mimedx narrative of deception -...
TRANSCRIPT
MiMedx Narrative of Deception Part of understanding the MiMedx story is being able to identify questionable and misleading
statements consistently made by management. The following statements have been proven
to be either false or intentionally misleading. This will be updated in the days and weeks
ahead. I recommend setting up a conference call to discuss the information that I’ve
submitted which is much easier to explain verbally.
A. Direct Business With Forest Park Medical Center
MiMedx Group, Inc. v. Fraser John Perring; Gabriel Bernarde; Aidan Lau; Ganadabi LTD, and DOES 1-100 inclusive. Case 3:18-cv-00327-TJC-PDB Filed 03/06/18
MiMedx Exposes Additional False and Misleading Information October 17, 2017
6. Viceroy Claim:
“Mark Brooks and directly MiMedx have other business relationships with indicted Forest Park
individuals.”
MiMedx:
“This is FALSE. MiMedx does not have business relationships with the indicted Forest Park
individuals. As mentioned previously, MiMedx does not control to whom our distributors sell
products. If one of these individuals or the companies purchase MiMedx product from a
distributor, it does not create a direct business relationship with MiMedx.”
If the above statements are true, then someone at MiMedx should be able to explain why the
company was listed as a creditor in the bankruptcy case for Forest Park Medical Center at
Southlake, LLC (see below)
B. Employee Documented Report Of Illegal Activity Petit Petit Addresses New Short Advocate October 13, 2017
Short sellers should simply ask our terminated employees why they did not report these
“supposed” incidents of wrong doing or malfeasance at the time they were supposedly
happening through the corporate compliance reporting systems. In one solution, their phone
calls could go straight to the Board of Directors. In the other case, a “Dear Pete” letter could
come straight to the Chairman’s office without anyone else seeing the document. When
individuals do not use those readily available systems, one should question their motives and
also their reported facts. By the way, the “Dear Pete” letter Cohodes read was never received
by the Company. Probably a recent creation after the fact!
Jess Kruchoski did in fact report “incidents of wrong doing or malfeasance” while still an
active employee at MiMedx. See below email to MiMedx General Counsel, Lexi Haden.
.
Exhibit 1 Case 1:17-cv-00577-AT Document 1-1 Filed 02/15/17 Jess Kruchoski v. Mimedx Group, Inc. and Parker H. Petit. –
Northern District of Georgia Atlanta Division
C. Misleading Timetable For A Resolution With Regulators And
Auditors Petit Petit Addresses New Short Advocate October 13, 2017
“I expect you will see tweets, reports and all kind of misinformation and lies as we move
forward. We do not plan to answer all of this “noise” from the “Circus”. We will certainly work
with any federal regulators who wish to discuss these matters with the Company. After those
discussions, we should have these matters behind us rather quickly, I believe. However, in the
meantime, please do not assume that any of this short selling activity is going to affect the
operating performance of the Company, because it will not. MiMedx has matured quite
rapidly, and our business assets are functioning well and producing exceptional results.”
Roughly 7 Months later and we have this………
Atlanta Journal Constitution: MiMedx expands workforce amid allegations of fraud
https://epaper.ajc.com/popovers/dynamic_article_popover.aspx?guid=7c39f063-5758-44e1-
9ee2-fbd142e72c58&pbid=8e0858ee-1443-484d-9e94-f8b8a1eaaaff
“In the latest blow, MiMedx disclosed March 15 that the Department of Justice is conducting a
preliminary review of its business practices”
”MiMedx said last September that the Securities and Exchange Commission issued a subpoena
after former employees alleged the company illegally inflated revenue by over shipping to
Veterans Affairs hospitals in a practice known as channel stuffing.”
“But Petit acknowledged it likely will take months, not weeks, for accountant KPMG LLP and law
firm King & Spalding LLP to conduct their independent investigation into any potential
wrongdoing before MiMedx can release audited results.”
