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Biotech / Medical : SABRATEK CORP (SBTK) -- Ignore unavailable to you. Want to Upgrade?

To: JEFF JORGENSON who wrote (38)	11/25/1998 11:57:00 AM
From: mod	Read Replies (1) \| Respond to of 487

I decided to buy some too. SBTK could recover to $16-18 when Rocap shipments resume, which should happen within a month or two. Dennis

To: JEFF JORGENSON who wrote (38)	11/25/1998 12:30:00 PM
From: mod	Read Replies (1) \| Respond to of 487

Here is the best explanation of what happened that I've seen, from Salomon Smith Barney: << Prefilled Syringes as a Medical Device Rocap has been producing prefilled IV flush syringes since 1995. Until recently, the business of prefilled syringes was considered a repackaging operation by the FDA. Specific approval for the product was not needed. The FDA ultimately decided that the heparin/saline filled syringes were a device and required 510(k) approval. Per FDA guidelines, Sabratek filed a single 510(k) in May 1997 for the device which has been under review for substantially longer then the typical 90 days. After many interim discussions with the FDA, the final resolution of yesterdays meeting was that the heparin portion is a pharmaceutical and under the scrutiny of a pharmaceutical review board and the device falls under the device board. On guidance from the FDA, Sabratek will be filing two separate 510(k) applications within the next few weeks. The FDA will put the filings under expedited review. FDA Warning Letters at Rocap Manufacturing Facilities The first warning letter Sabratek received for Rocap was for the Wooburn, MA facility. The response was accepted and the facility cleared of all compliance issues. Sabratek received a second warning letter for its Orlando Rocap facility. The company made changes at the Orlando plant comparable to those made in Massachusetts but did not received clearance from the FDA. Interpretation of the standards were different in the two districts and the FL district was looking for something different than the MA district. Yesterday's meeting clarified what Sabratek is required to do to the Orlando facility to meet compliance. After making the necessary changes, Sabratek will have both facilities audited by independent auditors and send the reports to the FDA to underscore that it has complied with guidelines and help stave off future warning letters. Voluntary Suspension of Rocap Production and Sales The FDA has not been enforcing its new guidelines because it changed regulation of prefilled IV flush syringes to a 510(k) device after they were in production. Rocap and its competitors continued to operate while they applied for 510(k) approval and brought facilities in manufacturing compliance. Given the ongoing problems with Rocap, Sabratek decided to halt production and sale of prefilled syringes until it was fully approved and in manufacturing compliance. All Rocap personnel will immediately stop production and all resources will be focused on getting the facilities in compliance with FDA manufacturing guidelines. Various scenarios exist to predict the time frame production will be suspended. A favorable scenario would have the FDA letting Sabratek produce again after getting the facilities in compliance. We are using the scenario that production will be suspended until the device receives 510(k) clearance. This could take up to 90 days under normal circumstances, although it is impossible to predict when the FDA will act. We are anticipating Sabratek will get clearance to resume production by the end of 1Q99 and require about two weeks to ramp up production again. Using this worst case scenario, we estimate that Sabratek could drop $16-$17 million from the top line and about $5-$6 million in pretax earnings before resuming production in 3Q98.>>