Dow Jones 10570.13 +122.76 12:13 pm PST, September 6, 2005  NASDAQ 2162.21 +21.14 For info, visit access.smallcapnetwork.com S & P 500 1230.94 +12.92 Change your subscription status here Russell 2000 671.38 +8.05 VOLUME 05: ISSUE 68  Feature: Novelos - Use Pullback to Acquire Shares. We strongly feel that the recent pullback in Novelos Therapeutics (OTCBB: NVLT) from $4.50 to $3.20--for no reason we can ascertain-- represents a great strategic opportunity for investors to accumulate shares or add to long-term positions.  We haven't seen these prices since just prior to its substantive Phase 1/2 completion announcement on August 8th for its NOV-002 compound treatment of NSCLC. (non-small cell lung cancer) As well, this recent share price pullback has been on low volumes, which is good news for those investors who have been waiting to accumulate a position in this unique cancer therapy company. Quiet periods can be the best time to pick up great smallcap stocks at great prices. We feel that the shares of Novelos are no exception at current levels. We expect more substantive developments from NVLT soon. Although the trading of Novelos has been tight, the shares made a decent run from $3.20 to roughly $4.50 after the company announced Phase 1/2 results in early August. The chart shows that the recent pullback to $3.30 on low volume represents a .382 retracement of that run and should it pullback further to the .618 point that puts it just slightly below $3. Given how hard the shares were to buy above $4, supply will most likely loosen up on this pullback.  Bids have been strong, albeit volumes low, but as we've mentioned, the liquidity will likely improve as the company pops up on more radar screens. What is apparent is that current holders obviously like the potential, as they seem reluctant to sell. As we mentioned in our initial Novelos Trading Alert and subsequently on August 8th, we strongly feel that the potential for Novelos is very compelling. With excellent Phase 1/2 results for its NOV-002 treatment for non-small cell lung cancer (NSCLC) to enhance the efficacy of chemotherapy--among other events-- the company is progressing extremely well as it executes its solid clinical development plan. Price Compelling When Compared to Peers Novelos has a current market cap of roughly $90 million, which is considerably lower than a large number of its peers. Given the success of the NOV-002 compound in Russia and the company's solid clinical development plan timetable, we feel that there is significant room for that valuation to expand markedly when compared to other companies in the same developmental space. We'll briefly mention two similar Phase 1/2 companies--although there are many--to position Novelos. You're welcome to research both companies further. We believe that at Novelos's current stage of development, these two companies give an indication of what investors might expect for the share price as NVLT executes its clinical development plan. The first is Ariad Pharmaceuticals (NASDAQ: ARIA) currently trading at $8.45 with a market cap of $450 million. The Company is developing a comprehensive approach to patients with cancer that addresses the greatest medical need - aggressive and advanced-stage cancers for which current treatments are inadequate. Over the last year the shares have moved from $4 to over $8 and have an all-time high of $14-$15. Ariad is currently in Phase1/2 trials for its small molecule drug AP23573, which has shown excellent promise in shrinking cancer cells and tumors. The second is Keryx Biopharmaceuticals (NASDAQ: KERX), which is focused on the acquisition, development and commercialization of novel pharmaceutical products for the treatment of life-threatening diseases, including diabetes and cancer. The company currently has an oncology compound KRX-0401, which is in Phase 2 clinical development as well as an oral heparinoid compound for the treatment of diabetic nephropathy, KRX101, which is now in Phase 3/4 development. The market cap for Keryx is north of $600 million and the shares trade for $16.50. A year ago the shares were $10. In February 2003,there was virtually no volume and the shares were at $1. Neither of these companies boasts significant revenues, but obviously has garnered the interest of investors who have moved the share prices up substantially. We believe that given the low market cap of NVLT against its peers, there is a great deal of potential for the share price to rise as it moves to come in line with companies at roughly the same stage of development. And, as the NOV-002 compound is in use in Russia--marketed by an unrelated company as 'Glutoxim'--investors can have good confidence that NVLT has excellent prospects to receive eventual approval in the US. Of course there are no guarantees, but the successful Russian history is a factor missing in the clinical development arsenals of most small biotech companies. Novelos has over 30 patents filed with several already granted in the US, Europe and Japan. There's more...much more... As well, Novelos's NOV-205 compound has shown promising results in the treatment of Hepatitis B and especially C. Chronic hepatitis C is currently a $2 billion market and expected to rise to $12 billion by 2012. China is of particular interest as Hep B and C is virtually epidemic in that country. With NVLT's unique relationships in Russia, it is able to carry out trials and research to determine a development profile to backstop submissions to the regulatory agencies in the US and elsewhere. Novelos has many other facets and potential uses for its compounds including the treatment of radiation sickness due to a nuclear accident or 'dirty bomb'-type terrorist attack. As well, NOV-002 has shown promise in opening up the use of chemotherapy for previously chemo-resistant types of cancer such as ovarian. Read our previous pieces as noted above and get familiar with Novelos. It's unique approach and solid clinical development plan should be of keen interest to those biotech investors looking for great growth potential.  We firmly believe the shares deserve a prominent place in the smallcap biotech section of a portfolio.     We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 3525 Del Mar Heights Rd #334 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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