D. A Definitive History of “Malfeasance” Atlanta Journal Constitution: MiMedx expands workforce amid allegations of fraud
“Petit, who started his first company in 1970 and has been heading MiMedx since 2009, allows
that some MiMedx sales staff might have engaged in “rogue” behavior but says there’s no sign
of widespread fraud.”
“I’ve been doing this a long time. Why is Petit all of a sudden going to go rogue and do stupid
things at my age of 78? This is all stuff trumped up to drive the stock price down,” he told a
reporter during a lengthy interview at the company’s headquarters on a recent morning.”
11/29/17 Piper Jaffray Health Care Conference:
Parker H. Petit:
“We'll say here's the allegation and here's what's false and everyone that we found is false. We're
a well-run company. I've been running public health care companies now for 36 years, business
for 46 years. If I were prone to be an individual who was going to conduct malfeasance in my
business activities or be corrupt, it would have shown up decades ago. I'm not. I'm a man of
integrity as is our whole management team. We've got 10 years of audit and financial statements.
We've just transitioned to a big four, which is normal maturation process for a company like ours.”
It did show up decades ago……….
3/7/06 The Roanoke Times: Medicare informants to get giant settlements:
http://www.roanoke.com/webmin/news/medicare-informants-to-get-giant-
settlements/article_e0025294-152a-594d-a843-82270f148855.html
“According to the settlement, Clarke, of Roanoke, filed a sealed lawsuit under the federal False
Claims Act in Roanoke in October 2002. She filed her complaint under a statute that allows private
persons to sue for penalties that will be shared by the government or some specified public
institution.”
“The settlement indicates that the federal government had some 16 civil claims pending against
the two companies for violations occurring between January 1998 and December 2003. They
include:
● Billing Medicare for medical equipment before obtaining a doctor's order or a certificate
of medical necessity.
● Failing to credit Medicare when equipment was returned.
● Billing Medicare for shipments of duplicate orders.
● Creating or changing documentation to support the shipment of supplies.
● Billing Medicare for blood glucose meters that the company sent out as part of a
promotional campaign.
● Altering the dates of service, shipment or request on equipment orders.
● Billing Medicare for shipments of supplies from a California facility that did not have the
required Medicare supplier number.”
“Clarke estimated in her lawsuit that some 40 percent of the monthly shipments by Diabetes
Self Care were fraudulent. She also said that although the company had about 65,000
customers, 15,000 were people who had died but were still being sent supplies.”
Viceroy Report, Part 2: September 26, 2017
7. Viceroy Part 2 Claim
MiMedx:
“In 2006, Matria paid $9 million dollars in settlement of two qui tam lawsuits filed against a
Virginia-based subsidiary of the company, Diabetes Self Care (DSC). Matria acquired DSC at
a time when Mr. Petit's only role at Matria was the Chairman of its Board of Directors. Mr.
Petit did not step back into the role of Chief Executive Officer of Matria until sometime later.
This Virginia-based company, which Matria divested in 2004, for approximately $104 million,
billed Medicare for sales of diabetes supplies. Such billings required the maintenance of a
substantial number of records to support its billings, including physicians' orders,
assignments of benefits, certificates of medical necessity and signature logs. As a result of its
paper-based systems, some billings were not properly documented, which gave rise to a
refund obligation. Any such errors would have been inadvertent and the settlement
agreement specifically acknowledged that Matria did not admit to any liability under the False
Claims Act or otherwise.”
FactSet Biography of Parker “Pete” Petit: Mr. Petit has been Chairman of Matria Healthcare, Inc. since March 8, 1996 and Chief Executive Officer since February 22, 2003. Previously, he was President and Chief Executive Officer of Matria Healthcare from October 5, 2000 to February 22, 2003. Mr. Petit was a Member of the Three-Person Office of President in 1997. He was Founder of Healthdyne and Chairman and Chief Executive Officer from 1970 to 1996. Mr. Petit is a Director of Intelligent Systems Corp. and Logility, Inc. Source: FactSet People
So if these violations occurred between 1998-2003, some did occur while Pete was CEO of
Matria from 2000-2003. MiMedx’s statements that “Mr. Petit did not step back into the role
of Chief Executive Officer of Matria until sometime later” and “If I were prone to be an
individual who was going to conduct malfeasance in my business activities or be corrupt, it
would have shown up decades ago” are therefore false and misleading.
