BULLISH: My previous target call is intact. A few weeks back I said I was bullish on NVIV and posted a price target of $29. About 10 days later Mr. Napodano followed with an upgrade from $24 to $26. This was before the market selloff and just before the shenanicans of manipulation began with NVIV. This stock had the makings of a move upward in light of solid performance on goal for the Neuro-Spinal Scaffold clinical trial. Of note, recent outstanding news that the third enrolled patient converted AIS A to AIS B in 30 days with a high level injury, 3 days after trauma and has been revealed to be an anonymous older patient. That is outstanding and has been completely missed by the market. The odds were against this patient from many fronts. It is quite significant that the NSS implant appears to have profoundly benefited him. Further, when considering the combined statistical odds of patient #1 and patient #3 converting from AIS A in a short duration it brings the likelihood to less than 1%. Even the second patient has shown obvious signs of improvement and for reasons of medical technicality has not achieved an official AIS conversion. However, as the study is primarily a safety trial and secondarily a probable benefit study, the InVivo scaffold has passed with flying colors and has delivered a 3 for 3 success. A 4th patient was just enrolled and we look forward to that patient's progress. For all patients thus far, there seems to be a clear probable benefit in the absence of any adverse effects. The device shows enormous promise for acute SCI victims.
The company has about $24M in its coffers, one of the highest cash balances in its history. Nonetheless for added comfort and security, the CEO has also proactively arranged a funding facility that it can use when it elects to do so in the future. CEO Mark Perrin has demonstrated himself to be a highly responsible professional who leans conservative, so it should be of no surprise that he made early arrangements for a facility that will probably not be tapped for many months and hopefully after significant new news and catalysts are achieved. Kudos to such forethought. It goes without saying that there are forces at work (such as shorting) which have succeeded in greasing the skids so that NVIV would drop in share value at a large extent in this summer's macro environment. My hunch is that there is healthy institutional interest and due to the timing of the stock's uplisting, there were many retail investors in with a sufficiently small float that pushed the share price higher anytime a significant number of shares were purchased. Market insiders of course have a solution for when this occurs. To avoid a shortage of shares, the market makers shorted many shares, both accountable and naked, which not only "artificially" lowered the price, but allowed acquisition to occur without significant price appreciation. The market downtrend then exacerbated this slide and the stock is in a very over-sold state making it even more of an excellent buy at this time. Mr. Napodano recently characterized the stock as worth double from approximately $13. Because of the additional drop since that time, the stock is now worth nearly triple its current share price of $9.83 as of Friday 8/20/15. Mr. Napodano details a very sensible analysis for what the shares should be worth and applies standard discounts to factor in time to market and probability of approval via FDA. He uses historical averages for all medical devices including mechanical and electronic devices. I believe the probability is significantly greater that it will obtain approval. We have already observed the probable benefit with absence of adverse events. This is huge. It is irresponsible to impede such a device from benefitting injured patients. CEO Perrin has a reputation of being quite conservative and is almost the diametric opposite of a previous CEO Reynolds. Mr. Reynolds would typically promise the sky and either not deliver or deliver at a much later timescale than he promised. Investors grew tired of his empty promises and the ensuing disappointments. Mr. Perrin will typically under-promise and over-deliver. That makes for the possibility of pleasant surprises when nobody is expecting. This bodes quite well for NVIV as we move forward. Suppose he negotiates an outstanding agreement with FDA whereby the next phase of the trial can be halted early upon consistently good findings such as what has already been seen? And while not intended to follow an alternate path, theoretically the clinical might wind up being converted to en EAP pathway which allows even earlier commercialization with post market study. Another surprise that the company could spring upon its investors is an agreement to bring the Neuro-Scaffold to clinical study with stem cells or what the company is calling bio-engineered tissues. These are neurons which have already sprouted axons. When applying some of these variables to the already established analyses, one can see how quickly the hypothetical figures can change and make the value of NVIV grow considerably. Can the company compress timelines from what is currently being guided? Can the company simultaneously pursue ROW avenues for increased revenues. My best guess is that they will be trying all of these things, but instead of shouting it from the "Center of the Bigtop" as with prior management, it will be accomplished silently, only to pop up unexpectedly and catch everyone whether long or short off guard. This is not a stock to sell short. This is a unique biotech in that it is not a pharmaceutical nor is a conventional device. It has the best of both in terms of regulatory pathway ease and none of the most arduous features. I predict that InVivo will commercialize and achieve revenues earlier than many pundits are modeling. The subsequent product in its pipeline to address a wider field of both acute and chronic SCI will likely be fast-tracked as well and the company can achieve multiple billion dollar revenues in a reasonable timeframe. One other factor to consider is that since uplisting, institutional ownership has increased significantly. Along with that fact, the stock has had strong retail appeal throughout its entire history. When you combine these factors with the low float of the stock, it is a recipe for an enormous upside potential in valuation. One must put aside the current downtrend and realize there are market forces at work transiently that can turn on a dime. You can acquire shares at today's low price or chase the price later as it climbs. Again, due to the relatively low float, my recommendation is Carpe Diem on this strong buy.
