Below The Knee | Market Signal

OPENING SHOT

A BLA for DFUs, Medicare GLP-1 Coverage, and the Reimbursement Landscape Keeps Moving.

The most consequential regulatory filing in wound care in a long time landed this week. PolarityBio submitted a Biologics License Application to the FDA for SkinTE — an autologous cutaneous multicellular therapy for Wagner Grade 1 diabetic foot ulcers — on July 1. The company describes it as what would be the first new biologic commercially available in the US for a common chronic wound indication in nearly 30 years — a claim that will invite scrutiny from incumbent cellular therapy manufacturers, but one with a defensible basis in the BLA pathway distinction that separates SkinTE from the 510(k)-cleared and HCT/P-regulated products that came before it. It carries both Regenerative Medicine Advanced Therapy and Breakthrough Therapy designations. The pivotal Phase III COVER DFUS II trial met its primary efficacy endpoint of complete wound closure. And critically: under current CMS policy, products licensed under Section 351 of the Public Health Service Act are paid as biologics under ASP-based methodology — not subject to the $127/cm² flat rate that has been reshaping the outpatient wound care market since January 1. If SkinTE receives BLA approval, it would enter a reimbursement lane that the CAMPs rate restructuring has not touched. That conditional — if approved — is doing real work here. But it is the right conditional to be watching.

Also this week: the Medicare GLP-1 Bridge launched July 1. For the first time in the program's history, Medicare is now covering GLP-1 drugs prescribed solely for obesity, at a $50 flat monthly copay, through December 31, 2027. An estimated 3.8 million Part D beneficiaries may qualify. The eligible population includes patients with BMI ≥27 and symptomatic peripheral artery disease — which is to say, exactly the patient population driving chronic limb-threatening ischemia and diabetic foot ulcer incidence in this market. This is a long-horizon signal, not a next-quarter one, but it is directionally meaningful for everyone in wound care and vascular intervention.

CMS also dropped the CY2027 Hospital Outpatient and ASC Proposed Rule this week. The 2.4% proposed rate update is the least interesting part for this audience. What matters is that the CY2027 rule is the first rulemaking cycle in which CMS was expected to deliver on its explicit CY2026 commitment: differentiated payment rates for skin substitutes by FDA regulatory category — separate rates for 361 HCT/Ps, 510(k)-cleared devices, and PMA products, rather than the single $127/cm² blended rate used as a stabilization measure in 2026. The comment period closes September. The final rule drops November. For anyone with a CAMPs or skin substitute product in the commercial market, this is the most consequential regulatory document of the year.

On the company side: AngioDynamics sets July 14 as its FY2026 full-year earnings date — the first full-year read on Auryon atherectomy commercial momentum and the AMBITION BTK trial. Integra LifeSciences reshuffled its commercial leadership in Tissue Reconstruction. Sonoma Pharmaceuticals picked up an expanded 510(k) for Microdacyn. And Sanuwave was dropped from the Russell 2000 Dynamic Index — a passive fund pressure mechanism the stock did not need following its June guidance cut.

Here's the week.

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WOUND CARE

Regulatory | PolarityBio Submits BLA for SkinTE in Diabetic Foot Ulcers

PolarityBio (Salt Lake City) submitted a Biologics License Application to the FDA on July 1 for SkinTE (autologous cutaneous multicellular units) for the treatment of Wagner Grade 1 diabetic foot ulcers. The submission follows the successful completion of the pivotal Phase III COVER DFUS II randomized controlled trial, which enrolled 120 patients across multiple US sites and met its primary efficacy endpoint of complete wound closure. SkinTE is a first-in-class autologous cutaneous multicellular therapy — meaning it uses a patient's own healthy full-thickness skin to activate regeneration at the wound site, rather than an allograft, amniotic product, or synthetic matrix. The product holds both Regenerative Medicine Advanced Therapy (RMAT) and Breakthrough Therapy designations from the FDA. If approved, SkinTE would be the first new biologic commercially available in the US for a common chronic wound indication in nearly 30 years. Under current CMS policy, products approved under a BLA are generally excluded from the $127/cm² flat-rate reimbursement structure that took effect January 1, 2026 for CAMPs, and would continue to be reimbursed under ASP-based biologics methodology. Robert Kirsner, MD, PhD, chair of the COVER DFUS II trial, stated that when standard of care and other advanced wound care fail to heal DFUs, ulcers often progress — increasing mortality risk, costs, and amputation rates.

