Nuvo Pharmaceuticals Inc (MRV)

[mybikeisorange]

I'll try to resurrect this board as lots of good news has started to flood in. After the sale of Pennsaid 2% to Horizon, NRIFF now has $67M in cash. Currently more cash per share than price per share:

http://searchingwallstreet.com/nriff-nuvo-research-sells-u-s-pennsaid-rights-to-horizon/

NRIFF: Nuvo Research Sells U.S. Pennsaid Rights To Horizon

October 20, 2014 admin Small Cap

By David Bautz, PhD & Jason Napodano, CFA

OTC:NRIFF
TSX:NRI.TO

On October 17, 2014 Nuvo Research (OTC:NRIFF) (TSX:NRI.TO) announced it completed the sale of the company’s Pennsaid 2% U.S. sales and marketing rights to Horizon Pharma (Nasdaq: HZNP) for a cash payment of $ 45 million (CAD$ 50 million). Horizon will begin commercialization of Pennsaid 2% on January 1, 2015. Nuvo continues to retain all rights to Pennsaid and Pennsaid 2% outside the U.S. and is intending to seek a marketing partner or partners for international territories.

As part of the agreement with Horizon, Nuvo will be the exclusive supplier of Pennsaid 2% to Horizon for the U.S. market. Based on the level of sales that Horizon is able to generate for Pennsaid 2%, there could be some additional upside to Nuvo through the manufacturing mark-up. In the past we have forecasted that Pennsaid 2% peak U.S. sales are roughly $ 50 million. We believe Nuvo’s manufacturing and supply agreement with Horizon equates to an additional low-single digit royalty on these sales at full scale.

This deal follows the announcement last month that Nuvo had settled the litigation with Mallinckrodt (NYSE: MNK) that included the return of all U.S. marketing and sales rights to Pennsaid and Pennsaid 2% along with a cash payment of $ 10 million USD. We believed that Nuvo would move quickly on licensing or selling the U.S. rights to Pennsaid 2% following the litigation settlement and had predicted that a deal was likely to bring in approximately $ 20-$ 30 million USD with royalties in the mid- to high-teens. Thus, our prediction was not too far from what Nuvo ended up with by selling the full rights unencumbered by royalties.

Nuvo exited the second quarter ending June 30, 2014 with $ 10.7 million CAD in the bank. We estimate burn for the third quarter 2014 was roughly $ 2.5 million CAD. Adding in the $ 10 million USD payment from Mallinckrodt and this new $ 45 million USD payment from Horizon, we now forecast that Nuvo is sitting on approximately $ 67 million CAD in cash.


We remind investors that Nuvo will be reporting top-line results from the Phase 2 clinical trial of WF10 for the treatment of allergic rhinitis in the first quarter of 2015. The large amount of cash that the company now has will aid in funding the company’s continued development of WF10, including further studies into WF10’s mechanism of action and dosing studies to determine the minimum effective dose. We provided investors a brief update on WF10 in August 2014.

Since our last Zacks Report on Nuvo on Sep. 16, 2014, the stock has risen close to 50%. Even so, we still believe the stock is undervalued as the company currently has close to $ 5.00 per share in cash. The next catalyst will be release of the Phase 2 data for WF10, with positive results likely to send the stock significantly higher. We are maintaining our ‘Buy’ rating and a $ 7.50 price target.
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