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   29. May, 2012

   Medgenics, Inc. (MDGN) Wins Big at FDA
   by Ray Dirks
   May 22, 2012

   EPODURE, using a Platform Technology, is Set to Start Clinical Trials in the US

   MDGN scores again. After a season of good news, the company recently told investors that in record time, the FDA approved its filing to start clinical trials using its Biopump platform technology to treat anemia in kidney dialysis patients.

   As we’ve said in the past, EPODURE, one of MDGN’s three proprietary Biopumps in development, looks to eliminate frequent, costly and inconvenient injections of erythropoietin (EPO). Amgen Inc. (AMGN) has owned this space for years and medicine is ready for a change.

   Our FDA, known for its sluggishness and bad management, moved quickly to allow MDGN to commence Phase IIb trials in the US, giving us their endorsement of a valuable technology that even the agency can’t ignore. EPODURE works, and the FDA recognizes that our overburdened healthcare system can only benefit from the economics that MDGN offers.

   The study will be a multi-centered, randomized trial for further evaluating safety and efficacy of EPODURE, and the first time MDGN will conduct trials in the US. Two important points: the FDA accepted Phase I/II EPODURE data from Israeli clinical sites, something investors are always concerned about; and the positive relationship MDGN appears to have with the FDA eases the path for future application submissions.

   We understand that MDGN, not only preparing to enroll US patients for this seminal study, is also laying plans for manufacturing here. The company is moving faster than we’ve seen when overseas firms put a strategy into action.

   When MDGN announces the enrollment of its first subjects, we expect a leap in MDGN shares. The kidney dialysis market is more than 100,000 people start dialysis each year in the US, and last year there were 500,000 patients receiving dialysis, an estimated industry of $42.5 billion..

   Initiation (and enrollment) of clinical trials often has a meaningful impact on a stock’s price. When Synta Pharmaceuticals (SNTA) announced the beginning of its Phase 11b study for lung cancer last year, price jumped 13%. Geron Corp. (GERN) put its first patient in place for its new telomerase inhibitor to a share hike of 7%. Aastrom Biosciences (ASTM) enrolled its initial patient for a trial on critical limb ischemia and its stock rose 8%.

   We also urge investors to pay attention to an upcoming scientific conference that should showcase MDGN nicely. The company will be presenting Monday, May 21 at ILSI-Biomed, one of the largest medical device and biopharma conferences in the world, held in Tel-Aviv. Attendance should exceed last year’s figure of 7,000 from more than 40 countries.

   For US-based investors who believe that innovations produced in Israel are secondary to those founded domestically, take a look at the line-up of keynote speakers: Senior management from Abbott Laboratories (ABT), Johnson & Johnson (JNJ), global lab equipment maker Life Technologies (LIFE), Medtronic (MDT), and the head of global healthcare at Goldman Sachs. Yet of the 60+ companies presenting, not one is headquartered on American soil. This tells us that Big Pharm is scouting overseas talent for pipeline filling, which is to say potential acquisitions.

   Ray Dirks Research recommended MDGN in February when it was trading at $3.50 per share. Since then, shares have risen over 68%. More to come. We strongly advise readers to watch this company as even more positive news flow develops not only for EPODURE, but also from its other line of proprietary products, leveraged on one clinically valuable platform that is intended to treat, along with anemia, varieties of the hepatitis virus, multiple sclerosis, arthritis, obesity and diabetes.

   Our team reiterates its previously-stated value proposition for MDGN with respect to protein therapy competitors. Protalix BioTherapeutics (PLX) is pursuing indications for diseases, such as Fabry’s, that have very limited clinical markets. Prolor Biotech (PBTH) reformulates older drugs and targets another small medical market as its first indication. Both of these trade at market caps of $564 million and $277 million, respectively.

   By contrast, MDGN’s market value is only $57 million. With more therapeutic areas targeted, a better platform technology, and progress achieved faster than we’ve seen with other biopharmaceuticals, do not miss out on this time to buy.

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