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Nuvilex, Inc. Price Valuation Justifies Investor Confidence in Biotech

Nuvilex, Inc. Price Valuation Justifies Investor Confidence in Biotech

Written by ι Stock Market Media Group Staff — April 25, 2013

Nuvilex, Inc. (OTCQB: NVLX) is an international biotechnology firm quietly going about its business in Silver Spring, Maryland.  The company is currently priced below $0.10/share, and according to a recent valuation report, at this price, it is highly undervalued given the work going on at Nuvilex.

Goldman Small Cap Research released a valuation of Nuvilex based upon its work with pancreatic cancer and its future potential in the medical marijuana arena.  This valuation gives the company’s many shareholders reason to say “I told you so.”  It’s clear investors have a lot of confidence in Nuvilex as the price and accumulation have remained steady while they await the company’s upcoming Phase III clinical trial studying its treatment for patients with advanced, inoperable pancreatic cancer.

We feel the valuation could be incomplete however.  Nuvilex’s research in the area of diabetes could, in the end, be the company’s real bread winner.  Goldman clearly made a strong case for Nuvilex’s valuation citing both the biotech’s already accomplished and future research in the areas of cancer using its cell encapsulation technology, and its new medical marijuana subsidiary respectively.  We agree fully with the report, but it would be interesting to see a full valuation that includes Nuvilex’s future with its diabetes studies, which also uses the company’s “Cell-in-a-Box” technology, factored into the equation.  We contend the valuation would be even higher given the alarming rate at which diabetes is being diagnosed. 

A Successful Diabetes Treatment Would be Welcomed by Hundreds of Millions

The timing of Nuvilex’s research and the astounding results it has demonstrated with its diabetes studies so far, are right in line with the growing necessity for a better treatment for the widespread disease.  By 2020, the market for diabetes treatments is projected to reach $65 billion worldwide.  According to the International Diabetes Federation, 371 million people around the world have been diagnosed with diabetes and another 187 million remain undiagnosed – leaving many millions susceptible to the debilitating, and even deadly, complications associated with this disease. 

If left untreated, complications from diabetes can include; heart disease, vision loss, kidney disease, and nerve damage.  Diabetes is characterized by sustained high levels of sugar (glucose) in the blood.  Glucose is a source of energy for all cells in the body, and the levels of glucose are regulated by insulin which is produced by islet cells within the pancreas. This collision course between a growing necessity for a better treatment and Nuvilex’s jaw-dropping, pre-clinical results lends itself to our opinion that this recent price valuation can be enhanced dramatically if the diabetes segment was factored into it.

Cell Encapsulation is the Key to a Higher Valuation and Future Successes

“Cell in a Box” is the proprietary cell encapsulation technology that the company has invested close to $30-million overall in, and Nuvilex has hitched its horse to this technology for the bulk of its research.  Nuvilex has invested most of that money in two independent Phase II clinical trials in patients with advanced, inoperable pancreatic cancer using encapsulated cells capable of converting the widely-used anti-cancer drug, ifosfamide, into its “cancer-killing” form.  Much of the remainder of the funds, Nuvilex has put into furthering the development of the “Cell-in-a-Box” technology.  In both cancer trials, and the company’s pre-clinical diabetes studies, the unique cell encapsulation technology has performed admirably, with eye-popping results that could very well solidify Nuvilex’s future.

Nuvilex’s “Cell-in-a-Box” technology uses living cells, and the company takes a very specific type of cell to address a specific problem a patient suffers from.  Scientists then enclose the cells in unique “capsules” made mainly of cellulose, forming essentially “cotton bags” with live cells inside.  The capsules are about the size of the head of a pin. The capsules have “pores” in them that allow nutrients for the cells inside to enter and waste products and “beneficial” factors produced by the encapsulated cells to leave.  Each bundle of encapsulated cells becomes much like a miniature cell factory with the ability to produce whatever is needed.

This basic cell encapsulation process can serve as a “platform” upon which treatments for many serious, debilitating, and even fatal diseases may be built.  Some of these diseases include different types of cancer, diabetes, diseases for which stem cell therapies are being developed, and diseases caused by viruses.

Goldman Small Cap Research points out in its valuation:

[According to our calculations and traditional valuations, NVLX should be afforded a valuation of $0.15 per share just for its live-cell encapsulation therapy for use in the treatment of pancreatic cancer patients, which is $70M, in line with the typical valuations afforded oncology companies at this stage of development.]

Diabetes Study Results Show Versatility of Cell-in-a-Box

While the results from the company’s two Phase II clinical trials studying its treatment for patients with advanced, inoperable pancreatic cancer were incredible and justify the valuation given in the Goldman report, the cell encapsulation technology continued to show its versatility and range of success with its performance in diabetes pre-clinical studies.   So far in Nuvilex’s animal studies, the company has essentially been able to develop a type of “artificial pancreas” that controls blood sugar levels and eliminates the need for insulin treatment.  In a 6-month study, pancreatic islet cells from pigs were encapsulated using the company’s technology and the capsules containing the islet cells were then implanted into live, diabetic rats.  Within only a few days, the blood sugar levels of the rats became normal and stayed at normal levels for the duration of the study. 

When the capsules were removed from the rats at the end of the study, the islet cells inside the capsules were still alive and functioning.  Pigs were chosen as the source for the pancreatic islet cells because, other than primates, they are biologically the closest to humans.  Because islet cells from pigs (“foreign” donors) could be implanted in rats without the cells being rejected, this proves the islet cells inside Nuvilex’s capsules were protected from attack by the rats’ immune systems. 

Plans are now being made, in conjunction with a national diabetes foundation, to repeat these studies on a larger scale, and if successful, the expanded animal studies could lead to clinical trials in humans.

Continued Success in Diabetes Studies Could Gain Government’s Attention

We feel these results can lead to a strong future in the area of diabetes for Nuvilex, and this area of study could be heightened by the governments call for a better treatment.  The American Diabetes Association (ADA) recently announced that in 2012, diabetes and its complications cost the U.S. an estimated $245-billion.  That is an incredible 40% increase in just five years from the government’s 2007 statistics.  It’s simple – more and more people are being diagnosed with diabetes, and the government is responsible for about 62% of the costs.

In a discussion at a recent meeting on Capitol Hill concerning the alarming increase in the numbers of newly diagnosed diabetics, Robert E. Ratner, MD, the ADA’s Chief Scientific and Medical Officer said, “We have an incredible epidemic of diabetes that is driving health care expenditures excessively.  Unless we do something to stop diabetes, the economic cost will continue to rise.”  Congress was most assuredly talking about diabetes when it tasked the FDA with expediting new drugs and treatments to commercialization that meet areas of great unmet medical need.

This call to expedite new diabetes drugs and treatments to commercialization has Nuvilex’s technology again front and center as one company that could enhance or outperform the current standard – and this alone will give the powers that be in Washington a reason to include Nuvilex in the conversation, as well as, enhancing our argument to include this area of study in a fair valuation of Nuvilex, Inc. today.