Summary

NervGen has already regenerated neurons under the microscope and in live rats with severed spinal cords. The rats regained most of the function in paralyzed legs.

The market cap of NervGen is under $80 million. It is currently in Phase 1 FDA trials in humans and is about to go into Phase 2. 

NervGen has exclusive rights to the technology from Case Western University. It is backed by top experts in the field and staffed by very high-level pharma executives. 

It has no competitors that can repair damage to the nervous system. If it works 50% as well in humans as in animals, a $15 billion market cap is feasible.

It is rare to find a drug developer that has an outstanding risk/reward proposition. Most are bad investments that go bankrupt or lose much of their value from my observation. NervGen Pharma, (NGEN.TSX-V) (OTCPK:NGENF) is a big exception to the common overvaluation in this sector. 

I have over 75 stocks in my portfolio and NervGen is the only drug company stock in it. The social good possible from their drug is the best I have ever seen—and so is the company’s investment potential.

I have done stock research about 25 hours a week for the last 20 years. By accident, I saw a video about NervGen and its drug candidate. After watching the videos below and doing more research on the company, I see it as the highest-potential stock I have ever found.

That is saying a lot. My specialty is investing in deep value stocks with extreme gain potential. I currently have several stocks in my portfolio that have 1,000% to 2,500% gains and one, Petrus Resources, (OTCPK:PTRUF), that bought as low as .05 and which has recently gone over $2.00. That is up about 4,000%. And I did sell some of it when it was in the $2 area.  My records go back 20.25 years and have a CAGR of 23.86%, which is the 3rd highest 20 year of longer CAGR that is known about.  Joel Greenblatt is #1, George Soros is # 2,  I would be #3, and Warren Buffet #4.  The chart below is of returns above the 7.5% long term SP500 CAGR.

Most of these current huge gain stocks are Canadian oil and gas stocks that I thought had huge potential when I was buying them 2 years ago. If NervGen's drug candidate NVG-291 works anywhere near as well for humans as it has in animal tests, its stock price growth potential is way beyond any of the huge winners in my portfolio today.

The video below is by San Diego Torrey Hills Capital. In it you will see a spinal cord paralyzed rat that has seen remarkable recovery when treated with NVG-291 at 7:37.


How NVG-291 works is very simple. Most things like skin regenerate, but nerves do not because a special scar tissue forms when there is damage to the nervous system. NervGen's NVG-291 allows cells to ignore the special scar tissue, and they start growing again.

Injury or disease to the central nervous system (CNS) results in multifaceted cellular and molecular responses. One such response, the glial scar, is a structural formation of reactive glia (cells) around an area of severe tissue damage. The purpose of the scar is to encapsulate the site of the injury to prevent further damage and begin the healing process, but it ultimately inhibits the body’s reparative mechanisms. The lead inventor of NervGen’s technology, Dr. Silver, discovered that a constituent of these scars, a glycoprotein called chondroitin sulfate proteoglycan (“CSPG”), is a major inhibitor of the body’s natural ability to regrow and regenerate the CNS.

Pictorial Representation of the Glial Scar Cregg et al., 2014, Experimental Neurology (NervGen Pharma)


In the video above at 11:56, you can actually watch human neurons regrow under the microscope after NVG-291 is applied. I strongly suggest watching the entire video above, it is highly informative to an investor.

For the animal tests, it was a 7-week treatment, and not only was there no loss of benefit after the treatment was over, there was improvement at slower rate after treatment ended. It appears to be able to permanently repair spinal cord injuries. A very high improvement happened for about 50% of paralyzed animals, which is wonderful considering there is no other alternative today. None in the placebo group had any significant improvement. In a separate study, 100% of animals had bladder control improvement at the two highest doses.

At 25:23 in the above video, they induced a MS (Multiple Sclerosis) equivalent state on rats. This paralyzed the rats' rear legs. In the placebo group, they stayed paralyzed. But after only 21 days, the NVG-291-treated rats regained their ability to walk. The theory of why NVG-291 would also will work on MS sufferers, is that MS is a disease in which the fatty tissue (called myelin) which surrounds the neurons in the brain and spinal cord is attacked by the patient’s own immune system. The body tries to repair the myelin (called remyelination) but over time the scars begin to form and stop the remyelination. Similar to how NVG-291 allows neurons to regenerate, it also allows the cells that produce myelin to produce more myelin, even in the presence of the scars.

A medical doctor was interviewed about NervGen and sees them the same as I do. It is Dr. Mark Swaim, founder of BioPub. He has made it the largest position in his portfolio and says it is the best drug stock investment he has ever seen. That video is below. It is cued to where he talks about NervGen.

What are the risks for NervGen?


