CRY Q3 10Q, FDA Disapproves Perclot IDE.....Perclot China Trial underway......

10Q - PerClot and HemoStase
Revenues from the sale of hemostats, consisting of PerClot and HemoStase, decreased 71% for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010. Revenues from the sale of PerClot and HemoStase decreased 40% for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010. The revenue decreases in the three and nine months ended September 30, 2011 were primarily due to a decrease in hemostat sales volume in domestic markets, partially offset by an increase in sales volume in international markets. The revenue decrease in the nine months ended September 30, 2011 was also impacted by a decrease in average selling prices, which decreased revenues by 6%.
International hemostat revenues increased 24% for the three months ended September 30, 2011 and 55% for the nine months ended September 30, 2011 as compared to the three and nine months ended September 30, 2010, respectively. This increase is primarily due to an increase in international sales of PerClot in the 2011 periods over the international sales of HemoStase in the corresponding 2010 periods. Management believes that international PerClot revenues have been favorably impacted by the Company’s ability to market PerClot for all surgical specialties, expanding the direct European sales force into Austria, and PerClot’s product performance when compared to other hemostatic agents.
The decrease in domestic sales volume for the three and nine months ended September 30, 2011 was due to the Company’s planned discontinuation of sales of HemoStase in late March 2011. The Company recognized no domestic hemostat sales in the second or third quarters of 2011, subsequent to the discontinuance of HemoStase sales, as PerClot is not yet approved for commercial distribution in domestic markets. The Company anticipates this loss of domestic hemostat sales to result in a decrease in total hemostat sales for the remainder of 2011 when compared to the corresponding 2010 periods.


The Company will not be able to sell PerClot in the U.S. in future years until U.S. Food and Drug Administration (“FDA”) approval is granted. On March 31, 2011 CryoLife filed an Investigational Device Exemption (“IDE”) with the FDA seeking approval to begin clinical trials for the purpose of obtaining Premarket Approval to distribute PerClot in the U.S. On April 29, 2011 the FDA disapproved CryoLife’s IDE filing with numerous comments and questions. CryoLife is currently addressing those comments and questions and anticipates refiling its IDE for PerClot in the fourth quarter of 2011.


Q3 Report - Brackets have been added-
Ashley Lee...

We experienced some delays in getting PerClot approved in certain international markets and some competitive issues in the EU, which leaves us to slightly lower our guidance.

Worldwide BioGlue revenues were up 10% for the third quarter and up 5% for the nine month period. These increases were predominantly driven by volume increases, particularly in Japan, due to the recent launch of the product. This was the largest year-over-year quarterly increase for BioGlue revenues, since third quarter of 2008, and we continue to remain enthusiastic about the opportunity in Japan.

Total sales in the third quarter in Japan were $651,000 and year-to-date in Japan were approximately $1.2 million. To-date, approximately 250 surgeons have been trained and over 160 accounts have ordered product. We expect another large order from Japan before the end of the year.

PerClot sales for the third quarter were $620,000 and were $1.9 million year-to-date. We experienced some delays in getting PerClot approved in certain international markets and some competitive issues in the EU, which leaves us to slightly lower our guidance. However, despite these delays, our international revenues from the sale of powdered hemostats in the third quarter still increased 24% compared to the prior year, and 55% for the nine month period compared to the prior year.

Steve Anderson...As Ashley has discussed earlier in third quarter of 2010, we announced our first technology acquisition and that we have signed a worldwide manufacturing and distribution agreement for a unique powered hemostatic agent PerClot with Starch Medical of San Jose (Shanghai), California (China).
(Chinese) PerClot is an ideal replacement for the hemostatic powder that we had been distributing worldwide. The primary difference is that PerClot’s gross margin will be 80%.....we filed our IDE for PerClot with the FDA in March of this year. The FDA had questions about our submission that we have been addressing. We will be reaching our IDE to the FDA in mid November. We expect to begin the clinical trial for PerClot (Link to current trial Xijing Hospital of Digestive Diseases, Xi'an, Shaanxi, China) during the second quarter of next year. The clinical trial will probably involve about 300 patients, 150 PerClot patients and 150 control patients. We expect that with six months enrollment and three months follow-up of these patients that we will file our PMA in the second quarter of 2013.

