NVLT - Current Decline in Share Price is an Opportunity to Accumulate Shares

Zacks Small Cap Research

Current Decline in Share Price is an Opportunity to Accumulate Shares

By Grant Zeng, CFA

Balance Sheet Boosted By Public Offering

On February 13, 2013, Novelos Therapeutics (OTC Markets:NVLT) announced the pricing of a public offering of 11,000,000 units at $0.50 per unit for gross proceeds of $5,500,000. 

Click here to download a free copy of the NVLT research report: NVLT 2-13-13

Each unit consists of one share of common stock, a Class A Warrant with a one-year term to purchase one-half of a share of common stock at an exercise price of $0.50 per share and a Class B Warrant with a five-year term to purchase one share of common stock at an exercise price of $0.50 per share. 

We think this financing is positive to the Company in general. Although this public offering dilutes shareholder base, it greatly boosts the Company’s balance sheet.

At the end of September 2012, NVLT had cash and cash equivalents of $5.6 million. With the $5.5 million gross proceeds, the Company should have about $6.5 million in cash as of today. Current cash will last into 3Q13.

On Nov. 5, 2012, Novelos announced the closing of a private placement of equity securities to an affiliated entity of Renova Group for gross proceeds to Novelos of $2 million.  Novelos has earmarked the proceeds for the build-out of an in-house clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT).  The facility is expected to be completed in about one year and is expected to cost approximately $3 million. The build-out of an in-house clinical-stage manufacturing facility for LIGHT is a key strategic initiative as the Company moves toward larger Phase II and pivotal LIGHT imaging trials. NVLT already has an operational in-house clinical-stage manufacturing facility for HOT.

The financing will accelerate the development of the Company’s LIGHT, HOT and GLOW2 cancer diapeutic programs, which are all progressing well. Current share price decline may be a good opportunity to accumulate NVLT shares.

 

Diapeutic Technology Platform Presented at EMIT: Targeted Radiotherapy Conference 

On January 31, 2013, Novelos Therapeutics (NVLT) presented an oral presentation on research conducted by Novelos and its collaborators at the EMIT: Targeted Radiotherapy international conference taking place January 29 to 31, in Washington, D.C.

This presentation by invitation from EMIT describes the mechanistic foundation for Novelos’ diapeutic (diagnostic + therapeutic) technology platform together with animal data and initial findings in advanced cancer patients that demonstrate selective and prolonged accumulation of Novelos’ PET imaging I-124-CLR1404 (LIGHT), therapeutic I-131-CLR1404 (HOT) and optical imaging CLR1502 (GLOW2) compounds in a range of tumor types. The presenter is Dr. Chris Pazoles, who is the Senior Vice President of Research and Development for Novelos.

NVLT’s LIGHT, HOT and GLOW2 have been designed to exploit a feature shared by most, if not all cancer cells including cancer stem cells, which results in the selective uptake and prolonged accumulation of the Company’s proprietary, small-molecule delivery vehicle in a wide range of malignant tumors compared with normal tissues. By incorporating a unique functional property in each – PET imaging, radiotherapy or optical imaging, NVLT has generated an array of potential therapeutic and diagnostic products that could, alone or in combinations, significantly improve the detection and treatment of cancer in multiple ways.       

Novelos’ diapeutic platform, which includes cancer-targeted PET Imaging, therapeutic and optical Imaging Compounds, offer broad-spectrum diagnosis and treatment for solid tumors.

The presentation is titled “Cancer-Targeted Diapeutics: Radioiodinated Phospholipid Ether Analogs for Broad-Spectrum Imaging and Therapy”. Dr. Pazoles presented data showing that LIGHT, HOT and GLOW2 all share a common cancer-targeted core chemical structure. Each attaches a unique moiety to this delivery vehicle – LIGHT, a PET imaging agent (iodine-124), HOT, a radiotherapeutic agent (iodine-131) and GLOW2, an optical imaging agent (near-infrared tracer).

  • Results described with LIGHT demonstrate broad-spectrum tumor PET imaging in dozens of animal tumor models, and recent human findings from ongoing Phase I/II clinical trials show selective uptake and retention by primary tumors and metastases in advanced non-small cell lung and brain cancer patients. 

  • HOT results shown include single-dose efficacy in a wide range of animal tumor models, and clinical trials to date demonstrate selective accumulation in cancerous tumors, including metastases.

  • Dr. Pazoles’ presentation highlights the potential diapeutic application of LIGHT and HOT, based on their chemical identity, to provide individualized treatment to cancer patients. For example, LIGHT serves as an ideal biomarker to potentially identify patients most likely to benefit from therapy with HOT.

  • Dr. Pazoles’ talk also describeed how selective uptake of GLOW2 could provide better definition of tumor margins in real time during cancer surgery, enabling more complete and selective removal of malignant tissue and potentially improving patients’ prognosis. Data illustrating the potential use of GLOW2 for non-invasive detection of tumors was also featured.

We believe Novelos’ platform technology has great potential for cancer imaging and therapy, which can be used in various cancer types.

NVLT is making good clinical progress with LIGHT and HOT across multiple human trials while advancing GLOW2 towards human trials. With all these progresses made in the past few months, we believe Novelos’ share price deserves further appreciation. 


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