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Street Buzzing about New Hepatitis Treatment Developer


July 1, 2012 - Vancouver

Despite a terrible day for the general markets on Thursday, shares of Medgenics Inc. (AMEX:MDGN) closed strong at $11.00 +1.01, +10.11% on rumors of positive developments ahead. The stock reached and then surpassed its previous 52-week high of $10.60and also traded +1006.24 % its average volume. It closed after seeing a 12.1% price spike and finishing the day after 648,690 shares traded hands.

The low-float biotech was a big winners last week after the firm announced that it had received Orphan Drug Designation from FDA for their INFRADURE Biopump (a novel technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue) to Treat Hepatitis D.

Immediately, analysts weighed in, stating that the development may have transformed the firm into a buy-out candidate given the Hepatitis space's related acquisition activity; including Gilead Sciences (NASDAQ:GILD) paying $11 billion in cash for Pharmasset and Bristol-Myers Squibb (BMY) snagging Inhibitex for $2.5 billion in cash. Other key players in the space, including Idenix Pharmaceuticals (NASDAQ:IDIX), Achillion Pharmaceuticals (NASDAQ:ACHN), Abbott Laboratories (NYSE:ABT), Vertex Pharmaceuticals (NASDAQ:VRTX) and Merck & Co. (NYSE:MRK), have seen volatility given that hepatitis viruses, grouped as A, B, C, and D, are considered a worldwide epidemic and highly contagious.

During our own interview with Andrew L. Pearlman, Ph.D., President and Chief Executive Officer of Medgenics he indicated his team was focused on making sure that his firm will continue to build its pipeline (of multiple +billion dollar market indications for the technology) and add value beyond its current market cap. He stated cleary that: "This isnow the second approval that we`ve gotten for our technology, for our company and we think it will give a lot more confidence to would-be partners and institutional investors who may have been looking for a clear sign from a regulatory agency that wehave a straight shot for an approvable product within a reasonable time."

Credible sources on the street say that pending events-- "Will signal to the markets Medgenics' commitment to the partnering game plan" and add even more credibility to thefirm as a player which is ready to position themselves more securely in the pharma partnering space. Buy partnering out each indication instead of simply selling out the technology engine, the company would certainly build more value for sharholdersas they moved forward."

There is a small short interest (over 55K shares short) in the stock and positive news early next week could put pressure on those shorts to cover. As we've seen, given the lack of available shares in the float, the stockcould see another pop shortly.

Smart money remains bullish on MDGN given its path to fast regulatory approval for treating a incurable condition in a huge medical market, not to mention progress with its Biopump therapy in anemia, multiple sclerosis, arthritis, hemophilia, pediatric growth hormone deficiency, obesity, diabetes, and other chronic diseases.

Disclosure: We are long MDGN

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