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What May Heal Organogenesis

Inside Wall Street


As far as short-sellers are concerned, Organogenesis (ORG) is on the brink of financial disaster. The biotech company, they note, has been awash in red ink for years. Yet its shares have been on a tear--shooting from 11 in August to nearly 20. Why?

Organogenesis, which produces material derived from living tissue to replace damaged or diseased skin, arteries, and ligaments, may yet prove the bears wrong, says a New York money manager. He believes a major European pharmaceutical company is negotiating to buy 20% of Organogenesis at 20 a share, in exchange for an exclusive marketing agreement for Organogenesis products. The Europeans will also fork over $25 million as part of the agreement.

A key product is Graftskin, designed to help those patients suffering from pressure sores, diabetic foot ulcers, and venous leg ulcers, according to Dr. Gerit Mulder, director of clinical and regulatory affairs at Organogenesis. The company has approval to market Graftskin in Sweden and has applied for similar rights in 20 other countries in Europe and Asia, says Jim Trozze, director of research at Moors & Cabot, an investment firm in Boston. Graftskin studies have been completed in the U.S. with favorable results, he says. So the company will seek approval from the Food & Drug Administration this year, says Trozze.

Despite the shorts' claim, says Trozze, Organogenesis "is a long-term investment in the future of replacement skin that addresses vast markets worldwide."By Gene G. Marcil

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