Orthofix Medical Inc. OFIX announced its support for the continuation of the FDA’s Class III designation for Bone Growth Stimulators (BGS) devices through a press release dated Feb 24. It is pledging its support to ensure patient safety and therapy efficacy as Class III medical devices are subjected to the most stringent course to approval for medical devices.
The FDA announced an Advisory Committee panel meeting on April 23, where it will decide whether BGS devices should be reclassified to Class II medical devices from the current Class III designation. Notably, the FDA determined the maintenance of the Class III status for the devices in 2006 to ensure safety and efficacy.
Currently, the company is working on strengthening its position in the Global Spine business segment through various developments discussed later.
Why the Reclassification is Not a Welcome Idea
The FDA considers reclassification of a device only if the proposed new class has sufficient regulatory controls to provide reasonable assurances of safety and effectiveness.
Per the company, BGS devices encompass a range of intended uses, distinct technologies, waveform parameters, functionalities, dosimetries and designs. Given the nature of and differences among the devices, Orthofix believes that a single set of special controls may not be able to reasonably assure the safety and effectiveness of each distinct type of BGS device. Otherwise stated, even with special controls, the devices cannot be categorized as 510K.
Measures Being Adopted by Orthofix
Orthofix believes that BGS devices should be regulated in a manner, which reflects the known benefits and risks for specific indications for use. The purpose can be served by mandating the manufacturers to submit clinical data through the FDA’s pre-market approval process to validate the safety and effectiveness. This leads to more information being passed on to clinicians about the safety and effectiveness of the devices, ultimately leading to improved patient outcomes.
Along with other manufacturers of BGS devices, Orthofix confirmed its participation in the FDA’s April hearing, where it will submit evidence supporting the importance of maintaining BGS devices as Class III devices.
Per a report on Transparency Market Research, the global bone growth stimulators market was valued at $1.3 billion in 2018, and is likely to witness a CAGR of 5% between 2019 and 2027. Factors like the global rise of the elderly population and the subsequent occurrence of orthopedic diseases along with the growing preferences for minimally-invasive and non-invasive surgeries are driving the market.
Given the market potential, Orthofix seems to be well-positioned in the niche market.
Of late, the company has witnessed a slew of developments in its business arms, especially in the Bone Growth Therapies product category of the Global Spine segment.
Currently, Orthofix is offering the Bone Growth Stimulation platform with the only cervical spinal indication granted by the FDA. The company also has the only mobile device app accessory — STIM onTrack 2.1 — under its wings, which is designed to help patients adhere to their prescriptions and improve clinical outcomes. Notably, the app received the FDA’s approval in February.
The company is also investing in investigational device exemption (IDE) studies to expand indications for use in areas such as rotator cuff tears.
In February, Orthofix announced an asset purchase agreement with Wittenstein SE, which is a privately-held Germany-based company. Per the terms of the agreement, Orthofix will acquire assets associated with the FITBONE intramedullary lengthening system for limb lengthening of femur and tibia bones. The transaction will also add other potential applications of the technology, currently in the preliminary development stage, including the FITSPINE system for early onset scoliosis.
Shares of Orthofix have dipped 39.1% in the past year against the industry’s 1.5% growth.
Zacks Rank & Key Picks
Currently, the company carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are ResMed Inc. RMD, Medtronic plc MDT and Hill-Rom Holdings, Inc. HRC.
ResMed has a projected long-term earnings growth rate of 12%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently carries a Zacks Rank #2 (Buy).
Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. It currently carries a Zacks Rank #2.
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