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Lifecore stock jumps after gel ruling
By Ted Griffith, CBS.MarketWatch.com
Last Update: 4:55 PM ET Sept. 7, 2001
CHASKA, Minn. (CBS.MW) -- Shares of Lifecore Biomedical soared more
than 50 percent Friday after mediators found that the Food and Drug
Administration had wrongly rejected the medical device maker's gel
designed to reduce scarring from surgery.
Shares of Lifecore (LCBM: news, chart, profile) moved up $3.14 to $9.04.
The Chaska, Minn.-based company announced
Thursday that an FDA dispute resolution panel, made
up of medical experts, had ruled in the company's
favor and said Lifecore's gel should be approved.
The decision was the first of its kind under a system
established to mediate disputes between the federal
agency and medical device companies. It's now up to
the director of the FDA's devices unit as to whether to
approve the product, known as Gynecare Intergel.
Analyst Thomas Gunderson at US Bancorp Piper
Jaffray, saying that final approval now appears to be
just a formality, predicted the gel will be cleared for
marketing within three months. The analyst upgraded
his rating on Lifecore's stock from "neutral" to "strong
buy."
Gunderson said Lifecore Biomedical already has
products on the market, including dental implants, but
the anti-scarring gel appears to have the most
commercial potential.
"This product is the home-run hitter," Gunderson said.
Gunderson expects the gel initially will be used in
gynecological surgeries and estimated the ultimate
potential market could be as high as $500 million.
If it does win final clearance, the gel will be marketed
by health-care giant Johnson & Johnson (JNJ: news,
chart, profile). After a recent run to higher ground,
shares of J&J fell $1.21 to $55.73.
Gunderson said the action of the mediators could
also have positive implications for the whole medical device sector. He said the
dispute resolution process offers companies another opportunity to win approval
for their products.
"The industry lobbied for this, they got it, and now they're seeing that it works,"
Gunderson said.
Ted Griffith is a reporter for CBS.MarketWatch.com
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