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July 24, 2013

The Stars Align For Nuvilex

Investing in any stock is fraught with risk and there is arguably no riskier proposition than investing in early stage biotechnology stocks.  However, over time, risks can be reduced as companies and their respective segments reach pivotal inflection points in their growth. A perfect example of how risk in a biotech stock is dramatically reduced while upside potential moves front and center is Nuvilex, Inc. (OTCQB – NVLX - $0.1435– Spec Buy).

It was not too long ago that Nuvilex had what some might view as crippling real estate-related debt from a bad deal executed by prior management. Plus, despite its affiliation with SG Austria, it did not yet own all of the assets and licenses associated with live-cell encapsulation platform technology for pancreatic cancer and all other forms of cancer for that matter.  Plus, the soon-to-be concluded deal at the time included the acquisition of all of the assets of SG Austria which would have resulted in a 22% share dilution and the ownership of non-core businesses that would have bled operating expenses.

Today, the real estate debt looks like it will be settled soon, if it isn’t already, all of the oncology-related assets and licenses for the use of the live-cell encapsulation therapy for oncology have been acquired with essentially no dilutive effect, and going forward, operating expenses are held in check since the ownership in SG Austria is 14.5%, instead of 100% of the SG Austria subsidiary, Austrianova Singapore.  This step has ensured access to the live cells Nuvilex requires for its trials without the associated overhead of non-core business lines. Plus, when the $1.5M in funds were raised privately to execute the transaction through restricted stock, they were priced at $0.12 with no warrants, earn-outs, milestone payments, or additional debt. As a result, the risk inherent in the stock is substantially reduced which in turn raises the value of the stock at an even greater level than the current price. Furthermore, as progress is measured and reported on the development front, the stock should only move in one direction: up.

Separately, one of Nuvilex’s peers in the pancreatic cancer treatment arena, Merrimack Pharmaceuticals (NASDAQ – MACK) is slated to complete enrollment for its Phase III pancreatic cancer trial with top-line results expected in the next year or so. Any positive news resulting from the trial will likely result in a boost for any stocks in the pancreatic cancer space, as a rising tide lifts all boats---even in this case where Nuvilex may ultimately likely exceed Merrimack’s results, if the success in the first 2 pancreatic cancer clinical trials recur.

Clearly, all of these events and milestone serve to benefit Nuvilex as the stars align for management and shareholders.

Senior Analyst: Robert Goldman
Rob Goldman has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.

Analyst Certification
I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

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