Rare Performance Bolsters Nuvilex’s Approval Prospects

Investment and Company Research
Opportunity Research
HOT TOPICS

June 10, 2013

There is an old adage that states: “You have to spend money to earn money.” This adage might as well be the mantra for most biotech companies, including Nuvilex Inc. (OTCQB – NVLX - $0.103 – Spec Buy), an international firm engaged in using its live-cell encapsulation technology for the development of treatments for pancreatic and other cancers along with the development of therapies based on components of medical marijuana for use in oncology patients.

Success is not guaranteed in the biotech world based upon how much money is spent on research and development. However, the needle moves sharply toward ensuring success when tens of millions of dollars in R&D spending occurs before Phase III clinical trials commence. Many biotech firms do not reach that level of commitment and expenditure through two phases of clinical trials, and few are able to enjoy the degree of success exhibited by Nuvilex.

To date, nearly $30M has been invested in the Company’s live-cell encapsulation-based therapies to treat pancreatic cancer and other diseases. This includes two successful Phase II clinical trials in advanced inoperable pancreatic cancer, preclinical trials for other cancer indications, and additional necessary product development. Research and development expenses do not end with the conclusion of clinical trials, however; $2M has been invested in the past 2 years alone to help further the Company’s development goals.

This cumulative $30M investment has resulted in something rare for biotech companies and enhances the likelihood of Nuvilex’s continued success with the ultimate goal of FDA approval and product commercialization for its products. A recent study has demonstrated that in the past few years, 82% of companies that have been initially engaged in Phase II clinical trials have failed. This means that Nuvilex is in the 18% minority of firms that have produced favorable results, which should increase the value of the Firm itself.

The primary reasons for clinical trial failures include insufficient efficacy demonstration and/or poor safety/toxicity of the drug or treatment. In the Nuvilex Phase II pancreatic cancer trials in which its technology was used to encapsulate live cancer-drug-activating cells which were then implanted near the pancreas and therefore the tumor. Then the anticancer drug ifosfamide was administered, median survival nearly doubled and one-year survival was doubled as compared to historical data for Gemzar, the only drug approved to date by the FDA as a single agent for the treatment of advanced inoperable pancreatic cancer. In addition, the side effects associated with the treatment were decreased due to the use of only one-third of the typical dosage of ifosfamide; even this low dose of anticancer drug when combined with the Company’s live-cell encapsulation technology was sufficient to give the excellent efficacy results described above.

Not only is it rare for a Firm like Nuvilex to have such success in Phase II trials, but given the excellent trial results to date, surely a new trial that compares Nuvilex’s treatment “head-to-head” with the gold standard pancreatic cancer drug Gemzar, has significant potential for success. Given that Gemzar generates annual sales north of $1 billion annually, it is likely that the Company’s previous and future R&D investments could have a huge return on investment for Nuvilex and its 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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