E. Bill Taylor Gets Amnesia
Plantar Fasciitis Update Call held on September 7th 2016.
We point to a question posed by former Brean Capital Analyst Jason Wittes to COO Bill
Taylor:
Jason H. Wittes Analyst, Brean Capital LLC
Hi. Thanks for all the information on this call. Wanted to ask about GMP compliance. Is that something that's going to culminate in an FDA inspection or is that just something you're doing internally just to be ready for when and if the FDA decides you need to GMP compliant as opposed to just tissue compliant? .......................................................................................................................................................... William Charles Taylor President, Chief Operating Officer & Director, MiMedx Group, Inc. Well, related to the BLA itself, once we are going through that process, I don't remember off the top of my head if they must do an inspection before you launch, but I'd say, they obviously can as soon as you've – we've gotten to the right part in the BLA process. So, our assumption is that, basically, as soon as we tell them we're compliant that they're going to walk in the door and audit us to that. So, that's the way we're operating.
Please note that the MiMedx facility was inspected in Feb 2016 and received a form 483 with
13 severe and dangerous observational deficiencies yet no mention of either and apparently at
the time Bill Taylor may have contracted some rare form of Amnesia that caused him to forget
this actually occurred or that he was the same Bill Taylor named as present in the FDA
investigator’s report.
F. Bill Taylor Part II
Staying on Bill Taylor, read the comments he made on 4Q16 earnings call in which he
incorrectly stated that HCT/P final guidance was unlikely to be released in 2017. Additionally,
Mr. Taylor invoked former Health and Human Services secretary and 2018 JP Morgan
conference seat filler, Tom Price.
.."And I also want to follow up on the press release we sent out regarding the FDA's guidance
document agenda for 2017, have reviewed a published calendar year guidance agenda, a
calendar for the guidance agenda. This is a scheduled or projected release dates of guidance
documents, both draft guidance as well as final guidance documents. The 2017 agenda did not
include any reference to the minimal manipulation or homologous issues of HCT/P. This was not
a surprise to us as we've been told that the FDA received many thousands of comments, the vast
majority of them taking issue with the draft guidance as proposed. So, we are very encouraged
that the FDA is taking the time to carefully review the input. And based on the calendar as
published, we don't expect any significant updates in this area for about a year or possibly
more"
"Another consideration that we think is very positive is that the people that are in the current
consideration for the position of FDA commissioner generally believe that new technology
should be made available to the public once safety is assured, much like what was stated in the
21st Century Cures Act. So that gives us comfort that we are not likely to see something coming
out of left field like the untitled letter or the draft guidance that's coming in the coming years.
We note that the 4Q16 call occurred on Feb 23rd 2017 and that Tom Price was already HHS
Secretary having been confirmed on Feb 10, 2017. The FDA would’ve fallen under his authority
as HHS Secretary.
Additionally, we note that Pete Petit was among the top individual contributors to Price when
he was just a simple Georgia congressman. Federal campaign finance records show MiMedx,
through its PAC, Pete and his relatives, had contributed more than $40,000 to Price’s campaign
and joint fundraising committees since 2014. With combined PAC and individual donations,
MiMedx was ranked as Price’s top contributor for 2015-2016 by the nonpartisan Center for
Responsive Politics.
Unfortunately for the company, roughly 8 months later Tom Price embarrassingly resigned for
taking expensive private airplane trips at the expense of U.S. taxpayers. Following him out the
door was MiMedx’s leverage and influence with the FDA, because contrary to Bill Taylor’s
aforementioned prediction, the FDA released its finalized guidance in November 2017 for
HCT/Ps that focuses minimal manipulation and homologous use.
