Today’s Daily Alert comes from BI Research Editor Tom Bishop, who is re-recommending his 2012 Top Pick as a Top Pick for 2013 today. New investors have a unique opportunity to get into the stock at good prices here thanks to a recent “no news is bad news” reaction to silence from the FDA; see the additional note after Bishop’s recommendation for more on that.
“While InVivo Therapeutics Holding Corp. (NVIV, $2) has taken a bit longer to play out than originally expected, I will definitely stick with it again as my favorite way to earn an outsized gain in 2013. The company seemed poised to gain FDA clearance to take its biodegradable, bio-polymer scaffolding device into clinical trials earlier this year. However, InVivo’s plans to move into new GMP manufacturing space later in 2012 prompted the FDA to delay clearance to begin the trial until InVivo moved into this new facility, completed validation of it and produced compliant batches there (now done). This delayed the time line a good six to nine months.
“This device, when implanted into a spinal cord injury (SCI), reduces swelling and inflammation that would otherwise cause total paralysis below the point of injury. The company has tried this, and other technologies it is working on, in over 40 monkeys with SCI and every one has walked again within two to three weeks. Human trials should start in the first part of 2013. Trial results in monkeys are as good a proxy for what will happen in humans as there is. So this is a very exciting time.
“But treated patients don’t have to walk across the room for this to be a success, if they can even move a hand or a finger they will be able to take much greater control of their lives. The FDA has agreed to HDE/HUD status for the device and decreased the necessary trial size from ten to five patients(!), with the very real chance that if there is success with this trial, it will approve the product for sale on Humanitarian Use grounds because there is currently no treatment to restore function for such spinal cord injuries. SCI is reported to be a $10 billion market. While there are no guarantees, the success on all 40 monkeys tested and the involvement of Noble Prize candidate Bob Langer of MIT (he’ll win it someday) gives us a measure of confidence. It’s well worth Googling him, and InVivo.”
- Tom Bishop, BI Research, January 2013
Regarding NVIV’s price decline on January 30, Bishop wrote this update: “Investors were hoping to get the official word on the HUD/HDE [Humanitarian Use Device/Humanitarian Device Exemption] exemption from the FDA by now, based on the 45 days to respond rule, measured from December 14. ... Since nothing has been announced yet the thinking behind today’s decline might be that investors are worried that no news is bad news. Unfortunately ‘new’ HUD rules came out on January 24. Whether this delayed things or not, I can’t say. ...
“A third possibility is that some back-and-forth between the FDA and the company for information might just automatically extend the clock somewhat. ... Hopefully this is just Nervous Nellies today, or maybe even a little bit of market makers taking advantage of the uncertainty to load up cheap for the ride up. Frankly, given the assumption since April has been that we’d get the HUD designation, I thought this would be a non-event, and am a bit surprised at today’s overreaction (hopefully) to no news yet. Near as I know everything is on track, no loss of faith here.”
Given Bishop’s continuing faith in the company, new investors interested in NVIV for the long-term potential of its story may wish to use this price decline as a buying opportunity.