Positive Initial Imaging Results From LIGHT Phase I/II Trial Observed

Grant Zeng, CFA

Early this morning (June 19, 2012), Novelos Therapeutics, Inc. (NVLT) announced that the University of Wisconsin Carbone Cancer Center (UWCCC) has successfully dosed three patients in a Phase I/II positron emission tomography (PET) imaging trial of I-124-CLR1404 (LIGHT), a cancer-targeted PET imaging agent, in patients with primary or metastatic brain cancer.

As a reminder, the investigator-sponsored Phase I/II trial of LIGHT as a PET imaging agent for brain cancer was initiated in December 2011 at UWCCC and first patient was enrolled on March 15, 2012. Lance Hall, M.D., is the trial’s principal investigator. This trial is being funded by the UWCCC and the Institute for Clinical and Translational Research (ICTR). Up to 20 patients will be enrolled at a 5 mCi dose.

The three glioma patients were dosed with LIGHT at 5 mCi.

o LIGHT is well tolerated, and there are no adverse safety signals are observed.

o Strong and sustained uptake of LIGHT in cancerous tumors against very low background has been observed;

o Further, LIGHT’s cancerous tumor to normal tissue uptake ratio exceeded 30:1 in one tumor, which compares favorably with PET agents that are generally considered good tumor biomarkers if tumor to normal tissue uptake ratios are in the range of 3:1 and 5:1.

Detailed trial results are expected to be presented at a scientific venue at a later date. Novelos expects final results to be available in 1Q13.

We think the preliminary results from these three brain cancer patients are very encouraging. The uptake is strong and cancer-specific with no safety signals. These results begin to establish proof-of-concept for LIGHT as a PET imaging agent for brain cancer, and could be used to calculate effective doses for Phase II clinical trials of I-131-CLR1404 (HOT) in this indication.

Balance Sheet Boosted by Recent Financing

On June 14, 2012, Novelos Therapeutics, Inc. closed a public offering of 5,420,800 units at $1.00 per unit for gross proceeds of $5,420,800.

Each unit consisted of one share of common stock, a Class A Warrant with a five-year term to purchase one-half of a share of common stock at an exercise price of $1.25 per share and a Class B Warrant with a 90-day term to purchase one share of common stock at an exercise price of $1.00 per share.

While some investors view this financing as negative, we believe this financing will benefit the Company as well as its shareholders in the long term. We admit that this equity financing certainly dilutes existing shareholder base, but it provides necessary funds for advancing the development of the Company’s two key programs LIGHT and HOT. With the new funds, the Company’s balance sheet is boosted immediately.
As of March 31, 2012, the Company had only $3.8 million in cash and cash equivalents. Current cash can only last into 3Q2012. With the addition of funds from the financing, the Company should have cash balance in the neighborhood of $6.5 million now, which could last into 1Q13.

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