In early May, ThermoGenesis announced that it received an approvable letter from the FDA for its CryoSeal Fibrin Sealant System. The company's pre-market notification application [PMA] for CryoSeal is seeking FDA medical device approval as an adjunct to hemostasis in liver resection surgeries, and Biomet (BMET) has signed on as the distibution partner for the device. The company stated in its May press release that:
…the letter is confirmation from the FDA that the Company's CryoSeal application is approvable, and will be approved upon satisfactory completion of certain requirements outlined in the letter, including submission of final labeling, !
operator manual, and related documents. . .
In my opinion, CryoSeal should receive approval based on the minor outstanding issues identified in the approvable letter, and the announcement could come any day now given that the company originally guided for a decision by the end of June based on their ongoing communications with the FDA.
An additional near-term catalyst for the company could come as early as mid-August (six months from the submission date), when the FDA may issue a ruling on its 510(k) PMA that is requesting regulatory clearance for its AutoXpress (AXP) System for cord blood processing. The AXP System is currently being marketed internationally through a partnership with GE Healthcare (GE). GE Healthcare began selling the AXP System over one year ago and robust demand for the disposable bags used by this system contributed to the achievement of record revenues of $5.2 million last quarter (an increase of 60% over the same period last year). As ThermoGenesis moves closer to profitability and key FDA approvals for two pending cord blood processing devices, shares appear to be undervalued at present around the $2.50 level, as evidenced by insider purchases last May of 75,000 shares at around $4 by current CEO Philip Coelho and director Dr. Hubert Huckel. Investors should also note that recent weakness in the stock can likely be attributed to its removal from the Russell 3000 Index, prompting forced selling of the shares by institutions and funds who owned the stock solely for purposes of tracking that index.
Disclosure: Author has a long position in KOOL
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