MIMEDX (MDXG)
ARTICLES/ E-Mails
MiMedx Receives Additional Medicare Reimbursement
Coverage for EpiFix®
6 of 8 Medicare Administrative Contractors Now Cover MiMedx EpiFix® Wound
Care Allografts
MARIETTA, Ga., Dec. 12, 2013 /PRNewswire/ -- MiMedx Group, Inc. (NASDAQ: MDXG), an
integrated developer, manufacturer and marketer of patent protected regenerative biomaterials and
bioimplants processed from human amniotic membrane, announced today that Medicare contractor,
CGS, has confirmed that the Company's wound care allograft, EpiFix®, has received reimbursement
coverage from CGS. The coverage by CGS now brings the total Medicare Administrative Contractors
(MACs) covering EpiFix® to six of the eight and 86% of Medicare beneficiaries will now be eligible
for coverage for EpiFix® products.
"We have been persistent in executing our strategy to gain MAC coverage throughout the country," said
Parker H. Petit, Chairman and CEO. "With the additional coverage by CGS encompassing the states of
Kentucky and Ohio, we have further expanded the opportunity for Medicare beneficiaries suffering from
chronic wounds to have access to our clinically and cost effective allografts."
CGS approved EpiFix® for both diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs) that fail to
respond to standard of care treatments. The approval was retroactively effective to November 1, 2013. Of
the six MACs that cover EpiFix®, five cover both DFUs and VLUs.
Currently, two of the largest categories of chronic wounds are DFUs and VLUs. A clinical study of over
300,000 wounds reported the median size of a DFU to be 1.35 cm2 and the median size of a VLU to be
2.32 cm2. Widely used legacy skin substitute products are only offered in fixed sheet sizes of
approximately 40 cm2, which leads to tremendous wastage in treating both DFUs and VLUs.
Bill Taylor, President and COO, stated, "Recently, the Centers for Medicare and Medicaid Services
(CMS) announced a change in the way skin substitutes will be reimbursed beginning in 2014. The change
bundles reimbursement for the cost of the product with the fee for the related surgical procedure. The
change incentivizes physicians to use more cost effective skin substitutes. We supported the change
and educated congressional members about the excessive wastage history in the skin substitute product
area to encourage them to support the change as well. We are pleased that the payers are embracing this
cause and consistently adding our cost effective EpiFix® allografts to their coverage authorizations."
"We look forward to continuing to provide our clinically and cost effective allograft, EpiFix®, for
advanced wound healing. By offering providers various sized product to more closely match actual
Page 1 of 58
wound sizes, EpiFix® allografts can eliminate unnecessary wastage of product compared to many other
available skin substitute products," added Petit.
About MiMedx
MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative
biomaterial products and bioimplants processed from human amniotic membrane. "Innovations in
Regenerative Biomaterials" is the framework behind our mission to give physicians products and tissues
to help the body heal itself. Our biomaterial platform technologies include AmnioFix® and EpiFix®, our
tissue technologies processed from human amniotic membrane that is derived from donated placentas.
Through our donor program, mothers delivering full-term Caesarean section births can elect in advance
of delivery to donate the placenta in lieu of having it discarded as medical waste. We process the human
amniotic membrane utilizing our proprietary PURION® process, to produce a safe and effective implant.
MiMedx® is the leading supplier of amniotic tissue, having supplied over 200,000 allografts to date to
distributors and OEMs for application in the Wound Care, Surgical, Sports Medicine, Ophthalmic and
Dental sectors of healthcare.
From: Jud Traphagen [mailto:jtraphagen@ploughpenny.com]
Sent: Thursday, December 12, 2013 8:34 AM
To: Jeb Terry; Bruce Conway; Chris Laffey
Subject: Color on MDXG offering
80% of stock went to top 10 buyers in the deal
Placed with large high quality investors
Book was 30 million shares or 6x oversubscribed
45 accounts got zero shares of the deal so placement was controlled
Judson Traphagen
Plough Penny Partners
270 Lafayette Street, Suite 1301
New York, NY 10012
Phone: 212-324-1747
Cell: 917-805-9907
From: Jud Traphagen [mailto:jtraphagen@ploughpenny.com]
Sent: Tuesday, November 12, 2013 1:29 PM
To: Jeb Terry
Subject: Fwd: MDXG call with Canaccord analyst Bill Plovanic 11/12/13
Have you talked to any doctors who have used the products? They did and feedback is positive
Your projections and price target take into account the Medtronic distribution deal? NO
Page 2 of 58
Medtronic has to fill their inventory first; then start selling it
Competition;
Dermasciences (marketing a product in 3 years in woundcare)
Bill Taylor is good, but he is not pete
Fastest grower among your comps? yes
Reception among IIs when marketing? A lot don't want to touch it until FDA and CMS is resolved
New markets and products? All future gravy; could be problematic if not focused on core market
Would have to build new sales force, new distribution channel, etc. so he thinks they should focus on
DFU;
Has he seen new facility? No, visited old one
How good is Mike Senken? He's OK
How tough woudl changing the labeling of micronized product be?? Easy, would have to make it more
generic
Is pete's SEC investigation an issue? No one has brought it up, but if he has to step down that's a
problem
Competitive products on horizon? OSIR
OSIR's CEO Randy is promotional to say the least, they don't have same experience as Pete
Think Medtronic is most obvious buyer?
Medtronic does not have wound care product so they may buy mdxg
How are Bill and Pete dividing responsibliities?
What if pete dies? Not good
Concern over shelf? No, they should have $30 million in cash not $6
Future catalysts? FDA and CMS
Also cover OSIR? ONVO?
Most IIs don't know about it, haven't done any work on it
Some people hate Pete Pettit depending on where they bought the stock of Matria
One of best small cap CEOs he has seen in years
He studied it for 2 years before launching
Page 3 of 58
Been amazed at how fast they have been executing
May have to label injectable for general generic jobs
MDXG has to let FDA woman save face; it's ok if they have to run a BLA trial (300 patients randomized
blanded)
MiMedx Group to exceed high end of Q3 guidance; meeting with
FDA postponed
Briefing.com 10-16-13
MiMedx Group to exceed high end of Q3 guidance; meeting with FDA postponed due to partial
government shutdown (MDXG) 4.60 -0.09 :
Co announced that it will exceed the $16.0 million high end of its revenue guidance range for the third
quarter of 2013. The Company's third quarter of 2013 revenue of approximately $16.1 million (vs
$15.21 mln Capital IQ Consensus Estimate) represents an increase of more than 100% over third quarter
of 2012, and the nine-month revenue totaling approximately $41.2 million represents nearly a 150%
increase over its revenue for the nine months ended September 30, 2012.
The Company also updated its revenue guidance for the full year of 2013. At the end of the second
quarter, MiMedx increased the lower end of its full year 2013 revenue range from $50 million to $54
million. MiMedx has now increased the lower end of its 2013 full year revenue guidance to $57 million
with the upper end of the guidance remaining at $60 million (vs $58.19 mln Capital IQ Consensus
Estimate).
Co also that it's meeting with the FDA that was scheduled for today, October 16, 2013, to discuss the
recent Untitled Letter has been postponed. The meeting was postponed as a result of the partial
Federal government shutdown. The FDA has not yet advised the Company when the rescheduled
meeting will be held.
MiMedx® Signs Distribution Agreement With Medtronic®
MARIETTA, Ga., Oct. 1, 2013 /PRNewswire/ -- MiMedx Group, Inc. (MDXG), an integrated
developer, manufacturer and marketer of patent protected regenerative biomaterials and bioimplants
processed from human amniotic membrane, announced today that it has entered into a distribution
agreement with Medtronic, Inc. and SpinalGraft Technologies, LLC ("SGT"), a wholly-owned subsidiary
of Medtronic. Through the agreement, MiMedx will provide its PURION® processed allograft products
to Medtronic to be marketed by SGT for spinal applications.
Page 4 of 58
The MiMedx PURION® processed allograft products distributed to Medtronic will be private-labeled.
SGT will promote, market and sell the private-labeled allografts to its customers and end-users throughout the United States.
Parker H. Petit, MiMedx Chairman and CEO, said, "This agreement is a significant milestone for
MiMedx in expanding our customer base and broadening the breadth of physicians and patients with
access to our PURION® processed allografts. By partnering with Medtronic, many additional physicians
and patients can be served through the extensive distribution arm and presence that Medtronic has in the
spinal surgery market."
The $3.1 billion Spine business segment of Medtronic is developing many of the new standards of care in
spinal and musculoskeletal therapies. Medtronic collaborates with world-renowned surgeons, researchers,
and innovative partners to offer a broad range of state-of-the-art products and technologies that return
patients to normal active lives more quickly, and treat a variety of musculoskeletal, neurological,
orthopedic, and spinal conditions.
"We are very excited about our relationship with Medtronic," said Bill Taylor, MiMedx President and
COO. "Medtronic has done an extraordinary job in serving the needs of practicing physicians. With the
growing demand for an offering that can deliver the outcomes achieved by our PURION® processed
allografts, it is critical to align with a partner that has unparalleled respect among physicians and
extensive relationships in this sector of healthcare."
About Medtronic
Medtronic, Inc. (www.medtronic.com), headquartered in Minneapolis, is the global leader in medical
technology – alleviating pain, restoring health and extending life for millions of people around the world.
About MiMedx
MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative
biomaterial products and bioimplants processed from human amniotic membrane. "Innovations in
Regenerative Biomaterials" is the framework behind our mission to give physicians products and
tissues to help the body heal itself. Our biomaterial platform technologies include AmnioFix® and
EpiFix®, our tissue technologies processed from human amniotic membrane that is derived from donated
placentas. Through our donor program, mothers delivering full-term Caesarean section births can elect in
advance of delivery to donate the placenta in lieu of having it discarded as medical waste. We process the
human amniotic membrane utilizing our proprietary PURION® process, to produce a safe, effective and
minimally manipulated implant for homologous use. MiMedx® is the leading supplier of amniotic tissue,
having supplied over 170,000 allografts to date to distributors and OEMs for application in the Wound
Care, Surgical, Sports Medicine, Ophthalmic and Dental sectors of healthcare.
Sent: Monday, September 30, 2013 12:50 PM
To: Jeb Terry
Subject: MDXG idea
Jeb,
I have an idea of how we can do some internal fundamental research on MDXG.
Page 5 of 58
I spoke last week with the head of East Coast sales for MDXG. Will send you my notes.
I got in touch with him by contacting MDXG as a potential patient who needed help with my plantar (I
was actually doing this for my sister in law).
Would you ever do the same for your texas region? And then call that MDXG employee up and suck his
brain? And then share the notes with me?? Great way to learn a lot about the company...
Jud
****************
From: Judson Traphagen <jtraphagen@ploughpenny.com>
Date: Mon, Sep 30, 2013 at 1:51 PM
Subject: MDXG 9/19/13 Conv with steve craddock salesperson in nyc
To: jtraphagen@ploughpenny.com
MDXG 9/19/13 Conv with steve craddock salesperson in nyc
Many of my notes are nonsensical since I don't FULLY understand the medical products sales and
regulation process
Two major topics:
1) FDA letter the company received which he thinks is "100% bullshit" and a non-issue
He suspects competitors lobbied and pushed the FDA to issue letter
still getting good response in field
Not effected sales at all
Some more great news coming out soon, improvements to the reimbursement picture, getting accepted
from commercial payers very fast
We have an in-house team that handles sending in an insurance certification forms, have our own
reimbursement team inhouse
At one wound care center in NJ (Clara Maas hospital), a doc sees 90 patients a day, and he just started
using our grafts
MDXG just joined the PAN (acronym of Patient Access Network), which we partially fund it
For some patients who can't afford the product, and who can't get additional assistance for some
reason, PAN will fund the difference, so it indirectly helps sell our products
Doing this just for DFU for now, soon will roll out to other products
Veinious Ulcers are 70% of wounds in wound care market
Page 6 of 58
He has 10 direct reps reporting to him on the East Coast, from Maine to Maryland, 7 of them are exdermagraft salespeople
In his region he has 4 MACs
Ohio has no mac approval nor CMS so he doesn't have salesperson there yet
Virginia has a little but not much
Competitors are hurting and desperate
Dermagraft was supposed to do $200 million in revenues in 2013, now planning on doing $100
Competitors are not playing fair; in addition to lobbying the FDA to issue that letter, they are also telling
docs MDXG products are made from aborted babies
He just did a dash meeting at Healogix wound care center in Maryland
new published article in ____ helps him, he hands out copies...
He is met with doubt, people say it's too good to be true
In his region, they are 25% there "being able to sell throughout the whole region" due to MACs, but will
get on LCDs soon
LCD is local coverage determination
Overall, business is still "booming"
2) More impending good news:
Our HOPS proposal re: CMS to reduce wastage of purchased product primarily by competitors products
Medicare is paying for extra wastage and therefore individual taxpayers
CMS wants to set ONE price, set a "package price"
$101 million in one year was spent by CMS in 2012 for grafts, $75 million was waste, scraps that ended
up being thrown away
Our variable sizes reduce this waste
He is sending that MDXG letter to accounts too
Placenta-Products Maker MiMedx Draws FDA Attention
The Question: Are Its Products, Made From Placenta, 'Minimally Manipulated?
Page 7 of 58
By SARA GERMANO
September 11, 2013, 8:22 p.m. ET
http://online.wsj.com/article/SB10001424127887324094704579067332893468454.html
A small medical company that operates in an unusual niche is scrambling to reassure investors
after the Food and Drug Administration raised questions about key products it makes, all of
which come from human placenta.
MiMedx Group Inc. MDXG -1.53% produces a number of treatments using amniotic tissue,
which it says can treat chronic wounds. The company grinds up amniotic tissue from placenta
into an injectable product to treat tendinitis, strains, sprains and other ailments. As of 2012,
placenta-based products account for 95% of MiMedx revenue. The company also makes
hydrogel- and soluble collagen-based products.
Its shares surged from around $1 at the start of 2012 to a high of $7.73 this summer. But they
plunged last week after the FDA posted a letter notifying the company that some of its
injectable therapies may violate regulations for human tissue products. The shares currently are
down 35% since the FDA's notice went up on its website.
The company's travails have shed light on a little known segment of the medical-products
business. A few companies including MiMedx have worked up treatments using amniotic tissue,
but the government appears to be taking a closer at whether their processing should force them
to be regulated as drugs.
Under FDA rules, human cell and tissue products can be sold without the strict premarket
scrutiny drugs face as long as they don't undergo much processing. Some in the industry
believe this "minimally manipulated" category presents an opportunity for companies using
human tissue to get products into the market more quickly than they could otherwise.
Jeffrey Karp, an associate professor of medicine at Brigham and Women's Hospital and
Harvard Medical School who specializes in advanced biomaterials, said he has noticed growing
interest in developing products under this regulatory regime.
"A lot of groups are now looking at ways of jumping on the minimally manipulated cell and
tissue therapy train," he said, particularly those looking to develop products derived from
amniotic tissue.
In a letter dated Aug. 28 but posted last week, the FDA raised questions about MiMedx's
treatments. The agency told The Wall Street Journal it believes the company's injectables don't
qualify as minimally manipulated "due to the manufacturing process which alters the original
relevant characteristics of the structural tissue."
The products cited by the FDA letter—which include AmnioFix, AccelShield and EpiFix
injectables—use amniotic material that is ground up through a process called micronization so
that it can be injected through a needle.
Page 8 of 58
MiMedx Chief Executive Parker H. "Pete" Petit said in an interview Monday that to the
company's knowledge, all of its products are in strict regulatory compliance.
The minimally manipulated category falls under what is known as Section 361 of the Public
Health Service Act. Products made from other tissues—including skin, bone, ligament, heart
valve, among others—can also be sold without strict premarket scrutiny so long as they comply
with all of the Section 361 criteria.
A product that doesn't satisfy all of Section 361's requirements is automatically considered to be
a drug, which requires intense premarket scrutiny that can include over a decade of expensive
research, said C. Randal Mills, chief executive of Osiris Therapeutics, a competitor to MiMedx
in the wound-care industry.
"The difference between those two is so enormous," Mr. Mills said. "It is unfortunate there is no
middle ground." Osiris makes wound-care products from stem cells, including products made
from placenta.
Christopher Bravery, a London-based regulatory consultant for Consulting on Advanced
Biologicals, said the concern is product safety risks could arise when a tissue's properties are
altered too much.
Mr. Petit, however, dismissed that concern: "Mother Nature did the safety and efficacy trials on
this tissue long ago," he said.
All of the placenta MiMedx uses for its products is acquired through donations from mothers
delivering healthy babies via caesarean section, coordinated by doctors at participating
hospitals. The company then collects amniotic tissue from the placentas for use in its products.
The company held a conference call Thursday to reassure investors. Executives reiterated their
guidance for fiscal years 2013 and 2014, and said they have "adequate" cash to manage the
company. MiMedx said it was already in the process of working on a resolution with the FDA.
The company is currently coordinating a time and place to discuss the letter with the FDA.
MiMedx's amniotic tissue business comes from Surgical Biologics LLC, which the company
acquired in 2011.
Mr. Petit said that the company expects its amniotic injectable products to account for about
15% of its 2014 revenue. MiMedx reported revenue of $27.1 million for 2012, up nearly 250%
from the year before.
Shares of the company, which were previously traded over the counter, were listed on Nasdaq
in April.
A version of this article appeared September 11, 2013, on page B5 in the U.S. edition of The
Wall Street Journal, with the headline: Placenta Products Draw FDA's Eye.
Page 9 of 58
From: Joseph Dedona [mailto:jdedona@fusioninvest.com]
Sent: Wednesday, September 11, 2013 10:39 AM
Cc: Jeb Terry
Subject: FW: this proves mdxg did nothing unethical so quetsioning the the ceo intergirty was bs as they are
going after another comapny too
I will have my contacts take of this latter
MDXG – Another company has received an Untitled Letter from the FDA, this time questioning
the status of their product as a human tissue and advising that company to file an
Investigational New Drug (IND) application. The company, OvaScience (OVAS), is not a close
comp to MiMedx as it is working with autologous cells to treat infertility, but the appearance of a
second untitled letter may create some additional noise around FDA risk for the
company. Jackson continues to think that MiMedx can eventually resolve the FDA issues. Lake Street
From: Michael Senken [mailto:msenken@mimedx.com]
Sent: Monday, September 09, 2013 10:31 AM
Cc: Wendy Larey; Michael Senken
Subject: MiMedx Letter to CMS with a note from Pete Petit
Dear Investor:
Please see note from Pete Petit below regarding recent letter to CMS:
**********
I have attached a copy of a letter that MiMedx has filed in response to the Centers for Medicare and
Medicaid Services proposed price changes for skin substitutes. CMS requested comments to its annual
price notifications in June. MiMedx met with CMS personnel in August to understand the issues that
CMS is attempting to address through its recent pricing proposal. After that meeting, we filed our
comments, which generally support CMS’s focus.
A major issue as acknowledged by CMS is that the skin substitute products made by many companies
other than MiMedx have huge wastage factors associated with their use, particularly for the smaller
wounds such as diabetic foot ulcers. The majority of these high wastage factor products are generated
