What: Despite reporting better-than-expected second-quarter sales, shares in Endologix, Inc. (NASDAQ:ELGX) tumbled 13% today on worries that a key FDA approval might get delayed.
So what: Endologix makes medical devices for treating aortic disorders, and sales last quarter grew 29.2% to $51 million from a year ago. That was $5 million higher than industry watchers were modeling.
Management also reported a loss of $0.20 per share for the quarter, which was in line with estimates.
The solid second-quarter results, though, were overshadowed by news that the FDA requested more information regarding Nellix, the company's endovascular aneurysm sealing (EVAS) system used to treat infrarenal abdominal aortic aneurysms. EVAS is a novel treatment approach, and an approval could mark a significant shift in care away from the endovascular stent graft devices currently used by doctors.
Although Nellix is already approved for use and seeing sales grow rapidly in Europe, the FDA requested additional information in July to support the company's U.S. application. The FDA also suggested that an approval could have to wait until an advisory committee panel weighs in on Nellix.
Previously, Endologix anticipated an FDA decision on Nellix in the first quarter, but if a committee review is necessary, that timeline could get pushed back to the third quarter of next year.
Now what: Endologix presented results from its IRENE study of Nellix for the endovascular repair of infrarenal abdominal aortic aneurysms in June, and results were good enough to prompt Glenn Navarro of RBC Capital Markets to call Nellix a "game-changer."
Investors hope he's right, because the company continues to lose money. However, Nellix needs to secure a green light from the FDA for investors find out how much of needle-mover Nellix really is. Given there's now some uncertainty associated with Nellix's timeline, and Endologix losses are mounting, it might be best to focus on other investment ideas for now.