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Ishan Majumdar
Ishan Majumdar
Articles (114)  | Author's Website |

NanoViricides: Sufficient Funding for Covid-19 Research

After two successful rounds of fundraising in 2020, the company has adequate cash to move forward

June 25, 2020 | About:

Biopharma companies are in a race to find a cure for the Covid-19 pandemic as the global tally of cases closes in on the 10 million mark. The U.S. alone now accounts for nearly half the deaths caused by the virus due to its focus on re-opening the economy as quickly as possible.

A relatively small biopharma player that has gained attention in this environment is Connecticut-based NanoViricides, Inc (AMEX:NNVC). With rapidly progressing research on its Covid-19 drug candidate, the management has attempted to dispel investor concerns related to its funding through its most recent financial results.

Current financial position

In its most recent filings, NanoViricides reported $6.44 million in current assets and 1.14 million in current cash liabilities, indicating a decent financial position.

The net cash used by the management in operating activities during the past nine months was around $5.11 million, much of which went towards the Covid-19 drug research as well as the other anti-viral initiatives undertaken by its research team against herpes, shingles and HIV.

In May, the company announced the completion of a $10.22 million fundraising effort, achieved through issuing 1.4 million shares for a price of $7.30 per share. This was their second stock issuance fundraising activity in 2020, the first one bringing in a gross value of $8.625 million in January. The management now appears to have sufficient funding for the coming year to move forward with research. 

The company reported a loss of $1.24 per share in the quarter, which was higher than its prior losses. CEO Dr. Anil Diwan and his team are optimistic about the Covid-19 drug program and expect it to produce positive results. It is also worth highlighting that the company’s first drug candidate, NV-HHV-101, a topical skin cream for the treatment of shingles rash, is slowly heading towards human clinical trials.

Progress on the Covid-19 drug program

NanoViricides has been working on the development of a drug treat Covid-19 since January. The company has developed several broad-spectrum anti-coronavirus drug candidates and commenced the testing process.

In its tests using cell culture assays of two different coronaviruses (not Covid-19), the management claims that their own drug candidates have proven to be more effective than favipiravir, the popular antiviral medication used to treat influenza, which is also currently being tested against Covid-19.

After the testing using the cell culture assays, the same testing process has been repeated through an animal model. This time, the results were compared with remdesivir, another broad-spectrum antiviral medication that has been developed by Gilead Sciences (NASDAQ:GILD) and is being tested against Covid-19. The management claims that the company’s drug candidates could be potentially superior to remdesivir in this particular model.

Next steps

As of the writing of this article, the management believes that it has broad-spectrum anti-coronavirus drug candidates that are worthy of human clinical trials based on the effectiveness in both the tests. It intends carrying out safety and toxicology studies and request a pre-Investigational New Drug (IND) Meeting with the FDA for regulatory guidance before moving forward to human trials.

Dr. Diwan and his team are also in the process of identifying and selecting appropriate partners and collaborators for the intended Phase 1/2a human clinical studies for this drug candidate. Earlier this month, the company signed a Memorandum of Understanding with respect to anti-viral treatments for coronavirus derived human infections with TheraCour Pharma, providing a limited, exclusive license to all research and development related to Covid-19. They had also signed a Confidential Disclosure Agreement with an undisclosed international pharmaceutical company from Asia with the objective of exploring a potential collaboration on its Covid-19 program.

Final thoughts

The past six months have been particularly good for NanoViricides shareholders as the company has gone to new highs and increased by 166% in share price. The company is currently trading at a price-book ratio of 3.34, which is well below the biotechnology industry median of 4.45.

The company’s proprietary "nanoviricide" technology of trapping virus particles the same way as a Venus-fly-trap captures and consumes insects clearly appears to have a very wide antiviral application. With future collaborations and potential cash flows expected through licensing, it is my opinion that NanoViricides is a good high-risk, high-return play in the biotech space.

Disclosure: No positions.

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About the author:

Ishan Majumdar
I am a qualified Chartered Accountant with a Masters in Management (Grande Ecole) from HEC Paris. I run a proprietary boutique financial advisory firm called Baptista Research (www.baptistaresearch.com) specializing in M&A, corporate advisory, equity research and valuation of listed companies.

I have nearly a decade of experience spread across investment banks, financial advisory firms, investment funds and other corporates in many different geographies, such as France, Spain, India and others. I was a part of the LBO Financing team at BNP Paribas where I worked on deals with a combined enterprise value of over $1 billion. I have also worked in mergers and acquisitions with Credit Agricole CIB and corporate strategy with Groupe Danone SA. Over the years, I have developed a strong specialization in corporate valuations, strategy and financial analysis.

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