The BTK read: Read this one carefully. There are three distinct reasons this BLA is significant. First, the clinical case: SkinTE is biologically distinct from every incumbent wound care product. Autologous. No donor tissue. No allogenic immune dynamics. A patient's own skin activated to heal a patient's own wound. If the Phase III data holds up to FDA scrutiny — and RMAT plus Breakthrough Therapy designation suggest it has been compelling — this is a genuine therapeutic advance for a patient population that runs out of options before amputation. Second, the reimbursement escape: BLA approval exempts SkinTE from the CAMPs rate fix. In an environment where the $127/cm² rate has forced product exits, guidance cuts, and goodwill impairments across the skin substitute landscape, a biologic pathway that bypasses that structure entirely is a commercial differentiator that will not be lost on the market. Third, the competitive pressure on incumbents: if SkinTE gains approval and favorable CMS coverage, it puts every CAMPs manufacturer in a difficult position — competing against an autologous product with a cleaner reimbursement pathway and a first-of-its-kind clinical story. Watch the FDA review clock: RMAT designation qualifies SkinTE for rolling review and more frequent FDA interactions, which could compress the timeline to a PDUFA date. This is the most important DFU-specific regulatory event in this market in a generation.

Regulatory | Sonoma Pharmaceuticals Receives Expanded 510(k) for Microdacyn Wound Irrigation Solution

Sonoma Pharmaceuticals (NASDAQ: SNOA) received a new FDA 510(k) clearance on June 30 for its Microdacyn Wound Irrigation Solution, adding expanded indications, multiple-use labeling, and new packaging configurations — 4 oz, 8 oz, 16 oz, and 34 oz formats. Cleared indications now span Stage I–IV pressure ulcers, diabetic foot ulcers, stasis ulcers, post-surgical wounds, grafted and donor sites, and ingrown toenails. The multiple-use designation and expanded packaging options reduce per-application cost structures and improve distributor and private-label attractiveness for the HOCl-based wound cleansing platform.

The BTK read: This is a commercial execution clearance, not a breakthrough clinical story. Microdacyn is hypochlorous acid — a well-established mechanism for wound bed preparation and antimicrobial management. The expanded packaging formats and multiple-use labeling meaningfully improve the product's cost-per-use profile in high-volume outpatient settings, which matters in an environment where wound care clinic economics are under sustained pressure from the CAMPs rate fix. The ingrown toenail indication is a foot and ankle care use case worth noting — it's a simple addition that expands the relevant prescriber and setting base. HOCl-based wound care continues to attract regulatory attention as a mechanism class; the FDA wound care device proposed rule (still unresolved) has implications for HOCl products longer term.

Market | Integra LifeSciences Reshapes Tissue Reconstruction Commercial Leadership

Integra LifeSciences announced multiple senior commercial appointments in its Tissue Reconstruction segment on June 23. Robert T. Davis Jr. was named EVP of Tissue Reconstruction and Distributed Technologies, leading wound reconstruction and soft tissue. Christopher Kilburn-Peterson was promoted to Corporate VP and President of the Tissue Reconstruction division. The changes follow the earlier appointment of Mike McBreen as Chief Commercial Officer and come as Integra navigates ongoing MediHoney product remediation, product recalls, and a post-CEO-transition execution reset.

The BTK read: Integra has spent the better part of 18 months in operational remediation mode. The commercial leadership reset in Tissue Reconstruction — now the third senior appointment in the segment in under a year — signals that the company believes the operational work is far enough along to refocus on commercial execution. The question the market will want answered on the next earnings call is whether the MediHoney remediation and product recall exposure is behind the company substantively or just organizationally. Tissue Reconstruction is Integra's most direct BTK-relevant business line, covering dermal regeneration, amniotic membrane products, and wound reconstruction. Leadership stability and commercial momentum in this segment are the key performance indicators to watch through H2 2026.

Market | Sanuwave Dropped from Russell 2000 Dynamic Index

Sanuwave Health (NASDAQ: SNWV) was removed from the Russell 2000 Dynamic Index, signaling a decline in market capitalization or liquidity thresholds required for inclusion. The index removal creates passive fund selling pressure as funds tracking the index are required to exit the position.

The BTK read: This follows Sanuwave's Q2 guidance cut — disclosed in June and covered in last week's edition — in which CEO Morgan Frank directly attributed Ultramist capital equipment market disruption to wound care clinic closures driven by CMS CAMPs reimbursement clawbacks. The Russell removal compounds the pressure on a stock that was already navigating a difficult commercial narrative. Index exclusion is not a fundamental judgment, but it creates forced selling that often amplifies existing sentiment. SNWV fell -17.16% in last week's BTK Wound Care Fund™ tracking period. The applicator consumable business Frank described as "on pace for record quarterly unit volume" is the only near-term financial buffer. Watch the Q2 results for whether the consumable thesis holds while the capital equipment headwind continues.

