Nephros waiting on three FDA decisions. Print E-mail
By Michael Sklar   
Wednesday, 17 June 2009 03:01
Nephros (OTC: NEPH) Nephros like many other Bio Pharm companies these day's is waiting for an FDA decision, actually they are waiting for three. Currently the FDA has made many investor's in this sector ride through bi polar roller coaster's. One of the major reasons is the appointing of a new FDA director. This is understandable because anytime a new director comes on board their is a transition stage. Day traders might worry ,however, people investing with long positions  are investing because of their belief in the company. Nephros is waiting on decions on the following 3 Class 2  510(k) applications:

The Nephros hemodiafiltration (HDF) system is designed to improve the quality of life for End-Stage Renal Disease (ESRD) patients while addressing the critical financial and clinical needs of the care provider. The HDF system removes a range of harmful substances more effectively, and with greater capacity, than existing ESRD treatment methods, according to the Company. On 11/14/08, Nephros submitted a 510(k) application to the FDA for approval of its HDF products for ESRD in the U.S. market. Following its review of the application, the FDA has requested additional information. Nephros replied to the FDA inquiries on 3/13/09. Per FDA guidelines, the FDA has 90 days to review the additional information provided by the Company for an estimated decision date of Friday 6/12/09 or Monday 6/15/09.

On 10/7/08, Nephros filed a 510(k) application for approval to market its Dual Stage Ultra-filter (DSU filters) to dialysis clinics for in-line purification of dialysate water. Following its review of the application, the FDA requested additional information, and Nephros provided a formal response to the agency on 2/24/09. Per FDA guidelines, the FDA has 90 days to review the additional information provided (5/26/09), but a response from the agency is still pending.

The FDA's authority over devices dates only to 1976, when they decided to make 3 classes. One way of prioritizing was to assign categories of risk associated with the devices. Rubber gloves seemed less risky than cardiac pacemakers, for example. So the agency assigned devices to 1 of 3 levels of scrutiny. Class I devices have low risk; oversight, performed mainly by industry itself, is to maintain high manufacturing quality standards, assure proper labeling, and prevent adulteration. Latex gloves are an example.

At the other end of the stick lay the class 3 devices which are mainly impantable, things that are life-supporting, and diagnostic and treatment devices that pose substantial risk.

Nephros is seeking FDA approval for 3 Class 2 devices. They already have an FDA approval on a similar device so their not new to the industry They also have several military contracts.

The OLpur HD 190 high-flux dialyzer cartridge, which incorporates the same materials as their OLpur MD series but does not employ their proprietary Mid-Dilution Diafiltration technology. Their OLpur HD190 was designed for use with either hemodialysis or hemodiafiltration machines, and received its approval from the U.S. Food and Drug Administration, or FDA, under Section 510(k) of the Food, Drug and Cosmetic Act, or the FDC Act, in June 2005.

This is an excerpt from their 10Q filing explaining their water filtration system up for FDA decision, Their Military contracts, and Revenues.

"In January 2006, we introduced our new Dual Stage Ultrafilter (the "DSU") water filtration system. Our DSU represents a new and complementary product line to our existing ESRD therapy business. The DSU incorporates our unique and

proprietary dual stage filter architecture and

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is, to our knowledge, the only water filter that allows the user to sight-verify that the filter is properly performing its cleansing function. Our research and
development work on the OLpur H2H and MD Mid-Dilution filter technologies for ESRD therapy provided the foundations for a proprietary multi-stage water filter that we believe is cost effective, extremely reliable, and long-lasting. We believe our DSU can offer a robust solution to a broad range of contaminated water and disease prevention issues. Hospitals are particularly stringent in their water quality requirements. Transplant patients and other individuals whose immune systems are compromised can face a substantial infection risk in drinking or bathing with standard tap water that would generally not present a danger to individuals with normal immune function. The DSU is designed to remove a broad range of bacteria, viral agents and toxic substances, including salmonella, hepatitis, cholera, HIV, Ebola virus, ricin toxin, legionella, fungi and e-coli. With over 5,000 registered hospitals in the United States (as reported by the American Hospital Association in Fast Facts of October 20, 2006), we believe the hospital shower and faucet market can offer us a valuable opportunity as a first step in water filtration.

Due to the ongoing concerns of maintaining water quality, on October 7, 2008, we filed a 510(k) application for approval to market our DSU to dialysis clinics for in-line purification of dialysate water. Following its review of the application, the FDA requested additional information from us. On February 24, 2009, we provided a formal response to the FDA. Per FDA guidelines, the FDA has 90 days to review the additional information.

In 2006, the U.S. Defense Department budget included an appropriation for the U.S. Marine Corps for development of a dual stage water ultra filter. In connection with this Federal appropriation of approximately $1 million, we are developing a personal potable water purification system for use by warfighters. Work on this project commenced in January 2008 and we have billed approximately $530,000 during the fifteen months ended March 31, 2009. In December 2007, the U.S. Department of Defense Appropriations Act appropriated an additional $2 million to continue the development of a dual stage ultra reliable personal water filtration system. Although it is our intention to execute an agreement with the U.S. Department of Defense to utilize this appropriation before it expires in September 2009, such an agreement has not been executed as of March 31, 2009. We have defined the project scope and objectives in connection with this appropriation and submitted a proposal to the Office of Naval Research in February 2009. We have also introduced the DSU to various government agencies as a solution to providing potable water in certain emergency response situations. We have also begun investigating a range of commercial, industrial and retail opportunities for our DSU technology.

Revenues

Total revenues for the three months ended March 31, 2009 were approximately $631,000 compared to approximately $387,000 for the three months ended March 31, 2008. Total revenues increased approximately $244,000. The increase of almost 63% is due to increased revenue of approximately $311,000 during the three months ended March 31, 2009 over the same period in 2008, related to our contract with the Office of U.S. Naval Research and $24,000 in sales of our DSU in the United States for the three months ended March 31, 2009 whereas we had no DSU revenue in the same period in 2008. Sales of our MD filters in our Target European Market were $91,000 lower in the three months ended March 31, 2009 compared to the same period in 2008. Approximately $51,000 of the European revenue reduction was due to less units sold and the remaining $40,000 was due to foreign currency exchange rate fluctuation. Unit sales in Europe decreased approximately 13% for the three months ended March 31, 2009 compared to the same period in 2008. The decrease in unit sales was not the result of decreased customer orders, but rather due to production delays resulting in deferment of shipments."

Disclosure:  Long Nephros




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