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ConforMIS Initiates Voluntary Recall of Certain PSI for iUni, iDuo and iTotal Knee Systems

ConforMIS (CFMS) initiated a voluntary recall of certain patient-specific instrumentation for iUni, iDuo, iTotal CR and iTotal PS knee systems following three complaints of moisture on the instrumentation. Approximately 950 patient-specific instrumentation sets are affected, of which ~650 sets were used in knee procedures and ~300 sets shipped but not yet used. CFMS does not believe that customized knee implants included with the sets were affected, and has not received reports of related adverse events, to date.

The recalled instrumentation appears to have held excess water before undergoing ethylene oxide sterilization and, as a result, may contain small amounts of ethylene glycol residue. ConforMIS has temporarily suspended use of the ethylene oxide sterilization process, and CFMS will use a validated, alternative sterilization process (hydrogen peroxide-based, per Canaccord Genuity analysts).

Stats:

  • ~ 950 patient-specific instrumentation sets affected
  •  ~650 sets used in knee implant procedures, ~300 sets shipped but not yet used
  • Affected sets manufactured and distributed from the company’s new manufacturing facility between July 18, 2015 and August 28, 2015

 

Manufacturing is likely to be substantially reduced in September (possibly into October) in light of investigation and resolution activities. Wells Fargo analysts cite CFMS’ expectation to secure a solution within this timeframe, with a potential resolution by year-end.

Combined, the effect of recalled products that were shipped but not used, lower production capacity and potential commercial disruption will impact sales; CFMS is revising 2015 revenue to a range of $64 million to $66 million (up 39% to 43% in constant currency)—a reduction of $8 million from previous guidance.

In early 3Q15, ConforMIS closed its IPO of 10,350,000 shares of common stock at $15/share (before underwriting discounts), and in mid-3Q, the company announced that interim analysis of 295 total knee replacement patients at seven U.S. centers indicated that patients with iTotal CR (cruciate-retaining) devices were more likely to have an excellent or good objective Knee Society Score and walked statistically significantly faster than patients with standard, off-the-shelf total knees.

Sources: ConforMIS, analyst notes

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