November 30, 2012

$PVCT: Travel

Peter is on travel this week.

Updated: Peter is in Asia.

Article: Lawyers gain from "say-on-pay" suits targeting U.S. firms

Sarah Good, who co-authored Pillsbury's report, said there was little companies could do to avoid being hit with these lawsuits. "Where the plaintiffs securities bar sees that they will get a return on their investment, they're going to keep filing them," she said.
Full article here.

November 28, 2012

$PVCT: Liver Cancer Addressable Market in China

Though rare in the west, liver cancer is serious in Asia due to the prevalence of hepatitis B infection, which is as high as 10 percent in China's population of 1.3 billion people. Chronic hepatitis B infection can result in liver cirrhosis and liver cancer later in life..."But in China, even 10 percent of liver cancer patients would be an incredible number," Jiang said. In China, there are about 350,000 new liver cancer cases each year, or half of the world's total.
Full article (from May 2012) here, and below.

November 27, 2012

$PVCT: 地理许可证

Provectus' share price has bounced above, below and around the 60-cent level following last month's terminated PVCTP "IPO." The SPA process has taken a toll on the stock in 2012. The market and life science investors' "certain" view the company will be forced to undergo substantial dilution to raise the necessary money for key and pivotal clinical trials (MM Phase 3, HCC expanded Phase 1 and Phase 2/3, pancreas Phase 1) weighs heavily on the share price too.

While management explored the opportunity to execute an "IPO," quarterly filings for Q2 and Q3 2012 indicated other avenues for seeking cash, such as from outlying geographic licenses (e.g., Australia, China, Japan,   MENA).
2Q12 10-Q Filing -- Click on the figure to enlarge it.
3Q12 10-Q Filing -- Click on the figure to enlarge it.
The horse race, which previously had a dermatology transaction and geographic-specific oncology deal in the lead (unless a company-friendly "IPO" could have been had to overtake them; in hindsight, it could not), now might see (for now at least) an outlying geography deal for oncology assume the lead. I am not sure if Provectus is in the homestretch in this regard, but we could shortly see if it is.

$PVCT: Get Shorty (Update)

Short interest as at October 31, reported today, was 965,742 shares -- down 10% from the October 31 reporting period (1,072,941). See the graph below.
Click on the figure to enlarge it.

Lawyers (follow-up)

A Provectus shareholder filled out the lawyers' solicitation information to learn of the follow-up. Below is the e-mail the shareholder received, together with an accompanying retainer agreement.
Click on the figure to enlarge it.
Click on the figure to enlarge it.

November 23, 2012

Lawyers (update)

My initial post on this topic is here. Provectus made an 8-K filing today in which the company responded to the Levi & Korsinksy's PR regarding the law firm's so-called investigation into compensation provided to certain executive officers. See below.

Click on the figure to enlarge it.
Provectus: "On November 21, 2012, Provectus Pharmaceuticals, Inc., a Nevada corporation (the “Company”), was made aware, after the stock market closed, that the law firm of Levi & Korsinsky, LLP, is seeking information in connection with the compensation paid to the Company’s executive officers. The Company has received no inquiry from the staff of the U.S. Securities and Exchange Commission (the “SEC”) related to this matter. The Company has received no inquiry from Nasdaq or any other self-regulatory organization related to this matter. The Company has never received shareholder proposals related to compensation. The Company held its most recent annual meeting of stockholders on Thursday, June 28, 2012. The Company’s stockholders approved the advisory vote on the compensation of the Company’s named executive officers. The Company may take legal action to recoup expenses relating to this matter and to determine if stock manipulation, including possible shorting in the Company’s stock, has occurred due to the actions of Levi & Korsinsky."

$PVCT: D&O Insurance

Like clinical trial insurance, Provectus, of course, also carries D&O (directors & officers) insurance. Both are givens in the biopharmaceutical industry, as variations of these and other relevant insurance coverage are givens in this and other industry sectors for serious small and large companies alike.

D&O coverage is included in Provectus' general and administrative expenses in the 10-Qs. Clinical trial insurance coverages and a portion of the D&O expense is itemized as insurance under research and development costs (see note below).

To imply, insinuate or guess otherwise continues to, um, strain one's historical and future credibility, to the extent anyone might still assume or think such ever existed in the first place.

Regarding expense allocation, per the company's filings: "Research and development costs are charged to expense when incurred. An allocation of payroll expenses to research and development is made based on a percentage estimate of time spent. The research and development costs include the following: payroll, consulting and contract labor, lab supplies and pharmaceutical preparations, legal, insurance, rent and utilities, and depreciation."

November 22, 2012


I modeled the essence of my thoughts about my investment in Provectus when writing blog posts on the essence of story behind a book by Gregory Zuckerman, a reporter at The Wall Street Journalnew book, entitled The Greatest Trade Ever, which narrates how John Paulson, his assistant Paolo Pellegrini and a few other investors saw what nearly everyone else initially and for some time did not see, went against conventional wisdom, and saw through the U.S. housing bubble (I have borrowed liberally from a 2009 article by The Daily Beast's Daniel Gross).

