Ex-MiMedx CEO Petit mounts proxy war

MiMedx

MiMedx (NSDQ:MDXG) is facing a proxy battle being led by former CEO Parker Petit, who was ousted last July “for cause”, according to a recently posted SEC filing.

The ex chief-exec nominated himself alongside former Pulte Home Corp tax director David Furstenburger and George & Lorenson partner Shawn George as candidates for the company’s board of directors, set to be elected at an upcoming shareholder’s meeting.

Petit said that he believes that the current MiMedx board has “failed shareholders with disappointing performance, failure to ensure competent leadership and lack of engagement with MiMedx shareholders.” He added that he “felt compelled to launch a contest seeking changes on the board,” according to the filing.

“In my opinion, the current board has done a major disservice to MiMedx’s shareholders and there is no sign the board has the ability, judgment or commitment to return MiMedx to its former growth and profitability as a NASDAQ listed company. Shareholders have been left in the dark while the company’s value has significantly dropped. I could no longer sit on the sidelines. Together with Shawn and David, we, if elected, will bring a wealth of experience working on and resolving expeditiously highly contentious and complicated matters. I believe that our slate of candidates will instill the much needed accountability and reason in the boardroom that MiMedx is now lacking, while supporting its valuable employees and expanding its best in class intellectual property patents,” Petit said, according to the SEC filing.

MiMedx faced a number of troubles last year, including the ouster of Petit and president & COO William Taylor amid a board-directed independent investigation that had already prompted the departure of CFO Michael Senken and treasurer John Cranston in June.

At the time, MiMedx said it would restate all of its earnings reports going back to 2012 and was cooperating with U.S. Securities & Exchange Commission and Justice Dept. investigations into the matter.

The company later said that all four executives’ departures were for cause, triggering the forfeit of all equity and incentive awards for the executives and Petit’s resignation from the board. Petit and Taylor denied the allegations in a statement from their lawyer.

In December, the accounting firm tapped to audit MiMedx’s books resigned in the wake of the financial issues the company faced.

MiMedx escapes Osiris trade theft suit

MiMedx, Osiris

MiMedx (NSDQ:MDXG) enjoyed a rare spot of good news when a federal judge in Maryland this week dismissed a trade theft and breach-of-contract lawsuit brought by Osiris Therapeutics over MiMedx’s  Stability Biologics acquisition.

Columbia, Md.-based Osiris said it inked a distribution deal back in 2013 to have Stability sell a pair of its products through the end of 2015. But after MiMedx paid $10 million for Stability in January 2016, it allegedly gained access to Osiris trade secrets and fostered a series of events leading to $6.8 million in losses for Osiris.

(In an about-face in August 2017, MiMedx agreed to sell Stability back to its original owners; that sale closed last October.)

The lawsuit, filed in April in the U.S. District Court for Maryland, alleged that MiMedx held on to Osiris inventory worth $2.2 million, plus $1.3 million in pre-paid commissions, and directed Stability not to pay another $2.9 million allegedly owed under a payment plan; Osiris allegedly incurred another $321,000 in legal fees from its attempt to recoup its losses in arbitration.

MiMedx filed a motion to dismiss for lack of jurisdiction. In a Dec. 11 ruling, Judge Catherine Blake ruled that Osiris failed to prove either general or specific jurisdiction in the case.

“None of MiMedx’s alleged contacts with Maryland – which, even by Osiris’s characterization are limited to the acquisition of a subsidiary that owed debts to a Maryland corporation and the operation of a single tissue bank in-state – suffice to give rise to general jurisdiction,” Blake wrote.

“Osiris improperly merges Stability’s contacts with MiMedx’s contacts,” she wrote. “MiMedx’s only contact with Maryland is its distribution of amniotic tissue through a Maryland tissue bank. … [T]his contact is insufficient to support specific jurisdiction in Maryland. “

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MiMedx accounting firm quits

MiMedxThe troubles at MiMedx (NSDQ:MDXG) continued last week with the resignation of the accounting firm tapped to audit its books in the wake of a financial scandal.

Marietta, Ga.-based MiMedx last July ousted ex-CEO Parker Petit and president & COO William Taylor amid a board-directed independent investigation that had already prompted the departure of CFO Michael Senken and treasurer John Cranston in June.

At the time, MiMedx said it would restate all of its earnings reports going back to 2012 and was cooperating with U.S. Securities & Exchange Commission and Justice Dept. investigations into the matter.

The company later said that all four executives’ departures were for cause, triggering the forfeit of all equity and incentive awards for the executives and Petit’s resignation from the board. Petit and Taylor denied the allegations in a statement from their lawyer.

Last week MiMedx, which makes regenerative and therapeutic biologics using human placental tissue allografts, said the company hired by its board’s audit committee resigned Dec. 4 after determining that it can’t rely on the company’s internal financial controls or the representations from the former executives and their interim replacements.

