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In response to the medical device company's updated regulatory timeline for its next-generation Nellix System, shares ofEndologix (NASDAQ: ELGX), which focuses on minimally invasive treatments foraortic disorders, fell 36% as of 11:00 a.m. EDT on Thursday.
Endologixrecently held a meeting with the Food and Drug Administration to firm up the regulatory pathway for its Gen2 Nellix Endovascular Aneurysm Sealing System. Unfortunately, the agency said it wants to see data from a confirmatory clinical study before it will give the device the thumbs-up. As a result, the company now believes that the product will be available for sale in the U.S. around 2020. That represents atwo-year delay from the timeline that it had previously communicated to investors.
Here's what Endologix CEOJohn McDermott had to say about the delay:
While the timeline has shifted from our projections, we appreciate the FDA's collaboration as Nellix EVAS proceeds in the regulatory process. We have evidence that our previously updated Nellix IFU provides excellent patient outcomes and look forward to starting the confirmatory clinical study with our Gen2 device. We appreciate the support of our physicians worldwide and their continued collaboration in developing new technologies and conducting clinical studies to provide the best outcomes for patients with abdominal aortic aneurysms.
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The market didn't take the news well, which is why shares are tanking today.
Image source: Getty Images.
Endologix's shareholders have been hit by a number of setbacks over the last few months. The stock took a nose-dive late last year after management announced a temporary hold on shipments of its AFX Endovascular AAA System. Regulators in the EU even suspended the company's CE Mark over reports of type 3 endoleaks in some of its older devices. While CE Mark was reinstated just a few months later, the damage had already been done to its share price. More recently, Endologixraised its GAAP loss-per-share estimate in 2017 due to higherinterest expense and debt extinguishment-related charges. When adding in today's timeline update, it is understandable why shareholders have been mauled over the past year.
Given the delay of theNellix system, it is hard to determine when the company will be able to turn a profit. That's a big problem considering that its net loss was $21.3 million and it ended March with only $36 million in cash. Those numbers suggest that stayingon the sidelines is likely to be the smart move for now.
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