MiMedx shares sink as FDA demands products be approved
(Reuters) - The U.S. Food and Drug Administration said MiMedx Group Co violated federal laws by selling its products without obtaining appropriate regulatory approvals, sending the company's shares down as much as 70 percent.
The company, which sells human-tissue derived products to help in wound care and spine repair, said in March its products fall under Section 361 of the Public Health Service Act and hence not subject to FDA's approval requirements. (r.reuters.com/qud82v)
The FDA, in a letter dated August 28 but posted on its website on Wednesday, told MiMedx that to market a drug that is also a biological product, a valid biologics license must be obtained after showing that the product is safe and effective for use. (r.reuters.com/rud82v)
The company's shares fell to a low of $1.81 before trading on the stock was halted at 2.25 pm ET pending a company statement. They were trading down 36 percent at $3.84 when trading was halted.
MiMedx acknowledged receipt of the letter late Wednesday afternoon and said it "expressly disagrees" with the FDA's position and has been in talks to resolve the matter quickly.
The company added that the FDA's conclusion was based on a misunderstanding and reiterated its 2013 and 2014 revenue expectations.
Trading had not resumed until markets closed. Shares recouped some losses to trade at $4.11 after market.
(Reporting by Zeba Siddiqui in Bangalore)
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