Shares of Axogen plunged Monday after the Food and Drug Administration delayed the expected approval date for the company's nerve graft product.
The product, dubbed Avance Nerve Graft, is a tissue transplant that surgically repairs broken or damaged peripheral nerves. Last week, the FDA said it needs more time to review manufacturing and facility information. Axogen submitted the information in response to request from the FDA.
This pushes the new expected approval date back to Dec. 5. The agency also said it would provide feedback on the product's label in November.
"We see the delayed (approval decision) date as largely procedural but recognize that it adds some additional uncertainty on the setup through year-end," Leerink Partners analyst Mike Kratky said in a report to clients.
Axogen stock slipped 9%, closing at 14.79. Shares, which have climbed more than 76% since mid-June, sank below their 200-day moving average.
Procedural Setback Slams Axogen Stock
Kratky says the FDA move is largely procedural, and kept his outperform rating on shares.
"We recognize that investors may ascribe incremental risk to the regulatory path forward as a result," he said.
He noted the timing of the FDA's approval decision could impact revenue and gross margins. But Axogen didn't change any of its guidance metrics in the press release.
Earlier this month, Axogen guided to 17% sales growth to $219 million for the full year. The firm also projects gross margins in the range of 73% to 75%. The range includes one-time costs, mainly related to the anticipated Avance approval.
Axogen shares have a strong IBD Digital Relative Strength Rating of 87, putting their 12-month performance in the leading 13% of all stocks. The stock also has a Composite Rating of 90 on a 1-99 scale of fundamental and technical measures.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
