RAY DIRKS Research recommends Nuvilex (NVLX) for its Blockbuster Potential in Oncology, Diabetes, and Medical Marijuana Applications.
By Ray Dirks
Ray Dirks and his team of money managers and security analysts are initiating coverage of Nuvilex, an early stage biotechnology company that is building a strong franchise portfolio through its proprietary encapsulation cell technology as well as subsidiary expansion into the burgeoning medical marijuana industry. This is our first article on Nuvilex, with our analysts holding a target price of $0.20 per share for the short term, (6 to 9 months), and a target price of $1.00 for the long term (1 to 2 years). At the time of this writing, Nuvilex is trading at $0.09 per common share, which offers investors a substantial upside potential in both time frames – with longer term price targets focused on commercialization prospects that are exponentially higher.
Nuvilex has a Market Capitalization of only $41 million, fairly low for a biotechnology- pharmaceutical company that possesses a unique technology centered on large opportunities in areas of great unmet medical need while being guided by a seasoned top management team. In our opinion, the company’s technology has the potential to deliver a great impact on therapies for several indications, including cancer and diabetes, positioning Nuvilex now in a similar fashion to other peer companies in the biotechnology field before they experienced a many-fold rise in market capitalization.
Nuvilex was recently featured on Yahoo Finance in an article dated April 18, 2013 with the headline – “Nuvilex, Inc and Diabetes Research Institute Have Similar Approach to Islet Cell Transplantation”. The Yahoo Finance story said that “Nuvilex appears to have a game plan in place to build a fully protected home to house pancreatic islet (insulin-producing) cells for transplantation into diabetics.”
The article explains that “that there is real hope on the horizon for diabetics who currently engage in a daily routine of checking their blood-glucose levels many times, giving themselves insulin either through injections or with an insulin pump, watching what they eat, monitoring how much or how little exercise they’re getting, and the list goes on and on. While the islet cells in a diabetic’s pancreas no longer sense glucose and therefore the pancreas doesn’t produce insulin, the pump or self-injections provide the body with the insulin needed to stay healthy.
Well, help is on the way! Whether it will be Nuvilex’s Cell-in-a-Box or DRI’s BioHub, or both, the many scientists working to offer what Nuvilex calls a type of “artificial pancreas” and what DRI calls a “mini-organ” are on the right track with their similar approaches to the same problem. Islet cell transplantation is nothing new, but long-term housing of the cells is the goal. The director of the DRI, Dr. Camillo Ricordi, says for his organization’s BioHub to be successful, the structure must prove it “restores natural insulin production and normalizes blood sugar levels without imposing other risks.”.
Another article on Yahoo Finance on April 19, 2013 by Goldman Small Cap Research, a stock market research firm focused on the small cap and micro cap sectors, has issued a research report which provides an updated valuation of Nuvilex….In the Goldman Opportunity Research report, Goldman, analyst Rob Goldman outlines his investment thesis.
“Following exhaustive due diligence of anti-cancer biotechs and bio-pharmaceuticals, we believe that the Street is significantly undervaluing Nuvilex’s shares. Given the strong Phase 2 pancreatic cancer trial results, and based on traditional valuations for firms at this stage, we believe that NVLX could be afforded a much higher valuation just for its live – cell encapsulation therapy for use in pancreatic cancer alone. According to our survey, a valuation of $70M is generally line with the typical valuations afforded a number of oncology companies at this stage of development.
“The Edmonton Protocol”, a study that produced ground-breaking work in the field of diabetes, demonstrated that pancreatic islet cell transplantations could hold the key to a game-changing therapy in the disease projected to affect 10% of the world’s population in 2030 by the International Diabetes Foundation.
Further delineating the company’s novel prospects, research by Stock House Group explained that “Nuvilex’s cell encapsulation technology uses living cells, and the company takes a very specific type of cell to address a specific problem a patient suffers from. Scientists then fully enclose the cells in unique “capsules” made mainly of cellulose forming essentially “cotton bags” with live cells inside. The capsules are about the size of the head of a pin. The capsules have “pores” in them that allow nutrients for the cells inside to enter and waste products and “beneficial” factors produced by the encapsulated cells to leave. Each bundle of encapsulated cells becomes much like a miniature cell factory with the ability to produce whatever is needed – in this case insulin.
