This tactical acquisition gives NVLX everything it wanted, plus lower operating costs, and sets it up for 3rd party funding and clinical trials. Moreover, the pricing of the deal was 10% higher than the stock price which bodes extremely well for the future.
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Why This Is Great News for Both Nuvilex and Investors:
The early acquisition plan centered on acquiring the Company’s foreign partner in order to gain access to the technology, broad exclusive rights, live cells, etc. Plus, it would have meant substantial dilution to shareholders. Conversely, the new deal, which is the purchase of a corporate subsidiary (Bio Blue Bird) that merely was the home for the targeted technology assets and rights means that the overhead for the Company will be substantially lower than previously thought. Nuvilex will not have the burden of full-time payroll and operating expenses for a company abroad, just employees in the U.S. All of the assets are now folded into Nuvilex. While the Company will maintain a close relationship and source live cells from Singapore, it now has much greater flexibility with respect to preparing for and conducting R&D as well as clinical trials. In a sense it is the best of all worlds for both the Company and its shareholders. The Company owns the rights to the use of live cell encapsulation platform-based oncology treatments yet will have a much lower burn rate and can more easily manage operations going forward, which serve to further ensure longevity and success. Clearly, good things come to those prudent companies who wait.
Separately, this milestone event substantially reduces Nuvilex’s investment risk.
For example, having direct ownership of exclusive rights instead of rights through ownership of an affiliate is far less complicated and demonstrates the ability of the Firm to raise the funds necessary at extremely favorable valuations, in order to achieve its objectives. Plus, the value of the IP and exclusive rights in oncology offers tremendous development opportunity as well as business opportunity. As success in future trials occurs, and larger players seek to play in the live-cell encapsulation platform oncology sandbox, Nuvilex is the only game in town and these firms will have to pay to play, given the value of the broad therapeutic and huge revenue opportunity.
Finally, the Firm’s positioning as a result of reaching this milestone removes the ammunition from the weapons of vocal naysayers and associated short sellers who have spewed falsehoods for many quarters. With the platform in its coffers, and a now recent history of successful funding, the game board has changed, and management should not have difficulty in funding accelerated oncology treatment R&D and initiating the steps that culminate in the commencement of its next clinical trials.
As NVLX executes on additional milestone achievements in its key arenas, the stock is poised to rise dramatically higher, on strong volume. We continue to rate these shares Speculative Buy with a $0.75 price target.
Recent Trading History For NVLX
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Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and 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.
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