I’ve looked into this a bit more and it seems that Integra is currently dealing with issues that extend beyond the previously discussed product recalls.
As a reminder, in May last year Integra recalled products manufactured at its Boston facility due to “endotoxin testing deviations”. Impacted products were SurgiMend and Primatrix. SurgiMend is used in hernia, so has no overlap with PNV products; Primatrix is used in wounds, primarily DFUs and VLUs and has some overlap with PNV products. Meanwhile, Integra’s principal skin product, the bilayer dermal matrix (IDRT) which is manufactured elsewhere, appeared to be unaffected by the recall action.
Integra initially hoped to resolve their Boston manufacturing facility problems by the end of last year but the issue dragged on and more recently Integra decided to shift manufacturing from Boston to a brand new manufacturing facility. Hence, the SurgiMend and Primatrix products won’t return to the market now until H1, 2026.
However, Integra is also dealing with other issues.
In the Company’s February 24 Earnings Call, it was stated that there had been a 4.4% sales decline in Tissue Technologies, excluding Boston, because production of Integra Skin was not able to keep up with strong demand.
In the Q1 2024 Earnings Call held in May, an organic decline of 6.3%, excluding Boston, was reported for Tissue Technologies. This was attributed to continuing supply constraint. “Integra Skin” first quarter revenues were reported to have suffered a low double-digit decline. International sales in Tissue Technologies were reported to be down by “low double-digits”, primarily due to the Boston recall and Integra Skin supply.
In the Q2 2024 Earnings Call held earlier this month, management said that although they had continued to ramp production of “Integra skin” over the course of the quarter, they still weren’t operating at full capacity.
Management also stated that “over the last several quarters” they had identified gaps in their operational and quality control systems. The gaps were said to have been identified by both internal review and “typical audit by regulatory agencies”. As a result, it was said to have become clear that “there is a need to bolster our manufacturing quality compliance processes across the organization.”
Integra updated its guidance this month to reflect “revenue impacts resulting from several shipping holds that we have put into place to assess and confirm product labelling and regulatory compliance.” The shipping holds were expected to impact revenue in this third quarter, with resumption of shipping of “many of those products” later in the year. It was said that while many of the cases that couldn't be supplied in the third quarter would be lost, they expected a substantial step-up in revenue into the fourth quarter as shipments were able to meet demand with modest backorder clearance.
The analysts at the Earnings Call probed the wider potential impact of these issues.
The analyst from J P Morgan asked how they felt about the ability to regain share, saying he imagined that “doctors will have moved on to other products, other companies, other contracts.”
It was also asked if there was any concern in terms of sales force retention as a result of the shipping holds and the broader issues in supply.
Management suggested they weren’t concerned by either sales or sales force migration. The analysts sounded less convinced.
During PolyNovo’s webinar last Friday, Swami Raote identified that Integra’s bilayer dermal template (IDRT) is one of the products that has been impacted.
David Williams' comment that “time is of the essence” and remarks about recent hires of highly experienced sales people surely relate to Integra’s current woes.
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