Report
on Nuvilex
Nuvilex
(NVLX) is a company that caught my eye about 8 month ago.
At first glance, my reaction was skeptic, why should I be bothered with a microcap transformational/developmental stage biotech company with downright scary financials. After doing my research and reading all the articles I could find I started to realize why I, and maybe you should care about this company, regardless of it being a volatile microcap OTC penny stock.
At first glance, my reaction was skeptic, why should I be bothered with a microcap transformational/developmental stage biotech company with downright scary financials. After doing my research and reading all the articles I could find I started to realize why I, and maybe you should care about this company, regardless of it being a volatile microcap OTC penny stock.
NVLX is much like other microcap bio stocks, insofar as it´s essentially impossible to value with any degree of certainty. So for this analysis I try to give you a better insight to understand where the company is and where it´s going.
What
the firm is offering:
The
real potential cash cow for Nuvilex is in the biotech/healthcare
arena. Their trademarked Cell-in-a-Box technology is their priced
possession which could lead to a big deal with a giant Biotech
Company or their start on commercialising cancer treatment.
Nuvilex
is working towards improving the quality of life for patients with
andvanced pancreatic cancer and on treatments for other types of
cancer using the Cell-in-a-box technology. In addition, Nuvilex is
developing cancer treatments based upon chemical constituents of
Cannabis, known as cannabinoids. To do so, Nuvilex is ecamining ways
to exploit the benefits of the Cell-in-a-box technology in optimizing
the anticancer effectiveness of cannabinoids, while minimizing or
outright eliminating the debilitating side effects usually associated
with cancer treatments. This provides Nuvilex a unique opportunity to
develop „green“ approaches to fighting deadly cancers, such as
those of the pancreas, brain and breast, which affect hundreds of
thousands of individuals worldwide every year. In
terms of time to market, the technology has been through studies and
phase I/II trials in Germany and has shown impressive results,
although more and larger studies are still needed before
commercialization/monetization
Some
people think NVLX makes for an obvious (and cheap) acquisition
target/licensing partner by/with a larger biotech firm. I’m not
going to speculate on that, although both are definite possibilities.
More to the point, if you think, as I’m inclined to do, that stem
cells and cell therapy are the next big things in medical technology
and disease treatment, Nuvilex should get your juices flowing.
This
technology is also used for their diabetes research.
Nuvilex
has obtained exclusive worldwide rights to use human
insulin-producing cells. The exploration was conducted by
UTS´Professor Ann Simpson, who sought to activate liver cells to
replace cells in the pancreas that fail to produce insulin in people
with type 1 diabetes.
Nuvilex´s
goal is to encapsulate Melligen cells and test them on animals with
diabetes to see if insulin can be produced on demand.
According
to the International Diabetes Federation, approximately 400 million
people worldwide are living with diabetes with that number expected
to grow to 552 million people by 2030. The global market for diabetes
treatments is approximately $500 billion.
NVLX
has recently announced several positiv developments, including moving
closer to „bio-artificial Pancreas“ diabetes treatment, adding a
new Chief Scientific Officer who co-developed the company´s
Cell-in-a-box proprietary platform, and reporting financial results
for the period ended July 31, 2014. These positive announcements were
somewhat mitigated by the recent announcement of changes in the
company´s management, including resignations of the Chief Financial
Officer, Chief Scientific Officer, and two members of the company´s
Board of Directors.
Finacial
Position:
- cash: $2.89 million
- current assets: $3.06 million
- total assets: $8.19 million
- current and total liabilities: $371,386
- revenues: $0
- quarterly net loss: $1.58 million
The fundamental longer term outlook for NVLX appears relatively solid, with approximately $2.9 milion of cash on hand, the potential for obtaining orphan drug status, and positiv licensing and contract developments. On a near term basis the stock hast moved sideways and appears to be establishing a higher base with several technical indicators turning postive:
Relative Strength Index (RSI): The momentum oscillator is nearing the upper band of 70. The stock broke above the centerline on October 13th and the move in the oscillator confirms the stock´s positive recent momentum.
The stock´s 50-day Moving Average crossed below the 200-day Moving Average in mid September, and at $0.22.5 remains below the 200-day MA of $0.267. The moving averages have not confirmed the recent positive action in the stock.
Bollinger Bands (BB) – The stock broke above the middle of it´s Bollinger Bands on October 13th and has remained at or above the upper Bollinger Band since that time, confirming recent positive price action.
Moving Average Convergence/Divergence Oscillator: The 12-day MA of this momentum indicator crossed above the 26-day MA on October 6th and the positive divergence between these MACD lines has continued.
Moving Average Convergence/Divergence Histogram: TheMACD sitting above its signal line at the 0.007 level.
Competition.
While Nuvilex appears to be on the cutting edge, cell encapsulation
is not a brand new or unique idea, and as such, others may bring
similar products to market faster than Nuvilex. The competition in
natural products is incredible, so any success the firm gains with
those products will be constrained accordingly.
Summary & Conclusion:
The stock has broken out of its early fall slump on good volume. (three-month average daily volume of approx 1.8 million shares) Smaller traders could profit from trading the stock´s intraday price movements and continued moves above the $0.25 level. Larger position could be initiated at these levels, with more risk adverse investors waiting until the stock breaks above resistance level at $0.25 to $0.26 per share.
Nuvilex is currently held by Ken Fisher of Fisher Asset Management. He is the son of the legendary investor Phillip A Fisher. The investment philosophy at Fisher Investments is based on the idea that supply and demand of securities is the sole determinate of their pricing. The way to add value is to identify information not widely known or to interpret widely known information differently and correctly from other market participants. He purchased 11,300 shares in the first quarter of 2013, the same quarter that the subsidiary Medical Marijuana Sciences, Inc was incorporated. His purchase was a very small one that amounted to about $500 at the time. Today it is valued at about $3000. Even though it was a small purchase, it helps bring some credibility to the company and helps separate it from the possible scams.
In the long run this stock is an investment where you can lose 100%, but with good news from the FDA and other Orphan Drug Status Applications (Dec 9-13 answer from EMU, End of January status on FDA Orphan drug approval) you can easily make a lot more.
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It's a winner!
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