Is Medovex Worth An Investor's Interest?
Dutch Trader | Dec 21, 2014 02:38PM ET
Last Friday, December 19, Medovex (NASDAQ: MDVXU) IPO'd on the Nasdaq. Medovex is an “emerging growth company” with currently no revenues, but it has a very promising product that could be a blockbuster in the $11.5 billion global spine surgery devices market.
To date, the company’s efforts have focused on the development of the patent-protected DenerVex device (U.S. Patent 8,167,879 B2), see picture below.
The DenerVex is designed to provide long lasting relief of pain associated with Facet Joint Syndrome (FJS), a condition in which the joints in the back of the spine degenerate and subsequently cause back pain.
The concept is simple: remove the affected nerve endings sending pain signals to the brain in such a way that they won’t grow back. But simple doesn’t mean it’s easy. The complexity and time required to complete such procedures is only done by a small number of surgeons. Here is where the DenerVex device comes in.
To simplify the procedure, Dr. Haufe conceptualized a hand held device that combined the tissue scraping and electrocautery procedures into one action. Dr. Haufe is co-founder of Medovex and a director of the company. He is a board certified physician in the fields of Anesthesiology, Pain Medicine and Hospice /Palliative Medicine.
DenerVex will be the first device of its kind intended to combine tissue scraping and electrocautery simultaneously in order to achieve a long lasting solution to FJS. The DenerVex is intended to be being designed as a single use device that will be provided to health care practitioners in a package that contains all of the items necessary in the sterile field of the operating room to carry out the surgery necessary to address FJS. The device is being designed for use with a few commercial electrocautery units in addition to a dedicated electrocautery unit being developed by Medovex.
The benefits of the DenerVex device are not only the cost savings from using it, but also the procedure to pain relief will be less invasive, faster and represent a lower risk of infection from surgery than its competitors. Because the DenerVex is currently in the prototype development phase some hurdles have to be taken to commercialize the device:
- Conduct additional research to further refine the product.
- Submit the final version to regulatory agencies for their approval, including conducting additional studies as they may require.
- Finalize reimbursement, marketing and distribution strategies.
- Source vendor(s) for production and marketing/distribution partners
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The primary targets for the sale of the DenerVex device are pain management practitioners. There are an estimated 6,200 pain management specialists in the United States. Medovex expects that the primary users of the DenerVex device will be these specialists, as well as clinicians who currently utilize interventional procedures to treat chronic back pain. Secondary targets for the DenerVex device are orthopedists and neurosurgeons, in addition to the 4,000 interventional radiologists, and 8,672 spine surgeons using one or a combination of the techniques now currently in use to treat FJS.
Why I got enthusiastic?
Medovex has a talented management team and board of directors. A talented management team is an important asset for a company to execute their business plan. Seasoned professionals who have started or managed successful companies before is one of the most important criteria. The pre-existence of an experienced management team in a startup life science company increases credibility and improves the chances of getting funding.
Making judgments about management is important before you invest in a company, especially when it is a start-up. Managers who have demonstrated they are killers at business execution, and who have a history of always acting in the best interest of all shareholders are important to shareholder value.
An important human asset is Mr. Steve Gorlin. Steve Gorlin is the Co-founder of Debride Inc., the first company acquired by Medovex. Over the past 40 years, Mr. Gorlin has founded several biotechnology and pharmaceutical companies, including HycorBiomedical, Inc. (acquired by Agilent), Theragenics Corporation (NYSE: TGX) , CytRx Corporation (NASDAQ: CYTR), Medicis Pharmaceutical Corporation (sold to Valeant for approximately $2.6 billion), EntreMed, Inc. (NASDAQ: ENMD), MRI Interventions (MRIC), DARA BioSciences, Inc. (NASDAQ: DARA), MiMedx (NASDAQ: MDXG), and Medivation, Inc. (NASDAQ: MDVN). Mr. Gorlin served for many years on the Business Advisory Council to the Johns Hopkins School of Medicine and on The Johns Hopkins BioMedical Engineering Advisory Board. He presently serves on the board of driectors of the Andrews Institute. Mr. Gorlin founded a number of non-medical related companies, including Perma-Fix, Inc., Pretty Good Privacy, Inc. (sold to Network Associates), and NTC China.
For more on the management team, look here .
Final Note
Investing in biotech takes vision, luck and balls. Medovex Corp. (Nasdaq:MDVX). Medovex intends to use the net proceeds it received from the offering to fund its clinical trials and product development, but also for other expenses.
Medovex will be an intriguing investment in management capabilities but also in a product that could revolutionize pain relief. Investors that are familiar with the pitfalls of investing in emerging life science companies can still jump on the bandwagon before it is too late.
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