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This Form 10-K and certain information incorporated herein by reference contain forward-looking statements and information within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. This information includes assumptions made by, and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company’s products by the market, and management’s plans and objectives. In addition, certain statements included in this and our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval, which are not statements of historical fact, are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict,” “will,” “should,” and other words or expressions of similar meaning are intended by us to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are found at various places throughout this report and in the documents incorporated herein by reference. These statements are based on our current expectations about future events or results and information that is currently available to us, involve assumptions, risks, and uncertainties, and speak only as of the date on which such statements are made.
Our actual results may differ materially from those expressed or implied in these forward-looking statements. Factors that may cause such a difference, include, but are not limited to those discussed in Part I, Item 1A, “Risk Factors,” below. Except as expressly required by the federal securities laws, we undertake no obligation to update any such factors, or to publicly announce the results of, or changes to any of the forward-looking statements contained herein to reflect future events, developments, changed circumstances, or for any other reason.
As used herein, the terms “MiMedx,” “the Company,” “we,” “our” and “us” refer to MiMedx Group, Inc., a Florida corporation and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only MiMedx Group, Inc.
Item 1.
Overview
MiMedx Group, Inc. was incorporated in Florida on February 28, 2008. MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative biomaterial products and allografts processed from human amniotic membrane. “Innovations in Regenerative Biomaterials" is the framework behind our mission to give physicians products and tissues to help the body heal itself. Our biomaterial platform technologies include the device technologies HydroFix® and CollaFixTM, and our tissue technologies, AmnioFix® and EpiFix®.
Recent Events
On January 5, 2011, the Company acquired all of the outstanding equity interests in Surgical Biologics, LLC, for an aggregate of $500,000 in cash, $1,250,000 in notes payable, 5,250,000 shares of MiMedx Common Stock, $183,000 in debt, and certain additional contingent consideration.
Located in Kennesaw, Georgia, Surgical Biologics develops allografts and other products processed from human amniotic membrane that can be used for a wide range of medical applications, including ocular surface repair, gum repair, wound care, nerve and tendon repair, spine repair, burn treatment, and many other types of procedures that require the repair of a patient’s integumental (native) tissue. This strategic acquisition brings together amnion tissue processing technology with our global distribution network in order to position the Company for market opportunities across multiple indications.
Surgical Biologics has developed a specialized process for the processing of amniotic membrane to produce a safe, effective and minimally manipulated allograft for homologous use. This patent pending process, named Purion®, was engineered to maximize yield, while minimizing processing costs and to create an allograft that is optimized for ease of use while providing the patient with the maximum assurance of safety. Surgical Biologics’ amniotic membrane allografts have unique “bio-active” properties that offer benefits that most competitive products cannot offer. Surgical Biologic’s tissues provide anti-inflammatory, anti-immunogenic, anti-scarring and barrier properties, as well as enhanced healing at the surgical site.
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At the time of the acquisition, Surgical Biologics distributed tissue in several different membrane sub segments, such as ocular, dental, and spine. During 2011, the Company launched EpiFix®, an allograft specifically processed to offer a wide variety of wound healing and wound care options. Much of the clinical usage of EpiFix® has been for wound care patients suffering from diabetic ulcers, pressure ulcers, vein circulation ulcers, or artery circulation ulcers.
The Company further expanded its amnion product offering in 2011 with the introduction of AmnioFix® Wrap for both nerve and tendon repair applications. Subsequent to year end, the Company announced the launch of AmnioFix® Injectable, which is an allograft composed of micronized amniotic tissue, uniquely processed to optimize performance and ease of use.
On the device technology side of our business, during 2011, the Company received 510(k) clearance for our HydroFix® Orthoshield device, which is indicated for the management and protection of tendon injuries in which there has been no substantial loss of tendon tissue. Also in 2012, the Company received the CE certification for the Company’s proprietary CollaFixTM Surgical Mesh CD, which is a Class III product in Europe.
Our Technology and Products
MiMedx is the leading supplier of allografts processed from amniotic tissue, having supplied over 70,000 allografts to date for application in the Ophthalmic, Orthopedic, Dental, Spinal and Wound Care segments of healthcare.
