NanoViricides Will Return To $3-$5 As Soon As The Coronavirus Newsflow Fades

Feb. 03, 2020 11:00 AM ETNanoViricides, Inc. (NNVC)INO, MRNA31 Comments4 Likes
White Diamond Research profile picture
White Diamond Research
2.48K Followers

Summary

  • Our research suggests that NanoViricides (NNVC) is unable to even attempt to create a coronavirus vaccine or treatment.
  • On 1/24/20, NNVC sold 2.85M shares at $3 apiece, which is about 20% of the current share price.
  • NNVC has told investors it would create a vaccine for other epidemics in the past, like Zika, but those went nowhere.
  • NNVC has basically the same pipeline of preclinical drugs that it had since 2008.
  • On 1/30/20, NNVC announced it is working on a coronavirus treatment, however it states that it has not been offered any collaborative funding.

If investors are looking to invest in a biotech that can create a possible treatment for the coronavirus, we believe NanoViricides (NYSE:NNVC) is the last stock they should buy in the “coronavirus sector”. NNVC has appreciated over 500% on the coronavirus hype over the past two weeks, as shown below:

Source: NNVC two-week price chart

Before the coronavirus news flow started happening, NNVC was effectively a broke, struggling biotech with no positive developments in the near future, negotiating with investors who we speculate didn’t even want to pay $2 a share. We speculate this because we see that NNVC has been filing S-1s, in order to sell shares, since 9/30/19, as shown below:

Source: NNVC SEC Filings

However, the company didn't raise any funds during that time period until 1/24/20. That tells us that NNVC wasn't able to strike a deal with investors until then. The coronavirus outbreak was a gift for NNVC, as they were able to raise gross proceeds of $8.625M, selling 2.875M shares at $3 per share on 1/24/20.

We believe that soon after the coronavirus news flow starts to slow down, that’s when the NNVC stock will start to decline. And this could happen within the next few days or weeks. We believe it will decline to $3-$5 per share within the next two weeks, and then fall further to sub $1 within a year.

Contributing to the hype, was NNVC’s CEO, Dr. Anil R. Diwan, said in an interview on Fox Business News on 1/28/20, that in the “best case scenario” the company can have a coronavirus treatment within 4-6 weeks. It appears that Fox Business News has since removed the video.

In our opinion, investors shouldn’t believe Dr. Diwan. First, NNVC does not have the funds to spend on R&D, nor manpower, with only 17 employees, to make this possible so quickly, or at all. NNVC has not received any funding from another organization. It would have to spend its own funds developing a coronavirus drug that might be a fruitless exercise, even if successful, if the coronavirus goes away by the time the drug is ready, which is the likely outcome. Second, NNVC has been around since 2005, and has never filed even an IND (Investigational New Drug) application. The company has never done any clinical trials.

On 1/30/20, NNVC published a PR titled “NanoViricides Confirms It Has Been Working On A Treatment For The Novel Wuhan Coronavirus.” Dr. Diwan gives a vague rundown on why he thinks he could have found a potential treatment by stating:

“We have already found some lead candidate ligands in our chemical library that can bind to the SARS-CoV spike protein…”

However, the revealing statement is the following:

“Of course, we will need support from governmental and international agencies such as the US CDC, WHO, and Chinese CDC to successfully develop these treatments, and, if developed, to get them to the patients in the fastest possible time… The Company intends to pursue a relevant collaboration for testing of our drug candidates soon.”

Dr. Diwan makes the point above that NNVC would only be able to develop a coronavirus treatment if it receives funding from another organization. However, evidence suggests the company isn’t equipped to develop a treatment for the coronavirus. Over the past 12 years of having mostly the same pipeline, NNVC has never been able to perform a clinical study. Therefore, why would any potential collaborative entity trust and invest in NNVC to successfully engage in prompt clinical studies for a coronavirus treatment?

We tried calling NNVC’s phone number to speak with an investor relations rep. The number is below:

Source: NanoViricide’s Website

The phone went to a generic voicemail message that didn’t say the name of the company. It also said the mailbox is full so we couldn’t leave a message. We tried calling twice over the past week with the same result. What if a potential collaborator calls the number and gets the impression that the company isn’t even active?

NanoViricide’s Pipeline Is Primarily The Same As From 2008 And Still Only Preclinical

NNVC has shown primarily the same pipeline in every annual report since 2008. 2008 is the furthest back it has published 10-Ks on sec.gov.

The following is NNVC’s pipeline currently shown on its website. None of the drugs are past the IND stage:

Source: NanoViricide’s Website

Now, compare it to the company’s pipeline shown in its 2010 10-K:

Source: SEC.gov

Today, ten years later, NNVC has almost exactly the same pipeline with only a couple additions and has not shown any progress.

NanoViricides Has Claimed To Have Drug Candidates For Other Virus Scares In The Past

When there's a virus scare in the media, NNVC has shortly thereafter released PRs claiming to be creating a treatment. But it has never worked out.

