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NUVILEX, INC.
(OTC:QB – NVLX $0.037

SG Austria Better Than Advertised; Next Stop $0.50

 

By Rob Goldman

Nuvilex represents the health care industry’s next game changing innovation in modern medicine.  Existing treatments for most serious and chronic diseases have demonstrated limited efficacy. By using the live-cell encapsulation technology and targeted delivery system in conjunction with these treatments, we believe efficacy along with quality of life improves dramatically, as the live cell encapsulation approach serves as a dramatic therapy booster.

 

While a number of preclinical tests to treat various diseases have been undertaken using this technology by Nuvilex and its soon-to-be acquired affiliate SG Austria, the most promising treatment thus far is for pancreatic cancer. The first live-cell encapsulation technology and delivery platform designed was used to treat pancreatic cancer patients in Phase IIa clinical trials with excellent results.  Patients’ median survival rate doubled compared to historical control and results of the current gold standard used today, Gemzar® while the 1-year survival rate was triple that of control and double that of standard Gemzar® therapy.  Moreover, only one-third of the standard chemo dosage was required, reducing toxicity.

 

With a platform approach that is treatment agnostic in most cases, we deem it likely that the leading pharmaceutical firms in each treatment segment will partner with Nuvilex. It is clear to us that these giants will be forced to gain access to the Nuvilex technology in order to maintain their respective market shares.

The broad applications for the Company’s technology include treatment of a multitude of cancers, enhanced stem cell implementation, chronic conditions such as diabetes, and the treatment of life-threatening viral infections.

 

Investors have mistaken silence in recent months from Nuvilex management for issues regarding its soon-to-be acquired partner SG Austria, when research collaboration is bearing significant fruit.   The two are collaborating on key R&D projects, strengthening and broadening the reach of combined firms, which will substantially raise Nuvilex’s valuation.

The current share price represents but a fraction of its true value, in our view. With recently increased interest and valuation in the pancreatic cancer treatment arena, we believe that Nuvilex is worth $0.20 just on the oncology therapies alone and that the shares will reach $0.50 in the next six months.

We derive this figure from a comparable valuation analysis where he compares the valuation of certain companies using drug-based pancreatic cancer treatments in clinical trials, in an effort to demonstrate that NVLX’s shares are dramatically undervalued based on its progress in this treatment category. These companies include Merrimack Pharmaceutical which uses encapsulation technology and Threshold Pharmaceutical (NASDAQ – THLD), which has a treatment in Phase II trials.

Interestingly, a technology head-to-head competitor, Living Cell Technology (OTCQB: LVCLY) also uses live-cell encapsulation technology, but to treat diabetes. The Company has completed Phase I trials. To date, Nuvilex has engaged in early stage testing in diabetes as well.  Nonetheless, LVCLY has only completed Phase I testing for diabetes and trades at a market cap of $28M. Conversely, NVLX, which has completed Phase IIa for pancreatic cancer, trades at a market cap of only $14M. This disconnect alone strongly illustrates the incredible buying opportunity in NVLX’s shares.

Looking ahead, as milestone events occur, $1.00 per share is within reach over the next 12-18 months. Thus, we reiterate our Speculative Buy rating.

We initiated coverage of NVLX on May 10, 2011 at a price of $0.026. To download NVLX reports, please visit www.goldmanresearch.com. Please refer to our website and reports for risks and disclosures.

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