For­mer MiMedx CEO and COO are con­vict­ed on fraud, con­spir­a­cy charges

The MiMedx saga — which has in­clud­ed a months-long in­ves­ti­ga­tion, FBI in­volve­ment and al­le­ga­tions that the com­pa­ny fraud­u­lent­ly boost­ed its sales — has re­sult­ed in the con­vic­tion of two for­mer ex­ec­u­tives. But it isn’t quite over yet.

Park­er “Pe­te” Pe­tit

For­mer CEO Park­er “Pe­te” Pe­tit and for­mer COO William Tay­lor have been con­vict­ed on a se­cu­ri­ties fraud count and a con­spir­a­cy count, re­spec­tive­ly, in the South­ern Dis­trict Court of New York. The Man­hat­tan US at­tor­ney’s of­fice ac­cused the men of false­ly re­port­ing $9.5 mil­lion of rev­enue in 2015 to boost the com­pa­ny’s stock and fill their own pig­gy banks, per a Law360 re­port.

But the de­fen­dants have de­nied the ac­cu­sa­tions, and say they plan on ap­peal­ing the ver­dict. Pe­tit was ac­quit­ted on a  con­spir­a­cy count, while Tay­lor was ac­quit­ted on a fraud count.

William “Bill” Tay­lor

“We are pleased that the ju­ry ac­quit­ted Mr. Tay­lor of se­cu­ri­ties fraud. We are of course dis­ap­point­ed in the ver­dict on the con­spir­a­cy count, but Mr. Tay­lor ful­ly in­tends to seek to have the ver­dict over­turned,” Tay­lor’s lawyer William Bur­ck told Law360.

MiMedx $MDXG, which pro­duces sur­gi­cal and tis­sue-graft prod­ucts for vet­er­ans and mil­i­tary hos­pi­tals, ran in­to trou­ble back in Feb­ru­ary of 2018, when the FBI showed up at the door of Marc Co­hodes. The vo­cal short sell­er had in­sult­ed the com­pa­ny and Pe­tit in hun­dreds of tweets. Af­ter FBI agents or­dered Co­hodes to stop, his lawyer went to the US De­part­ment of Jus­tice with a com­plaint.

The DOJ seemed to be al­ready in­ves­ti­gat­ing MiMedx’s sales and dis­tri­b­u­tion prac­tices. The com­pa­ny faced law­suits brought by ex-em­ploy­ees who ac­cused it of fraud­u­lent­ly boost­ing sales. And it spent sev­er­al years chal­leng­ing the FDA on whether its prod­ucts met reg­u­la­to­ry stan­dards.

MiMedx said it was con­duct­ing an in­ter­nal in­ves­ti­ga­tion in Feb­ru­ary of 2018, and that it would re­state its fi­nan­cial state­ments go­ing back six years. It part­ed ways with Pe­tit and Tay­lor and slashed 24% of its work­force to start a “new chap­ter.” By No­vem­ber, it delist­ed from Nas­daq.

The in­ter­nal in­ves­ti­ga­tion, con­duct­ed by King & Spald­ing with KP­MG as an au­di­tor, turned up a slew of ac­cu­sa­tions, in­clud­ing that MiMedx made ma­te­r­i­al mis­state­ments and omis­sions about its deals, that Pe­tit lied un­der oath when dis­cussing its largest dis­trib­u­tor, and that the com­pa­ny’s ac­tions were “de­signed to ma­nip­u­late the tim­ing and recog­ni­tion of rev­enue.”

The com­pa­ny’s shares, which once trad­ed at a high of $16.75, closed at $6.79 apiece on Thurs­day.

What comes next for the for­mer ex­ecs? Pe­tit is sched­uled for sen­tenc­ing on Feb 23, and Tay­lor is due back the fol­low­ing day. Pe­tit could be look­ing at up to 20 years for the se­cu­ri­ties fraud count, while Tay­lor’s con­spir­a­cy count could land him up to 5 years.

