MiMedx shares sink after company announces subpoena, lawsuit against competitor

Economic IndicatorsAssociated Press

Shares of MiMedx Group plunged Friday on the first trading day after the medical products maker announced that it had received a subpoena regarding its marketing activities and it has sued competitor Organogenesis over claims of business interference.

The Marietta, Georgia, company said Wednesday that the inspector general's office of the U.S. Department of Health and Human Services had sent the subpoena in connection with a civil investigation. MiMedx said it would cooperate fully and that it keeps a "robust" compliance program.

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"I can assure you that the corporate officers at MiMedx are not aware of anything that would stimulate this investigation," Chairman and CEO Parker H. Petit said in a statement from the company.

MiMedx develops biomaterials made from human amniotic membrane, which is the innermost layer of the placenta lining the amniotic cavity during pregnancy. Its AmnioFix products are designed to reduce scar tissue formation, reduce inflammation at surgical sites and improve healing.

The company also said Wednesday that it filed a federal lawsuit against Organogenesis Inc., which makes skin substitute products that compete with MiMedx.

MiMedx said some of its products were "suddenly and unexpectedly" temporarily removed from a Veterans Administration supply schedule in 2013. MiMedx has accused Organogenesis of providing "material misinformation" to the VA that improperly influenced that agency's decision.

An Organogenesis representative did not immediately return calls Friday morning from The Associated Press seeking comment.

Shares of MiMedx Group Inc. tumbled 20 percent, or $2.32, to $9.21 in Friday morning trading, while broader indexes rose slightly to start the new year.