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Biotech / Medical : NNVC - NanoViricides, Inc.
NNVC 1.690+5.0%Dec 2 4:00 PM EST

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From: Straynut6/6/2016 11:10:32 AM
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After An Up-And-Down Spring, Has Nanoviricide Set Itself Up For A Solid Second Half?Jun. 6, 2016 11:02 AM ET|
About: NanoViricides, Inc. (NNVC)

Just One Lab Nerd? Following(156 followers)
Long-term horizon, biotech, small-cap, mid-cap


SummaryNNVC has inked arrangements with 3 prestigious University laboratories to help select anti-Herpes drug candidates.
NNVC has also signed an agreement with St. Jude's medical center to complete pre-clinical testing for its anti-influenza drug candidate.
NNVC remains in a stable financial condition with sufficient resources to move its lead drug candidates forward.
It has been just over a year since I toured Nanoviricide's (NYSEMKT:NNVC) newly commissioned and (at that point) mostly functional, manufacturing plant in Shelton CT. While I intend to return there sometime this Summer or Fall, I have not had the opportunity to revisit the plant since that date. Several other individuals I have contact with have had that opportunity, and what they have related to me indicates that the pieces missing when I toured the plant in May of 2015 are now in place. The facility is fully staffed, and work there is progressing nicely. The absence of a cGMP capable production facility had been one of the pieces holding NNVC back both from scaling up production capacity, and from producing the quality of their candidate drugs needed to go into human clinical testing.
During the last year shareholders in NNVC have experienced an extremely dynamic, up & down market. During the Summer and Fall of 2015 share prices steadily declined and reached a low of less than $0.90/share, although share prices rebounded a bit before the end of 2015. NNVC opened 2016 (January 4) with a share price of $1.18 and climbed steadily during the Winter. Through the middle of March, there was a significant increase in share prices that correlated with the announcement of a new set of drug candidate testing partnerships (discussed below). By March 24, NNVC closed with a share price of $3.04 after reaching a maximum of over $3.40 per share on March 22. Over the course of the next several weeks share prices steadily dropped back to as low as $1.45 on May 12. As of this writing, NNVC stock prices had spiked (at least briefly) again to over $1.80, after trading in a range of near $1.50-$1.60 for most of the last few weeks.

Even with significant regression from the high share prices (and that nearly 150% short-term gain from the opening of 2016) seen in March, NNVC still holds a solid gain since the start of 2016. Those who have traded this stock and who were skilled (or lucky) enough to buy early and sell shares near that peak could have banked a solid profit since the end of 2015. Those who bought in during the run up during March are looking at a very significant loss and are no doubt concerned about further regression.
During December 2015 I wrote an overview of NNVC and why investors might expect to see significant progress during 2016 after an extremely underwhelming 2014 and 2015. While I anticipated that NNVC should move higher during 2016, the rate of and level of share price appreciation during the first 3 months of 2016 greatly exceeded my expectations. I did not foresee this rapid push past $2.50 into the $3 range during March of 2016 where, at least briefly, NNVC was trading in price ranges shareholders have not seen since during 2014.
During the remainder of this article, I will attempt to address some of the reasons we have seen this fairly extreme movement in share prices. I will point out several steps forward that the company has taken during early 2016, and attempt to assess what shareholders might expect to see during the remainder of 2016.
There have been a few specific developments of note for NNVC since my December 2015 article that do amount to solid steps forward for the company.
During January and February of 2016, NNVC announced that it has engaged three world-class University laboratories in the testing of late-stage candidate anti-Herpes (HerpesCide, to use the NNVC terminology) drug candidates for their potential to treat Herpes Infections, initially focusing on Herpes infections of the eye. Testing results from these three prominent laboratories will give considerable credence to NNVC once they have provided the outside and independent assessment of NNVC's candidate HerpesCide compounds. I will discuss these collaborations and what they might mean a bit later in this article.