While Paulson wound up making the so-called greatest trade in financial history, he was neither a mortgage expert nor a real estate one. He also did not have much background in the derivatives he used to make his bets, like credit-default swaps. Paulson and Pellegrini really never had a eureka moment and essentially backed into their trade, initially having a vague worry in 2005 about the state of the economy and housing market. They wanted to buy puts on the S&P 500 but found them too expensive, so they began buying CDS contracts because they were much cheaper. Paulson knew nothing about this stuff and Pellegrini knew a little more. They had a tough time convincing people. Paulson wanted to raise a specific hedge fund dedicated to betting against housing. His audiences had interesting arguments why Paulson was wrong: the contracts are illiquid and hard to trade, the government would act to stop any collapse, etc. Paulson ended up with a fund of about $147 million, but at the time hedge funds were raising billions of dollars for different funds. Timing is important. Paulson started out making his initial trades in 2006 by buying certain CDS contracts, and later expanded his trades in 2007 and 2008 to include CDS contracts on financial institutions involved in peddling subprime mortgages.

Paulson and others identified a market dislocation that most people did not initially see, including many directly involved in the housing industry. The dislocation later included certain aspects or parts of the financial services industry and its activities that overlapped or were involved with housing. Paulson et al. were not experts, but employed a process of thoughtful analysis and intelligent conclusion drawing to arrive at their respective investment theses. Their timing, implementation, discipline and patience varied to greater or lesser degrees when compared to each other and how the situation ultimately played itself out.

This narrative -- identifying a dislocation (market) or disruption (technology), not necessarily being an expert in order to do so, utilizing thoughtful process and intelligent decision-making to arrive at the starting point and along the way, getting the timing [somewhat] right, and ultimately monetizing the opportunity -- is what I hope to draw out further in subsequent posts related to this thread.

While I certainly am cognizant, however, that the Paulson example is the exception that proves the rule, I still use his story as a useful exemplar. To me, it was not just that Paulson had the greatest trade in investing history by virtue of how much money he made and the total return of it, I also was struck by the monstrous size of the dislocation he and others identified and then played (and the process by which he thought about and did it).

November 21, 2012

Dendreon: Anti-Cancer Immunotherapy, Reimbursement and New Promises

Read the full article here. The cost to make PV-10, which for all intents and purposes is de minimis, and thus the eventual cost to patients is a critical facet of the drug's value proposition.
"As several pioneering companies have shown us, immunotherapy – once science fiction reserved for Hollywood directors in disaster movies and to fight alien attacks – works. Numerous drugs successful in clinical phase have proven this technology to be tangible, effective, and safe. 
Now, the scientific community is exploring yet another baffling question: how can the drug developers make anticancer immunotherapy cost-effective? How can companies work with manufacturers and develop logistics to bring Cost of Goods Sold down? How can companies work with reimbursement agents and physicians to properly forecast sales? How can the healthcare complex make this groundbreaking therapy cost-effective for patients? 
Dendreon Corporation (NASDAQ: DNDN) is perhaps the best example of the consequences of prohibitive logistics related to the production of such a complex therapy.  Its Provenge line (Sipuleucel-T) became the first cancer therapy to reach the domestic market – approved by the FDA in April 2010. 
The median life extension benefit for Provenge is 4.1 months. The company has reported a 38 percent improvement in 3-year survival (this claim has been challenged, as data may not have been collected at 34 months but rather 20 months), and a 22.5 percent improvement in risk of dying. 
Provenge, like other leading immunotherapies (of which our readers point out big pharma’s main projects — more on this below — have not yet displayed the promise of Provenge, yet boast similar pricing),  is very costly. 
This is due to the labor and time sensitivity – the therapy carries a one-time cost of $93,000 for three courses of treatment.  On August 4, 2011, Dendreon shares plummeted 67 percent upon the company’s announcement of a over-estimated projected sales, sparked by issues of cost that had frozen a large percentage of the physician population. 
Dendreon announced doctors were not confident enough about getting reimbursement – in which physicians would be required to keep a prohibitive line of credit; analysts subsequently cut sales predictions by as much as 50 percent. 
Insurance companies will not reimburse on a therapy that has too high of a cost, and cost control with no precedent is one of the most difficult aspects of marketization to predict."


Refresh this link daily for more investigations.

November 20, 2012

$PVCT: Valuing the October Raise

As I have written on this topic before, the pre-money valuation of the $2MM October raise seems to be about $63MM, a drop of about 17% from the 2Q12 raise (the share price fell, as best as I can estimate, fell about 23-29%).

Click on the figure to enlarge it.
You can look at valuation in a few ways, such as using the shares outstanding figure readily available on Google or Yahoo!, or using the fully diluted number that includes preferred and common shares, stock options and warrants.

Using today's closing share price of $0.565 and Google Finance's share figure of 113.7MM, the market cap becomes $64.24MM. The October raise was priced at $0.75, implying an $85.28MM figure. I use fully diluted figures to better understand share price under an acquisition event. File this, for now, under "navel gazing."

$PVCT: Form 4 Filings -- Insider Buying

Eric and Peter filed Form 4s today in which:
It appears they were two of five investors who bought common stock at $0.75 per share in the October raise for which the Form D filing previously was made. Investors in this fund raising placement were issued one 5-year warrant for each common stock share purchased (i.e., 1-to-1). The warrants have a $1.00 strike price.

Since the raise had to take place after the PVCTP "IPO" was terminated, the premium to the then current closing share price probably was in the range of 15-25%, and 30%+ from today's closing share price.

UPDATE (correction): I misread the filing, and have since updated this post. My apologies.

November 18, 2012

$PVCT: Now dash away! Dash away! Dash away all!

