Nascent Biotech Inc. (OTCMKTS:NBIO) is an interesting name in the oncology treatment space. The company is in the very final phases of its first phase 1 trial process, with encouraging updates throughout the process.
With Biotechs now outperforming the major indices, early-stage pipeline opportunities could become a sweet spot as consolidation in the space starts to pick up pace with major IP opportunities trading at a discount to multi-year forward multiples.
In other words, it’s a buyer’s market for acquisition candidates. And NBIO could be particularly well positioned from that perspective.
The Story So Far
NBIO has been on a tear in 2022, outperforming other aggressive growth opportunities by a wide margin. Shares of the stock are now about 350% this year even in the face of the worst bear market we have seen in nearly 15 years.
That strength has been fueled by the company’s successful phase 1 study for its primary flagship clinical research asset and commercialization opportunity, Pritumumab (“PTB”), a natural human antibody that binds to Cell surface Vimentin (also referred to as ectodomain vimentin), a protein expressed on the surface of epithelial cancers. PTB is used as a targeted immunotherapy that seeks out cancer cells without damaging healthy cells.
PTB has been in play since the 1980’s in Japan where there was already a developing data history that suggested it may have application for brain cancer.
But it wasn’t until years later that Nascent took over that R&D story and was able to re-engineer PTB through the more common and cost-effective Chinese Hamster Ovary (CHO) cell line manufacturing platform for monoclonal antibodies.
The company saw promise and filed an IND request with the FDA in late 2018, which was granted, allowing clinical research to move forward. The start of the company’s clinical research on PTB was delayed due to the onset of the pandemic, but research got into full swing in March 2021.
NBIO was subsequently given permission by the FDA to enter human clinical trials for Primary and Metastatic Brain cancer.
Moving Toward Phase II?
NBIO has successfully fully dosed four cohorts in its Phase 1 trial, with dosing for the fifth and final cohort now underway.
When this process concludes, the company says it will prepare data for submission to the FDA in preparation for Phase II clinical research.
Sean Carrick, Nascent CEO, explains, “We are enthusiastically encouraging anyone interested in screening for the trial to do so in a timely manner. This cohort of patients will likely be the final one in this trial, and new patient enrollment will cease until our Phase II research gets underway.”
With a total addressable market growing towards $4 bln in its target market, if the company successfully navigates into a phase II trial, its market cap of just $31 mln is going to look extremely light to major investors, suggesting that a repricing of the equity could be in order.
Consolidation is Afoot
If we don’t see a significant boost to share pricing for the stock as it gets its next research phase underway, expect the rumor mill to start sniffing around for take-out potential.
The biotechnology space is believed to be heading toward a strong consolidation period given the number of cheap early-stage pipelines around and the fact that larger pharma and biotech companies are still sitting on significant cash holdings – the pharmaceutical industry is not cyclical. Cheap stocks with strong R&D programs generally get swallowed up.
We would also note that NBIO has been expanding its IP protection of late, recently announcing that the USPTO issued a Notice of Allowance for claims related to Pritumumab – which only happens after the USPTO makes the determination that a patent should be granted from an application.
That presents another catalyst to fuel take-out speculation.
In addition, according to Statnews.com, M&A is set to jump in biotech: the last surge in the space occurred from 2013-2018.
During that period, nearly 25% of the acquisition targets hadn’t ever begun even a phase 2 trial. That period represented an evolutionary shift toward targeting earlier stage players relative to previous consolidation periods in the space.
That perfectly describes NBIO right now.
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