HACKENSACK, N.J.–(BUSINESS WIRE)–ReGen Biologics (OTC: RGBO – News) announced today that it has entered into a bridge financing agreement for up to $3 million aggregate principal amount of secured convertible notes (“Notes”) and closed on the first tranche of the agreement with one of its principal investors. In the first closing under the bridge financing, the Company received $250,000 in immediately available funds and initial commitments for $1.5 million to be provided to the Company in increments to be established with the investors.
In order to reduce its cash requirements, the Company has initiated various personnel and other expense reductions and implemented a temporary employee furlough program for U.S. based employees. These initiatives are expected to have a significant impact on the Company’s ability to conduct certain aspects of its operations. The Company is currently working on a restructuring plan and will provide further updates regarding its plans and liquidity position as they become available.
“A protracted FDA review and recent report by the FDA indicating that a re-review of the clearance of the Menaflex device was going to be undertaken, has severely reduced our financing options,” explained Gerald E. Bisbee, Jr., Ph.D., Chairman and Chief Executive Officer. “This is unfortunate because it appears from the report that the FDA came to that conclusion due, not to any scientific issues, but to a number of internal FDA departures from processes, procedures and practices; including as stated in the report, ‘…the presence of widespread internal disagreement and confusion about the legal standard for 510(k) review…,’ and an admission from the FDA’s Office of Chief Counsel that certain aspects of the Menaflex review, …’supported ReGen’s long standing argument that the Center was holding the CS device to the wrong review standard.’” Dr. Bisbee concluded, “The science and resulting publications solidly support the safety and clinical benefit associated with the use of the Menaflex device.”
Several ongoing events are believed to have contributed to the Company’s current situation, including: conflict at the FDA between management and a group of “whistleblowers” that began well before clearance of the Menaflex device; pressure from certain members of Congress to investigate the whistleblowers’ accusations regarding the FDA’s Device Center; and long-standing congressional interest in changing the 510(k) program.