New hip system wins nod from FDA experts

NEW YORK (CNNMoney.com) -- FDA advisors gave their nod to a new hip resurfacing system from the British company Corin, placing it one step closer to regulatory approval.

A panel of FDA experts voted 4-1 in favor of the Cormet orthopedic system on Thursday, according to its maker Corin, which saw a 30 percent increase on the London Stock Exchange the following day.

The Corment hip resurfacing system

Cormet, which resembles a metal cap that is placed over the joint of the femur where it connects with the hip, would be used instead of an implant, which involves a more invasive procedure with a lengthier recovery.

"To have secured the FDA advisory panel recommendation is a critical step in the U.S. approval process for Cormet," said Corin Group chief executive Ian Paling in a press release. "We are now poised, subject to final FDA approval, to be able to supply the world's largest orthopedic market with our leading hip resurfacing product."

The panel's non-binding vote will be taken as advice by the FDA at a later date when it decides whether to approve Cormet for the U.S. market. The FDA follows the advice of its experts most of the time, so this is good news for Corin, and partner Stryker Corp., (up $0.29 to $63.74, Charts) a Michigan-based company that would market the system in the U.S.

The hip replacement market totals $2 billion in the U.S., according to research firm Datamonitor. But Greg Simpson, analyst for Stifel, Nicolaus & Company, said the U.S. market for hip resurfacing is a small slice of that: a $20 million monopoly held by the British company Smith & Nephew (up $0.16 to $60.05, Charts).

Simpson also said the baby boomer-fueled hip resurfacing has the potential of growing to $300 million, but these sales are still unlikely to make much difference to multi-billion dollar companies like Corin and Smith & Nephew.

Raj Denjoy, analyst for Piper Jaffray, said in a published note that the device will probably be approved by the FDA and would appear on the U.S. market three to five months after that decision. For comparison, Denjoy said that the competing hip resurfacing system from Smith & Nephew appeared on the market eight months after its panel vote.

Floyd Landis, the Pennsylvania-based winner of the 2006 Tour de France, is probably the most famous person ever to undergo hip resurfacing. Landis opted for the Smith & Nephew system after he won the race. Landis was later accused of using performance-enhancing steroids, an allegation that he denies, and his victory is in dispute.

Piper Jaffray has done investment banking for Smith & Nephew in the last 12 months, and makes a market for that company as well as Stryker.

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