by our two main competitors, Shire Pharmaceuticals (maker of Dermagraft) and Organogenesis (maker
of Apligraf).
As you can see in our comments document, our “informatics” experts used actual CMS data to calculate
the amount of wastage that has been occurring. This wastage has occurred for almost a decade, and it
has been an absolute travesty in terms of the amount of money that has been thrown away on the use
of these high wastage factor grafts.
Page 10 of 58
We knew there would be some repercussions for this abuse, and we believe the steps CMS is now
taking will help to address this wastage. It is certainly justified in our opinion. What this means is our
size appropriate EpiFix® wound care allografts should have a major advantage. Because our grafts are
size appropriate and have very little wastage, our cost effectiveness is substantial compared to these
other two products. In addition, our clinical studies have shown that our EpiFix® is more clinically
effective by closing wounds faster with a fewer number of applications.
To have CMS acknowledge this significant reimbursement problem is a distinct advantage. Our sales
organization will be highlighting the wastage issue, as well as how our EpiFix® product combats this
problem, to all hospitals, wound care clinics and prescribing physicians.
One final note relative to the “Untitled Letter” we received from the FDA. We sent our response to the
FDA on Friday, and while the FDA’s “Untitled Letter” was not specific about what exactly is at issue, we
tried to cover all the factors we could imagine with our response. Frankly, we do not see how there can
be an issue. The micronization process we use for our allografts is the same basic process that is used
by dozens of other suppliers of micronized human tissue, such as dermis and bone; we employ the
same techniques that have been used by others for a decade. We have requested a meeting with the
FDA immediately in order to bring this matter to quick closure. Please recall that this “Untitled Letter”
is not a warning letter or anything that rises to that level. It does not affect our sheet allografts, only
our micronized product. As we have previously stated, at this point, our micronized product constitutes
only about 15% of our revenue forecast for 2014, so if for some reason we are precluded from
marketing our micronized product, we believe we can make up any shortfall with our sheet allografts.
Pete
***********
If you have any questions, please give us a call.
Thanks
Mike
Michael J. Senken
Chief Financial Officer
Office 770-651-9105 | Fax 678-802-2860
From: Joseph Dedona [mailto:jdedona@fusioninvest.com]
Sent: Thursday, September 05, 2013 11:09 AM
Cc: Jeb Terry; dedona5@aol.com
Subject: FW: mdxg conference call
they basically said that worst case the extra studies would take only 6 to 9 months and cost 2 million
because they already have a huge amount of clinical data already collected some not released
they say the rest is up to fda as to how fast they can come back no control over them
but that made it clear that there are other products out their in bone etc that use the same procedure
Page 11 of 58
and are oked so the company is dying to asked the fda why they want to pick on them.
in the end pete said this is the greatest opportunity in his 40 year history in healthcare
they will meet with fda and had already requested a meeting to discuss some other products that
wanted to introduce
they will let us know the results of fda talks company thinks thiis gets resolved rather quickly with a
label added to product
they have no cash concerns and no reason to given guidance and line of credit
pete said in all his year he never been blinded sided like this and hinted it was political because we are
killing the competition
it wont effect there 3 remaining macs approvals or their sales or insurance coverage of main product
also doctors that have called about the injectables are happy with the firm answer and love product
pete reminded us that the doctors were the ones that requested mdxg to turn their grafts into an
injectable
to begin with pete believe that the fda wont make the mistake of denying doctors, patient and the
healthcare system the tremendous benefits and cost
saving of injectables
they held back issuing the letter receive last week because they were like what the hell is the fda
talking about
and wanted clarification before issuing a statement. Also because it was not a warning letter telling
them they should
stop using product are very surprise the fda would put this on their website and cause such commotion
and misinformation in stock market
without them explaining what was their issue
bottom line its like we said this politically driven but its show how disruptive the product are it will put
people out of business as
pete mention the competitors did nothing to further the science the last few years and now are in big
trouble as product are obsolete
From: Peter Lee <peter.y.lee@gmail.com>
Date: Fri, Aug 16, 2013 at 9:20 AM
Subject: MiMedx (MDXG) at Canaccord
To: plee@ploughpenny.com
From Evernote:
MiMedx (MDXG) at Canaccord
Arthritis market? Not sure what the market size is, but probably huge
Could look at the size of arthritis drug market as a proxy
But also consider all the pain relief medication that is taken for arthritis, so market is huge
Cardiac related product? Too early to tell what the market opportunity is, will know more when
things develop
Some doctors are using it to treat hearts after injury to help reduce the scarring
Page 12 of 58
Any other potential uses for the product? Many, anything dealing with soft tissue injuries
They get ideas from doctors in the field as well as ideas their internal medical staff have come
up with
Look at the stock of Osiris Therapeutics (OSIR), which develops stem cell based therapies
Stock more than doubled yesterday due to a favorable clinical results study
OSIR pop partly explains why MDXG was up yesterday
But using stem cells directly is not as good as Epifix, because while you can inject stem cells,
the cells don't stick to the area being treated, so they end up traveling to other parts of the body
and eventually die
MDXG's product attracts stem cells to the affected areas
They are working on more studies showing how Epifix is a "stem cell magnet"
Have 2 more studies and medical journal papers in the works
OSIR's study results aren't as good as MDXG's, and OSIR trades at 35x sales, versus MDXG
at 10x
OSIR also not growing as fast, sales went up sequentially from $4m to $5m in most recent
quarter
Biggest challenge for MDXG continues to be the "reimbursement wars"
They've successfully gotten several of the Medicare intermediaries, but still have more left
They also are working to get commercial payers to pay
There's a full team dedicated to getting reimbursement approvals, including 1 director, 1 policy
person poached from Shire, a call center for reimbursement with 3-4 ppl, 2 additional field
based ppl
Continuing to grow the sales team, now have 56 sales people, adding 6-7 more by the end of
the month.
Will have 70-80 salespeople by end of year
202 employees at end of last quarter, should get to 220 employees by end of year
Growing mainly the sales team, reimbursement team and clinical team
Supply? No problems, they have more placentas than they can handle
Moving to new facility, but keeping old facility for disaster recovery
They are being courted and approached by all the big banks now
Talked to Stifel analyst on Monday
Looking to add coverage from Canaccord and Needham
Fairly confident about hitting their guidance
Have hit all the guidance figures they've given in past several quarters
Given their run-rate, it won't be hard to hit their 2014 numbers
They had a dinner last night hosted by Canaccord with about 5 institutions at their table
Nobody asked about the short report or Pete Petit going to trial, nobody asked about Gorlin
selling shares
The institutions they met were mainly interested in the fundamentals
Hasn't been contacted by any short sellers, they mainly just encounter them in the message
boards
Page 13 of 58
MiMedx To Exceed High End Of Second Quarter Guidance
MARIETTA, Ga., July
15, 2013 /PRNewswire/ -- MiMedx Group, Inc. (NASDAQ: MDXG), an integrated
developer, manufacturer and marketer of patent protected regenerative biomaterials and bioimplants processed
from human amniotic membrane, announced today that the Company will slightly exceed the $13.5 million high
end of its previously communicated revenue range for second quarter of 2013.
The Company's second quarter of 2013 revenue represents an increase of greater than 175% over second
quarter of 2012 revenue, and for the six months ended June 30, 2013, MiMedx revenue increased by more than
190% over its revenue for the first six months of 2012. The Company reported that the second quarter of 2013
marks the 7th consecutive quarter in which MiMedx has met or exceeded its revenue guidance.
The Company also increased its guidance for the lower end of its full year 2013 revenue range. MiMedx reported
that it now expects the Company's 2013 full year revenue to be in the range of $54 million to $60 million. Where
revenue falls within this range is dependent on the reimbursement approval of the three remaining Medicare
Contractors. [ had been 5 +/- remaining MACs => got more approvals – JBTSR]
About the Company
MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative biomaterial
products and bioimplants processed from human amniotic membrane. "Innovations in Regenerative
Biomaterials" is the framework behind our mission to give physicians products and tissues to help the body heal
itself. Our biomaterial platform technologies include the device technologies HydroFix® and CollaFix™, and our
tissue technologies, AmnioFix® and EpiFix®. Our tissue technologies are processed from human amniotic
membrane that is derived from the donated placentas. Through our donor program, mothers delivering full-term
Caesarean section births can elect in advance of delivery to donate the placenta in lieu of having it discarded as
medical waste. We process the human amniotic membrane utilizing our proprietary PURION® process, to produce
a safe, effective and minimally manipulated implant for homologous use. MiMedx® is the leading supplier of
amniotic tissue, having supplied over 160,000 allografts to date to distributors and OEMs for application in the
Wound Care, Surgical, Sports Medicine, Ophthalmic and Dental sectors of healthcare.
Page 14 of 58
MiMedx Is Issued Three New U.S. Patents For
Placental Tissue Allografts
Press Release: MiMedx Group, Inc. – 2 hours 23 minutes ago
MARIETTA, Ga., June 11, 2013 /PRNewswire/ -- MiMedx Group, Inc. (MDXG), an integrated
developer, manufacturer and marketer of patent protected regenerative biomaterials and bioimplants
processed from human amniotic membrane, announced today its receipt of three newly issued patents
related to tissue allografts derived from the placenta.
The U.S Patent Office has issued to MiMedx® U.S. Patent Number 8,409,626, "Placental Tissue Grafts"
with a grant date of April 2, 2013. The U.S. Patent Office has also issued to MiMedx® U.S. Patent
Number 8,460,715, "Placental Tissue Grafts" and U.S. Patent Number 8,460,716, "Method for Applying
a Label to a Placental Tissue Graft", both with a grant date of June 11, 2013. The new patents relate to
the Company's placental tissue allografts, including AmnioFix® and EpiFix® brand allografts.
Human amnion/chorion tissue is rich in cytokines and growth factors known to promote wound healing;
however, preservation of the biological activities of therapeutic allografts during processing is
challenging. The dehydrated human amnion/chorion membrane tissue allografts ("dHACM") resulting
from the MiMedx proprietary PURION® process have solved this challenge. PURION® processed
dHACM retains biologically active growth factors and regulatory factors that are in part responsible for
its clinical effectiveness in wound healing and other applications.
"We are pleased to have been granted three new patents during the second quarter of this year. These
three newly issued patents now give us a total of eight dHACM-based U.S. patents that have been
issued to MiMedx®," said Parker H. "Pete" Petit, Chairman and CEO. "We are also pleased that our
allografts from our proprietary AmnioFix® and EpiFix® technologies are continuing to gain excellent
reception among the physician community and the private and public sector insurance carriers."
"We are being extremely diligent about the protection of our AmnioFix® and EpiFix® intellectual
property. At our direction, our patent counsel is currently reviewing certain issues that have come to our
attention related to potential infringement from competing products on our intellectual property. We will
use all of the legal remedies and means available to be certain that our intellectual property is respected,"
added Petit.
Bill Taylor, President and COO, stated, "Our diligence in protecting our intellectual property is also
evidenced by the fact that since the first of the year, we have filed more than 10 new applications for our
amnion technology. Currently, we have in excess of 30 additional patent applications filed with the
U.S. Patent Office relating to intellectual property of our AmnioFix® and EpiFix® technologies. We
expect to be quite prolific in filing further patent applications related to our designs, methods and
processes that preserve the critical anti-inflammatory, barrier, scar formation reduction and enhanced
healing properties inherent in amniotic tissue."
About the Company
Page 15 of 58
MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative
biomaterial products and bioimplants processed from human amniotic membrane. "Innovations in
Regenerative Biomaterials" is the framework behind our mission to give physicians products and
tissues to help the body heal itself. Our biomaterial platform technologies include the device technologies
HydroFix® and CollaFix™, and our tissue technologies, AmnioFix® and EpiFix®. Our tissue
technologies are processed from human amniotic membrane that is derived from the donated placentas.
Through our donor program, mothers delivering full-term Caesarean section births can elect in advance
of delivery to donate the placenta in lieu of having it discarded as medical waste. We process the human
amniotic membrane utilizing our proprietary PURION® process, to produce a safe, effective and
minimally manipulated implant for homologous use. MiMedx® is the leading supplier of amniotic tissue,
having supplied over 150,000 allografts to date to distributors and OEMs for application in the Wound
Care, Surgical, Sports Medicine, Ophthalmic and Dental sectors of healthcare.
MiMedx Announces Publication Of The Results From A
Randomized Controlled Trial Of Its Advanced Wound Care
Allograft, EpiFix®
MARIETTA, Ga., June 10, 2013 /PRNewswire/ -- MiMedx Group, Inc. (NASDAQ: MDXG), an integrated
developer, manufacturer and marketer of patent protected regenerative biomaterials and bioimplants
processed from human amniotic membrane, announced today that a randomized controlled trial (RCT) for the
Company's EpiFix® wound care allograft has been published in the International Wound Journal.
Parker H. "Pete" Petit, Chairman and CEO, said, "The results of this clinical trial were compelling. The
allografts were so clinically effective that extremely high statistical significance was reached quickly, and the
study was concluded early. This adds to our series of publications that chronicle the clinical and cost
effectiveness of our PURION® processed allografts. We expect the results of several additional clinical and
scientific studies to be released in the next few months."
The patients receiving "standard of care" treatment were given the chance to have EpiFix® applied in a
"crossover study." Bill Taylor, President and COO, commented, "The results of that crossover study have
been accepted for publication as well, and they should also be available shortly. When our study data is
compared to a published RCT of a major competitor's product, EpiFix® brought wound closure to
approximately three times more patients in half the time. EpiFix® also has size appropriate grafts to fit
the wound area with very little waste, making EpiFix® much more cost-effective overall."
Included in the IRB-approved, prospective, randomized, single-center clinical trial were patients with a
diabetic foot ulcer of at least 4-week duration without infection having adequate arterial perfusion. Patients
were randomized to receive standard care alone or standard care with the addition of EpiFix®. Wound size
reduction and rates of complete healing after 4 and 6 weeks were evaluated. After 4 and 6 weeks of
treatment, the overall healing rate with application of EpiFix® was shown to be 77% and 92%, respectively,
whereas standard care healed 0% and 8% of the wounds, respectively. Patients treated with EpiFix®
achieved superior healing rates over standard treatment alone. These results show that using EpiFix® in
addition to standard care is efficacious for
Healing Nerve Damage With Cadavers
Page 16 of 58
By Tedra DeSue | TheStreet.com – 40 minutes ago
http://finance.yahoo.com/news/healing-nerve-damage-cadavers-162700736.html
April 29, 2013
RELATED QUOTES
Symbol Price Change
CRY
5.95 0.17
AXGN
4.80
-0.04
MDXG
6.79
0.39
NEW YORK (TheStreet) -- When it comes to the biotech space, many investors may be overwhelmed by
the sheer number of companies clamoring to prove that their developments are the next great thing.
Unfortunately, many of these companies are startups that have not been truly vetted in terms of receiving
approval from the Federal Drug Administration or even passing crucial clinical trials.
Still, there are companies that have reached several critical milestones with their cutting edge products.
This is particularly the case when it comes to the subset area of the space called regenerative medicine. I
dug further into the space and found a couple of companies that are making their marks with allograft
products. Allograft is tissue that is taken from a human donor's body (cadaver) and placed into live
person; or patient's body.
While large cap companies are making considerable strides in the area, they are joined by smaller cap
players who are charging forward with their own products.
One of the small cap companies making a name for itself in regenerative medicine is MiMedx. It
processes, markets and distributes amniotic tissue for use in several surgery procedures. Through a
program called "Give the Gift of Healing," MiMedx receives human amniotic membrane tissue that
would otherwise be discarded.
Page 17 of 58
Surgeries performed include those in the areas of ophthalmology, spine, chronic wounds, dental,
orthopedic surgery, sports medicine, and urology. The company reports that more than 50,000 of those
amniotic tissue grafts were delivered in 2012 alone.
MiMedx's patented products are possible due to its PURION Process. It is the foundation of the MiMedx
AmnioFix and EpiFix products. Advantages of using the products in surgeries include reduced
inflammation, reduced scar tissue formation and enhanced soft tissue healing. MiMedx touts its PURION
Process as being able to preserve human amniotic membrane tissue by dehydrating the tissues. The
procedure can reduce the financial burden on the healthcare system, as well as increase the patient's
quality of life.
Another player in the regenerative nerve space, and an immediate competitor to MiMedx that is making a
name for itself is AxoGen. It's managed to carve out market share in regenerative medicine with three
products that repair peripheral nerve damage. One of its most notable products is the Avance Nerve
Graft, which AxoGen touts as being the only commercially available nerve allograft that can bridge nerve
gaps that result from a nerve being severed. The product works by eliminating the need for a second
surgery to harvest the patient's own nerve tissue to use to repair the damaged nerve. AxoGen's other
products include the AxoGuard Nerve Connector and the AxoGuard Nerve Protector.
AxoGen's products is that they come from cadavers. Furthermore, they are not considered as medical
devices, so the company escapes the 2.3% medical device tax that is part of Obamacare. (Note:legislation
to do away with the tax is pending.)
AxoGen's products are considered biologics, which are not subject to the medical device tax. This is
important because many of the companies that are subject to the tax are finding it difficult to pay the tax
and commit the funds needed to advance their R&D efforts.
AxoGen reports the results for its fiscal 2012 second quarter in early May, and I expect that we will see
several improvements to its income statement. This includes improvements in its gross margin, which
was 5.7% in 2012. It is estimated to grow to 10.3% this year and to 18.7% by next year. One troubling
fundamental is the company's earnings per share. They lost 85 cents per share last year, and are not
expected to improve until next year when they are estimated to be 53 cents per share.
Integra Life Sciences and CryoLife are among the larger cap, publicly-traded companies that are
making meaningful contributions to the field of regenerative medicine. However, the smaller cap
companies like MiMedx and AxoGen are making strides that are equally impressive.
This year, AxoGen revenue grew by 60% and MiMedx almost tripled its revenue. The regenerative
medicine space is estimated to be a multi-billion market and companies with unique products are wellpositioned in this space.
Keep in mind that biotech stocks can offer high risk/rewards, so they should be reserved for those with
the stomachs to tolerate the risks. I gleaned several rules of thumbs that may guide your decision from
Stock Rock and Roll.


