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North America Equity Research
10 May 2011

BioMimetic Therapeutics
Price: $13.39
Panel Docs More Onerous Than Expected; Still See

09 May 2011
Path to Approval - ALERT
FDA released the briefing documents this morning for BMTI's Thursday panel review
Medical Supplies & Devices
of Augment bone graft. The tone of the documents is more negative than expected,
Michael WeinsteinAC
with FDA raising questions around the trial design and primary endpoint, efficacy, and
(1-212) 622-6635
longer term safety.
[email protected]
BMTI is setting up for a busy Thursday and the company appears to have its
Kimberly Gailun
(1-617) 310-0740
work cut out for it based on the nature of FDA’s questions in the panel documents.
[email protected]
While most of the topics included in this morning's documents were expected items,
the language around safety and efficacy comes across as more prosecutorial in
Ross Comeaux
(1-212) 622-1895
nature than we would have expected and has the shares down in today’s trading.
[email protected]
We still see a path to a favorable panel, even after picking through the host of
Christopher Pasquale
FDA concerns. Company management, as well as the panel members, have had
(1-212) 622-6590
access to this document for over a month now, and we expect the panel to be well-
[email protected]
educated coming into Thursday's meeting. We also expect BMTI to be prepared,
J.P. Morgan Securities LLC
and at the end of the day continue to view the risk/benefit as in favor of Augment
Specifically, the FDA cites concerns around: (1) the trial design and use of CT
scan as the primary endpoint, as this is not the standard of care; (2) the
heterogeneous nature of patient enrollment (ankle and hindfoot fusions); (3)
efficacy, in light of trial design concerns; and (4) long term safety. Clearly the
Agency signed off on the IDE and original protocol, and we are optimistic that FDA
is increasingly comfortable with the analysis of the modified intent to treat (MITT)
vs. intent to treat (ITT) population, though these questions are also raised in the
documents. FDA does concede that BMTI has a non-inferior study, but wants further
assurance around the risk/benefit argument compared to autograft.
Augment itself has a compelling safety profile, but today’s documents indicate the
Agency is concerned about longer term safety of the product. The risk here is FDA
makes this a "class" decision, based on other recombinants like Medtronic’s BMP
(and Amplify, which failed to win FDA approval after a split panel last summer)
which have shown a potential cancer signal. Based on good safety data for Augment,
we think an approvable recommendation with post market follow up is a very
possible outcome.
However, we are incrementally cautious based on FDA's tone in this morning's
documents. We do question the ability of the Agency to block a product from the
market simply because of the potential that there could theoretically be cancer risk
on longer term follow up, particularly when FDA has an approved product out there
(InFuse) with known risk. In light of the InFuse experience, we see potential for
approval with specific risk labeling (i.e. black box warnings), which would still
allow for healthy adoption in the foot and ankle space.
Lastly, FDA cites concerns from the Data Safety Monitoring Board (DSMB) in
its report. DSMB did request additional data from BMTI on the clinical side
(reporting of non-unions), and has since signed off on the response.

See page 2 for analyst certification and important disclosures.

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Michael Weinstein

North America Equity Research
(1-212) 622-6635

10 May 2011
[email protected]
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Important Disclosures

Market Maker: JPMS makes a market in the stock of BioMimetic Therapeutics.
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for BioMimetic
Therapeutics within the past 12 months.
Client of the Firm: BioMimetic Therapeutics is or was in the past 12 months a client of JPM; during the past 12 months, JPM
provided to the company investment banking services.
Investment Banking (past 12 months): J.P. Morgan received, in the past 12 months, compensation for investment banking services
from BioMimetic Therapeutics.
Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from BioMimetic Therapeutics.

BioMimetic Therapeutics (BMTI) Price Chart

Date Rating
Price Target
19-Aug-10 OW
OW $16
03-Nov-10 OW
03-May-11 OW
OW $15
OW $17

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Aug 19, 2010. This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst
may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
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Coverage Universe: Michael Weinstein: Abbott Laboratories (ABT), Baxter Intl (BAX), Becton, Dickinson & Co (BDX),
BioMimetic Therapeutics (BMTI), Boston Scientific Corporation (BSX), C.R. Bard Inc. (BCR), CareFusion (CFN),
Covidien (COV), Edwards Lifesciences (EW), Heartware International (HTWR), Johnson & Johnson (JNJ), Kinetic

Michael Weinstein

North America Equity Research
(1-212) 622-6635

10 May 2011
[email protected]
Concepts, Inc (KCI), Medtronic (MDT), St Jude Medical (STJ), Stryker Corp (SYK), Talecris Biotherapeutics (TLCR),
Tornier (TRNX), Zimmer Holdings (ZMH)

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rating category; and our Underweight rating falls into a sell rating category.

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Michael Weinstein

North America Equity Research
(1-212) 622-6635

10 May 2011
[email protected]
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Michael Weinstein

North America Equity Research
(1-212) 622-6635

10 May 2011
[email protected]