• In which circumstances does the FDA disapprove or withdraw an IDE?
  FDA may disapprove or withdraw approval of an IDE application if FDA finds that:
• 1. The sponsor has not complied with applicable requirements of the IDE Regulation, any other applicable regulations or statutes, or any condition of approval imposed by an IRB or FDA.
  2. The application or a report contains untrue statements or omits required material information.
  3. The sponsor fails to respond to a request for additional information within the time prescribed by FDA.
  4. There is reason to believe that the risks to the human subjects are not outweighed by the anticipated benefits to the subjects or the importance of the knowledge to be gained, that informed consent is inadequate, that the investigation is scientifically unsound, or that the device as used is ineffective.
  5. It is unreasonable to begin or to continue the investigation due to the way in which the device is used or the inadequacy of:
     (i) the report of prior investigations or the investigational plan; (ii) the methods, facilities, and controls used for the manufacturing, processing, packaging, storage, and, where appropriate, installation of the device; or (iii) the monitoring and review of the investigation.

Q & A...

Matt Dolan - Roth Capital Partners

Great. First question on the guidance, just looking at the revenue at this point it implies maybe around 10% sequential uptick in Q4. So how far below $122 million should we expect or what gets you to that type of sequential uptick, meaning, is there a category that improves something on the macro level that rebounds?

Ashley Lee

We think that the upside is in the Cardiogenesis product line and the PerClot product line as well as potentially BioGlue in Japan.

Matt Dolan - Roth Capital Partners

Okay. But given your guidance on those categories it still requires a pretty big sequential uptick?

Ashley Lee

Yeah well the possibility exists again that we could do better and then we expect to do better in Cardiogenesis, PerClot, and BioGlue in Japan. And that -- we think that that’s, we have more upside in those three areas than the rest of the business.

Matt Dolan - Roth Capital Partners

Okay. And then on the earnings guidance just to clarify, I think the delta between adjusted and GAAP last quarter was $0.05 as supposed to an $0.08 differential at mid year. So I wanted to make sure that that’s the reason for the increase in the earnings guidance? And secondly the implied guidance for Q4 cuts EPS basically in half. So I’m just trying to understand why that would be?

Ashley Lee

The primary driver in non-GAAP, the increase in non-GAAP EPS as compared to the end of the second quarter is primarily due to the shifting of some R&D expenses due to some delays and getting some studies started, as those will be shifting out of 2011 into 2012. As it relates to the fourth quarter we provided for some additional expenses in the fourth quarter this year to account for the ongoing discovery and the acceleration of the discovery in our litigation with Medafor.

Raymond Myers - Benchmark

And that was going to be my next question. So let’s get right to that. Roughly how much Medafor litigation expense should we expect?

Ashley Lee

If you go through the end of the third quarter we had spent about $1.4 million and we’re expecting a similar amount in the fourth quarter of this year about $1.4 million.....

Cryolife announce first patients enrolled for BioFoam (Bovine) trial.

ATLANTA, Oct. 24, 2011 /PRNewswire via COMTEX/ -- CryoLife, Inc., CRY +2.52% , a leading tissue processing and medical device Company focused on cardiac and vascular surgery, today announced that it has enrolled the first patient in its U.S. Investigational Device Exemption (IDE) clinical trial for its BioFoam® Surgical Matrix protein hydrogel technology. In connection with the trial, BioFoam will be used as an adjunct to conservative measures of achieving hemostasis on newly resected liver parenchyma.
The approved IDE is for a prospective, multicenter, randomized feasibility study evaluating safety outcomes of BioFoam as compared to a standard topical hemostatic agent. The feasibility investigation will be conducted at up to three investigational sites and will enroll 20 eligible subjects with 10 subjects in each treatment group.
"We are pleased to begin enrolling patients in our IDE study, which is a milestone in our efforts to obtain BioFoam approval for distribution in the U.S.," said Steven G. Anderson, CryoLife president and chief executive officer. BioFoam is based on the same protein hydrogel technology platform from which BioGlue Surgical Adhesive was developed read more HERE.

A keratin biomaterial gel hemostat derived from human hair: evaluation in a rabbit model of lethal liver injury.

Abstract

Effective hemostatic dressings that are compatible with tissues are needed. Keratins are a class of biomaterials that can be derived by extraction of proteins from human hair. We have recently discovered that keratin biomaterials have hemostatic characteristics and hypothesize that a keratin hydrogel having the ability to absorb fluid and bind cells may be an effective hemostat. The goal of this study was to test a keratin hydrogel and evaluate it compared to current hemostats. Thirty-two New Zealand white rabbits received a lethal liver injury. Eight animals each were assigned to negative control, QuickClot, HemCon bandage, and keratin treatment groups. Vital stats and other data were recorded during surgery and all surviving animals were sacrificed after 72 h. Histology was conducted on all surviving animals. Twenty-four-hour survival rates were 0%, 62.5%, 62.5%, and 75% for the negative control, QuickClot, HemCon, and keratin groups, respectively. Other outcomes included blood loss, mean arterial pressure, heart rate, shock index, and liver histology. All of the hemostats were statistically better than the negative control group at late operative time points. The keratin group consistently performed as well as, or better than, the commercial hemostats. Histology showed an interesting healing response at the hemostat-liver interface in the keratin group.

