November 9, 2012

10-Q: Q3 2012

Provectus released its 10-Q filing for Q3 2012 today. See here.

Quarter-over-quarter ("QoQ") -- Q3-over-Q2 -- monthly cash expenditure decreased by 23.3% (v. +3.6%  Q2-over-Q1)  to ~$745K per month (v. ~$969K). Ending Q3 cash was $1.8MM. The company raised ~$2MM in October (Q4). I think, based on some assumptions, that Provectus might have $3-$3.3MM of cash as of the filing date. QoQ R&D expenses decreased by 47% (v. +5.6%). QoQ G&A expenses decreased by 7.1% (v. +0.5%). Operating expenses include both cash and non-cash charges.

Click on the figure to enlarge it.
Management noted in the filing's MD&A section: "By managing variable cash expenses due to minimal fixed costs, we believe our cash and cash equivalents on hand at September 30, 2012, together with cash proceeds received during October 2012, will be sufficient to meet our current and planned operating needs until well into 2013 without consideration being given to additional cash inflows that might occur from the exercise of existing warrants or future sales of equity securities, although we may, in our sole discretion, direct Lincoln Park Capital Fund, LLC (the “Fund”) to purchase up to an additional $29,950,000 of our common stock per an existing agreement with the Fund." I would expect the company to continue to do private placements, raising money as necessary to maintain enough cash on hand to satisfy the external auditors, until such time as a dermatology deal or a mini-oncology deal or two are consummated to provide Provectus with the necessary cash to effect the pivotal MM Phase 3 trial. I think the minimum cash figure acceptable to the auditors is around $3-4MM, but this is not a hard floor or range; rather, having the ability to continue to support 12+ months of cash burn should be helpful in Provectus' representations.

The company expanded on their Q2 filing statement related to the strategic investment program: "We are seeking to improve our cash flow through both the licensure of PH-10 on the basis of our Phase 2 atopic dermatitis and psoriasis results, and the geographic licensure of PV-10 on the basis of our Phase 2 metastatic melanoma and Phase 1 liver results in certain areas of the world, as well as pursuing a strategic investment strategy, including equity sales to potential pharmaceutical and or biotech partners, and continuing with the majority stake asset sale and licensure of our OTC products as well as other non-core assets." This refers to the mini-oncology deal transactions the company is exploring in Australia, China, Japan and MENA.

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