Tom Price attending MiMedx Presentation at J.P. Morgan Conference. January 2018.
G. “Rather Routine” Form 483 Observations 3/28/18 Needham & Company Health Care Conference:
Parker H. Petit:
“Well, 483s, I hate to say it this way but rather routine; that's when the agency comes in and
we've had inspectors in the past where we got no 483s and we've had some where we get one
or two's. It's not a failure. It's something that the agency wants you to focus on and clear up. So
during this inspection last year in January, was our first inspection on the Good Manufacturing
Practices (sic) [Practice] (26:08), which is a major issue, so we expected 483s. By the end of the
year and earlier this year, we cleared all those up and we're – as Mark indicated, we're
manufacturing now on a GMP, which is substantially different than the old GTP tissue
practices.”
This is another statement that spells disaster for the company because the agency’s
investigator issued to Pete directly a Form 483 that identified 13 separate observational
deficiencies ranging from sterility and purity issues tied MiMedx’s manufacturing process to a
lack of validated procedures and patient safety issues.
We say undisclosed, because the company never told shareholders about this inspection but
instead issued a rebuttal on the short seller commentary section of their website on Jan 3, 2018
titled “MiMedx Sales of AmnioFix Injectable” in which the company stated:
“Let us also remind you of the fact that in 2012, the FDA conducted a Directed Inspection of
MiMedx for the express purpose of evaluating AmnioFix Injectable. After that inspection, in
which the on-site FDA auditor sent information to, and conferred with CBER, the FDA gave
MiMedx a CLEAN audit report, and did not find anything wrong with AmnioFix Injectable. As we
discussed many times, MiMedx interacted with the FDA”
Again, no mention of the Form 483 issued to the company in early 2016 or the 13 separate
observational deficiencies. For those of you playing at home An FDA Form 483 is issued to firm
management at the conclusion of an inspection when an investigator(s) has observed any
conditions that in their judgment may constitute violations of the Food Drug and Cosmetic Act
and related Acts. FDA investigators are trained to ensure that each observation noted on the
FDA Form 483 is clear, specific and significant. Observations are made when in the
investigator’s judgment, conditions or practices observed would indicate that any food, drug,
device or cosmetic has been adulterated or is being prepared, packed, or held under conditions
whereby it may become adulterated or rendered injurious to health.
Moving on, the FDA investigator then told management which along with Pete included EVP
Debbie Dean and COO Bill Taylor, that in regards to the company’s micronized injectable
product otherwise known as Amniofix injectable:
“The expectation is that anything currently marketed will not only meet GMP standards but will
also have an approved Biologics license”
The investigator then went on to tell Bill Taylor directly that “their micronized injectable
products are biological drugs which require a valid biological license”.
On the 4Q15 earnings call held on 2/23/16, roughly 3 weeks after the disastrous inspection,
there was no mention of the inspection or Form 483 in the press release, on the call, or in the
10k.
Fast forward to the company’s to the company’s recent fireside chat at the Needham
Healthcare Conference on 3/28/18 in which MiMedx management stated:
“At best, we had no requirements to manufacture to the standard...”
“..the product that was going into the market was not – had no requirement to be BLA product”
Amniofix injectable IS a drug and this whole time it’s being illegally marketed and sold while
management lied to shareholders, healthcare providers, and most importantly, patients about
it.
H. “AvKare is just an intermediary”
MiMedx Demand for Correction to Cohodes Report dated Nov 2, 2017:
11. Cohodes Statement:
“AvKare is just an ‘intermediary’”
MiMedx:
See #3. This is another Cohodes Lie.
Is it really a lie?
The AvKare relationship as per Mike Carlton, MiMedx Senior V.P. of Global Sales:
Exhibit 3 to Notice of Filing Depo Trans (Depo of Michael Carlton.txt Case 2:17-cv-02028-JTF-egb Document 43-3 Filed
12/04/17 Mid-South Biologics LLC vs MiMedx Group, Inc.