Dive Brief:
- Integra Lifesciences said Monday that findings of a third-party audit of a Boston manufacturing plant have delayed the resumption of sales of two products.
- The facility, which makes the tissue technologies Surgimend and Primatrix, received a warning letter from the Food and Drug Administration in July over quality concerns. Integra worked to fix the issues, but a recent third-party audit revealed more outstanding problems than the company expected.
- Integra was aiming to return Surgimend and Primatrix to the market in the third quarter and forecast the products would add about $10 million to full-year sales. The company has removed the products’ contribution from the forecast and declined to answer analysts’ questions about 2025.
Dive Insight:
Integra acquired the Boston site in its 2015 takeover of TEI Biosciences. Four years later, the FDA sent a warning letter related to quality systems issues. An inspection in 2023 led to a second warning letter, a recall and a temporary halt on manufacturing. The warning letter required Integra to have an outside consultant audit the facility.
Now, the audit has set back Integra’s plans.
“Despite how much we accomplished leading up to the dress rehearsal, we were not as far along as we thought,” Integra CEO Jan De Witte said on an earnings call Monday. “The final audit confirmed that there's more to be done. That's a result that we acknowledge and accept as a result of that final audit.”
De Witte expected the audit to show Integra still had work to do. However, the audit report contained more findings than the company anticipated. Integra is “still determining the full scope of the work required to address these findings,” De Witte said.
The audit findings are now informing the creation of a work plan.
The company no longer expects to resume commercial distribution of the products in 2024, De Witte said. Analysts pressed for reassurance that the products will return to the market in 2025, but Integra declined to share further guidance.
“The fact that [management] cannot give investors a clear picture as to when it will be resolved and whether its contribution should be removed from FY25 numbers reaffirms investors' fears and provides uncertainty into FY25 (keeping any value oriented investor away in our view),” BTIG analysts wrote in a note to investors. “Simply put, it's too hard to get constructive until numbers are truly de-risked.”
De Witte said Integra has “made changes to the operations and quality leadership and structure to ensure the right focus and capabilities is applied to Boston” and remains fully committed to resolving the issues and returning to the market. The CEO said there is still demand for the devices, despite sales being suspended for longer than expected.
“Surgimend and Primatrix are differentiated products. They're chosen for specific reasons and not easily replaced. So, we believe customer preference will fundamentally remain, and we also continue to have access and relationships with those customers through our broader portfolio,” De Witte said.
Integra has an ongoing project of transferring Boston manufacturing to a new location in Braintree, Massachusetts. CFO Lea Knight said on the earnings call that management is “looking at options across the board from Braintree and Boston” as it works to return to the market.