The mostly institutional, but non-life sciences, participants of Provectus' March 2010 private placement (1Q10) are likely mostly gone. I think nearly 85% of the preferred shares have been converted to date into common stock and sold over time. My assumption is that these folks either held the preferred to enjoy the coupon, or converted them into common share that they sold right away.
Click on the figure to enlarge it.
The preferred shares in the placement were issued at $0.75 per share. Most of the 85% -- about 60% of this number -- converted and very likely sold within 3 quarters of the placement. 15% gradually sold as the common stock share price stayed above the issue price (through 2Q12). Another 10%, I think, sold in last quarter (3Q) and are selling thus far this quarter (4Q).
Click on the figure to enlarge it.
Some funds took profit very quickly. Others held on to take profit more slowly or in hopes of greater but still faster return. I wonder if some of the recent pressure on the stock has been due to the departure of more of the remaining funds that participated in the placement.
Click on the figure to enlarge it.

November 17, 2012

$PVCT.OB: PV-10 -- A Vaccine, or Vaccine-like

Click on the figure to enlarge it.
The abstract and poster from Craig et al.'s participation at the Society for Immunotherapy of Cancer (SITC) 27th Annual Meeting has begun the elaboration of the anti-tumor immune response to PV-10 immuno-chemoablation. This publicly builds upon Moffitt's description of PV-10's immunologic mechanism of action, presented at the 2012 Society of Surgical Oncology Annual Meeting, that confirmed PV-10 chemoablation of melanoma lesions leads to a systemic response and the induction of systemic anti-tumor immunity.

In the SITC abstract (above) Craig et al. hypothesized production of a vaccine- like immune response using a small molecule drug was possible and required:
  • An intralesional route of injection that generates rapid, durable tumor destruction via autolysis;
  • Rapid clearance of drug from normal tissue; and
  • Anti-tumor effects targeted only to tumor tissue.
According to Provectus, PV-10 appeared to meet each of these requirements.

"Treating cancer has historically relied on a trifecta of treatments—surgery, chemotherapy, and radiation—known colloquially as “slash, poison, and burn.” Vaccines have a potential advantage over these three options in that the body’s response is longer lasting (on a scale of years as opposed to weeks or months), which could possibly eradicate the micro-metastases that often linger after standard treatments end. Moreover, cancer vaccines have similar minor side effects to traditional vaccines: inflammation at the injection site and flu-like symptoms." Read more here.

"Cancer vaccines are designed to boost the body’s natural ability to protect itself, through the immune system, from dangers posed by damaged or abnormal cells such as cancer cells. The FDA has approved two types of vaccines to prevent cancer (Gardasil® and Cervarix®): vaccines against the hepatitis B virus, which can cause liver cancer, and vaccines against human papillomavirus types 16 and 18, which are responsible for about 70 percent of cervical cancer cases. The FDA has approved one cancer treatment vaccine for certain men with metastatic prostate cancer (Provenge®)." Read more here.
Click on the figure to enlarge it.
The great anticipation of Moffitt's next presentation(s), purportedly at the AACR Annual Meeting 2013 that will be held April 6-10 in Washington, DC (according to sources external to Provectus), derives from the release of more results and conclusory statements regarding the production of a vaccine-like immune response from PV-10 immuno-chemoablation, and both the preventative and therapeutic vaccine or vaccine-like benefit of the drug.

November 16, 2012

$PVCT.OB: The First Anniversary of This Blog

I wrote my first blog post on November 16, 2011. At the time of that post: "The share price is $0.88. 14,700 shares have traded." Today, it closed at approximately $0.53, down about 40%, and traded about 54,000 shares.

Click on the figure to enlarge it.
In the past 12 months, Provectus' notable PRs included:
  • October 29, 2012: Provectus Presents Nonclinical Data on Antitumor Immune Response to PV-10 Immuno-Chemoablation (very key),
  • October 17, 2012: Provectus Pharmaceuticals Terminates Proposed Convertible Preferred Stock Offering (the failed IPO),
  • October 2, 2012: Provectus Pharmaceuticals Presents Final Phase 2 Melanoma Data at ESMO 2012 (key),
  • September 28, 2012: Provectus Pharmaceuticals' Patent Application Published for Combining Local and Systemic Therapies for Enhanced Treatment of Cancer (the joint Pfizer-Provectus patent app),
  • September 27, 2012: Provectus Expands Protocol for Phase 1 Liver Cancer Study (important),
  • June 26, 2012: Provectus Pharmaceuticals Presents Final Phase 2 on PV-10 At 2nd European Post-Chicago Melanoma Meeting 2012 on June 22, 2012 (visibility),
  • May 30, 2012: Doug Ulman, National Cancer Survivorship Advocate, Joins Provectus Pharmaceuticals' Corporate Advisory Board (a great get),
  • May 14, 2012: Provectus Pharmaceuticals Forms Independent Board to Meet Corporate Governance Requirements (an important corporate governance advance),
  • April 10, 2012: Phase 2 Data on Provectus's PV-10 to Be Presented at the HemOnc Today - Melanoma and Cutaneous Malignancies Conference on April 13, 2012 (visibility),
  • March 26, 2012: Intralesional PV-10 Treatment Leads to the Induction of Anti-Tumor Immunity  (very key),
  • March 23, 2012: Mechanism of Action Data On PV-10 Demonstrates Therapy Induces Immunologic Response (very key),
  • March 19, 2012Provectus Announces Top Line Phase 2 Data For PH-10 in Its First Randomized Controlled Psoriasis Study (important), and
  • January 18, 2012: Provectus Receives Guidance From FDA On Pathway to Approval for Phase 3 Trial of PV-10 For Metastatic Melanoma (important regulatory step).
As for the blog itself, readership has steadily grown.

