Let's say that fully diluted there will be around 30m shares in Medgenics, creating a fully diluted market cap of $150m.
Now compare that to, for example, Immupharma...with a market cap of around $60m...to see if Medgenics is as good value as some other bios...
Immupharma has a Phase III ready blockbuster lupus drug with FDA approval, an SPA and Fast Track assessment. Currently towards the end of licensing talks to take this through.
It also has a Phase I/IIa cancer drug that is being tested in a revised formulation with a much longer patent life and 10x more powerful than the last, which had some success at Phase I/IIa. It has an unusual dual mechanism of action, acting both in preventing angiogenesis as well as proliferation. Preclinical studies have shown the majority of tumours were completely eradicated and survival time increased without additional treatment (breast cancer, prostate cancer, melanoma, glioblastoma, leukaemia, colon cancer and pancreatic cancer cell lines tested)
As for cash, it has enough to get it through to the end of 2014 and the licensing deal (if partnered with a major) brought in $45m up front last time.
Directors wise, it is very strong. Richard Warr, Chairman, Former Director at ABN Amro Equities. Dimitri F Dimitriou, Chief Executive Officer, Former Senior Director, Worldwide Business Development at GlaxoSmithKline. Dr Robert Zimmer, President and Chief Scientific Officer, has developed a substantial number of products for Roche, GlaxoSmithKline, Abbott, Searle, Sanofi-Aventis and Lilly. Tracy Weimar, Vice President, Operations & Finance, Former Director, Worldwide Business Development at GlaxoSmithKline. Dr Jean-Marie Geiger, Head of clinical development, 20 years at Roche as an International Clinical Leader and successfully developed three products now on the market.
Shares wise, directors hold 36%. M&G, Pictet, Ing, Aviva and Odey also hold sizeable holdings.
So at 2.5x the market cap of Immupharma, would a further drop at Medgenics not seem unreasonable, absent any news?
Believe it or not, many companies don't trade on US exchanges and until very recently, Medgenics traded only on exactly the same exchange that Immupharma currently does.
As for why, Immupharma has a collaboration with the French CNRS. It makes sense for the shares to have a European base (and it does with UK, French and Swiss operations). The CNRS by the way has 30,000 employees and an annual budget of over €3 billion. It has produced 17 Nobel laureates. Immupharma has an exclusive license to develop some of its peptides, and saving it millions in a lot of pre clinical work.
if you assume say mdgn is worth 6, let's say that, then there aren't 30mm shares out and will never be....many warrants aren't excercisable and only come into play when the stock goes well above that...so say 22 mm at 6 is 132mm with almost 30mm of that being cash...if you believe the tech. paying 92mm for the co is a steal, considering its approach has a far reaching appeal to many prevalent diseases. Add to that the credibitlity and expertise of blech and barrer
wiboth, if the company achieves its aims, there will be around 30m shares out there will there not. A takeover would activate all the warrants and options etc. You cannot build in all of the upside without building in the downside that will come with it (dilution). Any cash from the exercise of these warrants etc. will be minimal compared to the dilution cost on a takeover.
As for cash, that will be spent. MDGN is not Apple with a cash pile that can be taken into account as it will still be there / has some permanent value. The best time for a deal is at the end of Phase 2. By then, MDGN's cash will be gone. The cash merely facilitates MDGN's development, it is not a real asset that you can deduct to create enterprise value. It will be converted and hopefully what it is converted into will be worth the cash invested or more.
Re credibility and expertise of Blach and Barrer, yes, they have good track records. I'm impressed, which is why the company interests me. But there are many other companies with good directors. Immupharma being a prime example, see the details above.
Get your facts straight bro. Name of company is immunomedics and based on shares outstanding market cap is 217mm. Throw in warrants or options (one or the other likely exist) and it's possible the market cap is close to 300mm. Yes medgenics is nowhere near phase three but relative to potential market size we can go higher even with 27mm diluted shares.
Sentiment: Strong Buy