Does the company have solid financial resources in place, as well as a skilled medical team in
place?
Can the company show that that it has at least two years of operating reserves of cash.
Page 18 of 58


How successful has its product pipelines been in providing a steady stream of revenue?
How much debt does the company have?
Whether you are in the market to invest in a large cap company in this space, or any of the smaller ones,
there are opportunities that can afford you the chance to get into this sector while they are rising in value.
From: Foster Nelson [mailto:ssspinoff@sbcglobal.net]
Sent: Sunday, April 28, 2013 8:16 PM
To: Bruce Conway
Cc: Jeb Terry; Patrick Malone; Tom Sharpe; Dave Conway; Rick McCall; Margie Beebe; Jud Traphagan; Lang Reid;
Brooks Cullum
Subject: Re: fyi -- saw this on a message board
Very impressive!
Sent from my iPhone
On Apr 28, 2013, at 8:11 PM, Bruce Conway <bcctex@gmail.com> wrote:
fyi
---------- Forwarded message ---------From: Steve Gorlin <sgorlin@gorlincompanies.com>
Date: Sun, Apr 28, 2013 at 6:27 PM
Subject: Fwd: fyi -- saw this on a message board
To: Johnnie Sfakianos <johnniesfakianos1@gmail.com>, John and Beverly Monaco
<bevmonaco@aol.com>, Tom Becnel <TRBECNEL@aol.com>, Bruce Conway <bcctex@gmail.com>,
Christopher Laffey <c.laffey@gilfordsecurities.com>, Glen Hammer <glenhammer@me.com>, Kreamer
Rooke <krooke@akroffice.com>
FYI. Sg
Sent from my iPhone
Begin forwarded message:
From: <marty1035@aol.com>
Date: April 28, 2013 5:58:32 PM CDT
To: <sgorlin@gorlincompanies.com>
Subject: fyi -- saw this on a message board
The #1 national conference for wound care is the Symposium on Advanced Wound Care next week May 1-5 in
Denver CO. Of 138 posters/abstracts under the categories of Clinical Research and Case Studies only 8 are
chosen for oral presentations... MiMidex has 2 of the 8.
Page 19 of 58
correction... there were 8 out of 238 posters/abstracts chosen. MDXG awarded 2 of the 8
oral presentations.
Videos by Petit re: MiMedx
http://www.youtube.com/watch?v=ebsUmDkU72g
From: Bruce Conway [mailto:bcctex@gmail.com]
Sent: Monday, April 08, 2013 9:46 AM
To: Jeb Terry
Subject: Deals with Hospitals for sourcing placental material
Jeb
Phone tag finally over. Debbie at MDXG told me we pay $100 per blood draw test, which we do for
quality issues, and other than that hospitals know these placentas are going to good use and are happy to
see us get them. We have the largest hospital in the nation, Northside Hospital in Atlanta locked up, and
we have a corporate standard contract with the HCA chain, which leaves us to deal with each unit
with the wording worked out.
Debbie reiterated that everyone is happy to see us put the product to good use, but they are securing
supply on the possibility of someone in the future finding a use as well (good management again!)
Best
Bruce
[HCA , http://hcahealthcare.com/about/ , has 156 hospitals and 110 surgery centers in 20 states in the U.S.. They
have 6 hospitals in UK. – JBTSR]
From: Jud Traphagen [mailto:jud.traphagen@ploughpenny.com]
Sent: Thursday, April 04, 2013 4:21 PM
To: Jeb Terry; John Henderson (john@inflectionpointinvesting.com)
Subject: RE: what does MDXG have to pay hospitals for tissue?
Jeb, here are what I THINK are the answers, but I am not completely confident in my answers:
From: Jeb Terry [mailto:jbtsr@aberdeeninvestment.com]
Sent: Thursday, April 04, 2013 12:40 PM
To: Jud Traphagen; John Henderson (john@inflectionpointinvesting.com)
Subject: what does MDXG have to pay hospitals for tissue?
What is the cost?
I don't think they have to pay anything. In fact, it is against the law in the US to sell human tissue.
What are the safeguards collection processes / data collection / tissue transport to MDXG?
Page 20 of 58
I think a MDXG employee is in the operating room and is actually handed the placenta, then they FedEx
it to atlanta. When it is received in atlanta at the plant, they test it for disease/abnormalities, then attach a
code to it, store it, etc.
Are the deals with hospitals exclusive?
Not sure
BTW, a LOT of final product can be derived from one placenta
Are there patented processes / devices owned by MDXG used?
In the collection of tissue, I don't think so.
Any thoughts?
Jeb
From: Jud Traphagen [mailto:jud.traphagen@ploughpenny.com]
Sent: Tuesday, March 26, 2013 12:49 PM
To: John Henderson; Jeb Terry
Subject: FW: Jud/Peter - See the enclosed data points we've picked up from our MDXG marketing meetings
today.
From: Tim Mitchell [mailto:tmitchell@northlandcapitalmarkets.com]
Sent: Tuesday, March 26, 2013 1:01 PM
To: Jud Traphagen; Peter Lee
Subject: Jud/Peter - See the enclosed data points we've picked up from our MDXG marketing meetings today.
Per analyst, Bruce Jackson:
Price increase, expect to be $200/cm in July from $153/cm today [~31% price increase! - JBTSR]
Formal publication of EpiFix diabetic foot ulcer study expected soon, could trigger additional
reimbursement from remaining medicare administrators
Tennis elbow application looks promising, trial underway
Plantar fascitis study done, results soon
More to follow.
Tim Mitchell
Director - Institutional Equity Sales
Northland Capital Markets
45 South 7th St., Suite 2000
Minneapolis, MN 55402
Direct: 612-851-5921
Mobile: 651-983-0117
Trading: 800-851-4595
AOL IM: tmitchellns
E-mail:tmitchell@northlandcapitalmarkets.com
Page 21 of 58
From: Jud Traphagen [mailto:jud.traphagen@ploughpenny.com]
Sent: Thursday, March 21, 2013 12:29 PM
To: John Henderson; Bruce Conway (BCCTex@gmail.com); Chris Laffey (c.laffey@gilfordsecurities.com); Jeb Terry
Subject: More dirt
MDXG- Hewitt (at Craig Hallum) says lots of activity at AAOS show booth, believes offerings well-received. Matt
says MDXG’s Amniofix injectable is winning over docs who see the alternative treatments (steroids/cortisone
shots/PRP) failing to heal injuries or ease pain. Hewitt reiterates his Buy rating on MDXG.
Judson Traphagen
Plough Penny Partners
270 Lafayette Street, Suite 1301
NYC 10012
P: 212-324-1747
C: 917-805-9907
jtraphagen@ploughpenny.com
From: Jud Traphagen [mailto:jud.traphagen@ploughpenny.com]
Sent: Thursday, March 21, 2013 10:54 AM
To: John Henderson; Chris Laffey (c.laffey@gilfordsecurities.com); Bruce Conway (BCCTex@gmail.com); Jeb Terry
Subject: FW: EpiFix and AmnionFix Scientific and Clincial Compendia
These were distributed at the AAOS yesterday, which a friend of mine visited:
"I visited the MDXG booth at AAOS yesterday. Overall booth activity was stronger than I had
anticipated and the presentations that I sat in on were well attended. I had a chance to speak with the
presenting doc and was impressed."
10 Catalysts That Could Propel MiMedx To $9
Mar 11 2013, 13:19
http://seekingalpha.com/article/1263331-10-catalysts-that-could-propel-mimedx-to9?source=email_portfolio&ifp=1
By John Henderson, Inflection Point
MiMedx Group (MDXG.PK) is one of the most exciting growth stories most investors have never heard
of. With its shares residing on the bulletin board, MiMedx is either off limits or off the radar of the
majority of market participants. To wit, there are only 153 investors currently following MiMedx on
Seeking Alpha. In comparison, an established growth story like LinkedIn (LNKD) has accumulated
5,174 investors who receive daily updates from the site. And, as we posited last summer in our Seeking
Page 22 of 58
Alpha article, tracking the social interest in an early growth story can be a critical way to gauge your
investment "edge" in a stock. Once a story is widely circulated in the market, you can bet the stock's
earnings and growth have already been discounted in the price.
Happily, while MiMedx still trades in the undiscovered country of the OTC, an up-listing to a major
exchange by the summer will certainly change all that -- as will MiMedx's sterling fundamentals. Similar
to the way Uni Pixel (UNXL) is taking the touch industry by storm and how LinkedIn has positioned
itself as the de facto professional social networking site, so too is MiMedx establishing itself as the new
gold standard of its own industry -- bioactive healing products for tissue regeneration. With its
groundbreaking human tissue offerings proven to be more efficacious and cost effective than the current
standard of care, MiMedx has positioned itself to become the leader in regenerative medicine.
After scaling its revenues by 250% in 2012 to $27 million and improving gross margins to 81%,
MiMedx's top-tier management team is redefining execution. Perhaps more importantly, CEO Parker H.
Petit and his key executives have accomplished this feat twice before, steering two healthcare companies
-- Respironics (formerly RESP) and Matria Healthcare (formerly MATR) -- to their ultimate multibilliondollar takeouts. Considering MiMedx is showcasing the type of explosive growth seen in LinkedIn (circa
2006-07), we believe the MiMedx growth story has only just begun. The next three to five years could
see the company scale to $250 million to $500 million in revenues. Such growth could eventually
translate into a $2.5 billion to $5 billion valuation for the company, similar to the 10-15x sales multiples
the market has awarded such biotech stalwarts as Alexion (ALXN) and Regeneron (REGN).
Looking ahead to 2013/2014, we see 10 catalysts that should propel MiMedx to a billion-dollar valuation
by next spring. This would equate to a $9 stock price, or 55% upside from current levels. Let's examine
these important catalysts in further detail.
Catalyst No. 1: Investors hoping to learn more about MiMedx should listen to this past Thursday's
conference call and also visit the company's redesigned website. The call was very informative and an
impressive testament to managements' understanding of how this game is played. We will highlight
important aspects of the call throughout this article.
As far as we see it, MiMedx's management has shrewdly chosen to low-ball 2013 guidance. This sets the
stage for the company to post consistent quarters of triple-digit growth that will build an important track
record of success ahead of the stock's move to a major exchange later this summer. Perhaps the most
important update on the call was this: MiMedx has successfully received reimbursement from five of the
nine Regional MAC Medicare intermediaries. This is significant, as it will now allow MiMedx to
accelerate its direct commercial sales force roll-out, potentially leading to much better than expected
growth in the second half of this year.
Catalyst No. 2: With its prospects for accelerated growth improving, MiMedx is already preparing for its
future growth with a move to a new facility late this spring. This facility will dramatically expand
capacity. Along with its back-up facility, which will remain open, MiMedx will now have a combined
capacity of $300 million to $350 million. This new facility quietly reinforces management's bullishness
on the company's long-term potential and sends a strong message to shareholders regarding the dynamic
growth in store for MiMedx over the next decade.
Catalyst No. 3: In 2013, MiMedx will continue to make long-term investments in its business. In
addition to scaling the commercial sales force, the company is also expanding its IT infrastructure and
Page 23 of 58
call-center capabilities, while also conducting numerous clinical trials for additional uses of its platform
technology. These clinical trials should augment the company's prospects for gaining reimbursement
rates for them. While MiMedx did not provide specific guidance on how quickly it will ramp its sales
force, we can only imagine that it will continue to aggressively add new reps over the next two quarters.
After growing from 50 to 162 employees last year, the company is planning to add another 100
employees this year. A good many of these will seemingly be sales reps, who will play a significant role
in 2013's break-out second half and 2014.
Catalyst No. 4: Looking ahead, MiMedx was also upbeat about securing reimbursement from the
remaining four regional MACS by July 1. Stay tuned here. If the company can secure reimbursement
from all of the regional MACS faster than expected, this will only further accelerate MiMedx's growth
prospects.
Catalyst No. 5: A move to a major exchange is forthcoming. During the call, the management team
stated that they would have more specific feedback for investors on its Q1 conference call in late April.
We speculate this means an up-listing will occur by the early summer. This is an important catalyst, as
most institutional investors are precluded from buying into a non-listed equity. A move to either the
NYSE or to the Nasdaq removes this hurdle for these institutional investors. Consider that the stock
traded an average of 500,000 shares a day this past week. A move to a major exchange will further
increase the liquidity in the shares, ultimately serving as an additional catalyst for a higher valuation in
the coming years.
Catalyst No. 6: Gross margins continued to expand in Q4, advancing to 84%. The potential for
additional gross margin improvements in the new facility seems very tangible. We believe MiMedx may
eventually attain a 90% gross margin at a $25 million quarterly run-rate. Even if gross margins flatten out
in the mid-80s, it will still be a highly profitable business as revenues scale above $100 million a year.
Catalyst No. 7: Consensus 2014 estimates seem too low. We feel $125 million is very doable for next
year. A 9x sales valuation on these forward prospects would move the stock to our $9 price target by next
spring.
Catalyst No. 8: Notwithstanding MiMedx's major investments in its business during 2013, underlying
profitability should begin to manifest itself in the second half of this year. Further improvements in gross
margins, along with $125 million in sales next year would move the current EPS estimates of $0.22 for
2014 to $0.35. Put a 25x multiple on these earnings and you arrive at our $9 price target.
Catalyst No. 9: A secondary offering in the second half of 2013 would allow big institutions to buy into
the stock and also allow the company to buttress its balance sheet. Such a catalyst would not result in
much dilution and would also increase the stock's institutional reach, allowing the shares to potentially
reach our $9 price target much sooner than next spring.
Catalyst No. 10: It's a bull market. MiMedx has the potential to very quickly become even more of a
market darling shortly after its up-listing. The ultimate end-game could very well be a take-out with a $1
billion+ price tag attached to it. After all, its biggest competitor, DERMAGRAFT, was taken over in
2011 for 5x sales with only one application for its technology. MiMedx has a platform technology. Not
only is MiMedx gaining significant market share within the wound care market, it is also gaining share
within the dental, surgical, and sports medicine markets. Additional indications also lie ahead.
Page 24 of 58
Taken together, a 10x sales multiple would be more appropriate for MiMedx in any potential take-out
next year. This would mean that any take-out bid would need to start with a $1.25 billion price level.
Risks
Of course, there are risks attached to investing in MiMedx. The stock is certainly very pricey and has
already had a major move over the past 12 months. There is also the risk the company may not secure the
additional layers of reimbursement as quickly as they are anticipating. The new sales reps may
experience a longer learning curve, which would obviously curb productivity and growth.
Conclusion
Having noted these risks, we are highly confident MiMedx's impressive management team has already
figured out how to minimize such risks from affecting its growth rate and future prospects. We are
therefore very comfortable with our position in MiMedx until our $9 price objective is achieved. When it
gets there, we will evaluate the company's progress and its forward prospects.
Until then, the hardest thing may very well be sitting tight with a winning position, allowing the stock to
digest its recent run, and not selling out prematurely. To this end, we will conclude this piece with some
very appropriate words of wisdom from Jesse Livermore, as recounted in Reminiscences of a Stock
Operator:
It never was my thinking that made the big money for me. It always was my sitting. Got that? My
sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in
bull markets and early bears in bear markets. I've known many men who were right at exactly the
right time, and began buying and selling stocks when prices were at the very level which should
show the greatest profit. And their experience invariably matched mine - that is, they made no real
money out of it. Men who can both be right and sit tight are uncommon. I found it one of the
hardest things to learn. But it is only after a stock operator has firmly grasped this that he can
make big money. It is literally true that millions come easier to a trader after he knows how to
trade than hundreds did in the days of his ignorance.
MIMEDX IS ISSUED FOUR ADDITIONAL U.S. PATENTS FOR PLACENTAL TISSUE GRAFTS
KENNESAW, Georgia, February 11, 2013 (PR Newswire) -- MiMedx Group, Inc. (OTCBB: MDXG), an
integrated developer, manufacturer and marketer of patent protected regenerative biomaterials and bioimplants
processed from human amniotic membrane, announced today its receipt of four new issued patents related to
tissue grafts derived from the placenta. The U.S. Patent Office has issued to MiMedx U.S. Patent Number
8,357,403, “Placental Tissue Grafts”, with a grant date of January 22, 2013. The U.S Patent Office has also issued
to MiMedx the following three patents with a grant date of February 12, 2013: U.S. Patent Number 8,372,437,
“Improved Placental Tissue Grafts”; U.S. Patent Number 8,372,438, “Method For Inhibiting Adhesion Formation
Page 25 of 58
Using Improved Placental Grafts”; and U.S. Patent Number 8,372,439, “Method For Treating a Wound Using
Improved Placental Tissue Graft. The new patents relate to the Company’s placental tissue allografts, including
AmnioFix® and EpiFix® brand allografts.
“These four newly issued patents bring the total to five placental-based U.S. patents that we have recently been
issued,” said Parker H. “Pete” Petit, Chairman and CEO. “We are pleased with the pace of review and acceptance
of our patent applications preserving the unique intellectual property of our proprietary AmnioFix ® and EpiFix®
technologies. At present, we have in excess of 20 additional patent applications that have been filed with the U.S.
Patent Office relating to these technologies and our placental tissue allografts. We are encouraged about the
prospects of receiving more significant patent issuances resulting from our filings.”
Bill Taylor, President and COO, commented, “These newly issued patents represent only a portion of the unique
aspects of our PURION® process for amniotic tissues and the resulting allografts. Our special processing and
cleansing of the amniotic tissue is very gentle to the tissue, and allows us to preserve the critical wound healing
characteristics that are inherent in the amniotic tissue, and this yields an allograft with remarkable healing
capabilities. This process does not decellularize the tissue, but rather retains those growth factors and cytokines
that are critical to healing”.
The MiMedx allografts produced from the Company’s proprietary PURION ® Process for amniotic membrane tissue
can be stored at room temperature for five years without the need for refrigeration or freezing. The grafts can be
utilized right out of the package without a complicated thawing process. These critical qualities of the MiMedx
allografts allow hospitals, clinics and surgeons to effectively manage their inventory of allografts.
About the Company
MiMedx® is an integrated developer, manufacturer and marketer of patent protected regenerative biomaterial
products and bioimplants processed from human amniotic membrane. “Innovations in Regenerative
Biomaterials" is the framework behind our mission to give physicians products and tissues to help the body heal
itself. Our biomaterial platform technologies include the device technologies HydroFix ® and CollaFix™, and our
tissue technologies, AmnioFix® and EpiFix®. Our tissue technologies are processed from human amniotic
membrane that is derived from the donated placentas. Through our donor program, mothers delivering full-term
Caesarean section births can elect in advance of delivery to donate the placenta in lieu of having it discarded as
medical waste. We process the human amniotic membrane utilizing our proprietary Purion ® Process, to produce a
safe, effective and minimally manipulated implant for homologous use. MiMedx ® is the leading supplier of amniotic
Page 26 of 58
tissue, having supplied over 120,000 allografts to date to distributors and OEMs for application in the Wound care,
Surgical, Sports Medicine, Ophthalmic and Dental sectors of healthcare.
MIT and Children's Medical sue Shire over DermaGraft diabetic
foot ulcer treatment
January 18, 2013 by MassDevice staff
http://www.massdevice.com/companyorganization/shire-plc
Massachusetts Institute of Technology and Children's Hospital Corp. accuse Shire Regenerative
Medicine of willfully infringing on a trio of patents with its DermaGraft diabetic foot ulcer skin graft
treatment.
Regenerative therapies maker Shire (NSDQ:SHPGY) found itself the focus of a lawsuit after the
Massachusetts Institute of Technology and Children's Medical Center Corp. accused the company of
willfully infringing on a trio of patents.
Legal News, News Well, Diabetes, Patent Infringement, Regenerative Medicine
Shire expands regenerative medicine biz with Lotus Tissue
Repair acquisition
January 10, 2013 by MassDevice staff
British pharma player Shire expands its regenerative medicine footprint with the acquisition of Lotus
Tissue Repair, which focuses on the treatment of the genetic disease dystrophic epidermolysis bullosa.
Shire (NSDQ:SHPGY) said it aquired Cambridge, Mass.-based Lotus Tissue Repair, which is developing
the 1st protein replacement therapy to treat dystrophic epidermolysis bullosa, a rare genetic disease.
The purchase includes an upfront payment and later milestone payments, but specific details were not
released.
Page 27 of 58
From: G Fish MD [mailto:gfish@fletcherspaght.com]
Sent: Wednesday, January 09, 2013 9:22 AM
To: Jeb Terry
Cc: R John Fletcher
Subject: Fw: RE: MediSens Wireless Investment Opportunity
Jeb,
Here is another entrant into the space. I have not reviewed there materials yet, but thought you spoils see
out, regardless. And by chance i was seated next to a guy at dinner 2 nights ago who is also an entrant.
What he described as pressure AND moisture sensing sounded superior to me (if it works).
Net: crowded space.
Regards,
Guy
-------- Original message -------Subject: RE: MediSens Wireless Investment Opportunity
Date: Wed Jan 09 05:22:09 PST 2013
From: Andrew Amiel <aamiel@lamielpartners.com>
To: Guy Fish <gfish@fletcherspaght.com>
Dear Guy,
I hope you are doing well. I just wanted to follow up to see if you had a chance to review the information
I sent over regarding MediSens Wireless and to see if you had any questions or would like to set up a
short call with management to go over the opportunity in more detail.
Below you will find a short summary related to the opportunity and attached is a more detailed
presentation.
Looking forward to hearing from you.
Best,
Andrew Amiel
From: Andrew Amiel [mailto:aamiel@lamielpartners.com]
Sent: 02 January 2013 15:10
To: Guy Fish (gfish@fletcherspaght.com)
Subject: MediSens Wireless Investment Opportunity
Dear Guy,
Page 28 of 58
I hope you are doing well and had an enjoyable holiday season. We are working on a new investment
opportunity with a company called MediSens Wireless, Inc., a very promising Medical Device company
with an innovative and cost effective solution to reduce the occurrence of Pressure Ulcers known as one
of the top incidents under the CMS “Never Events” mandate.
The Company will be at the JPM Conference in San Francisco which could be an opportune time
to arrange an initial meeting.
MediSens has developed a non-invasive “EventSens” platform as its flagship product. This product
incorporates an all Fabric pressure sensing technology, related HW/SW and targeted algorithms
providing an unprecedented patient monitoring solution. EventSens’ platform is seamlessly deployed on
the surface of medical mattresses with nearly 8,000 embedded sensors, bedside console and a cloud
application.
Their solution is very unique compared to current products in the market due to the specific method of
detecting certain events and providing actionable information. This system is addressing a multi-billion
dollar market with significant unmet need.
The company is raising $8 million of capital to complete clinical studies, drive commercialization and
market penetration for the EventSens platform technology and related roadmap.
EventSens’ platform offers significant differentiation and stands out compared to current products in the
market:
 Large sensor array with direct sensing – Caregivers can monitor pressure distribution in real-time
and with spatial resolution