This basic cell encapsulation process can serve as a “platform” upon which many serious,debilitating, and even fatal diseases may be built. Some of these diseases include different types of cancer, diabetes, diseases for which stem cell therapies are being developed, and disease caused by viruses.”
Also, by going to Yahoo Finance, a person can read what Forbes Magazine has to say about Nuvelix through a writer who follows small cap stocks and bio-pharmaceutical companies – Jason S. Terry, Founder and Managing Partner, Stone Street Advisors L.L.C., who wrote on April 12, 2013 …“In my last post,… I expressed some concern about the Medical Marijuana part of the business. I’m not a marijuana user (I’d prefer a good whiskey), but after re-reading management’s comments on its uses and potential,…I want to revisit what management – with decades in treating cancer & other treatment ailment experience, had to say about this part of the business. The response from management – “ We do not consider the cell encapsulation and the medical marijuana arms of the company to be mutually exclusive. In fact, we consider them to be complementary. NVLX is divesting itself of the neutraceuticals that have been a major part of its portfolio for years and is becoming a purely biotech company that has two major areas to consider, namely cell encapsulation and medical marijuana.
The initial thrust of the company is to get its cell-encapsulation-based pancreatic cancer treatment into late-phase clinical trials. However, one of the goals in the medical marijuana arena is to develop a “treatment” for advanced pancreatic cancer based initially on constituents of cannabis. …these constituents are well recognized as being effective pain killers and may also be able to ameliorate symptoms of the cachexia (wasting syndrome) that accompanies advanced cancers. So, one must ask the question, “why not combine the cell – encapsulation based pancreatic cancer treatment with a cannabis-based treatment?”
In our considered opinion, at the very least, the two therapies in combination would allow for effective treatment of the cancer while significantly improving the “quality of life” of the patients undergoing therapy….we firmly believe that the overall treatment of the cancer will be improved using the combination of treatments.”
Ultimately, while I was originally pretty skeptical, after doing some more research, I’m fairly positive that management’s aforesaid comments make a lot more sense for medicinal marijuana therapy – especially in combination with cell encapsulation – than I originally thought. I’m also certain that even here in the U.S. where the “war on drugs” has been an epic failure, selective legislation, especially of cannabis derivatives for medicinal purposes, NVLX could really be on to something here with serious potential. The value? It’s virtually impossible to pin down, but given their work thus far and the comments I’ve received, I genuinely think this could be a multi-bagger, especially given the low-price/ market cap.”
As with any young biotechnology company, it is virtually impossible to place a value on the technology at this point. However, past stock markets have offered examples to us that offer parallels from which evaluation can be made.
A prime example would be Pharmasset Inc., a company trading for around $4.00 per share in mid-2007 while it was developing its drug candidate for hepatitis C. Over the next four years, as the drug advanced into Phase 2 clinical trials, shares of Pharmasset, then VRUS, climbed to $160.00 each. A subsequent 2 for 1 split resulted in a share price of about $80.00 not long before Gilead Sciences acquired Pharmasset for $11 Billion, or $137.00 per share.
Why would Gilead spend such a large amount for a single indication therapy that still has years of development left before even being considered for FDA approval? Simply, because of the potential of billions of dollars of annual sales should the drug reach commercialization for a target of great unmet medical need.”
RAY DIRKS Research believes that Nuvilex has similar alignment with Pharmasset several years ago, agrees with the assessment of Forbes, and recommends Nuvilex common stock for its attractive capital appreciation potential.
RAY DIRKS Research and its employees do not own any shares of NVLX. After this initial article is issued, however, Ray Dirks and other employees may buy or sell stock in Nuvilex if they so choose. RAY DIRKS Research was paid $1,500 to perform security analysis on Nuvilex common stock and to issue an introductory Article on the company and to issue follow-up articles over the next several months.
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