During May of 2016, NNVC has announced that they hired an experienced virologist, Dr. Brian Friedrich. Dr. Friedrich has worked with a variety of human pathogenic viruses. The addition of Dr. Friedrich will allow NNVC to screen early candidate compound in house, rather than having to schedule (and pay for) this important work with outside laboratories. This will simplify logistics, and should save NNVC considerable time and money in developing new or optimizing existing drug candidates for their pipeline. The Connecticut State Health Department also recently certified a small (but functional) containment facility housed within the Shelton manufacturing plant where this work can be conducted. I described the presence of this facility in detail in a previous article. This is excellent news for current and potential shareholders as this should increase the efficiency, and lower the expenses involved in early stages of testing of candidate nanoviricides for the future.
On May 31, NNVC announced that they had entered into a collaborative testing agreement with the St. Jude's Children's Hospital to (finally in the minds of many shareholders) begin some of the additional testing for their FluCide drug candidate that was suggested to them as part of their pre-IND meeting now several years past. The pre-IND meeting suggested that one of the issues that remained for NNVC to address was whether, or not, their FluCide drug candidate(s) were effective against a broader range of flu virus subtypes. This collaboration will give NNVC access to the expertise and the facilities needed to complete this testing and remove one of the potential roadblocks foreseen for FluCide if it were to be put into human clinical testing.
Three February announcements of agreements with university laboratories to carry out testing for HerpesCide drug candidates:
On February 1, NNVC announced that it has struck an agreement with the University of Wisconsin for the evaluation HerpesCide drug candidates in models of ocular herpes virus infections. The work is being carried out under the direction of Dr. Curtis Brandt. Dr. Brandt's laboratory has a history of working with several companies to test and develop antiviral drugs, and maintains an active and productive research program. Dr. Brandt has published broadly in peer-reviewed literature.

On February 11, NNVC announced that it has also struck an agreement with the University of Pittsburgh for the evaluation HerpesCide drug candidates in models of ocular herpes virus infections. The work is being carried out under the direction of Mr. Eric G Romanowski. Mr. Romanowski's research group at the Charles T. Campbell Ophthalmic Microbiology Laboratory has extensive history in investigating anti-viral and anti-microbial agents to treat disease of the eye. NNVC also has stated that they intend to perform IND-enabling efficacy work for their candidate HerpesCide(s) in the Campbell Laboratory. The laboratory has one of the top clinical research programs in the country focused on eye diseases and their treatments. Mr. Romanowski has also published broadly in peer-reviewed literature.
On February 16, NNVC announced that it has struck a third agreement with the Baylor College of Medicine for the evaluation HerpesCide drug candidates in small animal models of ocular herpes virus infections. The work is being carried out under the direction of Dr. Stephen Pflugfelder. Dr. Pflugfelder's research group at Baylor Dept. of Ophthalmology is also extremely experienced in ocular drug development and testing, and in conducting clinical trials for treatments of eye disease. Dr. Pflugfelder has published broadly in peer-reviewed literature.
The combination of these three high-powered University research groups gives NNVC a fundamentally solid base to support any subsequent claims that a HerpesCide compound can be an effective treatment for Herpes infections of the eye. Yes, the work at these laboratories still needs to be done and a candidate or candidate compound selected - but anything that does make it through the filters of these three research groups and that shows substantial efficacy against Herpes viruses should be easily moved into Clinical testing. The data that they collectively provide should be rigorously collected, trustworthy, and getting that drug candidate past the IND stage and into Clinical testing once it has displayed sufficient lack of toxicity to assuage safety concerns.