Click on the figure to enlarge it.
Thank you for visiting and reading!

$PVCT.OB: The SPA's Supportive Programmatic Elements

Per Provectus' October 2 PR, "[t]he study duration is estimated to be approximately 30 months, with commencement expected in late 2012 or early 2013 following completion of review for SPA." As such, management expects the SPA would arrive in November/December ("late 2012") or January/February ("early 2013").

Click on the figure to enlarge it.
I think the article below is instructive when trying to understand (a) the delay from Q3 to Q4 2012 or Q1 2013 and (b) Dr. Wachter's quote above -- "...and fostered relationships with key parties that will provide support in execution of the Phase 3 study."

Nov. 16, 2012, 9:24 a.m. EST

Drug trial contractors improve efficiency

By Joseph Walker
-- Companies, FDA find oversight of third-party contractors in clinical trials tricky
-- Mistakes made by contractors can derail or delay drug development
-- Peregrine retracts cancer drug data after finding errors by a contractor
Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM) was riding high in early September. Its experimental cancer drug had dramatically improved survival rates in a mid-stage trial, lifting the stock to multiyear highs and raising hopes that the 31-year-old company might be closer to bringing its first drug to market.
Three weeks later, Peregrine had lost more than 85% of its market value after telling investors that data from the trial wasn't reliable, blaming a third-party firm for making errors in its coding and distribution of study drugs. The error threw doubt on the drug's viability, prompted lawsuits against Peregrine and could lead to the company's stock being delisted from Nasdaq.
Peregrine's story highlights the role that third-party contractors known as contract research organizations, or CROs, play in drug research. The $25 billion industry--ranging in size from Charles River Laboratories International Inc. (NYSE:CRL) and closely held Quintiles Inc. to dozens of smaller CROs that perform niche tasks--can handle everything from analyzing data to choosing and conducting oversight of clinical investigators.
Outsourcing those responsibilities has saved drug companies money and quickened the development of life-saving therapies. But the process of supervising CROs has sometimes proven tricky for companies and even the U.S. Food and Drug Administration, as they juggle oversight of dozens of study locations and personnel across the world.
Even though contractors play an instrumental role in bringing drugs to market during the clinical trial phase, investors are seldom aware of the identities or reputations of the CROs involved. Neither drug companies or the FDA typically disclose the information, even when costly errors are made that derail drugs that took years of research and millions of dollars to develop.
Johnson & Johnson (NYSE:JNJ) and Basilea Pharmaceutica AG learned the risks of outsourcing in 2009 when the FDA rejected the antibiotic drug Zeftera, projected to be worth as much as $1 billion by analysts.
The FDA said J&J failed to properly monitor and ensure the accuracy of data collected by its CRO and didn't account for ineligible patients being included in the study, among other lapses. Basilea's stock price dropped 70% between 2008 and 2010.
Both companies declined to comment for this story. The name of the CRO was redacted in documents made public by the FDA.
There are risks for start-ups, too. Jay Lichter, a partner at biotechnolgy investment firm Avalon Ventures, said third-party errors are more common than many realize.
"We've been burned so many times by the lowest cost provider," Mr. Lichter said. A CRO with a poor reputation for quality-control can lower the price that big pharma companies pay to acquire or partner with a start-up.
"They'll say, 'Oh, it was those guys,'" and lower their offer, Mr, Lichter said.
As drug trials have become more diffused, they have also become more difficult for the FDA to monitor.
"The challenge of trying to have effective oversight in this complex, international ecosystem is overwhelming the FDA," said Greg Koski, associate professor at Harvard Medical School and co-founder of the Alliance for Clinical Research Excellence and Safety.
With information about closely guarded drug trials limited to the disclosures made by companies, investors count, in part, on the FDA to ensure the integrity of trial protocols and data. Yet most trial sites are never inspected.
The FDA inspected 1.2% of the 12,000 clinical trial sites where data were produced for drug approval in 2008, a government report found. The FDA's inspection regulations have "fallen behind industry practices" as "clinical trials have grown increasingly complex," the Department of Health and Human Services said in 2007.
In a statement to Dow Jones Newswires, the FDA said it "recognizes that the growing number of clinical trials" and "the range of contract research organizations (CROs) who assume various sponsor responsibilities create challenges for effective oversight of trial conduct."
The agency said it has begun using software tools to analyze data like the location of trial sites, financial disclosures made by physicians, and the number of patients being studied, to make more efficient use of its "limited inspectional resources."
On occasion, the agency has found errors. Inspections of two different CROs found widespread errors that forced drug companies to re-evaluate data or re-do studies completely, resulting in lost revenues and lawsuits. The CROs have since been broken up and had their assets sold.
The contractor implicated in Peregrine Pharmaceuticals's cancer drug trial had past difficulties. Clinical Supplies Management Inc. was a subcontractor on a separate study in which it was accused in a lawsuit of giving out placebos that contained elements of the study drug, invalidating the trial's data.
In September, Peregrine sued Clinical Supplies Management, accusing it of committing errors in the coding and distribution of study drugs during the cancer trial.
Clinical Supplies Management declined to comment.
Peregrine also declined to comment. Calls to its investor relations hotline went directly to a voicemail message.
"The company is not making any further comments at this time," the message said. "Thank you for your interest in Peregrine Pharmaceuticals."