Our current amnion products, AmnioFix® and EpiFix®, are processed from human tissue according to the American Association of Tissue Banks (AATB) regulations, and are considered tissue under Section 361 of the Public Health Service Act. This means that AmnioFix® and EpiFix® are regulated differently than the other two MiMedx platform technologies, CollaFixTM and HydroFix®, which are regulated as medical devices and therefore need FDA clearances or approvals prior to marketing in the United States. Because AmnioFix® and EpiFix® are regulated as tissue, they do not need premarket clearance or approval in the United States, which accelerates our ability to bring new products to market. Please refer to the Government Regulation section of this document for additional discussion regarding the regulatory pathways of our technologies.
The AmnioFix® and EpiFix® allografts can be used for a wide range of procedures including ocular surface repair, gingival recession repair, wound care, burns, and many other types of procedures for the repair of a patient’s integumental (native) tissue. As discussed above, amniotic membrane, as processed by MiMedx, has unique “bio-active” properties that offer benefits that most competitive products cannot offer.
Natural human amniotic membrane is composed of multiple layers that contain:
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Structural proteins:
o
Collagen types IV, V, and VII
Elastin
Specialized proteins:
Fibrillin
Fibronectin
Laminins
TIMPs 1,2,4, Tissue Inhibitor of Metalloproteinase 1, 2, 4
Growth Factors:
Epidermal Growth Factor (EGF)
Transforming Growth Factor Beta (TGF-β)
Fibroblast Growth Factor (FGF)
Platelet Derived Growth Factors A & B (PDGF A&B)
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Amniotic membranes have been used clinically for over 100 years. The first clinical uses of fresh amnion were for wound care patients and burn victims. There have been over 150 publications on the use of amniotic membrane for uses ranging from wound care to gingival recession and from pterygium repair to reduction of fibrous tissue following spinal surgery. The amniotic membrane has been shown to reduce inflammation, down regulate scar tissue and promote the regeneration of soft tissues.
Amniotic membrane has been shown to lack certain HLA antigens that elicit an immune response. Amniotic Membrane is considered immunoprivileged. Some dehydrated amniotic membranes include the epithelial layer, which studies have shown contributes significant immunosuppressive properties to dehydrated amniotic membrane products.
Our Purion® process for both AmnioFix® and EpiFix® is a proprietary tissue processing technology that produces an allograft which is safe, effective, and minimally manipulated. Critical processing steps, including sterilization, have been validated to ensure tissue integrity and safety. Our unique processing technique specifically focuses on maintaining the delicate multi-layered structure and collagen matrix of the tissue. The Purion® process does not subject materials to ultra low temperature conditions during processing or storage. This technique helps maintain graft structure, provides optimal performance and allows the allograft to be stored at room temperature. Additionally, each allograft incorporates specialized visual embossments that assist the surgeon with proper graft placement and orientation.
Our team is dedicated to providing safe, superior allografts that exceed customer expectations. To better satisfy the requirements and expectations of our customers, the Company maintains strict control on quality from the time of procurement. The Company has developed and implemented a Quality Management System in compliance with both the Food and Drug Administration (FDA) and the AATB. Using this Quality Management System, the Company maintains strict control over each step of the manufacturing process.
In addition to regulating recovery and processing activities, the Company has also established guidelines for donor eligibility, screening and testing. All donor records and test results are reviewed by our Medical Director prior to the release of the tissue. Only tissue from donors that test negative or non-reactive for infectious diseases and acceptable bacterial results are released for transplant.
The Company continues to research new opportunities for amniotic tissue, and currently has several additional offerings in various stages of conceptualization and development.
Our CollaFixTM technology combines an innovative means of creating fibers from soluble collagen and a specialized cross-linking process. MiMedx utilizes two separate cross-linking technologies for various applications. Initial laboratory and animal testing shows that the cross-linked collagen fibers produce a very strong, biocompatible, and durable construct that can be transformed into surgical meshes intended to treat a number of orthopedic soft-tissue trauma and disease disorders.