REIMBURSEMENT & POLICY

Reimbursement | Medicare GLP-1 Bridge Launches July 1 — Directly Relevant to the BTK Patient Population

CMS launched the Medicare GLP-1 Bridge demonstration program on July 1, 2026, providing eligible Medicare Part D beneficiaries access to certain GLP-1 drugs — Wegovy (injection and daily pill), Zepbound KwikPen, and Foundayo (Eli Lilly's new daily pill formulation) — for a flat $50 monthly copay through December 31, 2027. The program runs outside of standard Part D benefit coverage, meaning the $50 copay does not count toward the Part D deductible or the $2,100 annual out-of-pocket cap. An estimated 3.8 million Medicare beneficiaries meet clinical eligibility criteria, according to KFF analysis. Eligibility criteria directly relevant to the BTK market include: BMI ≥35 (automatic qualification); BMI ≥30 with heart failure, uncontrolled hypertension, or chronic kidney disease; and BMI ≥27 with symptomatic peripheral artery disease, previous MI, previous stroke, or prediabetes. Prior authorization must be submitted to a CMS central processor managed by Humana. The program is designed to bridge toward the BALANCE Model, which CMS delayed from a January 2027 launch; the Bridge has been extended through December 31, 2027.

The BTK read: Peripheral artery disease is an explicit eligibility criterion for the GLP-1 Bridge. That means wound care and limb salvage patients — the people whose obesity is driving PAD progression, DFU chronicity, and CLTI — are exactly who this program is designed to reach. The mechanism is not speculative: GLP-1-driven weight loss reduces body weight, improves glycemic control, lowers cardiovascular risk, and has demonstrated protective effects in patients with PAD and heart failure in clinical trials. The downstream effect on wound care demand is long-horizon — metabolic improvement in a Medicare PAD patient today does not reduce their DFU risk tomorrow. But in aggregate, if 3.8 million Medicare beneficiaries with obesity gain sustained GLP-1 access at $50/month, the incidence tail for the chronic wound and vascular intervention market shifts. This is not a near-term revenue story for wound care companies. It is a 5–10 year structural signal about the underlying disease burden in the primary patient population. Pay attention to it.

Reimbursement | CMS CY2027 OPPS Proposed Rule: $127 Holds, Differentiated Rates Pushed to CY2028

CMS issued the CY2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center proposed rule (CMS-1850-P) on July 2. The headline rate is a 2.4% payment update — 3.2% market basket reduced by 0.8% productivity adjustment. For the BTK audience, that number is almost beside the point.

The more significant signal is what is not in this rule. When CMS finalized the $127.14/cm² flat rate for skin substitutes in the CY2026 Physician Fee Schedule, it explicitly committed to proposing differentiated payment rates by FDA regulatory category — separate rates for 361 HCT/Ps, 510(k)-cleared devices, and PMA products — in future rulemaking. CY2027 was the anticipated delivery year. It did not arrive. CMS is maintaining the single flat rate for CY2027, citing insufficient CY2026 claims data to support differentiated rates yet. Differentiated rates are now effectively a CY2028 rulemaking story.

That deferral has real commercial consequences. Every CAMPs manufacturer that has been positioning around the expectation of FDA-category-based rate differentiation — where PMA products might command a higher rate than 361 HCT/Ps — now has another full year at a flat $127 rate with no product-level differentiation. The competitive sorting that differentiated rates would accelerate is delayed accordingly.

What else is in the CY2027 OPPS rule worth noting: CMS is proposing to cut 340B-acquired drug payments to ASP minus 33.4%, based on the acquisition cost survey conducted January through April 2026. That cut — estimated at $4.55 billion in reduced Medicare drug payments in year one — directly affects hospital outpatient departments using 340B-acquired biologics and drugs, including wound care biologics administered in hospital-based wound centers. It will be offset by increased payments for non-drug services, but the redistribution matters for how hospital outpatient wound programs manage their product economics.

Comments on CMS-1850-P are due August 31, 2026. Final rule expected November 2026.