Surgeons get tips and tricks for contending with antiplatelet therapy

Lisbon, Portugal - A session on the best practice for operating on patients taking antiplatelet therapies was well received at the European Association for Cardio-Thoracic Surgery (EACTS) 2011 Annual Meeting this week, with attendees saying they welcomed advice on this topic in light of the newer antiplatelet agents coming onto the market.
Surgeons generally want to stop antiplatelet therapy several days before an operation to reduce bleeding risk, but this can have a negative impact in terms of thrombotic events, particularly if a patient has recently had a drug-eluting stent (DES) placed. And while there are recommendations for when to stop antiplatelet therapy prior to surgery—generally advised at five days beforehand for clopidogrel, three days for ticagrelor, and seven days for prasugrel—"the reality is that very often we have to proceed with surgery much faster," surgeon Dr A Pieter Kappetein (Erasmus Medical Center, Rotterdam, the Netherlands) told the meeting.

Cardiologist Dr Freek Verheugt (Onze Lieve Vrouwe Gasthuis, Amsterdam, the Netherlands) acknowledged that "the eternal difficulty for the surgeon is balancing the risks of bleeding and thrombosis," in a sentiment that was echoed in another talk on "tips and tricks for operating under antiplatelet therapy," given by Dr Miguel Sousa Uva (Hospital da Cruz Vermelha Portuguesa, Lisbon).

Both Verheught and Sousa Uva stressed that the key to determining what to do about dual antiplatelet therapy in the face of surgery is to use individual risk assessment, on a case-by-case basis, and they advised using an algorithm to aid in this decision, taken from the latest European guidelines on revascularization.

Following the session, cochair Dr Jose Luis Pomar (Hospital Clinico de Barcelona, Spain) observed: "This is a very interesting topic. After this, I believe we are still ignorant, but perhaps we have a bit more understanding than before."

Fibrinogen and Hemostasis: A Primary Hemostatic Target for the Management of Acquired Bleeding

Jerrold H. Levy, MD, FAHA,
Fania Szlam, MMSc,
Kenichi A. Tanaka, MDand
Roman M. Sniecienski, MD

+Author Affiliations
From the Department of Anesthesiology, Emory University School of Medicine, Cardiothoracic Anesthesiology and Critical Care, Emory Healthcare, Atlanta, Georgia.
Address correspondence to Jerrold H. Levy, MD, FAHA, Department of Anesthesiology, Emory University School of Medicine, Cardiothoracic Anesthesiology and Critical Care, Emory Healthcare, Atlanta, GA.

Abstract

Fibrinogen plays several key roles in the maintenance of hemostasis. Its cleavage by thrombin and subsequent polymerization to form fibrin strands provides the structural network required for effective clot formation. During cases of acute blood loss, attempts to maintain circulating volume and tissue perfusion often involve the infusion of crystalloids, colloids, and red blood cells. Intravascular volume resuscitation, although vital, frequently results in dilution of the remaining clotting factors and onset of dilutional coagulopathy. In such cases, fibrinogen is the first coagulation factor to decrease to critically low levels. There currently is a lack of awareness among physicians regarding the significance of fibrinogen during acute bleeding and, at many centers, fibrinogen is not monitored routinely during treatment. We reviewed current studies that demonstrate the importance of considering fibrinogen replacement during the treatment of acquired bleeding across clinical settings. If depleted, the supplementation of fibrinogen is key for the rescue and maintenance of hemostatic function; however, the threshold at which such intervention should be triggered is currently poorly defined. Although traditionally performed via administration of fresh frozen plasma or cryoprecipitate, the use of lyophilized fibrinogen (concentrate) is becoming more prevalent in some countries. Recent reports relating to the efficacy of fibrinogen concentrate suggest that it is a viable alternative to traditional hemostatic approaches, which should be considered. The prospective study of fibrinogen supplementation in acquired bleeding is needed to accurately assess the range of clinical settings in which this management strategy is appropriate, the most effective method of supplementation and a comprehensive safety profile of fibrinogen concentrate used for such an approach.
Accepted July 11, 2011.