A cor­rec­tion has been made to re­flect that Pe­tit was ac­quit­ted on a con­spir­a­cy count, not a se­cu­ri­ties fraud count.

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

UP­DAT­ED: Boehringer nabs FDA's first in­ter­change­abil­i­ty des­ig­na­tion for its Hu­mi­ra com­peti­tor — but will it mat­ter?

The FDA late Friday awarded Boehringer Ingelheim the first interchangeability designation for its Humira biosimilar Cyltezo, meaning that when it launches in July 2023, pharmacists will be able to automatically substitute the Boehringer’s version for AbbVie’s mega-blockbuster without a doctor’s input.

The designation will likely give Boehringer, which first won approval for Cyltezo in 2017, the leg up on a crowded field of Humira competitors.

Bio­gen hit by ALS set­back with PhI­II fail­ure for tofersen — but fol­lows a fa­mil­iar strat­e­gy high­light­ing the pos­i­tive

Patients and analysts waiting to hear Sunday how Biogen’s SOD1-ALS drug tofersen fared in Phase III didn’t have to wait long for the top-line result they were all waiting for. The drug failed the primary endpoint on significantly improving the functional and neurologic decline of patients over 28 weeks as well as the extension period for continued observation.

In fact, there was very little difference in response.

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Sheldon Koenig, Esperion CEO

Es­pe­ri­on gets out the bud­get ax, chop­ping 170 staffers as its big drug launch sput­ters

Esperion’s executive team spent years insisting that they had found the sweet spot in the market for their cholesterol drug. But that strategy has soured badly, and after struggling to sell its heart disease pill for more than a year, the biotech says it will cut about 40% of its staff over the next few weeks.

The layoffs will take place across the board, from sales and marketing to R&D, CEO Sheldon Koenig told Endpoints News on Monday. While the chief executive declined to elaborate on how many employees will be affected, an SEC filing stated that approximately 170 staffers are on the chopping block.

Two drug­mak­ers hit with PDU­FA date de­lays from FDA amid back­log of in­spec­tions

As the FDA is weighed down with more and more pandemic responsibilities, the agency is beginning to miss PDUFA dates with more frequency too. Two different companies on Monday said they received notices that the FDA has not completed their drug reviews on time.

The review of an NDA for Avadel Pharmaceuticals’ candidate treatment for narcolepsy is not coming this month, the company said, and the review of UCB’s BLA for bimekizumab, used to treat moderate to severe plaque psoriasis, will miss its target date as well.

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Reshma Kewalramani, Vertex CEO (YouTube)

Ver­tex gets much-need­ed win with ‘ex­tra­or­di­nary’ first pa­tient re­sults on po­ten­tial di­a­betes cure

Vertex said Monday that the first patient dosed with its cell therapy for type 1 diabetes saw their need for insulin injections vanish almost entirely, a key early step in the decades-long effort to develop a curative treatment for the chronic disease.

The patient, who had suffered five potentially life-threatening hypoglycemic — or low blood sugar — episodes in the year before the therapy, was injected with synthetic insulin-producing cells. After 90 days, the patient’s new cells produced insulin steadily and ramped up their insulin production after a meal like normal cells do, as measured by a standard biomarker for insulin production.

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Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

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No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

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Scott Struthers, Crinetics CEO

Cri­net­ics spins out ra­dio­phar­ma ef­forts in­to a new com­pa­ny, high­light­ing the grow­ing field­'s al­lure

Largely known for its nonpeptide small molecule research, Crinetics has been keeping its radiopharma work comparatively under wraps. But that changed Monday afternoon as the California biotech spun out a new company focused solely on the burgeoning field.

Crinetics launched Radionetics after the closing bell Monday, the company announced, seeding the new entity with $30 million raised from 5AM Ventures and Frazier Healthcare Partners. Radionetics will start with its own radiopharma-centric platform and a pipeline of 10 programs aimed at solid tumors.