MiMedx (MDXG) placental “stem cell magnet” drugs attract FDA attention and lawsuit

MiMedxABC News just reported that the FDA is allgedly “cracking down” on the publicly traded company, MiMedx (MDXG), which sells a placental derivative touted for healing powers.

The Wall Street Journal is also following the story.

According to ABC News:

MiMedx is a publically traded, for-profit company that takes donated human placentas — solicited via a website featuring babies and a cartoon butterfly — and turns them into health products. These can be used as skin grafts or injections, and they’re intended to treat inflammation and scar tissue formation as well as promote healing, according to the company’s website.

Surgical Biologics, a subsidiary of MiMedx, seems to be the focus of the current issues.

MiMedx FDA

In the Untitled Letter (a regulatory step perhaps one level below a formal Warning Letter) to a MiMedx leader, Bill Taylor, the FDA indicates that the MiMedx placental product is not strictly a 361 human cellular and tissue product (HCT/P), but rather a drug that must be subject to FDA approval and different standards (emphasis mine):

…these products are HCT/Ps that do not meet all of the criteria in 21 CFR 1271.10(a) and therefore are not regulated solely under section 361 of the Public Health Service Act (PHS Act) and the regulations in 21 CFR Part 1271. Specifically, the products do not meet the minimal manipulation criterion set forth in 21 CFR 1271.3(f)(1) due to the micronization process which alters the original relevant characteristics of the structural tissue, relating to the tissue’s utility for reconstruction, repair or replacement.  As a result, your HCT/Ps are drugs as defined under section 201(g) of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. 321(g)] and biological products as defined in section 351(i) of the PHS Act [42 U.S.C. 262(i)].

The FDA also goes on to say that there are no investigational new drug (IND) applications for this product suggesting that there should in fact have been INDs before the product was marketed to patients. (Update: A previous FDA letter to the company from last year can be found here, which seemed to suggest that the FDA might have been OK with how the company was operating in relation to these drugs making the new action a bit puzzling).

MiMedx is a publicly traded company and its investors, says ABC News, have filed suit against the company at least in part due to this conflict with the FDA:

As a result of the FDA letter, MiMedx’s investors have filed a class-action lawsuit alleging that the company made misleading statements and falsely inflated stock market prices.

“If it’s a biologic, it has to be put through FDA scrutiny and they have to do extensive testing before they’re able to market the product,” said Phillip Kim, an attorney with the Rosen Law Firm in New York City. It is one of the law firms that have either filed several class-action lawsuits on behalf of MiMedx investors or announced they’re investigating MiMedx. Kim said dozens of investors have reached out to his firm.

ABC News included a truly astonishing response from the company that to me raises more concerns (emphasis mine):

Mother nature did safety and efficacy testing on the tissue,” MiMedx CEO Pete Petit told ABCNews.com, likening treatment with a placenta-based product to a kidney transplant rather than the use of a drug. Since the placenta product is made from human tissue, he said testing is unnecessary because placental cells already work in the human body.

Holy cow! That’s a new one. Mother Nature did the testing? That sounds to me like “the dog ate my homework”. It seems to me that we need biomedical experts, not Mother Nature, to validate product safety and efficacy.

Petit also indicated that more than 18,000 vials of the apparent unapproved drug have been sold apparently without licensing from the FDA because the company didn’t believe it necessary.

As ABC News points out, there are significant safety concerns with using human placental products:

Still, human placenta cells could potentially carry greater health risks than placental cells from pigs or cows, which are sometimes used in other products, because they can spread human viruses and bacteria, Badylak said. And since the drugs are being treated as human tissue donation, they don’t have the same sterility standards as other drugs or medical devices.

Placental products are often claimed to have healing powers at least in part because they possess some kind of stem cell-related elements. MiMedx also invokes this idea in press releases:

“As we stated in our previous press release, this research concludes that when applied to a chronic wound, our proprietary PURION® processed EpiFix® allografts act as a ‘stem cell magnet.’  Essential to the repair of these wounds is the attraction, proliferation and migration of these pivotal regenerative cells to the wound site.  The ‘stem cell magnet’ action of our allografts revitalizes the tissue regeneration,” stated Parker H. “Pete” Petit, Chairman and Chief Executive Officer.

The idea of a stem cell “magnet” is interesting, but is it proven?

Other companies are exploring placental and placental stem cell-related products, but are working with the FDA on product development.

The Wall Street Journal interviewed a competitor’s leader:

A product that doesn’t satisfy all of Section 361’s requirements is automatically considered to be a drug, which requires intense premarket scrutiny that can include over a decade of expensive research, said C. Randal Mills, chief executive of Osiris Therapeutics, a competitor to MiMedx in the wound-care industry.

“The difference between those two is so enormous,” Mr. Mills said. “It is unfortunate there is no middle ground.” Osiris makes wound-care products from stem cells, including products made from placenta.

It will be of interest to follow how the lawsuits and potential future FDA actions involving MiMedx unfold.

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