In 2014, a different coronavirus, MERS, came into the news. On 5/5/14, NNVC published a PR titled:

"NanoViricides Reports Novel Drug Candidates for Treatment of the MERS (Middle East Respiratory Syndrome) Corona Virus Ready For Animal Testing"

The article states:

The rapid development and deployment capability of our platform technology was demonstrated by how quickly we were able to create these drug candidates," said Dr. Eugene Seymour, MD, MPH, Chief Executive Officer of the Company, explaining, "The design of a set of viable ligands was completed in merely three weeks, and the initial syntheses took another four weeks.

In 2014, there was an Ebola scare. NNVC published a PR on 8/4/14 stating:

"NanoViricides to Restart its Anti-Ebola Virus Drug Development Program"

The article states:

"We believe that with our 'intelligent nanomachines' approach we have the potential to develop superior therapeutics as compared to other approaches," said Anil R. Diwan, PhD, President of the Company.

One of NNVC’s previous CEOs was Dr. Eugene Seymour. See a video of him from 3/17/16. In this interview, he is playing on the recent Zika virus hype.

"Those mosquitos are everywhere,” said Dr. Seymour. “They are moving up the coast, and are bringing with them Dengue, and soon Zika. And Zika, came out of nowhere…We have a lot of drugs in our pipeline, and we are moving as fast as we can to get these drugs into the regulatory system, one after the other.

In February 2016, WHO declared the Zika outbreak a Public Health Emergency of International Concern (PHEIC). Then in November 2016, WHO announced the end of the Zika epidemic, and NNVC hadn’t even gotten anywhere with its Zika vaccine.

So much for “as fast as we can”. The company is still in the preclinical stage with all of their drugs. They haven't done any tests on humans.

NanoViricides Has Had Two CEO Resignations Over The Past Two Years

Dr. Seymour resigned from NNVC on 5/14/18 in a PR titled:

“NanoViricides Provides Update, Says Company is Stable and is Moving Steadily Towards Clinical Trials.”

He was replaced by Dr. Irach Taraporewala, who then resigned less than a year later on 1/31/19. Then Dr. Diwan, who is also the Chairman of the Board, took Taraporewala’s place as CEO.

Which Biotechs Working On A Coronavirus Vaccine Should You Invest In?

There are many biotechs that have run up from the coronavirus panic. But only a few who seem to actually have a shot at developing a vaccine or treatment. NNVC has no chance in our opinion. We believe the following two biotechs have a chance. Both have received funding from another source, which is a great incentive for a biotech to create a vaccine rather than having to fund the development themselves.

Moderna (MRNA)

Moderna is a clinical stage biotech, which develops therapeutics and vaccines based on messenger RNA, which includes for the treatment of infectious diseases, like the coronavirus. On 1/23/20, Moderna announced that it has collaborated with the Coalition for Epidemic Preparedness Innovations (CEPI). Under the terms of the agreement, Moderna will manufacture an mRNA vaccine against the coronavirus, which will be fully funded by CEPI.

Inovio Pharma (INO)

Inovio focuses on developing DNA-based immunotherapies and vaccines to prevent and treat cancers and infectious diseases. Like Moderna, it also received a grant from CEPI of up to $56M to create a coronavirus vaccine. Inovio also announced on 1/30/20, that it is collaborating with Beijing Advaccine Biotechnology Co. to advance the development of INO-4800, Inovio’s vaccine against the Coronavirus.

Of course, if either one of the above biotechs create a new vaccine or treatment for the coronavirus, by that time the virus may have come and gone, like other viruses have like SARS and Zika, and the creator will not make any revenues from it. If that happens, then it will wait for the virus to return, and they will be able to attack it quickly to prevent it from spreading a second time.

Most of the coronavirus sector buying right now is emotional and momentum based, not so much fundamental. We’re confident the biotech that actually produces an effective vaccine or treatment for the coronavirus will likely jump on that news. Initially for emotional reasons, but also fundamental, maybe not because of a direct return on investment, as the virus might have stopped spreading by then. But rather because the biotech has shown the ability to quickly create a successful treatment for a nasty disease. This demonstrates competence to create other effective drugs in the future.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

This article was written by

White Diamond Research profile picture
2.48K Followers
We provide deep research and valuable information on small cap stocks to hedge funds and high net worth individuals. We specialize in the technology and healthcare sectors. We have an over 80% success rate, see our reports at whitediamondresearch.com. See the 3rd party verified return on each of our bearish reports over the last 24 months at: https://breakoutpoint.com/as-summary/white-diamond-gvmtg/To inquire about becoming a premium subscriber, send a PM here or email us at research@whitediamondresearch.com.Follow us on twitter @whiteresearch.
Follow

Disclosure: I am/we are short NNVC. 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.

Recommended For You

Comments (31)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.