1. Is it a scam?

On this issue, I have no fears it is a scam due to the people involved, the fact it is well known in the scientific community, and it has done Phase 1 FDA trials, etc. One example of the people involved is the NervGen board’s newest member, Craig Thompson—the former Vice President, Marketing at Pfizer. Also worth noting are the company’s Chief Medical Officer, Dan Mikol, who joined in May 2021 and came from a senior position in Amgen, as well as the world-class clinical advisory boards that the company works with.

2. Does it work for humans like it does for animals?

What is the translation between successful animal trials and human trials? That is a big question that the research community talks about a great deal with vagueness. One large study said it ranges from 0% to 100%. They never went further than that, making the study worthless except it had a chart in it where you can roughly answer the question they never did. Here it is:

Each dot is a study. A 50 Translation means it works 50% as well in humans as it did in animal studies. What I see is that since 2000, about 10% of drugs worked only 0% to 25% as well in humans than in animals; about 75% of drugs tested did about 50% to 100% as well for humans as for animals; and 10% of drugs were 90% to 100% as effective in humans. This is encouraging. If it works at 50% or higher in humans, as it has in animals, it will be a blockbuster drug and quite likely win the Nobel Prize for Medicine.

I was able to contact the CEO and President of NervGen, Paul Brennan, and he sent me a much more precise study on this issue. Clinical Development Success Rates 2006-2015 shows that about 30% of drugs that pass Phase 1 make it through Phase 2 and show significant enough benefit and continued safety to go on to Phase 3. Phase 2 is where new drugs are likeliest to fail.

Overall, from the start before Phase 1, a drug has about a 10% chance to make it to approval for public use. Do we have to make it to Phase 3? No. In my opinion, the stock will skyrocket on succeeding at Phase 2, proving it works on humans. Imagine the publicity if NVG-291 shows it can heal paralysis in 50% of patients and also reverse 50% of Alzheimer's damage? It might be the lead on the nightly news across the nation, and should be. The sector funds and pro investors know Phase 3 is easier to pass that Phase 2, in fact the study says 48% that make it past Phase 2 are approved. So passing Phase 2 and the anticipation of doing that is all the stock needs in my opinion to be the hottest drug stocks out there.

Since my initial version of this article was written, CEO/President Brennan answered some questions in email and we have talked. In regard to my guess this drug is more likely to translate to humans than most drugs, he not only confirmed the reasons I had, he had twice as many. He has given me permission to include his take on this issue in this article.

"That is a good question; we believe there are a number of reasons why this technology is more likely to succeed compared to others in the CNS field. These are as follows:

Most drugs in the CNS space are trying to stop or slow progression of disease. This is very hard when you don’t know the root cause of the disease such as in MS, Alzheimer’s, or ALS. It’s very different for us because we’re not trying to stop the disease, we’re trying to repair the damage that occurs as a result of the disease. And we believe we understand why the body’s own repair mechanisms are being inhibited (it’s the CSPGs that are there initially to constrain damage).

It’s also very hard to develop drugs when you are trying to stop a very slow progressing disease, where the changes develop over 5-10 years. You have to study 1,000s of patients for 12-24 months for what might be only small changes. This is the case for most drugs that are in development in the CNS space. We’re quite different as we are trying to promote repair; if the magnitude of repair is even half of what we saw in animal models, we should see results much quicker, and it should take much fewer patients to demonstrate these results.

The structure and function of CSPGs (the molecule in the scar that inhibits repair) and the PTPsigma receptor (the receptor that interacts with CSPGs and that is the target of our development program) are very similar in all mammals, suggesting conservation of function. More simply put, because the structures are similar between mice, rats, dogs, primates and humans, it’s likely they are doing the same things, and that experimental results studying CSPGs and PTPsigma can be translated from one species to another.

The experiment that we use in spinal cord a is very good model for what actually happens in humans (a bruise or crush of the spinal cord), and thus a good predictor of effect. This can’t be said for most disease models (such as cancer, Alzheimer’s, inflammatory bowel syndrome, pain, etc.).

Also in spinal cord, the magnitude of the effect that we see is substantial. A large effect size in animals typically gives greater confidence that the results translates to humans.

With NVG-291, we have had results in 6 different disease models, and have seen improvements in all the major neurological functions (motor, sensory, autonomic, cognitive). Again when you see results in animal models that are so broad, they tend to translate to humans.

We have seen positive results looking at the effect of disrupting the interaction of CSPGs and PTPsigma in primates using chondroitinase (a drug that digests CSPGs, which unfortunately can’t be used in humans). This is important as it demonstrated the relevance of the CSPG-PTPsigma mechanism in the species of animals that are closest to man.

We know that our drug promotes the desired response in human neurons in in vitro experiments.