The BTK read: The skin substitute differentiation delay is the story. CMS has now had two full rulemaking cycles to act on its stated intent to differentiate rates by FDA category — it has not. The stated reason (insufficient claims data from CY2026) is procedurally defensible but commercially frustrating for manufacturers of higher-regulatory-pathway products who expected a rate premium in CY2027. The practical consequence: the $127 flat rate remains the operative commercial reality for the foreseeable future, and CY2028 rulemaking — with a full year of CY2026 claims data available — is the next realistic window. The 340B drug cut is a separate but real pressure point for hospital outpatient departments operating wound care programs with biologic products in their formulary. Watch how systems respond to the redistribution when the final rule drops in November.

VASCULAR INTERVENTION

Market | AngioDynamics Sets July 14 for FY2026 Full-Year Earnings

AngioDynamics (NASDAQ: ANGO) announced it will report fiscal year 2026 fourth quarter and full-year financial results before market open on July 14, followed by a management conference call at 8:00 a.m. ET. Through Q3 FY2026, the company reported $78.4M in net sales (+8.9% YoY pro forma), with the Med Tech segment growing 19%, led by the Auryon atherectomy platform at $16.3M (+17.9%). The AMBITION BTK randomized controlled trial and registry remain actively enrolling.

The BTK read: July 14 is a key calendar date for the BTK vascular market. Auryon's below-the-knee atherectomy commercial trajectory — and any update on AMBITION BTK trial enrollment or expected readout timing — are the two signals that matter most for the broader peripheral atherectomy competitive landscape. Auryon has been the growth engine of AngioDynamics' Med Tech transformation; the full-year read will show whether 17–19% quarterly growth is sustainable or whether the easy comparison period has passed. Watch the conference call for any guidance language on AMBITION BTK, which is the clinical program that would formally validate Auryon's BTK positioning and open a direct competitive conversation with the incumbent laser atherectomy platforms.

CLINICAL & RESEARCH

Clinical | Texas A&M Develops Hydrogen Sulfide Bandage for Chronic Wound Healing

Researchers at Texas A&M, in collaboration with startup Exhalix, are developing a bandage-like device that delivers hydrogen sulfide gas directly to wound sites to promote vasodilation and angiogenesis. The technology targets patients with diabetes and peripheral ischemia whose wounds fail to heal due to poor circulation — the core CLTI and DFU population. The research is pre-clinical.

The BTK read: Hydrogen sulfide as a wound healing mediator is a legitimate mechanistic target — it promotes nitric oxide-independent vasodilation and has shown angiogenic activity in preclinical models. The Exhalix commercialization relationship gives this academic work a clearer translation path than most university research releases. The clinical challenge will be delivery consistency and safety — H₂S is a cytotoxic gas at higher concentrations, and a wound dressing that reliably produces therapeutic local concentrations without systemic exposure is not a trivial engineering problem. Early-stage, but worth tracking as a novel mechanism in the ischemic wound space.

FINANCE | CAPITAL ACTIVITY

No new funding rounds announced this week in the BTK coverage universe.

EARNINGS CALENDAR

BTK Wound Care Fund™ — Week in Review

The Fund finished the 5-day period at +0.005% — essentially flat in a week the broader market rallied hard. S&P 500 +1.76%. Dow +1.97%. Nasdaq +2.12%. The Fund gave up -1.76% to -2.12% in relative terms against the indices.

Top 3 · 5D:
Avita Medical (RCEL) +8.35% · Orthofix (OFIX) +6.31% · Globus Medical (GMED) +5.48%

Bottom 3 · 5D:
Organogenesis (ORGO) -3.28% · Covalon (CVALF) -0.68% · Solventum/3M KCI (SOLV) -0.10%

32 holdings. 14 positive. 18 negative.

The only real-time wound care market portfolio in existence. Live at intelligence.belowtheknee.co

📅 UPCOMING EVENTS

July 14 | Pre-Market — AngioDynamics FY2026 Full-Year Earnings

August 6–9 | Nashville, TN — APMA Annual Scientific Meeting — Gaylord Opryland

September 10–11 | New Orleans, LA — IPAWS & Tissue Repair Summit (Kernexus) — The Ritz-Carlton

September 14–16 | Louisville, KY — NAWCO HEAL Conference 2026

September 23–27 | Kuala Lumpur, Malaysia — WUWHS 2026

October 15–18 | Las Vegas, NV — SAWC Fall 2026 — Caesars Palace

October 22–24 | Anaheim, CA — DFCon 2026 — JW Marriott

November 6 | Virtual — WoundCon Fall 2026

December 9–12 | Phoenix, AZ — Desert Foot — Multi-Disciplinary Limb Salvage & Wound Care Conference

Below The Knee | belowtheknee.co — Independent market intelligence for wound care, limb salvage, vascular intervention, and foot & ankle.

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See you next week — Scott