November 15, 2012

$PVCT.OB: Provectus Corporate Advisory Board Member Doug Ulman of the LIVESTRONG Foundation

Getting Doug Ulman of the LIVESTRONG Foundation (formerly The Lance Armstrong Foundation) as a corporate advisory board was a great get for Provectus.

At the time I had and, until recently, still wondered what would happen to the LIVESTRONG Foundation and brand were Lance Armstrong to fall. What happens to iconic brands when something happens to the icon: e.g., LIVESTRONG and Lance Armstrong, Apple and Steve Jobs, Berkshire Hathaway and Warren Buffett, Microsoft and Bill Gates, etc.?

The Foundation has been quick to change some name-related things.

Click on the figure to enlarge it.
Other things may take more time.

Click on the figure to enlarge it.
With Lance Armstrong stepping off the Foundation's board of directors, the brand likely will evolve as an entity unto itself, with Mr. Ulman increasing his leadership role, own brand and brand association.

Click on the figure to enlarge it.
He certainly appears to be paying attention to Provectus. As an aside, for now, social media, in time, should be key to spreading of awareness of PV-10 within the community of cancer patients, survivors and their family members, and far beyond.

Click on the figure to enlarge it.
Mr. Ulman joined Provectus' CAB nearly 6 months ago. At the time, I wrote he filled or provided the role of patient advocate on the advisory board as:
  • A three-time cancer survivor,
  • Someone who already is recognized nationally and globally (growing) as a cancer advocate, and
  • Chief executive of a global organization and brand.
I had thought management would have already utilized him in events and/or PR-related or oriented activities to increase PV-10's (and, thus, the company's) visibility and awareness.

I am told activity in this regard is inbound. I, like you, will keep an eye out for all things Provectus-and-Ulman.

November 13, 2012

Article: "Will cancer breakthroughs pass economic test?"

Will cancer breakthroughs pass economic test?

By Virginia Postrel
Apostolia Tsimberidou, of the
University of Texas 
MD Anderson Cancer Center
in Houston, is on the front lines
of drug research to treat
narrowly targeted groups of
cancer patients.

When Apostolia Tsimberidou was a young hematologist, a diagnosis of chronic myelogenous leukemia meant a patient had only a few years to live.

The median survival time when she started medical school in 1985, she recalls, was just 3.5 years. Then came Novartis’s Gleevec, or imatinib, which the Food and Drug Administration approved in 2001. Unlike traditional chemotherapy drugs, which work by poisoning the body’s fast-growing cells, Gleevec is a so-called biologic that works by altering the behavior of abnormal protein molecules — in this case, inhibiting an enzyme that makes the cancer cells proliferate.

With Gleevec, the death rate for patients with the disease plummeted to only 1 percent or 2 percent a year. The estimated eight-year survival rate has increased from 6 percent before 1975 to 87 percent since 2001. The drug, says Tsimberidou, “changed dramatically the survival of patients with this disease.”

That striking success made her want to find more molecularly tailored treatments when she moved in 2007 from hematology to designing “Phase I” human trials in a new department at the University of Texas’s MD Anderson Cancer Center in Houston. But chronic myelogenous leukemia is an unusual case, because almost all patients have the same molecular abnormality and therefore are candidates for Gleevec.

When analyzed at the molecular level, a cancer that has traditionally been viewed as a single disease commonly fragments into many different subtypes, each possibly requiring a different treatment. There are now tests for about 200 different such abnormalities, which may occur by themselves or in combination.

“We should realize first that every patient is different,” says Tsimberidou. “We cannot treat all patients with, say, colorectal cancer the same or think, for instance, that all metastatic liver disease is the same. In addition to the standard diagnostic procedures, we should perform a more refined tumor molecular analysis to better characterize every patient’s disease, and we have to tailor the treatment to the specific tumor and patient characteristics.”

The molecular understanding of cancer means both good news and bad news for improving treatment.
The good news is that more cures should be possible, with less waste from giving the wrong patients drugs that won’t work in their particular cases. That has the potential to save money and significantly to reduce suffering.

By matching patients and drugs, Tsimberidou and her team have already gotten impressive, if preliminary, results.

The patients in Phase I trials, which test brand-new drugs for safety and dosage rather than efficacy, are usually in a bad place. Their cancers are advanced, and they’ve already had lots of treatments. In short, they’re dying. They’re willing to be guinea pigs on the off-chance that something new might buy them some time.

Traditionally, “there was no particular expectation that you would even see any responses in a Phase I setting,” says George Sledge, a professor at the Indiana University School of Medicine and the former president of the American Society of Clinical Oncology.

But Tsimberidou believed she could do better, using molecular information, even at the earliest stage of drug trials. In research reported in September in Clinical Cancer Research, she and her co-authors first performed molecular analyses of patients’ tumors to identify genetic abnormalities in patients with advanced cancer who had volunteered for Phase I trials. They then assigned patients to trials based on the tests.

The results were striking. Only about 5 percent of patients who weren’t assigned to drugs based on molecular profiles responded to treatment, which is typical for Phase I trials. By contrast, 27 percent of patients in the matched therapy — those who got therapy targeting the specific molecular abnormalities in their tumors — responded.

Other measures tell the same story. The median time to treatment failure was 5.2 months for the matched-therapy group, compared with 2.2 months for unmatched patients, and the median survival time was 13.4 months, compared with nine months.

