December 25, 2012

$PVCT: The Challenge. The Opportunity. The Total Addressable Market.

Source material: "Black swan theory," Wikipedia. "The black swan theory or theory of black swan events is a metaphor that describes an event that is a surprise (to the observer), has a major effect, and after the fact is often inappropriately rationalized with the benefit of hindsight. The theory was developed by Nassim Nicholas Taleb to explain:
  • The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology
  • The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities)
  • The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs."
"Taleb regards almost all major scientific discoveries, historical events, and artistic accomplishments as "black swans"—undirected and unpredicted." Taleb introduced black swan events in his 2004 book Fooled By Randomness.

I think the pervasive use of PV-10 -- first, second, last and everywhere in between during the treatment of cancer patients -- as a potential black swan event.

Click figure to enlarge it. Source map here.
  • A PV-10 treatment price (for the necessary cycles of RB to treat a particular indication), using a number of injections per vial, a number of vials per cycle, a number of cycles per treatment (the number of cycles will vary from indication to indication), the price per vial of PV-10, etc.,
  • The treatment of a percentage of annual, global, new incidences of cancer,
  • An average annual royalty rate,
  • Initial penetration rates that grow to their respective equilibrium levels, and
  • Perhaps some fine tuning on a per indication basis (although I am fan of a McKinsey'ish 8-20 to garner a perspective of the size of the potential black swan event.
The result is a very large total addressable market.

My point is this: A dispassionate and objective case can be made for a good return on investment outcome for Provectus shareholders, including myself. My investment, while founded on this outcome, is, however, more focused and a play on the potential of a PV-10 black swan.

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