In a shocking turn of events, the Therapeutic Goods Australia (TGA) —the medicine regulatory authority in the country—has rejected medtech company Hydrix’s (ASX: HYD) application to distribute its cardiovascular device, Guardian, in Australia.
The TGA was dissatisfied with the device’s effectiveness. According to the regulatory body, the AngelMed Guardian device didn’t demonstrate that the benefits outweighed the risks of an implanted device in patients.
Hydrix feels otherwise, citing the US FDA’s approval. When the US FDA approved the device, it stated in its decision that the benefits outweighed the risks and that the device “fills an unmet medical need by providing more effective diagnosis of a life-threatening condition compared to relying on patient symptoms alone”.
Hydrix Executive Chairman, Gavin Coote, commented, “The TGA’s view came as a surprise and was not the outcome we were expecting, given FDA approval endorsed the safety and efficacy of the Guardian device, concluding the benefits outweighed the risks, based on the same information provided to the TGA.”
The AngelMed Guardian is a device that assists with cardiac patient management. The Company says it is the world’s first and only real-time heart attack alert system. While it has been approved in the US, Singapore and Malaysia, its applications are still being processed in Thailand, Hong Kong, Japan and Indonesia. Other countries are also under consideration.
Hydrix has already been commercialising the Guardian in approved markets, like Singapore and Malaysia, where eight successful implants have been completed.
The TGA has given Hydrix until February 27, 2023— “the close of business” — to consider its response. This provides the Company with scope to appeal TGA’s decision. Hydrix is seeking clarification from the TGA and during this period, will assume the matters raised and evaluate the alternate pathways and options available to pursue a TGA approval.
Thankfully for Hydrix, cardiovascular diseases are the leading cause of death globally, amounting to 31%. So, the Company believes that it won’t lose significant revenue over this setback. It will continue to generate revenue and profits from its product design and engineering services business which grew revenues 24% and reported a 116% improved EBITDA profit result in the first half of FY23.
Plus, Hydrix currently invests in three Services clients with a $3.65 million book value, further cushioning its financials.
Coote added, “While the Australian launch of the Guardian remains a key objective, Australia is only one of the eight countries in which Hydrix has exclusive rights, and these other markets with a combined population greater in size than the USA, represent a significant opportunity to focus on.”
Till it finds a way out of the TGA mess, the Company is actively engaging in commercial discussions with several emerging USA and European cardiovascular technology companies to distribute their products in Australia and Southeast Asia. This will generate new revenue growth opportunities, an FY23 goal for Hydrix.
The TGA disapproval came as a surprise to both the Company and its shareholders, especially following the FDA approval. The next couple of weeks will bring more clarity on the reasons behind the disapproval and Hydrix’s appeal.
Alinda is a Business Reporter for The Sentiment
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