NNVC Valuation

NNVC is a more compelling buy today at $0.65 then it was when I first mentioned it here at $0.10, before it ran to $3.75. Then, it was pure speculation. Now, it has taken its first steps as a genuine biotechnology company. It is only because of it's "developmental" label that the shares are still available under a dollar. The risk here is $0.65, what is the reward?

Rather then reinvent the wheel, I am going to use the analysis of another NNVC shareholder, a prolific poster on the IHub, NNVC forum (which has an excellent overview of NNVC).

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Some basis for a future valuation of $200 a share

Looking 5 years out:

If all goes well in the next 90 days, the first pre-NDA will be filed before the end of the year and the NDA should be approved in the first quarter 2009. The first NDA will probably be the topical nanoviricide EkcCide. That should be a rapid approval of not more than 5 years and probably closer to 3. It will be fast-tracked and given compassionate use status if it in any way reverses EKC blindness. That is a billion dollar a year market just in Japan, and $5 billion world wide. Viral pink eye expends the market from there.

HiviCide will also get the fast track after the first round of animal studies and confirmation testing. Again compassionate use will enter following NDA status and Phase 1 trials. Look at how quickly other very toxic treatments were approved to get an idea of how quickly NNVC will receive approvals if the stuff is effective at controling HIV viremia. By 2013 it would be fully approved for a $2 billion market.

Ebola, Dengue and other military/defense hemorrhagics won't need FDA approval for stockpile. Still, looking 5 years out, my estimate based on other stockpile drugs would be in the $500 million a year range to maintain each application. DengueCide would actually have a market in 5 years as it has turned epidemic again.

FluCide and AviFluCide, eventually a $5 billion market for critical care patients who cannot be vaccinated or for whom vaccination will not be effective due to weak immune systems.

So, if all goes well, in the next 5 years, I estimate that annual gross sales for nanoviricides will begin approaching $12 billion a year with NNVC taking 17% to 20% of that (to be conservative). There would also be 2 $500 million drugs entering the market every year, which would add to the capitalization.

So, assuming a worse case scenario of another 20% dilution over the next 3 years (same as the previous 3 years) that would result in about 142 million shares in the o/s, but lets round that up to 150 million shares. So, 150 million shares with income of 2.04 billion a year times a 20X market cap yields 40.8 billion cap or a share value of $272 a share. I think $40 is a little low. This is why some posters keep saying $200 a share, which is probably low since my numbers are on the low end.

Recently,Takeda Pharma bought out Millinium Pharma for $8.8 billion. Millinium has only one drug with projected revenue for 2008 of $345 million with small income growth for the next several years. I'll repeat, a company with a $345 million income, with moderate projected growth was capitalized at 8.8 billion. Makes me wonder if my $200 a share isn't off by an order of magnitude.

However, all of the above assumes that EkcCide will be effective against viral EKC, and HIV can be controlled by a topical teratment with a skin patch. None of this is yet proven, but our docs haven't been wrong yet.

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ICPR

I think there's room for a 10th stock in our solar basket, so today I am adding ICPR. This is the most speculative of the solar plays, but it has risen about 200% in the past few weeks and the bet here is on that momentum continuing in the weeks and months ahead.

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Solar Stocks, Part II

Here are four more Solar stocks, all with strong fundamentals and/or bullish chart patterns:

ASTI
HOKU
JASO
QTWW

The five names from last week all popped anywhere from 10-30% in a few days. The sector is caught up in the general market's consolidation this week. When that consolidation gives way to the next up move, I expect this sector to lead the way.

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Solar Stocks

Quarterly Revenue Growth

FSLR +281%
SOLF +304%
YGE +168%
DSTI +2321%
ELON +238%

I own them all.

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NNVC

NNVC is perking up, again. It's trading at 0.57 X 0.60 this morning. A weekly close above 0.55 and it breaks above it's rising 8 week moving average. The only element that is missing is volume. Still, we know that this one takes no prisoners when it makes a move, so consider this your, "Heads Up" on NNVC.

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