The FDA has indicated that Surmodics’ Surveil drug-coated balloon premarket approval application is not approvable.

According to an FDA letter to the company, Surmodics’ Surveil was not approved due to certain information in the biocompatibility and labeling categories. The governing agency said more information needs to be added by an amendment to Surmodics’ PMA application to place it in an approvable form.

Needham analyst Mike Matson said in an email that company management anticipated approval in the first quarter of 2023 to trigger a $27 million milestone payment from Abbott, $25 million of which would be considered revenue. As a result, Matson said the company is reducing cash burn and noted that Surmodics ended Q4 2022 with $19 million in cash and access to $95 million in liquidity.

Surmodics said in an announcement that the additional information requested by the FDA to put the PMA application in approvable form would require additional testing and analysis. The FDA letter did not question the human clinical data submitted and did not request any further human clinical data.

“We are disappointed by the FDA’s response to our PMA application and continue to have confidence in our SurVeil DCB, including its compelling performance in the Transcend clinical study,” CEO Gary Maharaj said in a news release. “We are evaluating the issues raised in the FDA’s letter and plan to meet with Agency representatives regarding its contents. Based on our discussion with the agency, our team and external advisors will determine the appropriate path forward. Concurrently, we will be evaluating options to reduce our use of cash given this development. We expect to address these topics further in connection with our upcoming first quarter fiscal 2023 earnings call.”

The Surveil drug-coated balloon is a next-generation device that treats peripheral artery disease. It includes a proprietary drug-excipient formulation for a durable balloon coating and is manufactured to improve coating uniformity.