Sophisticated analytic algorithms – compliance is monitored, patient care is enhanced

Highly customizable – Treatment is personalized based on patient characteristics and needs
 Easy to use and low cost – Actual use case, compliance and outcomes are improved, and healthcare
facilities can recognize quick ROI
EventSens is an indispensable monitoring system that can result in shorter hospital stays and better
medical outcomes.
Below also please find a link to a movie related to the technology and how it works.
http://www.youtube.com/watch?v=QYbhMsNbA8k&feature=youtu.be
As well, I have an overview presentation for your review. Looking forward to hearing from you and to
see if we can arrange a meeting with the management team.
Best,
Andrew Amiel
Page 29 of 58
Founder and Managing Partner
Lamiel Partners
US Cell: +1917-519-8536
EU Cell: +32-485-496-123
From: Guy Fish [mailto:guyfish.md@gmail.com]
Sent: Monday, December 31, 2012 2:02 PM
To: Jeb Terry
Cc: R John Fletcher; Linda Tufts
Subject: MiMedx
Hello Jeb,
I hope you are well. Its been a while since we talked - you need to catch me up on how your son is doing.
I did get chance to look over MiMedx. You really cant argue with apparent success. This is a space I
have followed ever since working as VP of Biz Dev at Collagenesis where we competed against other
injectables and grafts. It was a difficult space due to FDA ambiguity, messy patient populations, and
trials with squishy endpoints particularly with diabetic wounds. None-the-less, it seem like the FDA has
resolved some issues and of course the success of vacuum assisted therapy has proven that wounds CAN
be improved.
As to this particular opportunity, I have a ton of observations:
MiMedx
(Need to review DermaGraft sales history at Shire, and also before 2011 acquisition?) What do analysts
say about that market and its limits? DermaGrafts prospects and its results?
What were some of the other placental product stories and how did they fail? why is this different? I
remember other placental-based products that didn't do so well.
who are the other amniotic tissue players in this "long history" of use? where are they in commercial
success? competition?
What is "vulnerable viable cells"?
Slide 14 claims 1 - 2 applications, but slides 15, and 16 both speak to 2 doses, avg 2.4 doses, and "less
than 4" applications: why?
Does grafting a wound earlier REALLY lead to clinically better outcomes? How big does the delay have
to be to get to a worse outcome: one day, three days, seven days, ten days? How long is the average
delay if Dermagraft is not on hand? How common is it for a practice to NOT have some Dermagraft on
hand, especially if they are an active plastic surgery practice? Is this an opportunity to service smaller
Page 30 of 58
practices with lower procedure volumes who have inventory problems, and if so, will this market go
away under ACO practice consolidations?
Is the cost of a freezer really a problem if the practice has other products requiring refrigeration? How
often is this the only product in the freezer?
To whom do they market? How penetrated is that market? What is the preferred channel and the most
cost effective channel? How much share-of-mind competition is there?
What is this "Purion" process? (What would Dale DeVore (Collagesis CSO) think of it?)
what is the patent situation: defensibility and expiry of key patents?
Need to see the published papers cited on slide 17, and the unpublished articles; plus any prelim looks at
RCT data.
so... what is the price?
Analyst report - DM Foot Ulcers: $1.5B /3M = $500per dose, check, but
Venus Ulcers @ $500per dose x 600,000 =\= $3B ,
One is off by a factor of 10?
PowerPoint states cost of 1 - 2 applications is $3140. Is that $2075 per?
Supply arrangements: what is the ratio of c-sections to product revenue, of hospitals to product
revenue? Have they tapped out the best suppliers, or are there many more of scale?
What is their production capacity utilization? COGS? Did 4Q2012 meet $10M expectation?
Isnt the terminal value calculation high given likely patent expiry and competition? we usually see a 10yr
tail applied to the terminal value calc. This will have the effect of lowering the estimated price per share
target.
Jeb, many of these questions could be asked of management. Some will require some external
validation. Overall, this company is in a tricky space, but seems to be doing well. Let us know if we can
help in the validation.
Guy
Guy L. Fish, MD
MiMedx to add 100 jobs, double space
MiMedx: Led by Pete Petit, the company develops and manufactures regenerative biomaterials for use in
wound care, burn healing, surgical and sports medicine, and other areas.
Urvaksh Karkaria
Staff Writer- Atlanta Business Chronicle
Page 31 of 58
Nov 30, 2012
MiMedx Group Inc. plans to add more than 100 jobs and expand manufacturing capacity to keep pace
with demand for its implants.
The Kennesaw-based biotech develops and manufactures regenerative biomaterials and bioimplants
processed from human amniotic membrane, for use in wound care, burn healing, surgical and sports
medicine, and other areas.
MiMedx, which has raised more than $20 million in the last three years, is close to signing a lease for an
80,000-square-foot building in Marietta, CEO Pete Petit said. The building, formerly occupied by a
chemical company, includes lab space. MiMedx occupies two 20,000-square-foot buildings and
following the expansion will retain one, which it will turn into a secondary manufacturing plant.
MiMedx has developed a natural material that can be processed in a way that, when applied to a wound,
accelerates the healing process, said Dr. Tom Callaway, partner in the bioscience seed fund Georgia
Venture Partners LLC.
“MiMedx found a leading product that was not being marketed strategically,” Callaway said. “They
added a sales force and now they are adding the manufacturing capacity to meet the demand.”
The new jobs will include production, sales and R&D positions. The manufacturing jobs will generally
pay about $40,000 annually, while many of the sales and scientific jobs will pay about $150,000 in base
and commissions annually.
MiMedx has been on a growth spurt — the company added about 100 jobs this year and doubled
manufacturing capacity.
The latest expansion, expected to be completed in late spring, is “driven by strong sales for the
company’s tissue products,” Petit said.
MiMedx sales will triple in 2012 — revenue is expected to hit $26 million, from $8 million last year, said
Petit, who founded Healthdyne and its subsidiary, Matria Healthcare.
In 2008, Matria was sold to Inverness Medical Innovations Inc. (NYSE: ALR) for $1.2 billion. At
Georgia Tech, Petit endowed the Petit Institute for Bioengineering and Bioscience, and assisted with the
funding of buildings that bear his name at Georgia Tech and Georgia State University.
MiMedx’s expansion comes amidst a wave of pharma and biotech manufacturing projects. The Peach
State landed 29 percent more life sciences economic development projects in fiscal 2012 compared with
the prior year, according to the Georgia Department of Economic Development.
California-based PureTek Corp., which makes pharmaceutical, nutritional and personal care products, is
said to be considering plans to locate its headquarters and manufacturing operations to Jackson County, a
North Atlanta suburb.
Page 32 of 58
In September, Newton, Mass.-based Galectin Therapeutics said it would relocate its headquarters to
metro Atlanta, drawn by a major research center at The University of Georgia. In April, Baxter
International Inc. announced plans to build a $1 billion plasma fractionation plant in Covington, Ga., that
will employ more than 1,500.
Osmotica Pharmaceutical Corp. last year confirmed plans to invest$20 million in an R&D and
manufacturing operation in Marietta. And, Seattle-based Dendreon Corp. picked Atlanta’s south side for
a cancer treatment manufacturing plant.
Atlanta’s central location and logistics infrastructure makes it a magnet for lifesciences companies.
“We are attracting a skill set of workers that have a knowledge base around cell processing,” Callaway
said.
Low operating costs and available real estate are major factors driving business expansion in metro
Atlanta, said David Harnett, a vice president at the Metro Atlanta Chamber. Manufacturing in Cobb
County is about 12 percent to 20 percent less expensive than other competing markets out of state,
particularly the Northeast, Hartnett said.
Atlanta’s biotech industry cluster provides the skilled executive and production talent to support a
growing business, Petit said. A low cost of housing and high quality of life makes it easy to recruit talent
to Atlanta, he said.
MiMedx, which holds exclusive rights to 19 issued and 62 pending U.S. and foreign patent applications,
was launched by serial entrepreneur Steve Gorlin. Petit, a major investor in the company, took over as
chairman and CEO in February 2009.
MiMedx’s proprietary tissue processing technology, Purion, dehydrates, sterilizes and processes the
amniotic membrane to a durable product with a shelf life of five years. The membrane is applied on a
wound to jump-start it into healing mode.
The human amniotic membrane, typically discarded after birth as medical waste, is the innermost layer of
the placenta and lines the amniotic cavity. The natural sheet, designed to protect the baby in the womb, is
rich in growth factors and other molecules that can grow tissue and heal wounds.
MiMedx’s tissue grafts can heal wounds twice as fast as the competition, and at about a third of the cost,
Petit said. The grafts have been applied to chronic and acute wounds, such as diabetic foot ulcers, venous
leg ulcers, pressure ulcers (bedsores), and surgical and traumatic injuries. Each year, these conditions
affect more than 3 million patients in the United States.
In addition to the amniotic membrane product, MiMedx has commercialized a polyvinyl alcohol polymer
called HydroFix, used as a blood vessel guard during anterior spine surgery; and a collagen-based fiber
technology, called CollaFix, that acts as a scaffold for soft tissue repair.
Beyond wound care, MiMedx is focused on the sports medicine and orthopedics markets — both seeing
robust growth from an aging and more active population.
Page 33 of 58
Plastic surgery could also be an attractive market for MiMedx, because the amniotic membrane grafts
reduce the formation of scar tissue.
Diabetes: DOJ investigates Shires' DermaGraft marketing
April 26, 2012 by MassDevice staff
http://www.massdevice.com/news/diabetes-doj-investigates-shires-dermagraft-marketing
Shire faces civil and criminal investigations by the U.S. Justice Dept. and a pair of U.S.
Attorneys' Offices for marketing practices related to its DermaGraft diabetic foot ulcer treatment.
British biotech Shire (NSDQ:SHPGY) is under investigation by the U.S. Justice Dept. for
marketing practices for its Dermagraft diabetic foot ulcer treatment, according to regulatory
filings.
This Month Last Year: Shire and Thermo Fisher’s
Acquisitions and Geron’s hESC Plans
While Geron’s good news in May 2011 didn’t last long, Shire and Thermo
hope their moves strengthen their businesses.
Patricia Fitzpatrick Dimond, Ph.D.
http://www.genengnews.com/keywordsandtools/print/3/27042/
Major biotech headlines last May included Shire’s purchase of Advanced BioHealing, Thermo Fisher
Scientific’s buy of Phadia, and Geron winning a $25 million loan to advance its human embryonic
stem cell (hESC) product for spinal cord injury through clinical development.
Through the takeover of Advanced BioHealing, Shire became a regenerative medicine company, at
least partially. Thermo Fisher’s deal extended and strengthened its current product line, while Geron
morphed into a cancer company from a hESC therapeutic company.
Shire Turning to Regenerative Med
On May 18, 2011, Shire shelled out $750 million for Advanced BioHealing, which agreed to sell itself
one day after it planned to go public. That acquisition bought Shire Dermagraft, approved to help heal
diabetic foot ulcers. It is an artificial skin product consisting of foreskin-derived human fibroblasts
grown on a mesh scaffold.
Advanced Tissue Sciences (ATS), Dermagraft’s developer, went out of business in 2002, filing for
bankruptcy. Canaan, among other investors, obtained rights to the project and started Advanced
BioHealing to commercialize it.
Page 34 of 58
This April 11, Shire made a second acquisition moving it further into the regenerative medicine space.
The company reported an agreement to acquire substantially all the assets of Pervasis Therapeutics
for its Vascugel product. This endothelial cell-based therapy is being developed to improve the
function of arteriovenous (AV) access sites, dialysis access points that connect veins and arteries with
tubing. Vascugel has received orphan drug designation from the FDA and EMA.
“About 50 percent of those grafts don’t last the first year,” Xconomy quoted Kevin Raking, former CEO
and chairman of Advanced BioHealing and now head of Shire’s Regenerative Medicine, as saying.
“But when Pervasis’ cells are wrapped around those access points, it improves healing.”
Advanced BioHealing was a leader in the field of regenerative medicine with its living cell product
Dermagraft, Jeff Jonas, M.D., Shire’s svp of R&D, specialty pharmaceuticals and regenerative
medicine, pointed out to GEN. The acquisition brought in biomaterials, experience in cell-based
manufacturing, and an understanding of the complications of diabetes, he added.
“Shire already had an internal familiarity with the complications of the disease, and we thought we
might have some competitive advantage because of our work with Renovo, even though we decided
not to move forward with Juvista, so this was a natural fit.
“Pervasis provides a natural evolution of a product line that leverages both our experience with
Dermagraft and our manufacturing skill. We already know how to develop a matrix and put cells on it,
and now we have another cell-based technology platform that we can leverage to develop additional
regenerative medicine therapies.
“Pervasis gives us an opportunity to conduct a clear Phase II clinical trial that will give us a clear
go/no-go outcome. This is in line with Shire’s desire to make decisions early on in the clinical
development process regarding whether or not to move forward with a technology. These products
are also in line with our focus on specialist physicians because each of them will be delivered to
patients by physicians in specialty practices.
Shire, however, has experienced some bad luck in moving from pills to proteins, following its other
acquisitions of biologics companies. In 2005, Shire acquired Transkaryotic Therapies (TKT), now
Shire Human Genetic Therapies, in an all-cash transaction valued at $1.6 billion. At the time, Shire
said the acquisition was consistent with its strategy and highly complementary to its business model to
develop and market products for specialty pharmaceutical markets.
The deal brought Shire two approved recombinant protein products, an enzyme replacement therapy
for Fabry disease called Replagal, and Dynepo, a treatment for anemia in patients with chronic kidney
disease.
Shire decided to stop marketing Dynepo, citing “changes in the external environment,” including the
launch of several biosimilars at lower prices. And while Replagal was approved in Europe in 2001 and
is avalaible in 46 countries, this March Shire decided to pull its BLA in the U.S. Shire commented that
“recent interactions with the FDA have led the company to believe that the agency will require
additional controlled trials for approval.”
Page 35 of 58
Petit raises $5M to expand biotech MiMedx
Jan 6, 2012, 6:00am EST
Expansion: MiMedx President and COO Bill Taylor, from left, and CEO Pete Petit plan to expand the
biotech this year.
