A Regenerative Medicine Company To Watch Out For

May.23.12 | About: AxoGen, Inc. (AXGN)

George Jarkesy, host of "The George Jarkesy Show," interviewed the co-founder and vice president of AxoGen (NASDAQ:AXGN), John Engles, on his radio show. This is a transcript of their conversation.

George Jarkesy: Our first guest today is John Engles. He's the co-founder and now the vice president of AxoGen. He's got the company up and going. AxoGen is a regenerative medicine company with a portfolio of proprietary products and technologies for the reconstruction and regeneration of nerves.

To put that in layman's terms: When you have a traumatic injury that damages your nerves -- cuts your nerves, severs your nerves -- these guys have products that can fix that. And so, John, welcome to the show.

John Engles: Hey, good to be here, George. Thanks for having me.

Jarkesy: So you co-founded the company. You go 10 years. You hit the worst economic crisis of all times from our lifetime, at least back to the Depression in America.

Engles: Yes.

Jarkesy: And you've stuck through it. I mean, what an entrepreneur!

Engles: We have persevered. We have a mission. It's all about nerves and it's helping people.

Jarkesy: Now, you've had great news in the last couple of years. You've got a number of new products through the FDA. All of AxoGen's products now are out, you're marketing and generating revenues. So you've gone from the laboratory idea phase all the way to product approval and are now out marketing -- in a tough period to get capital.

Engles: You got it. We went from an invention, a patent, an idea that started at a university; and we took that from the bench top. And we took it through development, and we raised funds, a heck of a lot for it. And now we have it out in the market. And we've helped thousands of people, and I'm really proud to say now we have one of the biggest studies in nerve repair showing 87% return to function for folks who have used the product.

Jarkesy: 87%, and prior to your product 20 years ago, what would that percentage have been?

Engles: Well, it depends on how you got the repair. Right now the gold standard in nerve repair is still using your own nerve to heal a nerve.

Jarkesy: Nerve grafts?

Engles: An autographed nerve they call it. And so you've got a bad cut, right? You've lost function of your nerve. You can't feel your fingers or move your muscle, and so folks have used previously -- used their own nerve from a different source of the body to heal that deficit. And so what we can now do is provide an option to surgeons to say use the advanced nerve graft to heal that nerve.

And with the Ranger Study that I mentioned, it's now a 25-surgeon, 12-center study looking at over 100 repairs using the advanced nerve graft. We're showing it 87% return to function in that group.

Jarkesy: Yeah, that's fantastic. And I guess a lot of your customers or the people that you serve are military, car accidents, people that have traumatic injuries.

Engles: Yeah, pretty much. You don't want to use this product, right? But if you need it, you want it. So we're here where you have a traumatic injury. Let's say you can't feel the tips of your fingers or you can't move your muscles. We'll restore that function. So after you use the products or you get a nerve repair, what you're trying to do is be able to basically grab a cup of coffee, shake someone's hands, throw a baseball; the normal things of life.

And so, yes, returning warriors have used this. We've been actively used at the Walter Reed Medical Center in D.C. in Bethesda. We've been used at the Brooke Army Medical Center in Texas, and we're very proud that we're establishing a good track record there.

Jarkesy: Well, I know it's been a tough time; and raising money for biotech is very difficult especially the early phase that you came in from patent phase on. That first pre-human stuff is difficult; but now, I mean, you're growing. It's a billion dollar market potential...

Engles: Sure is, yes.

Jarkesy: ...for your company. And in 2011 you grew at 61%. That's strong growth.

Engles: Yeah, we hit 4.8 million in revenue in 2011, and we hope to continue that growth. And the way we do that is by deploying more resources out into the field. So we're putting more sales and marketing efforts to work. We've introduced new products in the last couple years. So we have two new products to add to our nerve graft. They're called AxoGuard Nerve Connector and Nerve Protector.

Jarkesy: And so there are other -- more revenue generators in the pipeline...

Engles: You got it.

Jarkesy: ...coming up in the future?

Engles: We've got three products now.

Jarkesy: Now, where you are at right now, as far as you can see, you're not going to have to go back out to the capital markets as far as you know today for more capital? You've got the capital to get this to the positive cash flow phase?

Engles: Well, as you know being an entrepreneur, there's always new opportunities; and in a billion-dollar market we can see lots of them. So we see opportunities always, and we'll look for those opportunities in the future to raise money when it makes sense.

Jarkesy: OK, great. I want to thank you very much, John, for being on the show today; and thank you for your entrepreneurship. And for what you do for America. It is very important.

Engles: Yes, I'm proud to be here; and it's good to always support entrepreneurship. Thank you, George.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.