The two groups were not randomly assigned, so it’s of course possible that some hidden factor accounts for the disparate results. But given that these were very sick patients who had already had lots of treatments, and that they had many different kinds of tumors, even with a nonrandomized group the differences are great enough that it looks like Tsimberidou’s team is on to something real.

“When you’re talking about a five-fold improvement in a Phase I response rate over what you see historically, that implies that very early in the development process now we should be able to get some sense of whether or not a drug is active,” Sledge says.

Tsimberidou is now developing a randomized trial to test the concept.

Since June 2011, she and her team have also doubled the number of patients they’ve tested, finding even more molecular aberrations they might potentially match with new drugs. About 52 percent of patients have shown at least one abnormality, 11 percent have two, and 2.5 percent have three or more. A recent patient turned up with 10 molecular aberrations.

Therein lies the bad news.

The first problem is that not every abnormality has anything to do with the cancer. Some are just, in Tsimberidou’s phrase, “cosmetic” — correlated with a cancer but not causal. That poses a scientific challenge. To develop effective treatments, researchers have to figure out which biomarkers are relevant and should therefore be attacked with drugs.

Then there’s the economic problem.

It costs something like $1 billion to develop a new drug and bring it through testing to market. That cost, plus profit, needs to be spread over a lot of patients.

For blockbuster biologics like Gleevec or Genentech Inc.’s Herceptin, which treats HER2-positive breast cancer, the right patients are numerous and easily identifiable. But most mutations — or combinations of mutations — are much rarer, making the markets for drugs to address them much smaller. Sledge points, for example, to Pfizer’s Xalkori, or crizotinib, which treats lung cancer in just 5 percent of patients with a particular mutation.

As cancers and treatments are defined more and more precisely at the molecular level, nearly every form of cancer could become an “orphan disease” with a narrow, potentially unprofitable market for drugs.

“Your markets become a lot smaller,” said Meredith Buxton, the program director of I-SPY, a University of California at San Francisco program doing human trials of potential breast cancer drugs. “That’s the dilemma. The more people learn that breast cancer is not a homogeneous disease — that it’s many different little diseases — the less the value for a company to put in the $1 billion for a drug that’s going to be for a fairly specific and small-market.”

I-SPY is trying to turn the problem around by matching drugs to biomarkers and speeding up human trials. Testing drugs on patients who have the wrong kind of tumors is, after all, expensive and inefficient.

“The high cost of oncology drug development is not only an issue of finance but also occurs because many cancers are heterogeneous,” wrote Laura Esserman, the UC San Francisco professor who founded I-SPY, and Janet Woodcock, the director of the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research, in a December 2011 journal article. They called for “new clinical trial designs that account for the heterogeneity and complexity of the specific disease at the outset.”
I-SPY does just that, using two novel approaches to speed up Phase II trials testing the efficacy of about a half-dozen new drugs for breast cancer. Although the I-SPY program focuses on breast cancer, Esserman’s specialty, researchers hope oncologists treating other types of cancer will adopt the tools and processes it has developed.

Patients in the program have been newly diagnosed, but they already have large tumors. Everybody gets the standard treatment, but some patients are randomly assigned to also get one of the new drugs.

The first twist is that instead of treating patients with drugs after they’ve had surgery, and then waiting five years to see whether the cancer recurs, I-SPY uses the drugs first and tracks the size of the tumor over the six or seven months until surgery. If the tumor disappears by the time of the surgery, that qualifies as a “pathologic complete response.” Enough such results allow a new drug to move on to Phase III trials — years earlier than the traditional approach.

The second twist is an adaptive, or Bayesian, design. Patients’ tumors are analyzed for biomarkers when they start the program. If patients with certain abnormalities do particularly well on a certain drug, new patients coming into the trial with that same biomarker will have a higher probability of being given that drug. Over time, drugs that do badly are dropped and those that do well progress. The experimental design cuts the time and number of patients needed for testing. In theory, drugs that graduate to Phase III trials should have an 85 percent chance of succeeding in that final, tougher and much more expensive stage — much better odds than the typical trial.

“If we find a faster, less expensive way to provide these drugs,” said Buxton, “then companies will feel like it’s worth it to continue to test them.”

Understanding the molecular differences among cancers may be interesting science. But without economically feasible treatments, it won’t do much for patients.

November 10, 2012

$PVCT.OB: When Does PV-10 Fail?

"Put enough water onto the fire, and it goes out."

The compassionate use program, where doctors have significantly more flexibility than in the clinical trials to treat and re-treat patients revealed much to Provectus management about what the drug can truly accomplish when it enables the body's own immune system to cure cancer in a patient (and how to better design the pivotal MM Phase 3 trial). Put enough water onto the fire, and it goes out. Regularly treat the patient with enough PV-10 and, over time, the cancer goes away.

Constrained by treatment. As such, some trial failures of PV-10 are not actually failures. Some "failures" occur out of necessity because of the design of the trials. In both the dermatology and oncology studies, management was inhibited by the trial design per regulatory compliance. In the MM Phase 1 and 2 trials, principal investigators were only allowed to inject a few tumors. Nevertheless, you have to be impressed by how well the bystander effect worked given the trial constraints hamstringing the treatment approach. Injecting all accessible tumors with PV-10, of course, would be best. The impact of this is to (a) lower the tumor burden and, thus, the load the patient's immune system has to overcome, and (b) address tumor heterogeneity. Tumors are heterogeneous; that is, they are not all the same antigenically (i.e., what they present to the immune system). So, if the antigens the immune system needs to see are on in one tumor and not another, it is vital to inject PV-10 into as many tumors as possible.

