Dow Jones 10827.40 -50.11 8:15 am PST, December 5, 2005  NASDAQ 2253.43 -19.94 For info, visit access.smallcapnetwork.com S & P 500 1259.65 -5.43 Change your subscription status here Russell 2000 683.14 -7.43 VOLUME 05: ISSUE 91  Feature: Novelos - FDA Green Lights Phase 3 Cancer Study.  The title of today's release (below) from biotech Novelos Therapeutics (OTCBB: NVLT) speaks volumes: "Novelos Therapeutics Gets Green Light From FDA For Phase 3 Development in Lung Cancer". Obviously the FDA saw the value of continuing the regulatory process to potential approval for NVLT's NOV-002 compound based on the company's impressive Phase 2 results, which we detailed in our August 8th article. As SmallCap Digest noted last week, the company will now work with the FDA to structure a Special Protocol Assessment (SPA) (for its NOV-002 compound), which is essentially a results/approval blueprint between Novelos and the regulator. Once the agreed terms of an SPA are satisfactorily met, the FDA approves the drug/therapy.  2006 looks an exciting year for NVLT as it embarks on this major Phase 3 initiative as well as plans for a Phase 2 study for NOV-002 as a treatment for chemo-resistant ovarian cancer and for its NOV-205 compound for the treatment of chronic Hepatitis C.  For a company as young as Novelos, meeting these milestones is nothing short of amazing. And certainly should be a compelling reason for current and future shareholders to own the shares. As Novelos enters this new phase of growth and development, the shares should be accumulated at these levels and on dips for what we believe will be superior gains over the next 12 months and beyond. Nothing has changed markedly from our technical comments last week. The shares appear to want to move higher and the next resistance level appears to be $3.75. We'll see what effect today's announcement has, but increased trade volumes and better liquidity have begun to make Novelos a decent trader. As more investors see the shares blip onto their radar screens, we believe the liquidity and trade will improve further. Volatility will remain, but recent trade activity bodes well for the future. Here's The Bottomline. At the moment, Novelos has a market cap of roughly $90 million. We believe that today's announcement moves the company into a new growth realm-- from a Phase 1/2 company to a Phase 2/3 company. A look at comparable companies in the sector denote that NVLT's current market cap does not yet reflect its progress to date, potential or the valuation level of it's peers, which in many cases are significant multiples of Novelos's current market cap. Ariad Pharmaceuticals (NASDAQ: ARIA), a cancer therapy company on track for Phase 3 studies boasts a market cap approaching $400 million. Telik Inc (NASDAQ: TELK), with a market cap of almost $900 million is in Phase 3 registration with TELCYTA for the treatment of advanced ovarian cancer. Neither of these companies has anything approaching significant revenues, if any at all. Regardless, the biotech/drug market and investors have assigned significant valuations to those companies--among many others--based on future potential. We believe that this increased market valuation will come to pass for NVLT as well. At the very least, a significant increase of its market cap certainly seems appropriate in our opinion. That of course would mean a significant rise of the share price from these levels and beyond as the Phase 3 study is populated later in 2006. The planned endgame is obviously eventual FDA approval followed by the commercialization of NOV-002 for the treatment of non-small cell lung cancer.  Along with NVLT's other therapies, indications and developmental study initiatives, the path for the company and those shareholders who see the potential early, now exhibits a greatly enhanced risk/reward profile. In our opinion, Novelos shares are significantly undervalued at the $3 and change level given its progress to date, future potential as well as when compared to the market caps of its peers.   Press RELEASE Novelos Therapeutics Gets Green Light from FDA for Phase 3 Development in Lung Cancer Dec 5, 2005 8:00:00 AM Copyright Business Wire 2005 NEWTON, Mass.--(BUSINESS WIRE)--Dec. 5, 2005-- Novelos Therapeutics, Inc. (OTCBB: NVLT), a biotechnology company focused on the development of therapeutics to treat cancer and hepatitis, today announced that the Food and Drug Administration (FDA) agreed that advancing NOV-002 into a single pivotal Phase 3 study in advanced non-small cell lung cancer (NSCLC), in combination with first-line chemotherapy, is warranted at this time. The FDA also provided helpful feedback regarding the prospective New Drug Application (NDA) filing for NOV-002. During the End-of-Phase 2 meeting, the FDA agreed that a single well-controlled study would be sufficient to support licensure of NOV-002 (in combination with chemotherapy) for the first-line treatment of chemotherapy-naive Stage IIIb/IV NSCLC patients. Novelos will seek to finalize the pivotal Phase 3 study design under a Special Protocol Assessment (SPA) during the first half of 2006. The primary endpoint of the pivotal study will be overall survival. Novelos anticipates enrollment to begin in the third quarter of 2006. "This is a very significant milestone for us," said Harry Palmin, President and CEO of Novelos. "Novelos is now a Phase 3 drug development company, with other programs reaching Phase 2 in 2006, including NOV-002 for chemotherapy-resistant ovarian cancer and our second compound, NOV-205, targeting chronic hepatitis C." "We are pleased that the FDA has considered the NOV-002 clinical and non-clinical data package sufficiently robust to support Phase 3 development," said Taylor Burtis, Vice President of Regulatory, Quality and Compliance of Novelos. "We look forward to working with the FDA on a SPA to support a single pivotal Phase 3 study for licensure of NOV-002." About Novelos Therapeutics, Inc. Novelos Therapeutics, Inc. (OTCBB: NVLT) was established in 1996 to commercialize two promising oxidized glutathione-based compounds, NOV-002 and NOV-205, for the treatment of cancer and hepatitis. Both compounds have completed clinical trials in humans and have been approved for use in the Russian Federation where they were developed. NOV-002, the lead compound, is designed to act as a chemoprotectant and an immunomodulator. It is marketed in Russia by Pharma BAM under the trade name Glutoxim(R), and has been administered to over 5,000 patients, demonstrating clinical efficacy and excellent safety. The U.S.-based Phase 1/2 clinical study of NOV-002 in combination with chemotherapy for lung cancer has been completed, with positive results. The FDA has agreed that advancing NOV-002 into a single pivotal Phase 3 study in advanced NSCLC is warranted, and this study is expected to commence in 2006. NOV-002 is also being developed to treat chemotherapy-resistant ovarian cancer and acute radiation injury. NOV-205, the second compound, is designed to act as a hepatoprotective agent with immunomodulating and antiviral activity. In Russian clinical studies in hepatitis B and C patients, NOV-205 greatly reduced or eliminated viral load and significantly improved liver function. Novelos plans to file an Investigational New Drug Application (IND) with the FDA for NOV-205 as monotherapy for hepatitis C by the end of 2005 and initiate a U.S.-based Phase 1/2 clinical study in early 2006. For additional information about Novelos please visit www.novelos.com This news release contains forward-looking statements. Such statements are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. Drug discovery and development involve a high degree of risk. Factors that might cause such a material difference include, among others, uncertainties related to the ability to attract and retain partners for our technologies, the identification of lead compounds, the successful preclinical development thereof, the completion of clinical trials, the FDA review process and other government regulation, our pharmaceutical collaborators' ability to successfully develop and commercialize drug candidates, competition from other pharmaceutical companies, product pricing and third-party reimbursement. Source: Novelos Therapeutics, Inc. ------------------ Investor Relations: H.C. Wainwright & Co Inc. Stephen Lichaw Vice President 212-856-5706 slichaw@hcwainwright.com or Media Relations: Noonan Russo Brian Ritchie 212-845-4269 brian.ritchie@eurorscg.com    We Value Your Feedback Got comments, questions or suggestions? 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