In response to an announcement of a series of leadership and business changes, shares of MiMedx Group (NASDAQ:MDXG), a beaten-down biopharmaceutical company that is focused on regenerative medicine, fell 31% as of 10:25 a.m. EDT Monday.
Here's an overview of the changes that were announced today:
- CEO and Chairman Pete Petit has resigned. He will remain a director on the Board.
- President, COO, and Board member Bill Taylor has resigned.
- Charles Evans has been appointed Chairman of the Board.
- David Coles has been appointed as Interim CEO.
- The internal investigation into the company's business practices remains ongoing. However, the Board has concluded that it will need to restate all of its financial statements between fiscal year 2012 and fiscal year 2017. The Board told investors that the report from the first quarter of 2018 "should no longer be relied upon." Guidance for 2018 has been withdrawn as well.
- The Board is implementing a number of changes that are designed to "promote accountability and strengthen oversight."
- The company also continues to work with the SEC and U.S. Department of Justice to respond to the subpoena that was received last year.
- A search has been initiated to find a permanent CEO and CFO.
The new Chairman of the Board Charles Evans offered investors the following commentary on the sweeping changes:
The Board is confident that now is the right time for MiMedx to transition its leadership team as we look to the future and prepare our Company for its next chapter. David brings years of valuable executive leadership and operational experience, and we are pleased to have him in this interim role at MiMedx, a global biopharmaceutical company serving clinicians and improving patients' lives around the world.
Interim CFO Edward Borkowski also did his best to remind investors the company is in good financial shape:
MiMedx has no outstanding debt, and currently has sufficient liquidity to fund all of our operational needs and planned business investment activities. The Company continues to implement operational improvements, expand its product pipeline, grow its business, and remains focused on healthcare providers and their patients. I look forward to partnering with David as we continue to execute our plan for the future.
Given the slew of negatives updates, it isn't surprising to see that shares are being mauled today.
Today's update provides further validation that MiMedix Group's stock is far too troubled to touch. My plan is to watch this slow-moving train wreck from the safety of the sidelines and focus my time and attention on other opportunities.