Constrained by time of reporting. Some patients were fine at, say, week XXX; however, the trial design required observation at week X (XXX > X). Efficacy at week XXX, even if higher or better, goes unreported. The patient was listed as a failure.

Constrained by physician implementation. The trial design prevented tumors from being injected more than once: A doctor missed a tumor. There was no ability to retreat to correct the miss. The patient was listed as a failure.

Constrained by patient behavior. It is rumored a PV-10 trial patient flew from the U.S. to Australia in order to participate in the MM Phase 2 trial. His tumors were injected, and they went away. Apparently, it also is rumored that he broke his promise to stay and be observed, and returned home to the U.S. The patient was listed as a failure.

Our immune system can be overwhelmed. As with an infection, doctors use antibiotics to slow it down until the immune system itself can clear it away and cure the patient. If the host cannot help, there is no cure.

Provectus treats cancer like an infectious disease.

Thus, in the case of very late stage disease or very heavy tumor burden disease, more PV-10 is applied at the outset, the drug is applied again and again (i.e., re-treat or throw more water onto the fire), or PV-10 is combined with radiotherapy, chemotherapy or other immunotherapies to stimulate the immune system, reduce the burden and "hold the infection in place" and, eventually, allow the patient's immune system to takeover and finish the task of healing the body.

Failure? Perhaps not so much.

$PVCT.OB: Vical, Allovectin-7 and How They Matter and Relate to Provectus and PV-10

When Vical reported third quarter 2012 earnings on November 7, the company commented on its financial results and progress in key development programs. Vical management effectively guided the eventual release of results for the company's pivotal MM Phase 3 trial would be delayed (again) to mid-2013 or into 2H13.

Amgen's talimogene laherparepvec or T-Vec (formerly BioVex's OncoVEX), Vical's Allovectin-7 and Provectus' PV-10 are emerging intralesional immunotherapies the melanoma community has wanted to see more results for and now want to be combined with other immunomodulatory agents.

Dr. Robert Andtbacka profiled these therapies and compared their local-regional and systemic efficacy at the HemOnc Today conference in his presentation entitled Intralesional Therapy for Systemic Disease: Where Will It Fit In?

More potentially promising therapies and options than less are better for cancer-stricken patients. With Vical's announcement on Wednesday, however, it seems another promising therapy is going to fall by the wayside.

I previously wrote about Amgen and T-Vec here. Amgen acquired BioVex in early-2011 for $1B, more than 80% of which was an upfront payment. It later shut down OncoVEX's head & neck cancer P3 trial, and delayed the release of the drug's pivotal MM P3 trial results into 2013. Amgen makes less and less mention of T-Vec in its earnings calls. No mention on the Q3 call. 1 mention on the Q2 call. 2 mentions on the Q1 call. 2 mentions on the Q4 2011 call.  3 mentions on the Q3 2011 call. 6 mentions on the Q2 2011 call. T-Vec's shrinkage causes one to question whether the drug met either its primary or secondary endpoints.

In the same blog post, I also suggested Vical's Allovectin-7 primary endpoint, and thus the trial, was not well designed and wondered if the primary or secondary endpoints were met. Like with Amgen's T-Vec, it appears Allovectin-7 did not meet it primary endpoint -- objective response rate at ≥24 wks. The historical response rate for comparator DTIC at ≥24 weeks is <4%. Allovectin-7's Phase 2 response rate at ≥24 weeks was 11.8% and its Phase 2 response rate for the Phase 3 target population was 17%. The Phase 3 trial was 90% powered to detect a ≥10% difference in response rate.
Vical appears to be hoping it can eke out a survival advantage to meet their secondary endpoint -- overall survival: the historical median OS for DTIC is ~9 months. The median OS for Allovectin-7 in Phase 2 was 18.8 months and the median OS for the Phase 3 target population was 22.5 months. The Phase 3 trial was 90% powered to detect a survival difference; hence, the focus now on the number of events, where the goal is to have is to have sufficient deaths or events to read out the secondary endpoint. This is complicated because Vical would have needed to modify the trial design because they presumably did not meet the primary endpoint and are, therefore, relying on the secondary endpoint. Then, there has to be a delta on the Kaplan-Meier survival curves that is statistically significant to therefore meet the modified secondary endpoint.

Which brings me back to the focus on the trial design for PV-10 and Provectus management's strategy. The pivotal MM Phase 3 trial paves the way for the drug to be approved for a focused label and just reinforces what is already known: PV-10's tremendous local-regional benefit. The company selected Progression Free Survival (PFS) as the trial's primary endpoint PFS, carefully and thoughtfully designed certain others aspects of the trial, and understands the failure of DTIC/TMZ in the comparator arm should occur within 2 to 3 months because the comparator cannot prevent the progression of the disease. By virtue of the pivotal trial designed to focus on loco-regional demonstration, management ensures (through past experience in trials and from the compassionate use program) the near certainty of how and when the trial would end.

There is a belief Allovectin-7's benefit is marginal when compared to DTIC. As a result, that is why a statistical advantage in terms of the number of events has not been reached. Adam Feuerstein summed it up this way: "The latest delay tells you the melanoma assumptions upon which Vical designed the phase III study are worthless. The study is a mess. If allovectin manages to demonstrate a survival benefit (miracles happen occasionally) it will be small and clinically meaningless."

