Wright Medical Finally Wins FDA OK For Hip Resurfacing
By Jon Kamp, Of DOW JONES NEWSWIRES
Wright Medical Group Inc. (WMGI) said Monday the Food and Drug Administration
has finally approved the company's "Conserve Plus" system for bone-saving hip-
resurfacing surgery, capping a protracted wait.
Shares of the Arlington, Tenn., company rose on the news and were recently up
8.7% to $19.10. Analysts have long considered approval of the Conserve Plus
system a potential positive catalyst for Wright's stock.
The question for years, however, was when this would actually happen. The
company filed for FDA approval in early 2004 and has been in regulatory limbo
since then, with little explanation behind the reason for delay. Regulatory
reviews are typically wrapped up much more quickly if there are no major issues.
Wright said the FDA approved the original Conserve Plus system specified in
the company's application. The company plans to incorporate enhancements that
are now available outside the U.S. through an FDA pathway for application
supplements.
Wright said surgeon training for the system is expected to start immediately.
Hip resurfacing is a repair procedure for worn out hips that preserves more
bone atop the femur than traditional hip-replacement implants. Manufacturers and
surgeons believe this is helpful for younger patients by keeping bone available
for repeat surgery they may need down the road.
While all major replacement-joint manufacturers have hip replacement systems
outside the U.S., the U.S. market includes just two products from two U.K.
firms, including Smith & Nephew PLC (SNN) and Corin Group PLC (CRG.LN). Smith &
Nephew dominates in the U.S., where resurfacing has taken off more slowly than
Wall Street expected.
Smith & Nephew officials have said they expect more growth once competitors
win FDA approval for their resurfacing systems, which means they'll be backing
the technology rather than marketing against it.
Stryker Corp. (SYK) markets the Corin resurfacing system in the U.S. Stryker,
Zimmer Holdings Inc. (ZMH) and Johnson & Johnson (JNJ) are heavyweights in the $
11 billion market for replacement hips and knees, where Wright is a small
player.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com
(Updates to add analyst comments, updates share price)
By Jon Kamp
Of DOW JONES NEWSWIRES
Wright Medical Group Inc. (WMGI) said Monday the Food and Drug Administration
has finally approved the company's "Conserve Plus" system for bone-saving hip-
resurfacing surgery, capping a protracted wait.
Shares of the Arlington, Tenn., company rose on the news and were recently up
6.3% to $18.67 after hitting $19.30 earlier. Analysts have long considered
approval of the Conserve Plus system a potential positive catalyst for Wright's
stock.
The question for years, however, was when this would actually happen. The
company filed for FDA approval in early 2004 and has been in regulatory limbo
since then, with little explanation behind the reason for delay. Regulatory
reviews are typically wrapped up much more quickly if there are no major issues.
Monday's gains are "a good indication that a lot of expectations around
Conserve Plus" were no longer built into the stock price, said Jeff Johnson, an
analyst at Robert W. Baird.
Finally clearing this regulatory hurdle off the books could also bolster
Wright's profile as a potential takeover target in the orthopedics market, where
the company is a small player.
Wright said the FDA approved the original Conserve Plus system specified in
the company's application. The company plans to incorporate enhancements that
are now available outside the U.S. through an FDA pathway for application
supplements.
Wright said surgeon training for the system is expected to start immediately.
Because it could take six months or so to win FDA approval for the most up-to-
date Conserve Plus components, the system could start having a positive impact
on Wright sales in the back half of 2010, analyst Johnson said.
"It could be a meaningful double-digit growth driver to their hip business
over the next couple years as it ramps up," he said.
Hip resurfacing is a repair procedure for worn out hips that preserves more
bone atop the femur than traditional hip-replacement implants. Manufacturers and
surgeons believe this is helpful for younger patients by keeping bone available
for repeat surgery they may need down the road.
While all major replacement-joint manufacturers have hip replacement systems
outside the U.S., the U.S. market includes just two products from two U.K.
firms, including Smith & Nephew PLC (SNN) and Corin Group PLC (CRG.LN). Smith &
Nephew dominates in the U.S., where resurfacing has taken off more slowly than
Wall Street expected.
Smith & Nephew officials have said they expect more growth once competitors
win FDA approval for their resurfacing systems, which means they'll be backing
the technology rather than marketing against it.
Stryker Corp. (SYK) markets the Corin resurfacing system in the U.S. Stryker,
Zimmer Holdings Inc. (ZMH) and Johnson & Johnson (JNJ) are heavyweights in the $
11 billion market for replacement hips and knees.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com
(END) Dow Jones Newswires
11-09-091117ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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