In our Phase 1 studies, the pharmacokinetic characteristics were better than what we saw in the rat and mice studies. Specifically, the half life in humans was much longer in humans than measured in rodents. This bodes well for the Phase 2 studies."

3. We have to wait for human results, about 20 months.

If one waits until the FDA says the drug is effective, the market cap can go up billions of dollars in one day. It has happened. Since it’s now very cheap at an $80 million market cap, it makes more sense to me to buy it now. For the market cap it is based on the 4-27-2022 close of $1.72 after this article was finished and as I await a final proofread. It can take a while before publication and that is if it is accepted. The same day I was fortunate to buy a substantial amount of NervGen at $1.58, as the the overall stock market was down hard in the morning.

I give it a 50% chance it will work and be approved. Becoming a $10 to $20 billion market cap stock is very possible, if approved. If there is even just a 20% chance of approval, that would be a 20 times increase in stock price, as an average outcome between a 100% loss and 10,000% ($10 billion) gain, excluding dilution of the stock. You can make your own call on the likelihood it works in humans and what dilution will happen before approval and come up with your own average outcome. Investors do need to keep in mind that a total failure is possible and they may lose the entire investment. If it fails this time for Phase 2, though, I actually do not expect a drop to zero, as it shows so much promise; instead, a 50 to 75% drop is more likely.

The Phase 1 human tests showed it to be well tolerated. CEO/President Brennan, stated, “The results we are seeing in our Phase 1 study continue to be very promising. The dose of NVG-291 administered in the first cohort is already above the highest corresponding dose found to be efficacious in animal models and is substantially higher than the lower effective doses where dramatic functional improvements were observed. We have now proceeded to evaluate a higher dose level in the second MAD cohort and the blinded safety data observed so far are encouraging and highlight that we are a step closer to initiating the Phase 1b/2 efficacy studies in patients later in 2022.”

This was on healthy people for safety evaluation, so no effectiveness data. Phase 2 will be on people that have spinal cord injuries, MS and Alzheimer's disease. Although the testing is expected in less than a year, there is a delay before the company reveals the results, hence my guess of 20 months before results are published.

It did show a reduction in gonad weight in rats. This is has been observed in other FDA approved drugs. In light of the extreme need for this drug, it should not prevent approval. And for many uses it is a one-time use for a few months, then it is not needed again. For Alzheimer's, it would be needed long term, but being how devastating that disease is, it would be a big net benefit even if there are side effects.

If you can not wait 20 months, then it may not be a good stock for you.


Conclusion:

My opinion is the only reason NervGen has not taken off yet is that even though the medical community knows about this drug candidate, the investment community does not. There has never been an article on Seeking Alpha about NervGen. as an example. Like me a week ago, almost all investors have never even heard of this company.

I’m glad I was able to find it and have taken a large position in the stock before it has been discovered and at a market cap of $80 million. Even before the Phase 2 trials are published, if investors know about NervGen, it is my opinion that the stock will take off. If Phase 2 goes well, I’m expecting a big rush into the stock, as it will be one of the biggest medical breakthroughs in decades.

CEO Brennan mentioned another factor why it has not taken off yet. They do not have a famous large investor yet, but many that are waiting for another to go first into NervGen. I have seen that in Silicon Valley with venture capitalists. They would tell me "Get another VC to come in and we will come in too."

My thought is if you are good at picking good companies, you do not need to follow someone else. The market cap is so small for the magnitude of the opportunity, NervGen could go up many times just with retail investors. I have sold most of my Karora (OTCPK:KRRGF) stock recently to buy NervGen. Did very well on Karora, it was up about 7 times from the Covid low in 2020. It had the same issue, practically no fund managers were in it 2 to 3 years ago. I bought it for maybe a third of what many fund managers ended up paying. Now they love Karora stock when it is 7 times higher. I likely did not make 7 times on Karora overall, as bought quite a lot before the low, but did make a very nice bundle on it.

Another catalyst, if a major TV show interviews Paul Brennan on NervGen or even a top podcast like Rogan, it should also take off. I have told two relatives and one business partner about NervGen and all three have bought the stock. Think all it needs if for people to know about it. The stock going up now would be a good thing for the company. The reason is if the stock is three times higher, that means they can fund Phase 2 with one third the stock dilution, so it will be good for the investors too. I feel privileged to be able to participate as an investor in getting this technology to market.

The ultimate catalyst for this stock is that as the CEO says below, if just 10% a Alzheimer’s patients took NVG-291 that would generate $30 billion of revenue per year, which would make it the largest selling drug in the world.



Disclosure: I/we have a beneficial long position in the shares of NGENF either through stock ownership, options, or other derivatives.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.