“EY advised the company that the internal controls necessary for the company to develop reliable financial statements do not exist,” MiMedx said in a Dec. 7 regulatory filing. “Although EY could accept representations from the current interim CEO and interim CFO based on their knowledge, EY advised the company that EY is unable to rely on representations from them because, as of the date of the resignation, the current interim CEO and interim CFO, in turn, would have needed to rely on representations from certain legacy management personnel still in positions that could affect what is reflected in the company’s books and records.”

The accounting firm said it would need to “significantly expand” the scope of its audit, “due to material allegations of inappropriate financial reporting, material allegations of noncompliance with laws and regulations, the findings to date from the independent investigation conducted by the Audit Committee into these allegations, and the lack of internal controls necessary for the company to develop reliable financial statements,” MiMedx said in the filing.

“EY advised the company that information has come to EY’s attention that EY has concluded materially impacts the reliability of previously issued financial statements, and the issues raised by this information have not been resolved to EY’s satisfaction prior to its resignation,” MiMedx said.

MDXG shares closed down -4.2% at $1.15 apiece Dec. 7.

Last week the company said it’s planning to lay off 24% of its workforce in a restructuring effort.

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MiMedx to lay off 24% of workforce in restructuring effort

MiMedx

MiMedx (NSDQ:MDXG) said yesterday that it plans to eliminate 24% of its total workforce as part of a larger overall plan to reduce cost and improve efficiency.

The Marietta, Ga.-based company said that it plans to eliminate 240 full-time employees, with approximately half of those cuts coming from the salesforce. The plan also includes reducing costs of “various non-employee expenses,” with MiMedx expecting to realize the savings during the beginning of the first quarter of 2019.

“Today’s announcement is a continuation of management’s efforts to position the business for long-term success by focusing on our wound care business, where our clinical studies best support patient outcomes and for which reimbursement policy has traditionally been more stable. Recent business trends and our internal analysis have led us to simplify and streamline our organizational structure, and reduce costs in order to improve profitability and liquidity,” interim CEO David Coles said in a prepared statement. “I’d like to thank all of our employees for their contributions to our company and their support of our mission. We are confident these organizational changes will both better align our cost structure with our near-term revenue expectations and allow us to operate more efficiently and effectively. By tackling the cost structure now, we believe we are better able to position MiMedx to capitalize on the market opportunities presented by our products and pipeline and, hence, preserve and drive long-term shareholder value.”

The reorganization plans came about in response to an independent investigation performed by the company’s audit committee, MiMedx said, which are still ongoing.

“MiMedx’s realignment program was developed largely in response to these changes that have resulted in a material softening in the company’s recent revenue performance and expected near-term sales forecast,” the company wrote.

The company said that it is still working on restating its financial statements, but due to the “breadth and complexity of issues identified,” it has no estimated completion date at this time. It added that it can also not provide any financial performance-related information, and cannot estimate its exposure to “potential contingent liabilities related to pending and threatened shareholder lawsuits, pending government investigations or other legal proceedings.”

MiMedx said that it is still searching for a permanent CEO and that the board has been meeting with candidates, but that the “ongoing investigation” and “pending financial restatement process” makes it difficult find the appropriate candidate.

“We regret that the tough decisions being made as a result of the realignment program are affecting team members across the organization. We do believe MiMedx is making significant progress on numerous, critical fronts. In particular, the company has established an independent compliance function, assessed and improved sales and other business practices, is advancing the financial restatement process, continues to remediate the internal control environment, and is developing a long-range strategic plan,” board chair Charles Evans said in a press release.

In October, a report emerged suggesting that MiMedx held from government hospitals some of the lower-cost products it made available to private hospitals.

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MiMedx wins FDA regenerative med status for AmnioFix

MiMedx (NSDQ:MDXG) won regenerative medicine advanced therapy status from the FDA for its injectable osteoarthritis drug, AmnioFix, the company announced this week.

The U.S. regulatory watchdog told MiMedx that the company provided sufficient preliminary evidence that AmnioFix could address unmet needs for patients with osteoarthritis of the knee.

Get the full story at our sister site, Drug Delivery Business News.

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MiMedx shares tumble on internal accounting investigation, delayed 2017 earnings

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MiMedx (NSDQ:MDXG) shares have lost nearly a third of their value today after the company announced it is delaying the release of its 2017 financial results due to an internal investigation into alleged issues with sales and distribution practices at the company.

The Marietta, Ga.-based company said that its board’s audit committee has tapped a group of independent legal and accounting advisors to conduct an internal investigation into the matters, and that company executives are also reviewing the “accounting treatment of certain distributor contracts.”

Read the whole story on our sister site, Drug Delivery Business