Micro Cap Medical Technology Companies

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As a full time investor in micro cap companies, I’ve been drawn in recent years to companies focusing on medical technology.  Medical Technology broadly includes medical devices, information technology, biotech, and healthcare services.  The PowerShares S&P SmallCap Health Care Fund (PSCH) is up 18% the last 12 months, while the S&P is up 5%.  Micro-Small Cap medical technology companies seem to do fairly well in good and bad macro environments.  As many large cap players have flat lining growth curves, they will likely look toward acquiring growth through M&A.  Here is a list of med-tech micro cap companies that we are currently discussing at MicroCapClub.

 Bacterin International Holdings, Inc (BONE), PPS $2.95, $117m market cap:  Bacterin has grown revenues 100% per year for the last three years (based on FY 2011 Guidance), and is expected to grow 70% in 2012.  The company operates two divisions:  The Biologics division develops, manufactures and markets biologics products to domestic and international markets. Bacterin’s proprietary methods optimize the growth factors in human allografts to create the ideal stem cell scaffold to promote bone, subchondral repair and dermal growth.  The Medical Device Division develops, employs, and licenses bioactive coatings for various medical device applications.  Two analysts follow BONE with an average price target of $5.25.

Medgenics (MDGN), PPS $2.90, $27m market cap:  Medgenics is developing and commercializing Biopump, a proprietary tissue-based platform technology for the sustained production and delivery of therapeutic proteins using the patient’s own skin biopsy for the treatment of a range of chronic diseases including anemia, hepatitis C and hemophilia. Medgenics believes this approach has multiple benefits compared with current treatments, which include regular and costly injections of therapeutic proteins. The company has three long-acting protein therapy products in different stages of clinical development.  Medgenics plans to develop and/or out-license a pipeline of future Biopump products targeting the large and rapidly growing global protein therapy market, which is forecast to reach $132 billion in 2013.  One analyst follows MDGN with a price target of $8.00.

Patient Safety Technologies (PSTX), PPS $1.25, $42m market cap: Patient Safety provides the Safety-Sponge® System, a solution proven to improve patient safety and reduce healthcare costs by preventing one of the most common errors in surgery, retained foreign objects.  Since the company received FDA clearance in March 2006, over 60 million of the company’s Safety-Sponges have been successfully used in more than 3 million surgical procedures.  The Safety-Sponge System is currently being used in 78 institutions-hospitals (including six of the 2011-2012 US News and World Report Best Hospitals Honor Roll) and planned to grow to 100 by year-end 2011, with an additional 130 in the backlog.  No analysts cover the company.

Response Genetics (RGDX), PPS $1.70, $33m market cap:  Response Genetics is focused on the development and sale of molecular diagnostic tests for cancer. RGI’s technologies enable extraction and analysis of genetic information from genes derived from tumor samples stored as formalin-fixed and paraffin-embedded specimens. In addition to diagnostic testing services, the Company generates revenue from the sales of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry.  The company expanded its sales force by adding seven sales people during the third quarter to meet expected demand.  One analyst follows RGDX with a $3.50 price target.

Verisante Technology (VRSEF), PPS $0.79, $45m market cap:  Verisante is a medical device company committed to commercializing innovative systems for the early detection of cancer.  The Verisante Aura for skin cancer detection received CE Mark approval in Europe in November, after receiving approval in Canada in October.  The Verisante Aura™, a non-invasive optical system, is indicated for use for the evaluation of skin lesions that may be clinically suspicious for melanoma, squamous cell carcinoma and/or basal cell carcinoma when a medical professional chooses to obtain additional information to rule out one of the above conditions before making a final decision to biopsy.  One analyst covers Verisante with a $2.60 price target.

Zynex (ZYXI), PPS $0.75, $23m market cap:  Zynex is a fast growing, profitable, medical device company focusing on developing medical devices ignored by larger medical companies. The company has grown revenues from $2.6 million in 2006 to $33-34 million in 2011 (guidance). Zynex is involved in the design and sale of FDA-approved non-invasive electrotherapy devices for the treatment of pain management and the rehabilitation of stroke and spinal cord injury patients. The company has three divisions: Zynex Medical (all of the revenue to date), Zynex NeuroDiagnostics (created 2010), and Zynex Monitoring Solutions (created 2010).  There is some litigation pending on the company that has been waning on the stock price, so be sure to do your DD into the company.  Zynex expects to grow revenues by 40% in 2011 to $33-34m and earn $0.08-0.09.  One analyst follows Zynex with a $1.40 price target.

The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $500m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas.  If you are an experienced micro cap investor, feel free to Apply today.

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