Nevertheless, OncoVEX (T-Vec) and Allovectin-7 historically were important to beginning the conversation of local-regional treatments having systemic benefits. While their MM Phase 2 trial results were good enough locally, their systemic potential captivated the melanoma community. The local benefit is not key for either T-Vec or Allovectin-7, it is their systemic potential.

Provectus leaves to Moffitt and historical trial data to explore and demonstrate the systemic benefit.

A important preparatory observation for when the trial commences, and one I will return to at the appropriate time, is the the number of patients that ultimately are needed to be enrolled and treated before the trial is stopped. The number of patients is driven more from the hazard ratio and powering. Patients will have events, which is bad. Since PV-10 works so well, it has much less events as a result, and events in the Phase 3 trial's PV-10 arm should come much less quickly. More events should occur in the DTIC/TMZ arm, which will enroll and treat 1 patient for every two that are enrolled and treated in the PV-10 arm.

How many patients ultimately would be required to be enrolled and treated, out of the contemplated 180 patient study size, before the study could be be terminated on the basis of an interim read-out concluding the unquestioned superiority of PV-10? 20, 40, 90, etc.?

November 9, 2012

$PVCT.OB: Get Shorty (Update)

Short interest as at October 31, reported today, was 1,072,941 shares -- down 13% from the October 15 reporting period (1,230,229), which was up 28% from the September 28 reporting period (959,298), which was up 48% from the September 14 period (650,550), which was up 34% from the August 31 period (486,559). See the graph below.

There is a pernicious inter-period short of 250-270K in October. You may recall I presented what I thought was a structural period-to-period short figure of 470-480K. The balance of 490K during the October 15 period could be related to the conversion of the preferred stock into common stock. 490K of preferred shares were converted in Q3 per the filing.

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.

November 6, 2012

$PVCT.OB: Onychomycosis, Another Indication for PH-10?

Abstract: Onychomycosis, a fungal infection of the finger or toenails, is predominantly caused by Trichophyton rubrum. Treatment is difficult due to high recurrence rates and problems with treatment compliance. For these reasons, alternative therapies are needed. Here we describe the photoactivation of Rose Bengal (RB) using a green laser (λ = 532 nm) at fluences of 68, 133 and 228 J/cm2, and assess its fungicidal activity on T. rubrum spore suspensions. A 140 µM RB solution was able to induce a fungicidal effect on T. rubrum when photosensitized with the fluence of 228 J/cm2. RB photosensitization using a green laser provides a potential novel treatment for T. rubrum infections. (© 2012 WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim)

About Onychomycosis: "Onychomycosis is a chronic persistent fungal infection of the nail bed resulting in thickening and discoloration of the nail, which sometimes can be accompanied by serious pain and disability. According to the Merck Manual, the worldwide incidence rate of onychomycosis is approximately 10%. As described by Iorizzo and Piraccini (2007), the incidence has been increasing due to diabetes, immunosuppression and an aging population. While occurring in approximately 2.6% of children younger than 18 years, it occurs in as much as 90% of the elderly population ( As of 2008, Thomson Reuters Pharma had stated that the worldwide market was approximately $2.8 billion in size and is expected to grow to approximately $2.9 billion by 2014." [Source of paragraph above is in the link provided.]

$PVCT.OB: Mini-Oncology Deal Discussions

I have written on this topic in the past. For example, see here. As I understand the lead indications and potential geographies of current discussions:

$PVCT.OB: New Rose Bengal Animal Case Study Success

East West Vets Bentleigh veterinary group has been an early adopter of rose bengal to treat animal (primarily dog) cancer. You can read about their various successes as case studies here. The veterinarians operate on invasive malignant cancers with a combination of surgery and rose bengal infiltration to avoid limb amputation, and have seen good longevity in more that 50% of cases.

Two new case studies or stories are below.

November 4, 2012

$PVCT: Desperately Seeking Gross Margin

SeekingAlpha contributing author Theodore Cohen recently wrote an article about Dendreon in which he discussed COGS in relation to valuation.

Provectus' gross margin for PV-10 has not been the subject of much if any public discussion. Circulated material to Big Pharma indicates a placeholder 60% gross margin figure (i.e., a 40% COGS). This gross margin figure, while appropriate, is not the "real" number. It's closer to at least 80% (20% COGS), if not higher.

Dendreon's ultimate goal is to get its COGS to 20-30%, down from 77% in 2Q12 to, hopefully or expectedly, 65% in 4Q12. 20-30%, from here, and exactly when?

Cohen writes: "...[20-30%] will get both the Street's and an acquirer's attention! Why, because Big Pharmas, basically, are in the gross margin business. It's not the multiple of revenue that excites the big guys…it's the multiple of gross margin. The reason for this is when a Big Pharma looks at a biotech, its management makes a series of assumptions. They know they can sell more product than the biotech company simply because of their huge market presence. So, they make their own (higher) sales projections. As well, the potential buyer usually has an overlapping sales force that will sell the product. So, the first cost they eliminate is the sales and marketing line. They also have their own administrative functions, so all of the biotech's general and administrative ((G&A)) costs are eliminated from the analysis. Finally, the remaining operating expense, research and development ((R&D)) is applicable to the overall R&D spending of the Big Pharma, in many cases, so it shifts to a different profit and loss ((P/L)) statement."