanks guys.

Bill Taylor

We’re still moving full speed ahead and moving information along and continue communication with them. Nothing is going on this FDA matter effected any of that.

Mike Senken

Thanks, Jon.

Operator

Thank you, ladies and gentleman. (Operator instructions). The next question comes from Carlo Casulo of Ascend Capital. Please go ahead.

Carlo Casulo - Ascend Capital

Thanks so much for hosting the call it’s very helpful, just a couple of questions for you. What would be the legal ramification of continuing to sell the injectable products while the FDA still considers them to be noncompliant; and number two, I’m looking at the balance sheet it’s got about 4 million or so in cash, how are you thinking about that and given the shouts out there? Thanks.

Bill Taylor

Okay one question for Pete and one question for Mike. We’re acting obviously under the advice of our FDA legal counsel and our consultants, and we will conduct our sales is a instruct us to conduct our sales. This letter was not a warning letter, it was not a safety or efficacy letter, and we are conducting our sales accordingly.

Pete Petit

And with regard to the cash question, we feel we have adequate cash to manage the business. We indicated in the Press Release that we reiterate our guidance for this year and next, and so we don’t see this as being an issue. We have a working capital line of credit. We could in one form another step that up if we chose to, so we don’t this is a major issue from a cash perspective.

Bill Taylor

Okay any other questions?

Operator

We have no further questions in the queue. I would now like to turn it back to Pete for closing remarks.

Pete Petit

Thank you. Well, first of all, thanks for joining this morning. We apologize again for the rather disruptive nature of things yesterday in my whole tenure as a CEO of public company which is why we’re several decades, I’ve never been surprised like this by matter and I apologize for it. But we’re doing the things necessary to reassure shareholders that yes some things have changed, but this is what I’ve called a pebble in the path. When you’re in the healthcare sector, the Food and Drug Administration generally follow your business and in many cases of partner, and we don’t always understand clearly what they got in mind, and we’re in the process of trying to do that and will, and we will react appropriately when the time comes and keep you inform about the process.

I will just reiterate; we’ve done this by saying that our guidance we’ve given is still intact and I will remind you that we’ve had five or six or seven quarters of (inaudible) meeting our forecast or exceeding them. We will certainly let you know those kind of issues change. This is one of the most exciting, well is the most exciting technology that I’ve ever been involved with the MiMedx and I have had a number of exciting things to bring to the market, it’s a very large opportunity for us. We want to see it develop property in the right way both scientifically clinically and regulatory wise, and we will continue to do the things we need to do that we sure that’s a case.

Thank you very much and standby for further communications on this subject as well as some other things that will be discussed in the future. Thank you.

Operator

Thank you, ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thanks for joining. Have a very good day.

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