* Shares fall as much as 33 pct on studies in journal
* Studies doubt efficacy of a type of spine surgery
* Co says product meant for use in surgery not affected
* Co backs 2009 sales view, including Cortoss sales
* Co sees Cortoss as $100 mln drug in 3-5 yrs (Adds company comments, updates share movement)
By Jennifer Robin Raj
BANGALORE, Aug 6 (Reuters) - Orthovita Inc lost a third of its market value on Thursday, a day after a medical journal reported a common spine operation that would use one of Orthovita's new products was no more effective than make-believe surgery.
However, Orthovita management disputed the conclusion of the studies and said it stood by its sales forecast for Cortoss, its injectable polymer for use in treatment of vertebral compression fractures (VCFs).
"We don't expect our Cortoss business to be affected at all by this," Chief Financial Officer Nancy Broadbent told Reuters.
"We believe that Cortoss stands on its own based on the clinical data we generated in our FDA-cleared study, which was a much, much larger study over a much longer period of time." said Broadbent.
Reports of two studies published in the New England Journal of Medicine, said that patients who received sham surgery did just as well as those who got the real operation.
The procedure called vertebroplasty is a common spine operation for relieving back pain and involves injecting medical cement into a fractured spine bone to strengthen it.
"The efficacy of the procedure is in question. It's a prestigious journal and that's why people are concerned. The question is will (Medicare) cut its reimbursements and stop paying for vertebroplasty," said Roth Capital Partners analyst Matt Dolan.
However, the company does not anticipate any change in Medicare reimbursements towards vertebroplasty.
"The rigor, the size of the study is going to require much more work before there is a change in the practice of medicine or reimbursement at the physician level or from the reimbursement level," said Chief Executive Antony Koblish.
Koblish backed Orthovita's 2009 product sales view and said, "our goal is for Cortoss is to be a $100 million product 3-5 years post launch and we are sticking with that."
According to the company, the U.S. market for the treatment of VCFs is about $500 million.
On Wednesday, the company forecast 2009 product sales of $92 million to $95 million, including expected sales from Cortoss, which will be launched broadly in the United States during the fourth quarter.
CEO Koblish sees $300 million in total company sales in 3-5 years post Cortoss launch.
Orthovita's first Cortoss sale in the United States occurred in July and it plans to launch the product broadly in the fourth quarter.
Shares of Orthovita were down 25 percent at $4.92 in late afternoon trade on Nasdaq. They touched a low of $4.44 earlier in the day. (Editing by Gopakumar Warrier, Anthony Kurian)