As the work that these laboratories are doing could have been initiated as early as during February, and the NNVC management has indicated that they anticipated that the work that these laboratories would be doing could take between 2-3 months, it is very likely that NNVC will have some progress to report on their HerpesCide drug candidates during the Summer of 2016.
Why might a generalist anti-Herpes virus drug be a big winner for NNVC and its shareholders?
During pre-clinical testing of the HerpesCide candidates conducted during 2015 the company reported that the laboratory of its collaborator, Professor Rosenthal, had successfully treated mice infected with an otherwise lethal dose of HSV-1 (Herpes Simplex Virus-1). There was substantially complete survivorship among mice treated with a topical version of candidate HerpesCide compounds in an otherwise generally lethal infection. Treatment of these same mice with therapeutic (or greater) doses of acyclovir (the same chemistry used in the brand-name pharmaceutical anti-viral drugs Valtrex and Zovirax), the standard of care drug, resulted in only a limited survival (less than 58%) for mice with the same infective virus. Later during 2015, these results were replicated by a second, independent, laboratory.

A generalized structure for Herpes Viruses, showing the primary envelope proteins involved in recognizing and binding specifically to target cells. Figure derived from. These primary envelope proteins are also presumably the target molecules for virus-specific ligands on an anti-Herpes nanoviricide compound. Knowledge of the 3-Dimensional structure and binding nature of these primary envelope proteins are used to design the viral-specific ligands using computer aided modeling. Once candidate ligands have been designed, they are tested empirically to determine which (if any) have the best binding characteristics on viral targets. Often, more than one iteration of design - trial - redesign - trial is required to develop an effective ligand. There is currently no way for NNVC to circumvent the empirical testing aspects for candidate ligands.


A generalized schematic of how (generally) Herpesviruses bind to their target host cells. Figure derived from. While the Herpesviruses are a large and complex family of viruses that infect a broad range of animals, their basic process of infection of those cells, and most of the glycoproteins on their viral surfaces that permit entry into those host cells have relatively conserved structures and functions. Initial binding of the virus (for both HSV-1 and HSV-2, and for many other related Herpesviruses) to target cells appears to be initiated by the binding of the viral gC surface glycoprotein to heparan sulfate proteoglycans (proteins with specific attached sugars) located on the target cell's surface. Once this initial recognition and binding has been accomplished, other viral surface proteins and cell surface targets continue the interaction and trick the cell into allowing the attached virus to enter and to begin infection.
These conserved and required binding actions among different Herpesviruses mean that, at least potentially, a well-designed ligand attached to one of NNVC's micelles, has the potential to bind to more than just a single type of Herpesvirus.
What might the advantage of a topical/externally applied HerpesCide over the existing treatments?
Existing therapies against HSV include acyclovir and other chemically related drugs chemically which must be taken orally or by injection. These drugs are not very effective used as topical treatments, and the existing head-to-head studies between HerpesCide candidate compounds and the chemistries used in Valtrex and Zovirax indicate that the HerpesCide could be extremely effective when used as a topical treatment. The available pre-clinical date we saw described by NNVC during 2015 covering their HerpesCide candidates suggests that they could be extremely effective in treating at least the symptoms of a disease for which there is otherwise no cure.

NNVC's initial market for a HerpesCide drug would be as a treatment for herpes virus infections of the eye. Herpes infections of the eye can lead to severe consequences - including and not limited to damage to a patient's cornea that can require corneal transplants to effectively repair. Existing treatments (including Valtrex and Zovirax) are not particularly effective as treatments for severe Herpes infections of the eye.
An entry into this market by NNVC could be extremely lucrative, and of extensive benefit to shareholders. However, at best, NNVC is not likely to get this treatment into initial clinical trials before the end of 2016, and more likely these trials would continue into 2017. Barring some deeper-pockets Pharma company entering into a licensing agreement with NNVC before the completion of Clinical testing, NNVC cannot realistically expect to see revenue generated from a HerpesCide prior to 2018.
Implications of the May 1 announcement that NNVC has engaged with the St. Jude's Hospital to complete the optimization and pre-clinical testing for their FluCide IV drug candidate.
Prior to the fortuitous discoveries of 2015 about HerpesCide, the most likely lead drug candidate for NNVC was their anti-flu treatment (they refer to as FluCide). Further progress with FluCide has been limited by a few factors. Among these factors were that the company did not have the facility needed to produce cGMP quality material needed to start clinical testing. The purchase, equipping, and staffing for their plant in Shelton, CT has given NNVC the means to get around this limitation. Another of these factors has been the inability to synthesize their drug candidates in sufficient quantity to complete Toxicity testing for that Intravenous anti-flu treatment. This is a problem that NNVC is still working on, and that will likely take them through at least the end of 2016 to complete.
During the pre-IND meetings that NNVC held a few years ago, one other set of limitations that they needed to overcome was that they needed to test their FluCide compound against a broader array of influenza strains and more extensively in order to make the claim that their treatment might be effective as a generalist treatment for complicated, hospitalized influenza patients. The arrangement with St. Jude's and the enlistment of the expertise there should quickly allow NNVC to move forward to overcome those problems. I look forward to hearing more specifically how the needed work will be going forward over the remainder of 2016.