Urvaksh Karkaria
Staff Writer- Atlanta Business Chronicle
A Kennesaw-based biotech led by industry heavyweight Pete Petit has raised $5 million to help finance a
corporate expansion.
MiMedx Group Inc. (OTC BB: MDXG) expects to add about 100 production and sales-related jobs this
year. To accommodate the growth, MiMedx will double manufacturing capacity and take an additional
20,000 square feet of production space next year, said CEO Petit, a life sciences research benefactor.
The expansion comes amidst some shrinkage in the region’s life sciences industry. Several Atlanta area
firms, such as Solvay, Stiefel Laboratories Inc. and AtheroGenics Inc. have exited the market because of
acquisitions or bankruptcy.
MiMedx develops and manufactures regenerative biomaterials and bioimplants processed from human
amniotic membrane, for use in wound care, burn healing, soft tissue trauma, sports medicine and other
areas.
The human amniotic membrane, typically discarded after birth, is the innermost layer of the placenta and
lines the amniotic cavity. The natural sheet, designed to protect the baby in the womb, is rich in growth
factors and other molecules that can grow tissue and heal wounds, said Dr. William Li, president and
medical director of the The Angiogenesis Foundation, a Cambridge, Mass.-based nonprofit that promotes
blood vessel growth technologies.
MiMedx technology dries and processes the amniotic membrane to a durable product with a shelf life of
five years, said Li, an adviser to MiMedx.
“The membrane is applied on a wound to jump-start [it] into healing mode,” Li said. “MiMedx is taking a
page from Mother Nature’s playbook, to speed healing.”
MiMedx’s tissue grafts can close wounds twice as fast as the competition, and often with half the number
of applications, Petit said. The grafts have been applied to wounds in gums and even in the eye.
MiMedx has yet to fully exploit the healing potential of the amniotic membrane.
“This natural product may have multiple benefits and applications that have yet to be discovered or
developed,” Li said. “A small company like MiMedx has to work very carefully to be able to determine
where it’s going to put its resources.”
Page 36 of 58
MiMedx, which has raised more than $20 million in the last three years, reported 2011 revenues of about
$8 million. The company expects sales to top $23 million this year and anticipates profitability in the first
quarter.
In addition to the amniotic membrane product, MiMedx has commercialized a polyvinyl alcohol polymer
called HydroFix, used as a blood vessel guard during anterior spine surgery; and a collagen-based fiber
technology, called CollaFix, that acts as a scaffold for soft tissue repair.
MiMedx’s growth strategy includes making acquisitions, as it searches for new technologies and markets.
“I always seek companies that are at the top of their markets, that would blend with something we’ve
already done, and would make us a strong No. 1 or No. 2 player,” Petit said.
Acquisitions not only broaden MiMedx’s product portfolio — they also leverage the company’s
distribution network and sales force, Petit said.
Last year, MiMedx acquired Kennesaw-based Surgical Biologics Inc., which develops tissue processing
techniques for creating implants.
The acquisition gives MiMedx a larger foothold in the wound care business — a market estimated to be
worth about $7 billion in the United States, and one that is expanding at a 10 percent to 15 percent annual
clip, Petit said.
The wound care business, which accounted for about 25 percent of MiMedx’s 2011 revenues, is expected
to double this year.
Cardiovascular disease, diabetes and obesity are converging to create an epidemic of chronic wounds, Li
said.
Chronic wounds may not heal for years and can be life-threatening because they make patients vulnerable
to infections that can lead to gangrene and even amputation.
The market potential for treating chronic wounds also makes it a competitive one — MiMedx faces
growing competition from other advanced technologies, Li said.
Beyond wound care, MiMedx is focused on the sports medicine and orthopedics markets — both seeing
robust growth from an aging and more active population.
Plastic surgery could also be an attractive market for MiMedx, because the amniotic membrane grafts
“reduce the formation of scar tissue,” Petit said.
MiMedx, which holds exclusive rights to eight issued and 33 pending U.S. and foreign patent
applications, was launched by serial entrepreneur Steve Gorlin. Petit, a major investor in the company,
took over as chairman, president and CEO in February 2009.
MiMedx is steered by a “top-notch management team,” said Lee Herron, vice president of
commercialization at the Georgia Research Alliance.
Page 37 of 58
“They’ve been there and done that multiple times,” Herron said. “They know what works and doesn’t
work.”
Petit founded and led Matria Healthcare Inc. before selling it to Inverness Medical Innovations Inc.
(NYSE: IMA) for $1.2 billion in 2008. Matria was a subsidiary of Healthdyne, which Petit founded in
1971.
At Georgia Tech, he endowed the Petit Institute for Bioengineering and Bioscience, and assisted with the
funding of buildings that bear his name at Tech and Georgia State University.
Shire CEO sees diabetes surge buoying
Dermagraft
Published September
16, 2011
Reuters
September 16, 2011 – By Ransdell Pierson and Lewis Krauskopf
NEW YORK (Reuters) - Shire Plc <SHP.L> sees a strong market for its recently acquired Dermagraft
skin substitute due to surging rates of diabetes that can cause foot ulcers in a significant number of
patients, according to its chief executive.
Shire acquired Dermagraft through its $750 million purchase of privately held Advanced BioHealing in
June. The bio-engineered product last month flunked a late stage study for treating leg ulcers.
"The whole deal was justified on diabetic foot ulcers alone," CEO Angus Russell said in an interview in
New York on Thursday, without providing specific sales projections for Dermagraft. Approval for leg
ulcers "would have been a quick kind of nice upside early after the acquisition. It would have been icing
on the cake."
Dermagraft had U.S. sales last year of $146 million from treating slow-healing diabetic foot ulcers.
Russell in July said a new possible use in treating leg ulcers was an important new global opportunity.
But that hope was dashed in late August, when effectiveness of the product in that patient group fell
short in a Phase III study, prompting Shire to scrap the trial.
Russell said Shire only gave the leg-ulcer trial a 40 percent odds of success when it agreed to buy
Advanced BioHealing.
"We thought there was more a chance it wouldn't work," he said, in part because many such patients are
very old and have had leg ulcers for many years. "The cellular area around their ulcers is often dead and
it's very hard to reactivate the cells."
Page 38 of 58
But Russell said Dermagraft's approved use, among diabetics that have foot ulcers, can only grow given
sobering medical statistics.
He cited estimates that 30 percent of Americans over the age of 60 have diabetes, and that will grow to
more than 50 percent within a decade.
Moreover, he said an estimated 60,000 leg amputations were performed in the United States three
years ago because of infections associated with foot ulcers. "And last year, there were 90,000. The point
of (Dermagraft) is to try to promote healing of the ulcers so you don't have an infection."
Shire shares have risen 30 percent in the past year due to demand for a growing number of products in
its medicine cabinet, including treatments for attention deficit disorder and rare genetic diseases.
Sales of Shire's treatments for the rare Fabry and Gaucher diseases have been boosted by
longstanding production problems at rival Genzyme, now a unit of French drugmaker Sanofi
<SASY.PA>.
Most recently, Genzyme in August failed to ship its Fabrazyme drug for Fabry disease despite telling
doctors and patients the shipment would be prompt, according to letters released last week.
"Every time one of these announcements goes out ... we get a lot of phone calls and a lot of requests for
more drug," Russell said.
Read more: http://www.foxbusiness.com/industries/2011/09/16/shire-ceo-sees-diabetes-surge-buoyingdermagraft/#ixzz2H3IlkUDC
Shire CEO sees diabetes surge buoying Dermagraft
(Reuters) - Shire Plc (SHP.L) sees a strong market for its recently acquired
Dermagraft skin substitute due to surging rates of diabetes that can cause
foot ulcers in a significant number of patients, according to its chief
executive.
9-12-11
https://www.google.com/#hl=en&tbo=d&output=search&sclient=psyab&q=shire+buys+dermagraft&oq=shire+buys+dermagraft&gs_l=hp.3...3708.10298.0.11374.21.21.0.0.0.0.206.16
42.18j2j1.21.0.les%3B..0.0...1c.1.WJqTOYWSBi4&pbx=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&bvm=bv.1355534169,
d.aWM&fp=2afa5d44ccb651f3&bpcl=40096503&biw=1020&bih=706
Shire acquired Dermagraft through its $750 million purchase of privately held Advanced BioHealing in June.
The bio-engineered product last month flunked a late stage study for treating leg ulcers.
"The whole deal was justified on diabetic foot ulcers alone," CEO Angus Russell said in an interview in New
York on Thursday, without providing specific sales projections for Dermagraft. Approval for leg ulcers "would
have been a quick kind of nice upside early after the acquisition. It would have been icing on the cake."
Dermagraft had U.S. sales last year of $146 million from treating slow-healing diabetic foot ulcers.
Russell in July said a new possible use in treating leg ulcers was an important new global opportunity.
Page 39 of 58
But that hope was dashed in late August, when effectiveness of the product in that patient group fell short in a
Phase III study, prompting Shire to scrap the trial.
Russell said Shire only gave the leg-ulcer trial a 40 percent odds of success when it agreed to buy Advanced
BioHealing.
"We thought there was more a chance it wouldn't work," he said, in part because many such patients are very
old and have had leg ulcers for many years. "The cellular area around their ulcers is often dead and it's very
hard to reactivate the cells."
But Russell said Dermagraft's approved use, among diabetics that have foot ulcers, can only grow given
sobering medical statistics.
He cited estimates that 30 percent of Americans over the age of 60 have diabetes, and that will grow to more
than 50 percent within a decade.
Moreover, he said an estimated 60,000 leg amputations were performed in the United States three years ago
because of infections associated with foot ulcers. "And last year, there were 90,000. The point of
(Dermagraft) is to try to promote healing of the ulcers so you don't have an infection."
Shire shares have risen 30 percent in the past year due to demand for a growing number of products in its
medicine cabinet, including treatments for attention deficit disorder and rare genetic diseases.
Sales of Shire's treatments for the rare Fabry and Gaucher diseases have been boosted by longstanding
production problems at rival Genzyme, now a unit of French drugmaker Sanofi (SASY.PA).
Most recently, Genzyme in August failed to ship its Fabrazyme drug for Fabry disease despite telling doctors
and patients the shipment would be prompt, according to letters released last week.
"Every time one of these announcements goes out ... we get a lot of phone calls and a lot of requests for
more drug," Russell said.
Shire Falls After Scrapping Dermagraft as Leg
Ulcer Therapy
By Simeon Bennett -
Aug 25, 2011 11:12 AM CT
Shire Plc (SHP) fell in London trading after abandoning development of the Dermagraft skin
substitute for the treatment of leg ulcers, three months after it bought the product.
The drugmaker dropped 57 pence, or 2.8 percent, to 1,955 pence, after earlier declining as much as
5.4 percent in the session. Dermagraft failed to completely heal leg ulcers in a late-stage trial, the
goal Shire had agreed on with regulators in the U.S. and Europe, the company said in a statement
late yesterday.
Shire acquired Dermagraft in May in the $750 million purchase of Westport, Connecticut-based
Advanced BioHealing Inc. Dublin-based Shire has also had disappointing sales of Resolor, a drug it
Page 40 of 58
gained with the purchase of Movetis NV last year, said Justin Smith, an analyst at MF Global in
London.
“The poor execution on Movetis, coupled with yesterday’s news on the ABH deal, is why some
investors may now question Shire’s M&A track record,” Smith wrote in a note today. Still, the
successful integration of Transkaryotic Therapies Inc., which Shire bought in 2005, indicates the
company’s “expertise in M&A is solid,” Smith wrote. He rates the stock “buy.”
The shares pared losses late in the trading session after Shire won U.S. marketing approval for
another product, Firazyr, to treat attacks of a rare genetic swelling disease.
Dermagraft was previously marketed by Smith & Nephew Plc until 2005 when the London-based
company stopped making the therapy after the U.S. Food and Drug Administration rejected it at as
a treatment for leg ulcers. Smith & Nephew sold the rights to Advanced BioHealing the following
year. Dermagraft is approved for treatment of diabetic foot ulcers and had revenue of $147 million
last year.
Shire buys Advanced BioHealing for $750m
By Adam Jones
http://www.ft.com/cms/s/0/a494712e-811e-11e0-9360-00144feabdc0.html#ixzz2H3GNpow3
May 18, 2011 9:41 am
An ulcer treatment once discarded by Smith & Nephew has been bought by Shire, another FTSE
100 healthcare group, for $750m (£462m) in cash.
Shire announced on Tuesday night that it had agreed to purchase a US company called
Advanced BioHealing to gain access to Dermagraft, a skin substitute that assists in restoring
damaged tissue.
The agreed purchase came as Advanced BioHealing was in the final stages of preparing for an
initial public offering of shares on the Nasdaq stock exchange.
Smith & Nephew had sold Dermagraft to Advanced BioHealing in 2006 for an undisclosed sum
after failing to win US regulatory approval for the product’s use in the treatment of venous leg
ulcers.
However, the use of Dermagraft to heal diabetic foot ulcers allowed Advanced BioHealing to
increase its sales from $9m in 2007 to $147m in 2010. The company also posted an operating
profit of $21m and a net profit of $7m in 2010.
Page 41 of 58
Shire said it still saw growth for Dermagraft in the US market for diabetic foot ulcer treatment,
adding that it would be able to help Advanced BioHealing to increase manufacturing capacity.
Advanced BioHealing is carrying out a clinical trial to assess the use of Dermagraft in the
treatment of venous leg ulcers in the hope of securing the approval from the US Food and Drug
Administration that had eluded Smith & Nephew.
From: Baber, Rodney [mailto:Rbaber@aaroncapital.com]
Sent: Wednesday, December 19, 2012 10:19 PM
To: John Henderson
Cc: Jeb Terry
Subject: Re: MDXG
John, definitely want updates. Jeb and I both feel that you're on to something with this one
but we haven't had a chance to spend any time on it. Will look at it over the holidays.
Thanks for your work on it. Personally, I think timing will be the issue on this one based
on the ramp.
On Dec 19, 2012, at 5:40 PM, "John Henderson" <john@inflectionpointinvesting.com>
wrote:
Jeb and Rodney,
Please let me know if you want further updates on MiMedx hereafter.
Here is my article which will hit tmrw on S. Alpha: http://seekingalpha.com/article/1072281-mimedxgroup-inc-the-next-disruptive-force-in-regenerative-medicine
See commentary below from Craig Hallum sales presentation in Minneapolis. Apparently, they are
looking to raise money for clinical trials. My guess 5-6 million shares. See below:
Best,
John
Incremental comments from MDXG sales presentation by Bill Taylor/Mike Senken (Kip's notes, not my
analysts)

