Kevin Kotler’s Latest Move Lifts His Ownership In This Biotech Company To 5.92%

The shares of Medgenics have grown by over 35% since the beginning of the current year despite suffering a few substantial slumps throughout the last three months. There has been a lot of positive news about Medgenics lately. Just recently, Medgenics Medical Israel Ltd., a wholly-owned subsidiary of Medgenics, was awarded a government grant of roughly $3.4 million by the Office of the Chief Scientist (OCS) at the Ministry of Economy of Israel. The grant is intended to cover the company’s Research and Development expenses from December 2014 to December 2015. Specifically, the grant will fund further research and clinical development of Medgenics’ TARGT system. Although the subsidiary will have to fully repay the grant plus interest as soon as the developed technology starts commercializing, the $3.4 million figure will definitely be quite handy for its R&D department. In addition to that, the grant is not reimbursed in case Medgenics does not generate any revenues from its system, so there is no downside risk for the company at all.

Let’s take a moment and review the financial health of the company in order to assess whether Medgenics will be able to develop its candidates without financial constraints. Medgenics Inc. posted losses of $8.92 million for the first quarter of 2015 and the company expects to generate further losses until the commercialization of its candidates sets off. The company reported research and development expenses of $3.90 million for the recent quarter, compared to $2.14 million for the same quarter a year ago, which is a strong indicator that the company is on the right path. Moreover, Medgenics reported cash and cash equivalents of $25.16 million as of March 31, compared to a figure of $33.29 million as of December 31, 2014. Hence, the company still has a huge pile of cash to spend on the development of its products, though the future capital requirements of the company still represent a subject worthy of consideration. Medgenics stated that its cash on hand will be sufficient to cover all its expenses through the third quarter of 2016 and as a result, the company is planning to seek additional investments and capital to continue its operations without disturbances. Within our database of over 700 hedge funds, James A. Silverman’s Opaleye Management represents the second-largest shareholder in Medgenics Inc. (NYSE:MDGN), owning 850,000 shares, tailing only Broadfin Capital.

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