July 16, 2012

What's Going On? In Actuality, Not Much, For Now.

Today's share price drop spooked some shareholders, while continuing to frustrate others.

An intraday low of $0.67 on much heavier than [recent] normal volume (337K v. 70K) suggests either indiscriminate (i.e., a shareholder raising cash for whatever reason) or determined (i.e., one's thesis or reason for buying no longer is there, therefore one sells) selling.

Management thinks Provectus is at an inflection point. It thinks the company has been at this inflection point for some time (i.e., refer to Provectus' corporate presentations since last year). The data and value support "external validation" and, therefore, a meaningful event. The tipping point, then, is when such value actually is recognized, and should occur after the receipt of the SPA, which paves a clear path towards the approval of PV-10 for local (loco-regional) use, and the release of more Moffitt work, which clearly substantiates PV-10's systemic use. PV-10's multi-indication viability goes without saying

Provectus is a broken stock, saddled by having to trade over-the-counter and legacy decisions regarding cash bonuses. An independent board now oversees compensation decision-making.

A familiar mantra remains: The value proposition of the business has never been stronger. The value proposition of the stock in the near-term remains dangerously weak.

With no strong buying interest (thus, a weak bid), indiscriminate or determined selling can easily push the share price lower. With no new news as yet, the fear of a cascade affect on selling remains: Some shareholders sell. The price drops. More shareholders sell. The price drops even further. And so on.

Has anything changed in one day? Five days? One month? Three months? Six months? Year-to-date? Click on this Google Finance chart of PVCT. The share price's period loss ranges from -8% to -13%. Ironically, for the share price, nothing really has changed, save more of the same: stagnation, or more accurately, a painfully slow drift downwards.

For the business, the value proposition has increased dramatically. The SPA is in the bag; however, I cannot foresee when it is received, and can only rely on management's Q3 guidance. More Moffitt data should be very highly anticipated, and put a final nail into the coffin of criticism of or skepticism about PV-10 not being a systemic agent.

So how does the stock become unbroken? A move to the Nasdaq reforms and refreshes the stock, but certain events must be triggered.

Some kind of transaction or related event is in the offing. I cannot divine the timing. What kind of transaction?
  • A mini-oncology deal (a geography-specific, indication-specific license transaction). Perhaps two such deals.
  • An equity transaction by Big Pharma.
A dermatology deal will occur when prospective partners get full comfortable with the data. There, PH-10 data will drive the time frame and the value (as PV-10 data has for oncology).

My investment thesis remains sound. My analysis, which is constant and continuous, remains positive. The stock price performance, while dismal, remains a non-factor for now.

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