During the testing done during 2012, the FluCide candidate compounds demonstrated that they were highly effective against at least 2 common subtypes of influenza viruses (H1N1 and H3N2 subtypes). If they can be shown to be effective as a treatment for advanced influenza (in general) then the market for their FluCide compound is broad, and could provide a solid revenue stream for NNVC. Given, since it should be expected that Clinical testing may be a year or more down the line for FluCide, the immediate positive financial effect of FluCide has essentially no chance of helping NNVC before we determine whether (or not) their HerpesCide candidate is going to prove useful. Interested shareholders and potential investors should take into account that - at a minimum - FluCide is not likely to be a revenue generator for NNVC prior to 2018 either.
In more general terms for NNVC after the first few months of 2016:
I was looking for two or three specific catalysts before I anticipated that there would be steady improvements in share prices for NNVC. Only one of these catalysts has been announced to date. Shareholders were pleased to hear Dr. Seymour (NNVC, CEO) state that during a public presentation at a meeting in February that they had successfully increased their batch size production capacity to 500 g for their carrier micelles. This was a 2.5x increase over their previous reported limit. However, since that statement, there has been some indication that the company's validation of that 500 g process is still incomplete. This apparent back-tracking has justifiably raised concerns in the minds of at least some shareholders.
NNVC continues to claim that the process is in place to make this quantity again even if the process isn't completely validated, and that the company can move forward with the next steps of preclinical and early stage clinical testing for their HerpesCide drug candidate with the level syntheses (200 g) they have already completed validating. This has been more than a bit of a mixed message from management and is likely one of the factors that underlies the decrease in share prices since March.

The other specific catalysts that I was looking for that I thought would give NNVC share prices a boost during 2016 have not yet occurred. NNVC has not initiated toxicity testing for either their HerpesCide drug candidate, nor have they restarted their long-delayed toxicity testing for their FluCide drug candidate.
In a more general sense, NNVC's financial situation remains stable and they retain current assets of greater than $25.9 MM (as of March 31, 2016). This is down only approximately $2.4 MM since (previously they reported having ~$28.3 MM) their last quarterly report and is not out of line with their burn rate in recent quarters. With these figures in mind, NNVC has a current Market Cap of approximately $106 MM. NNNVC states that they expect this capital to be sufficient to fund planned operations through March, 2018. The projected capital spending through their 2018 estimates includes the planned projected spending needed to begin human clinical trials for at least one, possibly two, of their drug candidates. This continues to be very promising news for current shareholders, as likelihood of NNVC needing to conduct dilutive financing continues to be low and manageable while they continue to move their two lead drug candidates forward.
My expectations for the remainder of 2016 are that NNVC will continue to experience declining share prices until or unless specific announcements indicating that their HerpesCide drug candidates have been evaluated favorably by one or more of the Universities, and that at least one of those candidates is being advanced towards toxicity testing that will be needed in order to place that compound into clinical testing. Alternatively, but less likely to my mind, an announcement that their FluCide drug candidate is moving forward - either into toxicity testing, or that St. Jude's scientists have confirmed that their candidates drug is effectively a broad-spectrum treatment for influenza - could trigger a more positive market outlook for NNVC.

Disclosure: I am/we are long NNVC, CVM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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