By: Dylan Sikes - AllPennyStocks.com News

Thursday, November 20, 2014

Nuvilex (OTCQB: NVLX) surged more than 100% this year, in stark contrast to the underperforming healthcare sector. The company got another boost Wednesday after announcing preliminary data from the preclinical study of its pancreatic cancer treatment on ascites fluid formation. The data came from a preclinical animal study and indicated that treatment with Nuvilex’s live-cell encapsulation technology called Cell-in-a-Box® plus ifosfamide produces a significant survival advantage in tumor-bearing animals when compared to non-treated animals. In fact, the data suggests that Nuvilex is at least as good as cisplatin, which is the current standard of care for ovarian cancer.

Until last year, Nuvilex (OTCQB:NVLX) focused on nutraceuticals. In Fall 2013, the company moved its focus to biotechnology. As part of the restructuring, the company divided its business into three segments, with the segment housing the cellulose-based live cell encapsulation technology being the most advanced. The company is currently using the technology for the development of treatments for pancreatic cancer and diabetes.

Pancreatic cancer is one of the worst forms of cancer and there is a significant need for new treatments in this area. While the diabetes treatment is quite crowded, there is need for new treatment options. The success of the preclinical study will certainly not be bad for Nuvilex.

Nuvilex acquired the rights to the cellulose-based live cell encapsulation technology through its acquisition of a 100% interest in Bio Blue Bird AG last year. In addition to that acquisition, the company also acquired a 14.5% stake in SG Austria.

Nuvilex has already applied for orphan drug designation for its pancreatic cancer treatment in the U.S., the EU and Australia. An orphan drug designation will give Nuvilex pricing power in case its pancreatic cancer treatment is approved. One of the things to watch, therefore, in coming months is how the company’s orphan drug designation application progresses through the FDA.

All that aside, a biotech needs strong cash flow to support a strong pipeline through to the market. At the end of July, the company ha4d $2.90 million in cash on its balance sheet. The company’s cash position is a possible concern for investors, especially if it is forced to sell more shares in a secondary offering.

However, the company did gain 130% this year, which tells us that investors are overall bullish on the prospects moving forward. Even better, despite the significant gains, technical indicators suggest that there could be a rally in the near-term as NVLX has crossed above its 50-day moving average. The MACD is also about to make a bullish crossover. It will be interesting to see if NVLX can break through the $0.250 resistance level. If it does then there could be further upside in NVLX shares in the near-term.

Longer-term, investors need to keep an eye on the company’s cash position. Dilution is a major risk with Nuvilex given the company’s relatively weak cash position. An orphan drug designation though could provide a major boost to the company’s shares and even make it an attractive takeover target, especially in the present environment where big pharma companies are looking to boost their pipeline.

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