BioMimetic Up Despite FDA Note

The stock surged $1.95, or 30 percent, to close at $8.45 Friday. Shares have traded between $6.35 and $19.51 over the last 52 weeks.

On Thursday, the FDA posted a notice referring to a study that it believes shows evidence for an increased risk of death from cancer for patients using the topical treatment Regranex made by Johnson & Johnson. BioMimetic's Gem 21S treatment uses the same drug ingredient.

The FDA cited data from a long-term safety study completed in 2001.

BioMimetic, meanwhile, said the study included inconsistencies and that the actual results were based on a small number of cases.

Wachovia Capital Markets analyst Michael Matson said key differences between the products include the dosing. Regranex is used chronically, between one and three times per day, until the ulcer is healed. Gem is used only once during surgery. He also said the study did not have enough information in it to say whether there was an increase in the number of patients that developed new cancers.

"Bottom line, we think investors have overreacted to the Regranex news and would be buyers of BioMimetic," he said in a note to investors, reaffirming a "Outperform" rating.

Nevertheless, the data could put more scrutiny on Gem 21S and in turn could delay approval for some of the company's developing treatments.

Deutsche Bank-North America analyst Tao Levy reaffirmed a "Buy" rating, citing the small number of patients in the study, while keeping an outlook for minimal impact on the company's clinical program.

However, Canaccord Adams analyst William J. Plovanic in a note to investors urged caution until the more information can be gained from BioMimetic on the study data and the potential reivew of Gem safety data. He reaffirmed a "Buy" rating.