Henry McCusker's  Instablog

Henry McCusker
Send Message
Analyst, Journalist and Publisher ... Henry enters his tenth (10) year at Scimitar Equity -Regenerative Medicine Investors which aggregates, curates and creates bottom-line content weeding of regenerative medicine and cell therapy news to provide a customized, vetted selection of relevant and... More
My company:
Scimitar Equity-Regenerative Medicine Investors
My blog:
Scimitar Equity Blog
  • Cytori (CYTX)- David Versus Goliath – FDA 0 comments
    Oct 1, 2012 6:43 PM

    A challenge to FDA's Medical Device Authority …?

    A 3 judge panel of the US Court of Appeals for the DC Circuit heard oral argument on whether an FDA decision … was arbitrary and capricious. Now …Appeals court must decide whether it has jurisdiction over the matter or whether the case must first go to a federal district court; and, if, it has primary jurisdiction, whether FDA's decision was arbitrary and capricious.

    Judges from the US Court of Appeals for the D.C. Circuit on 9/21 pressed a lawyer for medical device company Cytori Therapeutics (NASDAQ:CYTX) to explain why the FDA's decision not to allow marketing of 2 of Cytori's medical devices … should not be accorded deference (Cytori Therapeutics Inc. v. FDA, D.C. Cir., No. 11-1268, oral argument 9/21/12). (Dana A. Elfin - BNA)

    The Bottom Line: At issue is whether FDA's refusal to find 2 new medical devices made by Cytori "substantially equivalent" to medical devices already marketed-a key step for allowing marketing of the devices-was arbitrary and capricious, and also whether the appeals court has jurisdiction to review those decisions. The Cytori case "illustrates a developing problem facing many device companies, namely that FDA is in the midst of a major regulatory reform effort for medical devices with a heavy emphasis on the overall 510(k) review and clearance process." The devices at issue in the Cytori case are the Celution 700/LAB device and the StemSource 900/MB. The 700/LAB device is a liposuction device and the StemSource 900/MB is used for cord blood banking and cryopreservation.

    CYTX submitted the devices for clearance through the 510(k) pre-market notification process. That process by-passes the pre-market approval (NYSEARCA:PMA) process if the manufacturer can show that its device is "substantially equivalent" to a device already on the market. In this case, FDA rejected Cytori's 510(k) applications for both devices and said the devices needed to go through the formal PMA process. Cytori argues that FDA abused its discretion in making those decisions.

    Cytori argued that FDA's decision to refuse to clear its devices for marketing under the 510(k) process was arbitrary and capricious because, in its review, the agency looked at issues beyond the indications the manufacturer listed in the device labeling. Among other things, Cytori argued that the agency inappropriately refused to clear one of the devices because of its potential off-label uses. The 510(k) process is how most medical devices reach the US market. The process was created under a 1976 law. Devices are cleared under 510(k) if the device is similar to a predicate device already on the market. The PMA process, used for a smaller number of higher-risk devices, often involves generation of significant clinical data to support an application, as well as the use of FDA advisory panels to review the device.

    • "FDA turned the manufacturer's 510(k) notifications into "strawmen," Andrew S. Ittleman, of Fuerst Ittleman David & Joseph in Miami, told the appeals court, "and rejected them based on new, unintended uses not intended by Cytori [and] not submitted by the manufacturer." Circuit Judge Brett M. Kavanaugh asked Ittleman, "How can we second-guess the FDA's expertise in a case like this? We're not experts."
    • Ittleman responded, "We're not here to talk about the science; we're here to talk about their review." FDA, he argued, "aborted their job." Although Ittleman acknowledged that while agencies are to be accorded a high level of deference, "deference does not mean abdication." Here, he said, "what FDA did is virtually nothing … they received the 510(k) notices and just rejected them. "FDA, he argued, "needs to ask for safety information in the least burdensome way; they have an obligation to explore the gray area. They did not do that." FDA, he said, should have gone to an alternative means of negotiation-such as changing the labeling or exploring black box warnings rather than outright rejection.

    Kavanaugh also pointed out that the agency has "a lot of discretion" and that "the court is not to substitute its judgment for that of the agency."

    On the jurisdictional issue, the judges similarly were skeptical of FDA's argument that the court lacked jurisdiction to hear the case. Adam C. Jed of the U.S. Department of Justice in Washington, representing FDA, argued that the appeals court …. only has jurisdiction to review decisions that a device is substantially equivalent, not decisions finding that devices are not substantially equivalent.

    • "The jurisdictional argument is not the strongest," Chief Judge David B. Sentelle of the US Court of Appeals for the DC Circuit told Jed. "There is an order here." During the Obama administration, FDA has undertaken a review of how devices reach the market under the 510(k) process. In January 2011, for example, the agency issued a plan of action on the 510(k) process . At FDA's request, the Institute of Medicine examined 510(k), and issued a report in July 2011 concluding that the process is flawed based on its legislative foundation, and should be scrapped. However, FDA has indicated that it does not think the 510(k) program needs to be scrapped entirely, and industry supports the existing program.

    Regarding the 510(k) process it is important for practitioners to understand "how CDRH's internal views of its device review authority and procedures have been shifting, and how the rules of engagement have already changed." "Understanding these changes as well as the possible alternate avenues for relief can assist in avoiding such disagreements in order to foster medical device innovation and enhance patient safety which are shared goals of both the FDA and regulated industry. "The impact of FDA's device initiative is going to be felt not only in the context of product submissions, but also in the context of regulatory compliance and FDA enforcement."

    • The Cytori case was argued before a panel consisting of Sentelle, Kavanaugh, and Circuit Judge Janice Rogers Brown. Ittleman, of Fuerst Ittleman David & Joseph in Miami argued for San Diego-based Cytori Therapeutics. Jed, of the US Department of Justice in Washington, argued for FDA.
    • A copy of Cytori's brief in the case is available at … op.bna.com/hl.nsf/r?Open=deln-8yfs42 .
    • A copy of FDA's brief in the case is available at op.bna.com/hl.nsf/r?Open=deln-8yfrly.

    There is no DOWNSIDE to the CYTX position … but, there is an UPSIDE … this issues is jurisdiction! However, traders will try to make a short but, this is a non-trading event!! More to follow u[on this matter …

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To Henry McCusker's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


  • ImmunoCellular (OTC BB: IMUC) files to Sell $13.8M of Units via Cowen
    Nov 30, 2011
  • Mid-Day Movers: BioTime (AMEX: BTX), Cytori (CYTX), Geron (GERN), Neuralstem (AMEX: CUR), ReNeuron (RENE.LON), ThermoGenesis (KOOL)
    Oct 26, 2011
More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.