45 min presentation to CHLM sales & a few outside investors who attended

Bill Taylor/Mike Senken

Another 4 patents to be issued in next couple of months with many many more being filed to
continue blocking completion on placenta processing

Have 2 medicare ‘macs’ who are reimbursing for DFU now (Palmetto & one other) and are
working on the other 10 actively to gain approval
Page 42 of 58

Have private pay in nearly all settings – think that private pay represents about 25% of the wound
care market historically

Have placed over 120k grafts without an adverse event

In may tripled capacity and only incurred 200k in incremental capex – have capacity currently to
support 60M in revs. In a couple of months will be ‘north of that’ level. Feel like they have ample
capacity for growth.

Focus when training docs is to size the graft appropriately – medicare focused on ‘scrappage’ of
grafts (mostly b/c Dermagraft & appligraf have just 1 size fits all approach). Average DFU is 10sq cm.

Working with Stanford, Univ. of Miami, Georgia Tech on a range of unique applications for their
technology

Dermagraft peaked out at 200M in US sales run rate in 2Q ’12, that rate came down to 33M in
sales in Q3 ’12. Stated MDXG ‘taken a chunk’ of biz, mostly via govt market. Hired 2/3rd of
ABH/Shire’s government salesforce that didn’t have non-competes for some reason.

Govt market will be all direct sales

Commercial market will be moving from distributor to direct sales force. Disty’s have been
notified of this transition.

When asked about shape of US wound care market, said at peak ABH’s 200M in run rate was
60M in govt, 140M in commercial.

Believes there are 153-155 VA hospitals in US, MDXG currently selling into about 80 of those
right now.

Believes about 700 clinics that could be wound care settings in the US, but about 100 are
applicable as key targets (I didn’t get this at all, gotta be more than 100))

***when on the clinical trials slide about the roster of trials, said their investment will be
significant in ’13. (guys getting the sense this is reason for needing to raise cash)

Plan to issue full ’13 revenue guidance when they report Q4 ’12 in February.

