ReGen Sues FDA Over Menaflex Reversal

ReGen Biologics is suing the U.S. Food and Drug Administration (FDA) for revoking approval of its Menaflex knee implant device. ReGen filed for Chapter 11 bankruptcy on April 11, a decision Chief Executive Gerald Bisbee claims was a direct result of the FDA’s actions, which a company statement called “arbitrary and capricious.” The lawsuit was filed May 31 in the U.S. District Court for the District of Columbia.

A spokesperson from the FDA said that the agency does not comment on pending legal matters.

ReGen’s bankruptcy petition includes its wholly-owned subsidiary RBio Inc. but not its wholly-owned Swiss subsidiary, ReGen Biologics AG, according to a document submitted to the U.S. Securities and Exchange Commission (SEC). The firm will use cash flow from operations and proceeds from a loan to continue to operate during the bankruptcy process.

The SEC document claims ReGen raised $1 million through a private deal with Sports Medicine Holding Company LLC, an affiliate of Ivy Healthcare Capital II LP, a creditor and one of the company’s largest shareholders. Sports Medicine Holding Company has agreed to provide ReGen with funding through senior secured notes due Aug. 31; those notes carry a 12 percent annual interest rate.

The additional infusion of cash should enable ReGen to submit its annual earnings filing with the SEC. Late last month, the company said in a regulatory dossier that it was unable to obtain the proper financing to complete the “necessary accounting and internal control procedures required for preparing the Form 10-K and…Management’s Discussion and Analysis of the financial and other information required to be included in the Form 10-K.”

ReGen’s cash flow troubles are the latest setback in the company’s protracted effort to market its controversial Menaflex knee implant in the United States. The firm has spent more than five years and $30 million trying to prove the implant’s safety and efficacy for the FDA’s Center for Devices and Radiological Health (CDRH). ReGen thought it had sufficiently argued its case after the FDA cleared the device in December 2008, but the approval occurred over the objections of agency scientists. Nearly a year later (September 2009), the FDA launched an investigation into the Menaflex approval after admitting that its decision was influenced by four New Jersey congressmen and former Commissioner Andrew von Eschenbach.

Last fall, the FDA rescinded the 510(k) clearance it granted ReGen for its Menaflex Collagen Scaffold, an absorbable mesh implant designed to encourage the re-growth of damaged knee cartilage. As a result, ReGen must keep the device off the market until it can prove its safety and effectiveness to the FDA’s satisfaction. The FDA told the company that it wanted to discuss the “appropriate marketing pathway for the device” as well as the kind of data needed to provide a “reasonable assurance of safety and effectiveness.”

“There were in fact numerous departures from the review process,” Jeffrey Shuren, M.D., director of the FDA’s Center for Devices and Radiological Health, said about the CDRH’s 2008 decision. “There is no adequate information in the record establishing why the device was approved.”

After reevaluating its decision, the FDA said it concluded that Menaflex was “technologically dissimilar” from other surgical-mesh devices the agency had approved, and it embodied differences that could affect its safety and effectiveness. Unlike predecessor products that repair or reinforce damaged tissue, for example, Menaflex helped the human body grow new meniscal tissue.

“Because of these differences, the Menaflex device should not have been cleared by the agency,” the FDA said in a news release.

The FDA’s about-face infuriated ReGen CEO Gerald Bisbee, who called the move “totally unbelievable.” He blamed the agency’s change of heart on politics.

“The agency’s clearance of Menaflex has become a political football and the FDA is not playing by the rules,” Bisbee said in a statement last October following the FDA’s decision. “Regen has invested 58 months and more than $30 million to meet (the center’s) requirements only to have the agency reverse decisions made by previous officials by stating that they were in error with no substantial evidence that is true.”

Last week, the FDA finalized the revocation of approval for the Menaflex implant. Before making its decision permanent, the FDA reached out to ReGen one final time to discuss its about-face on the Menaflex approval, but the agency’s offer fell on deaf ears—Bisbee quickly rejected the offer, calling it an exercise in futility.

In his 18-page letter to the FDA (dated March 21), Bisbee accuses the FDA of failing repeatedly to provide ReGen with a fair and impartial review process. “It’s unbelievable that after more than five years of 510(k) review of this product—and after being told by the ODE Director and the CDRH Director to file two separate 510(k) submissions for this device as a surgical mesh—[CDRH Director Jeffrey] Shuren now says that they were wrong,” Bisbee said. “This arbitrary and unsubstantiated intention is an example of why the investment community is increasingly wary of investing in companies with products requiring FDA approval.”