Surmodics struck out on its first attempt to win FDA approval for the highly-anticipated SurVeil drug-coated balloon when the company received a letter from the agency that its premarket approval (PMA) application for the device was not approvable. The Eden Prairie, MN-based company submitted an amended PMA application in May, however, and this second swing just might be the home run investors have been hoping for.
"We began the second quarter having to navigate unexpected challenges along our path to securing the PMA for our SurVeil Drug-Coated Balloon and ultimately made important progress that exceeded expectations we shared on our earnings call in early February," Maharaj said during the company's second quarter earnings call in late February.
FDA did not require the company to conduct additional testing and Surmodics has expressed confidence that the amended PMA application addresses the agency's concerns. Needham & Co. upgraded its rating on the company's stock from "hold" to "buy" this week in anticipation of FDA approval coming sooner than previously thought.
"We expect SurVeil to be a meaningful growth driver and to help bridge the gap until the Sublime and Pounce products materially contribute to growth," Mike Matson, an analyst at Needham, said this week in a report.
The SurVeil drug-coated balloon is designed to treat peripheral artery disease (PAD). The device includes a proprietary drug-excipient formulation using a special process to improve coating uniformity. The device is designed to use a lower paclitaxel drug dose of 2.0 μg/mm2 and to have better efficiency of drug transfer. The aim was to achieve similar clinical outcomes with a lower dose of drug, potentially lowering the risk of complications.
Maharaj said the information FDA requested in its letter earlier this year was within two general categories: labeling, including language revisions related to some of the device’s patient labeling; and instructions for use, and biocompatibility, including additional questions and data requests related to the company's non-clinical testing.
"While this was an unfortunate and disappointing development, we were pleased to see that the letter did not question our engineering, large animal studies, and most importantly the human clinical data that we submitted, including the safety and efficacy data from our 446 patient, TRANSCEND clinical trial," Maharaj said.
Abbott on-deck for commercialization of the drug-coated balloon
If FDA approves the SurVeil DCB, the milestone will trigger a payment from Abbott, the company's commercial partner, of either $24 million or $27 million, depending upon timing, Surmodics CFO Tim Arens said during the company's second quarter earning call in late April.
Scoring FDA approval for the device and then supporting Abbott's commercialization efforts is the company's primary strategic objective for fiscal 2023, Surmodics CEO Gary Maharaj said during the earnings call.
Based on FDA guidance, Surmodics anticipates that it will take the agency180 days to review and render a decision on the amended PMA application. Maharaj said the decision could come during the company's fiscal fourth quarter. He noted that the "waterfront of things to review" in the amended PMA application is not everything, but rather the specific things the agency asked for in order to get it in an approval format.
"We have been updating Abbott on all progress and have had communications with them on the regulatory strategy," Maharaj said. "But really, based on the restriction of the agreement, I can’t go into any specific details in there. I will say Abbott remains excited about the prospects of having this product commercialized and in their portfolio."
And so, you know, I think, as we said, you know, the FDA usually guides 180-day turnaround on an amended PMA, but we are confident with our discussions with them that they, the reason we can set this as an expectation in our fiscal fourth quarter is that two things, they can move quickly on this.
If FDA approves the drug-coated balloon, Abbott plans to launch the device as soon as possible, Arens said.
"However, there still needs to be work to be prepared and implemented, executed to be able to manufacture product and then be able to get it to Abbott," Arens said. "I think in the past, we had characterized this as being several months. So, it could be several months following the approval.
The device received CE mark clearance in 2020, after first encountering a delay due to the paclitaxel controversy sparked by a meta-analysis published in late 2018 showing an increased risk of death among patients who received a paclitaxel-coated balloon or paclitaxel-eluting stent.
After a two-day meeting of the Circulatory System Devices Panel, FDA concluded that there is a signal associated with an increase in mortality through five years of paclitaxel-coated devices as compared to non-coated devices. The agency was not, however, able to attribute this increased risk to a specific cause, and the committee was befuddled by data discrepancies. Tensions over paclitaxel devices eased in August 2019 when FDA provided some recommendations for doctors treating patients with paclitaxel balloons or stents.