Asked when going to get on NASD listing…said sometime in 2013. Not any more specific than
that. Said there are NO limitations currently to listings other than resources.

***heard they were in MSP w/ Northland about 3 months ago.
That’s what I took away.
Kip
__________________________________________________
Kip D. Moen
Institutional Equity Sales
Craig-Hallum Capital Group LLC
Direct: 612.334.6340 Mobile: 612.801.0694
Trading: 800.752.1471
From: John Henderson [mailto:john@inflectionpointinvesting.com]
Sent: Thursday, December 13, 2012 6:52 PM
To: Jeb Terry
Subject: MDXG
Jeb,
Page 43 of 58
As per our conversation, here is the Craig Hallum report from two weeks or so ago re:
Mimedix, MDXG.OB.
Mimedix seems to have a disruptive technology that is highly scalable at a very low cost.
Market opportunity is $10 billion, with new applications on the way.
Biggest issue seems to be private pay reimbursement. Management seems very confident
in most recent investor presentations about making headway on reimbursement front in
early 2013. Should this occur, this will obviously act as a big spur for shares.
I see a number of catalysts to drive what is an already high valuation even higher. First, an
up-listing should occur within the next 3-6 months. While stock could certainly come
back below $3, I think the odds are better that it does not. With a dearth of high-margin,
organic growth stories out there, any such up-listing would broaden shareholder base
significantly.
In most recent earnings call, management essentially stated that their manufacturing
process should become more efficient in Q3 and on a go-forward basis. I think gross
margins, which have risen I think 5 quarters in a row, will continue heading higher as
company scales to $15M by the spring time. I see 84% margins next year and high 80s in
2014. I am not sure margins can go into the low 90s, but I am not ruling this out for 2014.
I think numbers are too low for next 2 years. This is another significant catalyst that
should unfold. Company would be immensely more profitable in 2013 and 2014, with an
additional 15M in revenues in 2013 and an additional 25-40M above current numbers. I
would expect other analysts to initiate coverage throughout 2013.
Last, but not least, MDXG's management team may be the most polished team that you
will see at the helm of a $400 million company. They are a multi-billion management
team overseeing rapid and accelerating growth. This company is in the right hands.
Management itself makes me want to really size this position up even more than it already
is (9% position for our accounts and 15% for my own capital.)
Company's website, http://www.mimedx.com/, has some great info, including recent
investor webcasts.
I can chat about more whenever you would like. I owe you for ICAD!
I should be getting something out on MDXG first, as have been researching since
September. Hopefully will get it out by Tuesday, if I can get time this weekend to get
some writing in.
Page 44 of 58
Best,
John
MiMedx third quarter revenue increases 270% to $8.0
million
Published on October
30, 2012 at 2:06 AM·No Comments
MiMedx Group, Inc. (OTC Bulletin Board: MDXG), an integrated developer, manufacturer
and marketer of patent protected regenerative biomaterials and bioimplants processed
from human amniotic membrane, announced today its results for the quarter ended
September 30, 2012.
Highlights of Third Quarter 2012 Results include:
 Revenue Increased by more than 3.5 times over Third Quarter of 2011
 Quarter over Quarter Revenue increased by 63%
 Gross Margins Hit Record Level of 82%
The Company recorded record revenue of $8.0 million for the third quarter of 2012, a
270% or $5.8 million increase over third quarter of 2011 revenue of $2.2 million, and a
63% increase over second quarter of 2012 revenue of $4.9 million. The Company's
earnings before interest, taxes, depreciation, amortization and share-based compensation
(Adjusted EBITDA) for the quarter ended September 30, 2012, were $726,000, a $1.7
million improvement as compared to the Adjusted EBITDA loss of $934,000 for the third
quarter of 2011.
For the nine months ended September 30, 2012, the Company recorded revenue of $16.5
million, more than threefold increase over revenue of $5.1 million for the first nine months
of 2011. The Company's Adjusted EBITDA for the nine months ended September 30, 2012
was $2.0 million, a $6.6 million improvement over Adjusted EBITDA loss of $4.7 million for
the first nine months of 2011.
For the 7th consecutive quarter, the Company reported improved gross profit margins. The
Company's third quarter 2012 gross margins of 82% is nearly a twenty-three percentage
point improvement over third quarter of 2011 gross margins of 59%, and a six percentage
point improvement over the Company's second quarter of 2012 gross margins of 77%.
Management Commentary on Second Quarter Results
Parker H. "Pete" Petit, Chairman and CEO stated, "By all the measures that I have
traditionally used, I would clearly classify this as "excellent" quarterly performance. When
you can increase revenues quarter -over -quarter by more than 60%, increase gross profit
margins by 5%, increase the size of your sales organization by 5 times and still maintain
positive EBIDTA, that is excellent quarterly performance. Our third quarter revenue growth
was primarily attributed to our EpiFix® wound care product gaining acceptance in
Page 45 of 58
numerous Veterans Administration hospitals. Up to this point, our AmnioFix® tissue grafts
had provided the majority of our revenue; however, we now expect sales of our EpiFix®
tissue grafts to show accelerated growth, especially in wound care. While we are pleased
with the prolific growth we achieved in the third quarter, I want to make it very clear that
management does not expect revenue to grow at a 60 plus percent quarter- over -quarter
rate. We believe that our growth will be very robust, but that the incremental quarterover- quarter rate we saw last quarter is not going to be achievable in the ensuing
quarters. However, we are confident we will exceed the upper end of our previous 2012
revenue goal of $25 million."
The Company reported that prior to the start of the third quarter, it embarked on a
strategy to aggressively establish its direct sales force to serve the VA hospitals. "We
recognized the significant and timely opportunity we had available to us to increase our
presence in the VA hospitals where the reimbursement process for our grafts is well
established. Late in the second quarter, we added a sales executive to head up the
government sector of our sales force. Throughout the third quarter, we added 19 additional
members to that government- focused team of sales executives. With only a partial
quarter of activity under our belt, the sales results from our government sales team is
dramatic: The professionalism of our sales team and the clinical and cost effectiveness of
our grafts will enable strong revenue and profit growth in the future," said Petit.
"This is the fourth quarter in a row where we met or exceeded our revenue goals, with our
latest quarter exceeding our revenue goal by a significant margin," commented Bill Taylor,
President and COO. "If you add to this, the results of our first EpiFix® Randomized
Controlled Trial, where 92% of the patients treated with EpiFix® fully healed in six weeks,
I think it is safe to say we had a fantastic quarter. Additionally, we have significantly
improved the quality and depth of our and organization, particularly in the sales and
management functions, and we are well-positioned for continued strong growth over the
coming quarters."
As the Company continues to receive impressive results from studies currently underway
to validate the clinical and cost effectiveness of its EpiFix® grafts, used externally, and its
AmnioFix® grafts, which are used internally for surgical procedures, MiMedx expects to see
reimbursement coverage broaden among commercial health insurance plans and Medicare
intermediaries. "We received the Medicare C-code for our EpiFix® grafts on January 1,
2012; however, the various Medicare intermediaries generally do not reimburse products
in this category without additional clinical data to support their efficacy and costeffectiveness. With the excellent results emanating from these clinical studies, we are
confident that we will have successful break-throughs in these reimbursement processes.
The reimbursement successes we anticipate in the Medicare and commercial insurance
coverage sectors, combined with our government focused efforts in the VA hospitals, will
set in motion our growth expectations for the years to come," added Taylor.
Revenue Breakdown
The Company also reported the revenue breakdown between its primary regenerative
medicine specialties. MiMedx will now report its regenerative medicine specialties in three
categories... "Wound Care", "Surgical & Sports Medicine", and "Other." Revenue for the
Company's EpiFix® grafts comprises the Wound Care category. Its Surgical & Sports
Medicine specialty is comprised of the Company's injectable, orthopedic and surgical
Page 46 of 58
applications for its AmnioFix® grafts. The "Other" category of the MiMedx regenerative
medicine specialties includes the Company's tissue revenue from its dental and ophthalmic
applications and products, as well as revenue from its HydroFix® technology. The third
quarter of 2012 marked the first quarter in which Wound Care revenue exceeded Surgical
& Sports Medicine revenue. In the quarter, 61% of MiMedx sales volume was for Wound
Care, 34% for Surgical and Sports Medicine and 5% for "Other." On a year- to- date basis,
Wound Care represents 38%, Surgical & Sports Medicine represents 51%, and "Other"
represents 11% of total MiMedx revenue.
Balance Sheet and Cash Flow
Cash and cash equivalents as of September 30, 2012, were $7.6 million, as compared to
$2.7 million as of June 30, 2012, and $4.1 million, as of December 31, 2011. During the
quarter, the Company raised over $6.2 million from the exercise of warrants and options.
Cash flow from operating activities of negative $862,000 for the quarter was due primarily
to increases in working capital in line with the Company's sales growth. During the quarter,
the Company invested $163,000 in capital equipment to continue its ramp up of tissue
processing activities to meet the market demand for its grafts.
Total Current Liabilities increased to $10.5 million as of September 30, 2012.
During the quarter, the Company paid off the convertible debt related to the
Surgical Biologics acquisition and recorded an additional provision of $1.3 million
based upon the forecasted increase in sales volume. The earnout related to the
acquisition will be paid in MiMedx common stock in April 2013.
Early in the quarter, a total of 3.3 million Contingent Warrants at an exercise price
of $0.01 were voided per the terms of the 2012 Contingent Warrant agreement
related to the trading price of the Company's Common Stock.
GAAP Earnings
For the quarter ended September 30, 2012, the Company recorded a Net Loss from
Operations of $3.6 million and a $4.4 million loss for the nine months ended
September 30, 2012. This represents a $2.0 million increase over the third quarter
of 2011 Net Loss from Operations and a $2.9 million improvement over the nine
months ended September 30, 2011. Included in the third quarter net loss were the
earnout liability charge mentioned previously and a $1.8 million impairment
charge. Research and development expenses increased due to the decision to
accelerate investment in clinical trials for reimbursement purposes. Selling, general
and administrative expenses increased due to the decision to build out the
Company's direct sales force for government accounts, as well as to add key
management and infrastructure related resources to support the Company's
growth.
The Net Loss for the quarter was $4.2 million, or $0.05 per diluted common share,
as compared to the Net Loss of $1.8 million, or $0.02 per diluted common share,
recorded for the quarter ended September 30, 2011. In addition to the previously
mentioned charges and investments, there were also increases of $358,000 in debt
discount expense and $113,000 in interest expense related to the Company's
Page 47 of 58
convertible debt offerings. The Net Loss for the nine months ended September 30,
2012, of $6.1 million or $0.07 per diluted common share, represents a $1.6 million
improvement as compared to the Net Loss of $7.6 million, or $0.11 per diluted
common share, recorded for the nine months ended September 30, 2011. Included
in reported Net Loss for the first nine months of the year is non-cash related
financing expense associated with the debt discount of $1.2 million. This expense
will continue to be amortized over the life of the convertible notes.
\
Petit raises $5M to expand biotech MiMedx
Date: Friday, January
6, 2012, 6:00am EST
Urvaksh Karkaria
Staff Writer- Atlanta Business Chronicle
http://www.bizjournals.com/atlanta/print-edition/2012/01/06/petit-raises-5m-to-expand-biotech.html?page=all
A Kennesaw-based biotech led by industry heavyweight Pete Petit has raised $5 million to
help finance a corporate expansion.
MiMedx Group Inc. (OTC BB: MDXG) expects to add about 100 production and salesrelated jobs this year. To accommodate the growth, MiMedx will double manufacturing
capacity and take an additional 20,000 square feet of production space next year, said
CEO Petit, a life sciences research benefactor.
The expansion comes amidst some shrinkage in the region’s life sciences industry. Several
Atlanta area firms, such as Solvay, Stiefel Laboratories Inc. and AtheroGenics Inc. have
exited the market because of acquisitions or bankruptcy.
MiMedx develops and manufactures regenerative biomaterials and bioimplants processed
from human amniotic membrane, for use in wound care, burn healing, soft tissue trauma,
sports medicine and other areas.
The human amniotic membrane, typically discarded after birth, is the innermost layer of
the placenta and lines the amniotic cavity. The natural sheet, designed to protect the baby
in the womb, is rich in growth factors and other molecules that can grow tissue and heal
wounds, said Dr. William Li, president and medical director of the The Angiogenesis
Page 48 of 58
Foundation, a Cambridge, Mass.-based nonprofit that promotes blood vessel growth
technologies.
MiMedx technology dries and processes the amniotic membrane to a durable product with
a shelf life of five years, said Li, an adviser to MiMedx.
“The membrane is applied on a wound to jump-start [it] into healing mode,” Li said.
“MiMedx is taking a page from Mother Nature’s playbook, to speed healing.”
MiMedx’s tissue grafts can close wounds twice as fast as the competition, and often with
half the number of applications, Petit said. The grafts have been applied to wounds in
gums and even in the eye.
MiMedx has yet to fully exploit the healing potential of the amniotic membrane.
“This natural product may have multiple benefits and applications that have yet to be
discovered or developed,” Li said. “A small company like MiMedx has to work very
carefully to be able to determine where it’s going to put its resources.”
MiMedx, which has raised more than $20 million in the last three years, reported 2011
revenues of about $8 million. The company expects sales to top $23 million this year and
anticipates profitability in the first quarter.
In addition to the amniotic membrane product, MiMedx has commercialized a polyvinyl
alcohol polymer called HydroFix, used as a blood vessel guard during anterior spine
surgery; and a collagen-based fiber technology, called CollaFix, that acts as a scaffold for
soft tissue repair.
MiMedx’s growth strategy includes making acquisitions, as it searches for new
technologies and markets.
“I always seek companies that are at the top of their markets, that would blend with
something we’ve already done, and would make us a strong No. 1 or No. 2 player,” Petit
said.
Acquisitions not only broaden MiMedx’s product portfolio — they also leverage the
company’s distribution network and sales force, Petit said.
Last year, MiMedx acquired Kennesaw-based Surgical Biologics Inc., which develops
tissue processing techniques for creating implants.
Page 49 of 58
The acquisition gives MiMedx a larger foothold in the wound care business — a market
estimated to be worth about $7 billion in the United States, and one that is expanding at a
10 percent to 15 percent annual clip, Petit said.
The wound care business, which accounted for about 25 percent of MiMedx’s 2011
revenues, is expected to double this year.
Cardiovascular disease, diabetes and obesity are converging to create an epidemic of
chronic wounds, Li said.
Chronic wounds may not heal for years and can be life-threatening because they make
patients vulnerable to infections that can lead to gangrene and even amputation.
The market potential for treating chronic wounds also makes it a competitive one —
MiMedx faces growing competition from other advanced technologies, Li said.
Beyond wound care, MiMedx is focused on the sports medicine and orthopedics markets
