Diverse a family of products giving Nuvilex a boost Print E-mail
By Rob Goldman   
Thursday, 19 May 2011 03:45
Since our initiation of coverage, Nuvilex, Inc (NVLX.PK) is on the move, and that is putting it mildly. The stock more than doubled in intraday trading and traded over 18 million shares in 4 days after averaging around 400,000 in daily volume. Premium subscribers saw the stock gain over 27% on the same day we told them about it. What's so special? A little background will help explain the Company's unusual positioning.

Nuvilex, Inc. Sets Aggressive Biotechnology Growth Strategy Agenda

Nuvilex is poised to emerge as a leader in four key market segments of the $150 billion natural products space: Nutraceuticals, Cosmetics, "Green" Cleansers, and Lawn/Crop Protection. Few companies in the industry have as broad and diverse a family of products sold in major outlets, on the Web and the reach is growing.

With 14 patents under its belt, Nuvilex's research and development portfolio provides the Company with a major competitive advantage. Nuvilex is monetizing this advantage through the release of 2 potentially eco-friendly blockbusters slated for release in the next 18 months that should immediately capture share of a combined multi-billion market opportunity.

New management has recently purchased 5 million shares and has energized the Company with the swift execution of key milestones. Plus, the new Nuvilex leadership has engaged in pre-clinical development of natural product-based biotechnology products such as the anti-cancer agent Alternia™ that should raise Nuvilex's valuation and profile.

Late last week, Nuvilex announced that preliminary testing of its pre-clinical stage anti-cancer agent, Alternia™, is favorable. As a result of these positive outcomes, management plans future testing. These results indicated that Alternia™ was recognized to cause alterations in cell division and initiate apoptosis in cancer cells, a series of events typically leading to cell death. Future testing will include additional cell line and animal studies to determine specific cancer cell types in which Alternia™ may be effective against.

This news represents a major milestone for the Company and its shareholders. On the face of it, the news means that testing will continue as management leads the charge in leveraging its deep R&D portfolio by taking products through pre-clinical, and then likely, clinical studies. This is one of many steps that may lead to the blockbuster anticancer product's approval and marketability. Separately, the company that performed the early stage animal studies is a highly regarded best-of-breed clinical testing company, which should add further confidence to investors regarding the favorable results.

Looking at the Company as a whole, investors should expect to witness major hockey stick-type growth in 2011. The Company should benefit from increased sales and distribution of its flagship nutraceutical Cinnergen™, along with sales of Talsyn™, a topical solution for scar abatement. Additionally, the expected 2H11 marketing of Citroxin™, an innovative eco-friendly, anti-bacteria, sterilizer and cleanser offers huge direct and private label sales potential.


From the valuation perspective, firms in the pre-clinical and clinical developmental stages are assigned a valuation based upon their stage of development, market opportunity, etc. With the recent milestone event, Nuvilex just got a bump in valuation which may not yet be fully reflected in the stock. If additional products in the pipeline demonstrate similar results as they are introduced, these shares should continue to receive a boost with each event. Despite its big moves, we believe that the stock has a lot of room to grow, buoyed in part by additional catalytic events. We rate the stock a Speculative Buy rating and have a $0.50 year-end price target.


 

Rob Goldman has 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. Goldman produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select product represents the Firm’s internally generated stock ideas while the Opportunity product represents sponsored research reports. This coverage tends to be dominated by early-stage health care, technology and energy sectors. Six month or three month subscriptions can be commissioned by publicly traded company management, investor relations or consulting firms, investment banks, or related parties. Full disclosures and report details are available at goldmanresearch.com




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