MiMedx Group Inc MDXG 0.95% can’t seem to leave controversy behind. Even as the company announced the conclusion of an independent audit committee investigation into some of its business practices, a new report in the Wall Street Journal said the company’s injectables are not meeting regulatory standards.
Lax Manufacturing Process, Diluted Quality Standards
MiMedx, which sells injectable wound care products, was testing the finished products quarterly as opposed to checking each lot, WSJ said, citing an internal document prepared for the company in January by Lachman Consultants.
The biomedical product company sells wound care products derived from the amniotic sac that protects the fetus, processing it into patches or grinding it into a powder.
The report comes even as the company claimed that it corrected deficiencies identified by the FDA in 2016 : failing to validate its manufacturing process and failing to investigate the process even after products flunked visual inspection.
MiMedx reportedly said in a 2017 update: “we have conducted a wholesale validation of our manufacturing process for injectable wound-care products to ensure it consistently meets specifications.”
The company told the FDA it has improved its quality system to ensure full compliance with the cGMP for micronized products, according to WSJ.
When contacted by the Journal, the company said it hasn’t reached full compliance and is committed to finishing the job now.
“MiMedx has new senior leadership in place, and is focused on moving the company forward in a renewed culture of compliance,” the statement said.
Investigation Confirms Malpractice
MiMedx announced Thursday after the close that an independent audit committee concluded its 15-month review of certain sales and distribution practices. The committee said the company will have to restate its previously released financial statements for fiscal years 2012-2016 and three quarters of 2017.
Top MiMedx executives — including former COO Parker Petit, former CFO Michael Senken and former Controller John Cranston —knew about improprieties in the company’s dealings with its largest distributor, but made material misstatements and omissions to key stakeholders, the report said.
Petit was also accused of intimidating whistleblowers by recording their interviews and discussions without their consent using a secret video surveillance system, according to MiMedx.
The company’s response to the conduct has included included dismissal of the previous senior management team and the hiring of both a chief compliance officer and hiring a vice president of internal audit.
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