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Ray Dirks, CP Reports (1 click)
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We reiterate our excitement over Medgenics, Inc. (MDGN). Never before have we seen a small biotech move so quickly - in the right direction. This gives us confidence that this company may be on track to become be the next Amgen, Inc. (AMGN), Idenix Pharmaceuticals (IDIX), or Vertex Pharmaceuticals (VRTX), all of them trading at billion dollar market caps.

A look at the recent news is part of the reason for our enthusiasm - First, MDGN wins FDA approval to start clinical trials for EPODURE to treat anemia, an $11 billion market. Next, the company broke ground for its first US-based manufacturing facility to build its patented Biopump.

Just last month MDGN announced an FDA Orphan Drug Designation for INFRADURE for treating hepatitis, a worldwide epidemic affecting 8% of the world's population with a market size of $20 billion. Is it any wonder that Gilead Sciences (GILD) and Bristol-Myers Squibb (BMY) paid huge premiums to acquire companies with new drugs for this quiet killer.

Now, a company filing reveals that Sol Barer, the former chairman and CEO of Celgene Corp. (CELG) has now been appointed as chairman of the young company.

Wall Street All-Star analyst Sharon di Stefano, a long-time observer of Barer's career who watched him build that company into a multi-billion dollar biotech powerhouse, recognized the latest development at Medgenics. In her recent article, she cites the power the company and its main investors have shown to attract Barer, one of the most respected scientific and business figures in the last 25 years. We've known and worked with Ms. di Stefano for many years and have collaborated on ideas that have made investors millions of dollars. We agree with her and also expect good things to happen at Medgenics with Dr. Barer and the helm. Indisputable is the fact that the team behind Medgenics has a history of infusing fledgling life science companies with both monetary and intellectual capital.

Of course, there is always risk in any stock. Shares could lose steam if the management team fails to execute their game plan and reach announced milestones (see below) in a timely manner. In addition, recently announced funding could be burned through sooner than expected or worse yet, the technology could meet with unexpected challenges or results in the clinic. For this and other reasons we always urge investors to do their own due diligence.

Still, these possible risks are minimal compared to the upside realities and we are not alone in our enthusiasm for the firm. Furthermore, we believe the cost-effectiveness of MDGN's products all point to significant future shares in multiple sizeable markets.

In a note to investors, the biotech analysts at Maxim point out that as a novel gene therapy, Medgenics' Biobump protein delivery technology may prove to have better efficacy and fewer side effects than traditional injections, due to the elimination of over- and under-shoot during repeated injections, thereby leading to improved chronic disease management. Furthermore, we believe that in the short term we may see strong and perhaps more detailed clinical data that supports Biopump's advantage and significance over repeated injections.

This is a game-changing technology and most certainly an unconventional gene therapy which utilizes toothpick-size slivers of the patient's dermal tissue, transfected with an engineered gene to produce and secrete certain therapeutic proteins continuously.

As things stand, the global sales of the major products which are currently in clinical trials and which EPODURE and INFRADURE are designed to replace, were approximately $6.9B and $2.2B in 2011. When one looks at the rest of the pipeline and "future" candidates, however, we see one opportunity after another for multiple deal opportunities and substantial partnerships which-as the company discloses in their own presentation (below)-points to revenues before product approvals.


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We see the management team's experience as a major de-risking component in the stock. This team knows how to build biotechs and get drugs through the regulatory process. Additional risk has been removed from the stock now that the company has demonstrated that these Biopumps can be transported over long distances with maintained viability. Already we know that the firm is also developing devices to automate and scale up the cost-effective production of Biopumps in local or regional processing centers.

In addition, as the technology is accepted by regulators and continues to produce results for patients in the lab, we see rapid routes and clinical pathways to product approvals.

Form a share price perspective, multiple analysts see higher targets from these levels despite the fact that shares have more than doubled in the past two months since we first recommended the stock to our readers and followers at Seeking Alpha.

While some may fear a pull-back, we see this trend continuing ahead of schedule and feel that share prices will likely continue to surpass price targets given the lack of available shares in the market. Anyone waiting on the sidelines to see what's next for Medgenics will likely lose out.

We continue to predict a short-term stock price of $30 given the markets for the Biopump technology and feel that long-term this number may actually be conservative.



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Source: Medgenics Continues To Move Rapidly In The Right Direction