Why Accumulating and Trading Shares of Medgenics Now May Not Be A Bad Idea Print E-mail
By M.E.Garza   
Wednesday, 29 August 2012 04:26

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On Tuesday afternoon, we tweeted to our followers that it might not be a bad idea to pick up some shares of Medgenics, Inc. (AMEX:MDGN) (AIM: MEDU, MEDG), particularly given the recent buzz about the firm's anticipated hepatitis pipeline development milestone. 

This is a stock that had traded as low as $11.89 during Wednesday's session following the sad news that one of the firm's Board Members, Gary Brukardt, had passed away.  Still, we reminded our readers that we continue to anticipate news related to the firm's active hepatitis program and that such news might come at any moment. The stock closed the day almost a dollar higher from those lows, at $12.86- a testament to how quickly MDGN shares move on limited volume. 

Some of you may recall that MDGN was one of our biggest movers earlier this summer after the company announced that it had received Orphan Drug Designation from FDA for its INFRADURE Biopump to Treat Hepatitis D. The stock stock has a very low float and it went on an incredible run from roughly $6.50 to over $15. Shares had recently traded as low as $10.23 and we began to accumulate more at those levels, given the anticipation of the telegraphed milestones that other writers and research firms have been pointing to.

Recently, we've also seen articles tht remind us of the importance and opportunity that has presented itself for the company within the hepatitis space, particularly given the Biopump Platform technology's ability to provide sustained protein therapy for the treatment of various chronic diseases and conditions, including anemia, hepatitis, hemophilia, multiple sclerosis, arthritis, pediatric growth hormone deficiency, obesity, diabetes, and other chronic diseases or conditions.

This is a solid firm with multiple shots on goal and the recent addition of former Celgene Corporation Chairman and Chief Executive Officer, Sol J. Barer, PhD. as Chairman of the Board cannot be overlooked. In May, Medgenics was given the FDA nod to begin a Phase IIb clinical trial for its EPODURE Biopump that treats anemia in dialysis patients, the company`s first such approval in the U.S. In June we saw the Orphan Drug designation granted for INFRADURE, a biopump designed to treat a form of hepatitis. If Medgenics can realize these achievements in a short time, imagine how far and how fast it can move with Barer now in place.

The fact that the firm has a limited float only adds to the reasons we like to trade and have accumulated shares. This is, without a doubt, one of our favorite- most intriguing- biotech plays out there and we hope to continue to follow their story on a regular basis. If the firm starts to partner some of these indications, as we are told they plan to do, then MDGN's market cap will begin to rise substatially, but it will take patience. In the meantime, we are happy to trade in an out, taking profits and leaving some shares to ride on "house money." Remember that the FDA has been putting the brakes on hepatitis c drug hopefuls quite agressively and as such, the longer Medgenics' own program 

In an earlier report, we pointed out that whileanalysts have weighed in, about how the Orphan Drug development may have transformed MDGN into a buy-out candidate, during our own interview with Andrew L. Pearlman, Ph.D., President and Chief Executive Officer of Medgenics he indicated his team was focused on making sure that his firm will continue to build its pipeline (of multiple +billion dollar market indications) and add value beyond its current market cap. He stated cleary that the approval was the second one they had gotten for their technology and that, "for our company and we think it will give a lot more confidence to would-be partners and institutional investors who may have been looking for a clear sign from a regulatory agency that we have a straight shot for an approvable product within a reasonable time." 

We note also that more recently, MDGN appointed Marvin Garovoy as its chief medical officer.Garovoy is another heavy hitter who has been involved in clinical development and regulatory submissions at a number of drug development and biotechnology companies, including Genentech, Hyperion Therapeutics and BioMarin.

Regardless of how quickly this anticipated news arrives, we continue to feel that 
Medgenics is a solid biotech bet with limited down-side given their widely recognized upside potential

Disclosure: Long MDGN




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