Atlanta headquartered Medovex Corporation (MDVXU, Financial) is an upcoming company to watch out for in the healthcare sphere. The company manufactures surgical and medical instruments. It has started trading since December 19 this year at an IPO price of $5.75 for 1,391,305 units, each unit consisting of one share of common stock and one Series A Warrant. As on Boxing Day the shares were trading completely in the green. Let’s dig deeper and find out how this medical company could be a strong buy after the initial public offering.
The fundamental analysis
Medovex Corp. has shown interest in using the funds from its IPO kitty primarily for development and clinical trials of DenerVex, a device that promises a long-lasting to permanent, minimal invasive solution to Facet Joint Syndrome (FJS). FJS is a condition in which the joints in spine degenerate, causing severe and chronic back pain. The ideal solution is to remove the affected nerve endings that send pain signals to the brain and arresting its growth. But there are select few surgeons who are capable of executing this procedure successfully.
31% of global population are suffering from FJS which corresponds to a $12 billion market pie. Medovex Corp is currently riding high on the possibility to capturing this market once it starts rolling out the commercial units of DenerVex. The product is expected to the much required finance for allowing the commercial takeoff of DenerVex.
Here is where DenerVex comes in (literally) handy. The handheld device is assigned with the task of combining tissue scraping and electrocautery procedure into one task. Out of 174 subjects who have received the treatment as a part of the clinical trials, 70% have had positive results or at least 50% less pain event after 3 years. The existing temporary solutions have a lasting effect only up to 2 years, which has given Medovex development and management team a boost in confidence.
DenerVex aims to target pain management practioners, clinicians, orthopaedists, interventional radiologists, neurosurgeons and spine surgeons interventional radiologists.
Expanding in the healthcare space
Medovex Corp is channelizing its efforts to generate and expand its sales volume primarily in the U.S., EU and China besides other parts of the world through other innovations in the healthcare sphere. The company focuses its resources on developing products and therapeutic solutions that cater to osteoarthritis disease, cardiovascular disease, cerebrovascular disease or stroke, diabetes and infection control (largely Hospital Acquired Infections which affects one in 20 patients admitted to a hospital).
Mr. Jarrett Gorlin, CEO of Medovex Corporation, believes in the inorganic growth model. This reflects through the company’s acquisition of Debride Inc. in 2013. Debride Inc. is credited with the conception of DenerVex device and later securing a patent for the product.
Jarrett has ambitious plans for his newly listed company. He wants to “build a portfolio of market-leading medical device companies comprised of FDA approved technologies and products from the largest market opportunity segments and emerging research and development technologies.”
Among the board of directors, Steve Gorlin’s names stands out prominently due to his position as the co-founder of Debride Inc. In his career of 40 years so far, Gorlin is credited with starting many biotechnology and pharmaceutical companies, many of which eventually became listed companies.
Moving forward
Medovex Corp faces competition from RF ablation devices manufactures Cosman Corporation and Stryker Corporation (SYK, Financial). DenerVex also faces challenge from Glyder Facet Restoration System device conceived by Minneapolis based Zyga Technology Inc. This product is in its development phase and undergoing clinical trials in the EU. It is yet to be approved by FDA.
Despite the stiff competition from companies having deeper pockets and much bigger marketing and distribution networks, one cannot write off Medovex Corporation. With an impressive clinical trial record so far and a parentage which includes industry stalwarts like Steve Gorlin, Medovex presents a strong case which would make it difficult for someone to not believe in its growth potential. Thus, the newly listed company on the NASDAQ does remain a strong buy with good upside potential in the long run.
