Analysis: Nuvilex Inc (NVLX)
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.
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.
Disclaimer
?Past performance is no guarantee of future success and you should not assume that the securities of companies in our newsletter, on our website or mentioned in electronic communications will perform better than or even equal to the performance of the securities of companies profiled or mentioned previously. You alone are responsible for your own investment decisions. The information presented has been obtained from sources believed to be reliable, but accuracy cannot be guaranteed. Any and all earnings projections and estimates assume certain economic conditions and industry developments, which are subject to change. You should independently verify all information generated on this website and/or sent via electronic distribution. You should consider obtaining professional advice before making any investment decision. Investing in small and micro-cap stocks can lead to loss of investment and is not appropriate for all investors. All stock investments carry some degree of risk. By investing in any of the stocks of the companies profiled or mentioned on our website, in our newsletter or by electronic communication you can and may lose some or all of your investment. Do not invest in any stock if you are not prepared to lose your entire investment. Small and micro-cap stocks can be highly volatile. High volatility securities may experience sudden and large falls in their value, leading to losses. Small and micro-cap stocks may be difficult to sell due to a lack of liquidity. The author of this blog post may hold positions in the securities that are discussed in our newsletter, on our website or delivered via electronic communication. These securities can be bought or sold at any time, without restriction.
http://rvlcapital.blogspot.de/2014/11/analysis-nuvilex-inc-nvlx.html?m=1
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