Magforce: The Nanomedicine Company
In a previous article, we highlighted Nanobiotix (EPA:NANO), a company that saw their share price increase nearly +200% in the past 12 months on the back of their nanoparticles that are injected into tumor cells and then interact with X-rays to maximize the effect of radiotherapy. While Nanobiotix expects that their technology could be CE marked for sale in the European Union by 2016, another German company, Magforce, has developed injectable nanoparticles for tumors that already have EU-wide approval.
Founded in 1997, Berlin-based Magforce (ETR:MF6) was first brought to our attention by a reader in 2005. Since then, the Company launched their NanoTherm™ therapy technology in 2011 and began trading on the Frankfurt stock exchange in the same year. Magforce has 40 employees and a strong IP portfolio consisting of 17 international patent families, approximately 100 single patents, and 65 patent applications. While investors in the 2011 IPO would have lost -77% of their investment so far, recent events show that Magforce still has some serious potential.
About Nanotherm Therapy
NanoTherm™ therapy involves injecting iron oxide nanoparticles directly into a tumor in a procedure similar to performing a biopsy. The patient is then placed in the NanoActivator which is a machine that produces an alternating magnetic field. While safe for human beings, this causes the nanoparticles to generate heat directly within the tumor tissue. Depending on the temperature reached and the duration of treatment, the tumor cells are either destroyed directly or sensitized for additional chemotherapy or radiation treatments.
Prostate cancer and brain tumors make up combined annual treatment costs of 12 billion euros. Nanotherm therapy has EU-wide certification with the Company beginning their first commercial treatment of brain tumors in Germany around the end of 2014. Clinical trials are expected to begin in the U.S. this year and just yesterday, Magforce issued a press release about a meeting with the FDA on their prostate cancer Investigational Device Exemption application.
A Vote of Confidence from Peter Thiel
Perhaps the most compelling indicator of Magforce’s potential is the investment made in the Company by Peter Thiel’s Mithril Capital Management in August of 2014. For those who aren’t aware of Peter Thiel’s pedigree, he co-founded Paypal with Elon Musk and was the first outside investor in Facebook. Mithril led an investment round of $15 million in August 2014 giving them a 23% ownership in Magforce’s U.S. venture, Magforce USA, with the option to increase their investment to $30 million. While our due diligence may be limited to Google, investors can be assured that Mr. Thiel’s due diligence was far more extensive and his vote of confidence in Magforce’s technology goes a long way in validating commercial viability.
Magforce stated in mid-2014 that they had enough cash on hand to execute on their operating plan through 2015. The Company’s stated financial goal is to achieve annual revenues of 100-150 million euros by 2019. While the stock price will no doubt undergo a period of significant volatility as the story unfolds, long term investors may consider dollar cost averaging into a position while keeping a close eye on the progress made in the U.S. venture.
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