January 12, 2012

im·mi·nent (update)

In my im·mi·nent post, I played with OMP's use of the words "imminent" and "imminently." Based on my read of their work, I had felt OMP made a very agressive call on the MM Phase 3 trial design decision's time frame.

In the last few days, two shareholders (who do not know each other, as far as I know) shared with me the rumor (they heard) that there is no need of a further meeting for the company with the FDA. They wanted my take on it. One shareholder thought the rumor was bad news. The other thought it was good news. How's that for making a market? Someone's a "buyer." Someone's a seller.

I won't speculate on this rumor, or answer their questions of me: Sorry guys! Given how diligently and collaboratively management has worked with the FDA, I highly doubt this purported outcome is bad news.

As I previously blogged, here and here, my current expectation is for management to complete their remaining trial parameter discussions with the FDA at the 4th EOP2 meeting and, thus, agree on a consensus design; a meeting that likely would be held around or before mid-February.

Afterwards, the company would submit the final protocol to the FDA. Provectus then, some time thereafter, would receive the SPA.

Summarizing: Meet. Discuss. Agree. Submit. Receive.

I would expect to see a PR announcing agreement on a consensus design, followed some time later by a PR announcing receipt of the SPA.

Aside from the small group of us that thinks agreement on the SPA is inevitable and simply a matter of when (not if), the rest of the market falls into the following camps:
  • Provectus who?
  • They won't get the SPA. I don't care.
  • When they get the SPA, I'll buy.
  • Provectus got an SPA? I need to do more homework on these folks. I think I need to buy some shares
  • Why is the share price of this biotech going up so much? I better buy some shares.

While I am being tongue-and-cheek with the above list, there is a lot of truth there. I think the ambiguity or uncertainty of the regulatory path for metastatic melanoma is weighing heavily on the share price. When the uncertainty is removed -- once the FDA and management agree on the SPA -- that weight is lifted, and it is replaced by a gusty wind beneath their wings.

Equity markets react poorly (they fall a lot) to negative surprises or when companies fail to live up to expectations. They react irrationally (they rise violently) when a positive surprise occurs or when companies beat the expectations of the market.

If there really is no need to meet, then I would expect we will hear from management in due course about this reality, its meaning and next steps.

Such an outcome would have "beat expectations" by a good amount, or be termed a big "upside surprise" (in Wall Street lingo), in my view.

Not only would management not require another meeting (the expected 4th one) to seek agreement with the FDA, but they the agency itself would have agreed with management's design parameters much sooner than the market actually expected the FDA to do so (if the market even expected such agreement to occur in the first place).

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