NBIO is a stock we have followed closely recently because it is an early-stage biotech with an interesting flagship pipeline asset targeting cancer treatment that is about to start phase 2 clinical research trials. That’s a sweet spot for speculation in emerging biotechs.
It’s important that the company hasn’t had a prior major success—pritumumab (PTB) is the company’s first pipeline asset. Biotechs with new drugs just entering phase 2 research that have had prior commercial success are usually priced with an asymmetry toward further success—the more winners, the larger the skew in share pricing toward the assumption of good news ahead.
Experienced biotech investors can tell you that’s a recipe for risk. The asymmetry is working against you on a risk-to-reward basis. But emerging biotechs hitting phase 2 for the first time skew the other way—shares price in skepticism, which equates to much bigger investment returns if the path through phase 2 goes well in terms of evidence of clinical efficacy with no serious problems along the way.
This is especially true if the stock is cheap, relatively unknown, and saw positive efficacy signals during phase 1 research.
That’s exactly what we are seeing right now with Nascent Biotech Inc. (OTCMKTS:NBIO).
PTB’s Promise on Display in Phase 1
PTB’s Phase I research process went smoothly and clearly generated results promising enough to warrant Phase II exploration: 15 patients received PTB and were evaluated for safety and efficacy analyses. 12/15 patients had a diagnosis of glioblastoma and one patient each had anaplastic astrocytoma, oligodendroglioma, and non-small lung cancer with brain metastases.
There were no dose-limiting toxicities to this natural human IgG mAb. Overall, the study reportedly found that single agent Pritumumab is safe up to a dose of 16.2 mg/kg every 7 days in brain tumor patients. One partial response showed nearly a 98.0% and 40.8% reduction in 2 tumor lesions for 17 months on study.
“The presentation displayed our Phase I data, which included our safety data at various dose cohorts and early outcomes data, was well received and viewed by interested parties at the conference. In summary, it showed the drug to be very safe at 5 ascending dose cohorts and definitive bioactivity in several patients,” stated Dr. Mini Gill who presented for the Company at a recent conference.
Not only was PTB shown to be safe at sufficient dosing, but there were some early signs of important activity that may bode well heading into phase 2.
The FDA has approved that research progression, and the company has taken steps to shore up its IP control over the asset and reduce exposure to toxic creditors. These are good signals. If anyone knows how much promise phase 2 may bring, it’s the people running the company. And IP protection and equity dilution prevention are the types of agendas that only make sense as priorities if you think you may be on the verge of qualitative value creation.
Is the Market Catching On?
If the story above is on target for NBIO, then the market will eventually start to sniff it out. That’s how the equity market works—it’s a discounting mechanism that predicts the future based on complex information processing through transactions by unassociated actors.
Clearly, the value of PTB, if it is headed for commercialization down the line, is far greater than the company’s current market cap. So the market hasn’t caught onto its potential yet. PTB is especially interesting because, as we discussed last time, it is a potential ‘generalist’ in the oncology space.
PTB is being tested now for brain cancer. But it potentially will have multiple applications because it binds to cell surface Vimentin (also referred to as ectodomain vimentin), which is a protein expressed on the surface of epithelial cancers, or carcinomas, which are the most common forms of cancer.
If it turns out that PTB is a winner in glioblastomas, it may well turn out to be a winner against breast, lung, prostate, colon, and skin cancers as well. In other words, pricing in even just a small percentage of future cash flows from the probabilistic universe that contains PTB’s eventual commercial success is a big, big thing. Certainly, quite a lot more than $0.15/share on a $17 million market cap.
That said, the stock is starting to act much better over the past 30 days than it has for most of 2023. Shares of NBIO have tripled in value since September 5, breaking out above key chart resistance, including both the 50-day and 200-day moving averages. It has also checked back to test the major moving averages successfully as chart support, suggesting it may have made the transition into a bullish trend.
The takeaway message here is clear: this horse is starting to leave the barn.
