This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

May 1, 2009 - BioMimetic Therapeutics, Inc. (BMTI-NASDAQ) develops and commercializes regenerative protein therapeutic-device combination products. Its products are primarily used for bone and tissue regeneration for the repair and healing of musculoskeletal injuries and conditions affecting bones, tendons, ligaments, and cartilage within orthopedic, spine, and sports injury applications.

The company was formerly known as BioMimetic Pharmaceuticals, Inc. and changed its name to BioMimetic Therapeutics, Inc. in July 2005. BioMimetic Therapeutics, Inc. was founded in 1999 and is headquartered in Franklin, Tennessee.

The first thing you need to know is that the company has a rights offering. Under the terms of the rights offering, the Company will distribute, at no charge, to holders of its common stock as of the record date, (April 21) other than participants in the BioMimetic 401k Plan, non-transferable rights to purchase up to 2,000,000 shares of its common stock. The rights offering and all rights will expire at 5:00 p.m., New York time on June 15, 2009 (unless extended). In connection with the rights offering, the Company entered into a standby purchase agreement with Novo A/S, an existing stockholder of the Company, pursuant to which Novo A/S has agreed to backstop the rights offering by agreeing to purchase up to $15 million of common stock in the offering, if this stock is not purchased by other current shareholders. The company also sold stock outright to InterWest Partners for $8.50 a share (a total of 941,177 shares) to raise another $8 million.

Basically the company has a guarantee on the purchase of $15 million worth of stock, about the value of the entire rights offering. So while there will be more stock outstanding, there is no question that the whole issue will be sold, and the company will receive new funds.

Another thing to know: earnings have been non-existent, and in fact, have been deteriorating over the last 2 years, going from a negative $1.37 in 2007 and then a negative $2.55 in 2008. This year, analysts see better negative numbers (down $1.93 and then in 2010, negative $1.48). Clearly, this company has a way to go before it gets to profitability.

Still, the analysts are positive on the stock. With 5 brokers following BMTI, the low target price for one year from now is $11.50 and the high target is $24. The median price is $15.00. The stock reached a high of $19.51 in 2007, then hit an all-time low last October/November when the rest of market cratered, going to $4.69. Now it's in recovery.

Also, this is a very, very small firm with total revenues in 2006 of $4.1 million, then $7.0 million in 2007, followed by a large dip to $3.1 million in 2008. This year, analysts think sales will be $3.44 million. But it's next year where there's great divergence in expectations. Some analysts believe the company will come through with a breakthrough and rack up revenues to $55.80 million. Others don't agree, putting their estimate for next year's sales at $2.29. Investors with great optimism and lots of nerve will go with the higher number. And that's what this investment is all about.

Will the company finally break through and deliver a new product that will put it on the map and ramp revenues to such a degree that profits will be positive? Or will it takes years before that happens, if ever? That's always the question with medical device companies, biotech and pharmaceuticals. How long will it take, if it ever happens? No one ever knows. It just happened for Dendreon with its Provenge vaccine for prostate cancer. That took years before it showed enough efficacy, and it still hasn't gotten FDA approval but that seems to be almost assured. That stock went up more than 5 fold on the news.

More numbers: Price to sales is 50. Price to book is 2.64. Most numbers are negative from operating margin to profit margin to net income (loss of $8 million in last 12 months). There's cash of $50.75 million in the bank for $2.71 a share in cash. Current ratio is 6.28. Book Value is 3.16. Total debt is $39.15 million. Beta is 1.13. There are 18.72 million shares outstanding with a float of 12.53 million. Insiders own 29.44% and institutions own 48.8%. There is no dividend.

With the rights offering assured of selling new equity, the company will add to its already strong cash position. The fact that the buyer of the stock is an existing shareholder suggests that the future looks bright and this owner wants more. It's the timing of any new products that is the unknown. It would seem that current portfolio offerings aren't selling too well and something new and better is needed. If the company delivers, expect the stock to revisit its old highs. The big question remains: when and if the company can deliver. Some big investors like the stock at the current prices (Novo and InterWest). Since they are buying large blocks, it should give other investors some confidence.

- Company Web site: www.biomimetics.com

- Ted Allrich