MiMedx Group Target Price $6

MDXG : NASDAQ : US$4.53
BUY 
Target: US$6.00

COMPANY DESCRIPTION:
MiMedx Group, Inc. is an integrated developer, manufacturer, and marketer of patent-protected biomaterial-based products, with the key products derived from dehydrated Human Amniotic/Chorion Membrane tissue (dHACM)

Life Sciences — Biomedical Devices and Services
A NEW LIFE AFTER BIRTH; ADDRESSING AN UNDERSERVED SEGMENT IN WOUND CARE
A newer player in the fast-growing dermal substitute segment of the advanced wound care market – By our estimates, the dermal substitute segment of the advanced wound care market generated ~$354M of revenues in 2012, growing ~23% per year since 2009.
Expanding direct distribution a growth driver – MiMedx utilizes distinct distribution channels for its three revenue reporting segments: Wound Care, Surgical & Sports Medicine, and Other/OEM. We believe the increasing number of reps in the direct channel on the commercial side for wound care, combined with improved coverage, will drive top-line growth in 2013 and beyond. AWC Direct reps are expected to increase to ~140 by YE15 from ~49 in Q2/13.
Gaining coverage/reimbursement for wound care – MiMedx receives reimbursement from the VA and has six of nine Medicare Administrative Contractors (MACs) providing coverage, with the balance expected by YE13. MiMedx has begun work on gaining private pay insurance reimbursement and is utilizing published data to support its efforts.
Better economics and handling separates MiMedx from the pack – MiMedx’s proprietary Purion tissue sterilization process results in a dynamic, user friendly product. When combined with clinical trial outcomes and multiple size configurations, use of Epifix leads to meaningful reductions on treatment costs relative to competitive treatment options.
FDA questions surrounding non-core product and segment create opportunity – Shares of MDXG are down 40%+ since the FDA untitled letter regarding the micronized version of its products.
Initiate with a BUY rating and $6.00 price target.

 

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