|Two medical device bets which have not finished playing out|
|Wednesday, 18 January 2012 05:40|
Shares of SANUWAVE (OTCBB:SNWV), took a serious hit during the holiday season after the FDA told the company that their PMA application for dermaPACE® lacked significant information necessary for the FDA to complete its review or to determine whether there is reasonable assurance that the device is safe and effective for its determined use. The Company’s Pulsed Acoustic Cellular Expression (PACE) technology for use in acute and chronic wound healing, delivers high-energy acoustic pressure waves in the shock wave spectrum to produce compressive and tensile stresses on cells and tissue structures.
Zacks analysts who follow the stock have recently adjusted their price target on SNWV shared to $2.50 down from $6.00, but there are plenty of reasons to believe that SNWV shares will continue to bounce back. I got a good sense on the situation after meeting with the management team last week in San Francisco. We know that the FDA could not approve the application as it was submitted. Despite the fact that SANUWAVE’s clinical trial results for healing chronic diabetic foot ulcers were outstanding, the way the trial was designed (even double blinded) the primary end-points were not met and it appears FDA officials had some questions which they need more information on. The fix could be as simple as re-submitting some data or as difficult as having to do another arm of the study. Either way, things are looking positive and the recent sell-off appears unwarranted.
Since diabetic foot ulcers are very difficult chronic wounds to treat, seeing the type of results the company got at 20 weeks is amazing. The only problem was that the trial was designed with a 12 week end-point-- something far more ambitious. Still, most of these cases end up costing the healthcare and government support system far too much money and I believe strongly that government officials and the medical community would like to see this type of treatment get approval. It makes sense on many levels; patricularly since closure and non-recurrence rates were outstanding.
Longs in the stock have been accumulating at these levels and rightly so. Many of these medical devices go through this type of regulatory process before approval. The dermaPACE® product is certainly not alone and many of us continue to believe that it will get approval.
SANUWAVE's management reported to me that they are in discussions with all relevant parties to get dermaPACE on the proper path to FDA approval and they will fulfill all data and information requirements needed to accomplish that goal.
SNWV’s technology has much more upside potential than most of the medical devices we've seen and the fact that it can be used for so many applications continues to make it appealing as a medical device play. While at the conference in San Francisco last week, the company reported publication of peer-reviewed, preclinical data conducted at Cleveland Clinic that demonstrate the ability of the Company’s technology to substantially decrease the detrimental effects of microcirculatory injury for certain ischemic (lack of blood flow) and reperfusion (restoration of blood flow) injuries.
On the other side of the coin, we have different company in a very different position but, frankly, I'm not sure what to make about the level of confidence there. Shares of Guided Therapeutics, Inc. (OTCBB & OTCQB: GTHP) doubled and traded as high as $1.84 after we told our readers that the company was up for regulatory approval in December. While still up, shares are now trading -23.37 % from those 52-week highs as insiders have been disposing of shares on a regular basis. While odds for approval of the firm's LuViva™ Advanced Cervical Scan in the U.S. are still very good, the market has not taken well to the Form 4 filings. It will be interesting to see if the insiders were right to "sell on news"-- or in this case, ahead of it.
As reported previsouly, GTHP is developing a rapid and painless testing platform for the early detection of disease based on its patented biophotonic technology that utilizes light to detect disease at the cellular level. The company’s first planned product is the LuViva™ Advanced Cervical Scan, a non-invasive device used to detect cervical disease instantly and at the point of care. In a multi-center clinical trial, with women at risk for cervical disease, the technology was able to detect cervical cancer up to two years earlier than conventional modalities.
In November, the FDA informed the company that the agency would not hold a panel review to render a decision on the Premarket Approval (PMA) application of the LuViva™ Advanced Cervical Scan. Based on FDA guidelines, the company is expecting a decision from FDA this week-- by January 20, 2012.