— both seeing robust growth from an aging and more active population.
Plastic surgery could also be an attractive market for MiMedx, because the amniotic
membrane grafts “reduce the formation of scar tissue,” Petit said.
MiMedx, which holds exclusive rights to eight issued and 33 pending U.S. and foreign
patent applications, was launched by serial entrepreneur Steve Gorlin. Petit, a major
investor in the company, took over as chairman, president and CEO in February 2009.
MiMedx is steered by a “top-notch management team,” said Lee Herron, vice president of
commercialization at the Georgia Research Alliance.
“They’ve been there and done that multiple times,” Herron said. “They know what works
and doesn’t work.”
Petit founded and led Matria Healthcare Inc. before selling it to Inverness Medical
Innovations Inc. (NYSE: IMA) for $1.2 billion in 2008. Matria was a subsidiary of
Healthdyne, which Petit founded in 1971.
At Georgia Tech, he endowed the Petit Institute for Bioengineering and Bioscience, and
assisted with the funding of buildings that bear his name at Tech and Georgia State
University.
Page 50 of 58
ConvaTec Said to Scrap Takeover Offer for
Kinetic Concepts
By Adam Ewing -
Sep 16, 2011 7:32 AM CT
ConvaTec Inc., the wound-treatment maker owned by Nordic Capital and Avista
Capital Partners LLC, has abandoned an offer for Kinetic Concepts Inc. (KCI), said
a person familiar with the bid.
The person declined to be identified, as the process wasn’t public. ConvaTec had
made an offer for Kinetic that surpassed a previous $5 billion bid from a group led
by London-based buyout firm Apax Partners LLP, people familiar with the process
said last month.
Kinetic, which generated about 70 percent of its $2 billion in revenue from the
wound-treatment business last year, also makes hospital beds and tissueregeneration products used in surgeries. The San Antonio-based company, led by
Chief Executive Officer Catherine Burzik, has gained 13 percent in New York
trading since July 5, the day before reports of buyout talks surfaced.
Apax Partners and Canadian pension funds agreed in July to buy Kinetic for about
$6.5 billion, including assumed debt, and said they would borrow as much as $5
billion to do so. Bank of America Corp., Credit Suisse Group AG and Morgan
Stanley are helping finance the deal.
Kinetic shares closed at $66.60 in New York Stock Exchange composite trading
yesterday. Swedish business publication Dagens Industri reported the collapse of
the deal earlier.
Stockholm-based Nordic and Avista bought ConvaTec from Bristol-Myers Squibb
Co. for $4.1 billion in 2008.
KCI is being sold in $6.3 billion deal
Page 51 of 58
By Patrick Danner
pdanner@express-news.net
Updated 2:21 am, Thursday, July
14, 2011
Read more: http://www.mysanantonio.com/news/local_news/article/KCI-is-being-sold-in-6-3-billiondeal-1464209.php#ixzz2FRcFwcpA
San Antonio wound-care products maker Kinetic Concepts Inc. announced Wednesday it has
agreed to be acquired in a leveraged buyout for $4.98 billion in cash from a group that includes
London-based private equity firm Apax Partners.
KCI valued the transaction at $6.3 billion, which includes the company’s debt. The deal was
unanimously approved by KCI’s 10-member board.
KCI will keep its headquarters in San Antonio, according to Apax spokesman Benjamin
Harding.
About 2,000 of KCI’s more than 7,000 employees are in San Antonio.
Apax’s investments include Bankrate Inc., owner of the financial information website of the
same name, and PVH Corp., a large apparel company that owns such brands as Calvin Klein,
Tommy Hilfiger and IZOD.
Apax and affiliates of two Canadian pension investment management firms have offered KCI
shareholders $68.50 a share, a 16.5 percent premium to its closing price on July 5 — the day
before Bloomberg News reported KCI was in buyout talks.
The stock closed at a new 52-week high of $68.23 Wednesday, a nearly 6 percent increase for
the day.
Harding said it was “much too early to talk about business specifics” when asked if the deal to
take KCI private would lead to layoffs.
As for KCI’s executives, he said: “I think there’s every intention of partnering with the core (KCI)
management team.”
KCI ranks as San Antonio’s third-largest publicly traded company, based on the value of all of
the outstanding shares at Wednesday’s market close. Its market cap is $4.95 billion; only
Valero Corp. and Rackspace Inc.’s are larger.
The deal is expected to close before the end of the year. It still requires shareholder and
regulatory approval. KCI, though, has a 40-day period to solicit alternative offers, according to a
company statement.
Page 52 of 58
“We believe there is a very small chance of a higher bid, although we don’t expect interest from
strategic buyers,” Michael Matson, a Mizuho Securities USA Inc. analyst, wrote in a research
report.
Madison Williams & Co. analyst Spencer Nam had said the company could fetch $70 to $75 a
share.
“While the deal price was a bit lower than our expectations, we view the deal to be a
strategically attractive outcome for KCI,” Nam wrote in a research report.
Bloomberg News reported it is the largest leveraged buyout since the collapse of Lehman
Brothers Holdings Inc. in 2008.
Also part of the buyout group are affiliates of Canada Pension Plan Investment Board and the
Public Sector Pension Investment Board.
“This consortium is a group of well-respected investors whose interest in KCI represents an
endorsement of our market leadership, differentiated products and services and consistently
strong performance,” KCI President and CEO Catherine Burzik said in a statement.
KCI’s portfolio includes negative-pressure wound-therapy products, including its VAC Therapy
System, used to treat chronic and large wounds. The unit accounts for about 70 percent of its
$2 billion in revenue last year.
Apax spokesman Harding described the firm as a “growth buyout investor” that focuses on five
sectors, including health care, where it has completed more than 100 deals since its founding in
1981.
“The strategy for KCI is to expand the business, which is obviously very strong in the U.S.,
(and) to keep pushing it internationally,” Harding said.
Apax can open doors for KCI, said KCI spokesman Joe Izbrand. He cited Apax’s investment in
a large hospital chain — Apollo Hospitals — in fast-growing India, as an example.
“To go in there ... and introduce on a greater scale negative-pressure wound-therapy treatment
is a tremendous opportunity for the company,” Izbrand said.
KCI previously was taken private in 1997 by company founder Dr. James Leininger and two
investment firms in a deal valued at $850 million. KCI went public again in 2004.
Leininger, KCI’s chairman emeritus and holder of about 8.1 million shares, or about 11 percent
of the outstanding shares, has agreed to vote in favor of the transaction.
Providing debt financing for the deal are Morgan Stanley & Co. LLC, BofA Merrill Lynch and
Credit Suisse AG.
Express-News archives contributed to this report.
Page 53 of 58
Read more: http://www.mysanantonio.com/news/local_news/article/KCI-is-being-sold-in-6-3-billion-deal1464209.php#ixzz2FRc9HuVx
Kinetic Concepts accepts $5 billion buyout led by
Apax
Wed,
Jul 13 2011
By Debra Sherman and Esha Dey
CHICAGO/BANGALORE (Reuters) - Kinetic Concepts Inc KCI.N, a maker of medical devices
used in wound care, agreed to a $5 billion cash buyout from private equity firm Apax Partners
APAX.UL and two leading Canadian pension funds.
The transaction, announced Wednesday, is one of the largest in a new series of private equitybacked deals, which are up 42 percent from a year ago.
Several multibillion-dollar deals have come in the healthcare sector, where medical device
companies are seen as ripe for consolidation due to slower growth and pricing pressure from
hospitals and insurance companies.
Kinetic Concepts was a particularly attractive target for private equity as it commands a stable
cash flow but has had trouble growing. The bet is that demand for their surgical equipment will
spring back.
"For many of these companies, growth has slowed and valuations have come down, and
there's a belief that people have health issues that eventually need attention," said Tim Nelson,
an analyst at Nuveen Asset Management.
At $68.50 a share, the buyout price represents a premium of 6 percent to Kinetic Concepts'
closing price on Tuesday. That comes on top of the stock's 13 percent rise on July 6 amid
media reports of a deal in the making.
"Investors should jump on it," said analyst Julie Stralow of Morningstar.
"As we look out, we think growth will be harder to come by," she said. "The stock has traded in
the mid-$40s over the past year and it was in the $30s a year ago. We think this is a great
deal."
Including assumed debt, the deal is worth $6.3 billion.
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It is the largest healthcare acquisition for Apax, which teamed up with the Canada Pension Plan
Investment Board and the Public Sector Pension Investment Board that manages investments
for pension funds of the Royal Canadian Mounted Police and other state employees.
Apax has shown a preference for working with large pension funds and sovereign wealth funds
to secure acquisitions, rather than bringing in rival private equity firms.
The deal is expected to close by the end of this year. Kinetic has a 40-day "go-shop" period to
solicit other bids. "We see a very low probability of higher bids and don't expect interest from
strategic buyers," analyst Michael Matson of Mizuho Securities wrote in a research note.
Analyst Tao Levy of Collins Stewart pegged the value of Kinetic at $73 to $76 per share and
said a rival bid from another private equity consortium could emerge. But investors were not
betting on a higher bid Wednesday. Kinetic shares were up 5.8 percent at $68.22 shortly before
the close on Wednesday.
A NEW TREND?
Matson expects more private equity deals in healthcare and medical technology over the next
six to 12 months.
David Turkaly, an analyst with Susquehanna International Group, said likely future targets
include dental device maker Align Technology Inc (ALGN.O: Quote, Profile, Research, Stock
Buzz), imaging company Hologic Inc (HOLX.O: Quote, Profile, Research, Stock Buzz), and
orthopedic device makers Mako Surgical Corp (MAKO.O: Quote, Profile, Research, Stock
Buzz) and Wright Medical Group Inc (WMGI.O: Quote, Profile, Research, Stock Buzz). Align
shares rose 3.1 percent, while Mako gained 1.8 percent and Wright Medical jumped 3.5
percent.
Kinetic faces increased competition in its key business -- products that use negative pressure
technology, or a vacuum, to promote wound healing. The company also manufactures
technology for tissue regeneration.
"Kinetic Concept's primary business has lost its monopoly," said Jason Wittes, medical
technology analyst at Caris & Co. "They still dominate the vac (vacuum) market, but the
expectation is that smaller players will continue to enter the market. That's what we've seen in
the last two years."
Kinetic founder James Leininger and other shareholders, who collectively hold about 11 percent
of the company's shares, have agreed to vote in favor of the deal.
Kinetic was advised by JPMorgan Securities, while the Apax-led consortium was advised by
Morgan Stanley. The consortium has secured committed debt financing from Morgan Stanley,
BofA Merrill Lynch and Credit Suisse. CPPIB is one of the world's most active private equity
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dealmakers in recent years. It manages Canada's national pension fund and has taken a role in
some of the largest leveraged buyouts of the past two years.
Recent private equity deals in the healthcare sector include TPG Capital's TPG.UL $2 billion
buy of diagnostics firm Immucor BLUD.O, Carlyle's CYL.UL $1.73 billion deal with Australia's
Healthscope, and KKR's (KKR.N: Quote, Profile, Research, Stock Buzz) $2.38 billion buyout of
Pfizer's (PFE.N: Quote, Profile, Research, Stock Buzz) Capsugel unit.
Nov 30, 2009, 12:00am EST
Biotech firm to raise $10M
Urvaksh Karkaria
Staff Writer
A Marietta-based orthopedic and spine implant maker plans to raise $10 million and launch a high-tech
production facility as it marches toward profitability.
MiMedx Group Inc., backed by health-care hotshot Parker “Pete” Petit, is developing biomaterial-based
products for use in musculoskeletal specialties, based on technology from Georgia Tech and the
University of South Florida.
The company, which went public (OTCBB: MDXG) through a reverse merger in February 2008, plans to
raise an initial $5 million by year-end, which it will be used to commercialize a polyvinyl alcohol (PVA)
polymer. That Food and Drug Administration-cleared product, expected to hit the market next month,
may be used as a blood vessel guard to protect against scar-tissue formation after surgery.
MiMedx is also developing a proprietary collagen-based fiber that act as platforms or “scaffolds” on
which a patient’s tissue grows during the healing process to achieve healthy tissue reconstruction without
major scarring. That technology is expected to hit the market by the end of the second quarter of 2010.
“The two materials we have, have some far-reaching uses in orthopedics,” said Petit, former CEO of
Matria Healthcare Inc. “It’s going to take years and years to exploit the various aspects of what we have.”
MiMedx, which holds exclusive rights to eight issued and 33 pending U.S. and foreign patent
applications, was launched by serial entrepreneur Steve Gorlin. Petit, a major investor in the company,
took over as chairman, president and CEO in February.
MiMedx’s PVA-based technology is new to the orthopedics space, said Chris Fair, an orthopedic
industry executive and chief operating officer at MedShape Solutions Inc., an Atlanta-based orthopedic
startup.
MiMedx is “on the forefront of trying to find the right applications for their base technologies,” Fair said.
Jobs and dollars
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Petit is a serial entrepreneur with a track record of building companies. He sold Matria to Inverness
Medical Innovations Inc. (NYSE: IMA) for $900 million last year. Matria was a subsidiary of
Healthdyne, which Petit founded in 1971.
Petit is also a noted financier of research.
At Georgia Tech, Petit funded the Parker H. Petit Distinguished Chair for Engineering in Medicine,
endowed the Petit Institute for Bioengineering and Bioscience, and assisted with the funding of the
Biotechnology Building that bears his name. At Georgia State University, he assisted with the funding of
the Science Center building that also bears his name. Petit is an inductee of the Technology Hall of Fame
of Georgia and the GSU’s Robinson College Business Hall of Fame.
At MiMedx, Petit has focused the company on the core technologies, Fair said.
He has “cleaned up a lot of the stuff that didn’t matter,” Fair said, referring to Petit’s decision to jettison
some of MiMedx’s me-too technologies.
Having figured out product strategy, Petit is now focused on the execution — filling out the management
team and going to market slowly, Fair said.
“If you chase clinical efficacy first,” he said, “revenue will always follow.”
Raising dollars in a recession
MiMedx, which expects to triple its workforce to about 135 in 2011, plans to launch an up to 18,000square-foot production facility, possibly in Marietta, next year.
The company is in negotiations with orthopedic device-makers to license parts of the PVA and collagenbased technologies, Petite said, declining to disclose names.
Forging relationships with the guys higher up the industry food chain not only allows MiMedx to raise
capital, it’s necessary to fully exploit the company’s technologies.
“If we had $50 million of cash in the bank, which we don’t,” Petit said, “I’d still be seeking some
relationships with the larger companies because I couldn’t build sufficient staff, or facilities, fast enough
to take advantage of some of the materials that we have here.”
The second — and final — $5 million raise will be used to finance the production facility and take the
company to break-even.
MiMedx hopes to go from pre-revenue to break-even in the fourth quarter of 2010.
The company expects annual earnings of about $7.2 million on net revenue of about $36 million in 2012,
according to Securities and Exchange Commission filings.
Petit is raising dollars in a tough market. Wealthy Americans, who generally invest in early-stage
companies, have watched their investment portfolios take a hit in the volatile stock market.
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Venture capital funds, meanwhile, have gotten conservative and are steering clear from investing in
early-stage companies.
MiMedx hopes to raise the initial $5 million from angel investors and may look to venture firms and
institutional investors for the remaining financing.
The company raised $3.5 million earlier this year.[2009]
Petit is confident the startup will raise the financing it needs.
“It’s not easy, but it’s possible,” he said. “Between people I know, and people who know me and our
company’s founder, we know a lot of angels.”
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