MiMedx Group Inc (NASDAQ:MDXG) under illegal drug manufacturing hex
MiMedx Group Inc (NASDAQ:MDXG) is a manufacturer of various patented regenerative-bio-material products. Its shares plummeted by almost 70% at some point in Wednesday’s trading and then did a 50% recovery move. At close of the last trading session the shares had dropped 36.49%. The opening price of the shares was $6.05 which rose to an intraday high of $6.21 and closed at a dismal $3.85. More than 4.85 million shares were traded on Wednesday while the average volume of shares traded over 30 days was 0.356 million. The company has a market cap of $370.95 million.
The illegal manufacture
This major shake-up took place post an announcement from the company that that it had received an untitled letter from the U.S FDA. The letter alleged that the company does not have the necessary licensing that is required for the manufacture of certain products. The FDA’s letter stated that some products that are being manufactured by MDXG are treated with a micronization process. This potentially requires them to be treated as drugs and require FDA licensing. Without the necessary licensing, it would indicate that MiMedx is manufacturing some drugs illegally.
Revenue projections unchanged
The MDXG management did not delay in retorting. Bill Taylor, the Chief Operating Officer and President noted due surprise at receiving the letter and the company stands behind its 2013 and 2014 revenue guidance. The company’s management believes that it has done everything possible to meet all the pre-set guidelines. However, Parker Petit the CEO stated that MiMedx can change its production to meet all revenue goals. The company will be meeting the Food Drug Administration to determine the further plan of action.
Only time will tell
At the moment, this is nothing but an entangled mess and investors will have to tread with caution until there is some further development. If MDXG sails through the legal cloud that is hanging over it threateningly, it will be able to easily recover from Wednesday’s losses. On the contrary, if there is any truth to the allegations that have been put forth in the untitled letter, the company might just get dented very seriously.