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August 8, 2013

Nuvilex Is the Rodney Dangerfield of Biotechs

I was recently thinking about the time I had the pleasure of sitting in the front row of a stage in Las Vegas to see a Rodney Dangerfield performance. Interestingly, the recent trading of some of Nuvilex Inc.’s (OTCQB – NVLX - $0.148 – Spec Buy) biotech sisters has prompted me to realize that Nuvilex is the Rodney Dangerfield of biotech stocks. Let’s face it, the Company gets no respect.

That is all about to change. In fact, we predict that Nuvilex will ultimately turn from Rodney Dangerfield into Cinderella.

If you remember your fairy tales, some of Cinderella’s (step) sisters are shining stars, and undeservedly so.  Still, Cinderella stays the course, perseveres, and emerges triumphant and is valued as per her true worth, trumping the others. The unbelievable trading and valuation of one of Nuvilex’s sister-stocks this quarter as compared with the current valuation of Nuvilex itself is reminiscent of that story.

Inovio Pharmaceuticals, Inc. (NYSE – INO) is a great and exciting company in its own right. It is an early stage vaccine developer whose shares have enjoyed at their recent peak, a nearly 300% increase in share price and valuation. Specifically, Inovio is revolutionizing vaccines to prevent and treat today's cancers and challenging infectious diseases. Its SynCon® vaccines, in combination with its proprietary electroporation delivery, are generating best-in-class immune responses, with therapeutic T-cell responses exceeding other technologies in terms of magnitude, breadth, and response rate. Human data to date have shown a favorable safety profile. Inovio's lead vaccine, a therapeutic against human papillomavirus (HPV)-caused pre-cancers and cancers, is in phase II clinical trials. Inovio’s other phase I and preclinical programs target prostate, breast, and lung cancers as well as HIV, influenza, malaria and hepatitis C virus.    As a vaccine developer, it has a number of collaborations with leading institutions and companies.

While the magnitude of the rise has baffled some market watchers, one of the major drivers was news that in preclinical animal models, Inovio demonstrated that its vaccine showed the potential to reduce tumors and prevent tumor recurrence by a wide margin versus the peer technology.

Nonetheless, if success in an animal model cancer study and a vaccine in Phase II clinical trials are worth a peak market cap of over $500M, shouldn’t Nuvilex be worth at least half that much considering it is further along the development path, instead of just $70M?

After a series of fits and starts, Nuvilex now owns exclusive rights to a live-cell encapsulation platform technology for all cancers and that has not only successfully completed Phase II trials for advanced, inoperable pancreatic cancer, but comprehensive animal trials for mammary (breast) cancer, and is on the verge of acquiring similar rights to the technology to fight diabetes.  Moreover, management is gearing up for next stage of trials for pancreatic cancer due to its outstanding Phase II trial results.

Perhaps if the Company had gone through these steps in quicker fashion or its stock was uplisted, its market cap would be at a similar level to that of Inovio.  Still, Inovio has been around for 30 years, so it has taken them quite some time to get to this point, despite its amazing rise in 6 weeks.

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.

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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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