January 10, 2013

$PVCT: Something Wicked[ly Good] This Way Comes?

Trading volume and price have behaved like opposite from December 27-January 9 compared to, say, November 7-December 26.

Volume has nearly tripled, and price has gone from a "flat" range to close to vertical.

This volume/price action is not disimilar from behavior about a year ago that preceded the company's announcement about FDA guidance on the SPA. See my blog posts here and here.

Is (are) something(s) being anticipated? Or is Provectus simply receiving more investor love?

Click figure to enlarge it.
In my blog post $PVCT: China Process, I wrote the first step would be the signing of a term sheet between Provectus and a Chinese pharma company. I also wrote such a signing may or may not be an 8-K event, depending on Provectus' counsel's interpretation or advice.

I don't believe a signing is an event, since there is too much uncertainty related to ultimately whether a/the deal is consummated. Rather, the 8-K event will be something closer to the consummation of definitive agreements (the license transaction itself). I dug out some of my old term sheets that may be applicable to the situation (and would be different from Letters of Interest or Intent for M&A transactions).

There are customary and not-so-customary conditions to closing. The party extending the initial term sheet (i.e., the Chinese company) sets certain conditions for the transaction to close. The receiving party can and usually does counter to some extent.

Term sheets typically are not binding. I never put a binding term sheet (binding on terms and most conditions) on the table when I was making venture capital investments. There was the safety valve (usually due diligence to our satisfaction) that could be utilized to walk away from the deal. A China pharma company simply extending a term sheet to Provectus (which both parties eventually sign some negotiated and mutually agreeable version) does not mean there is a likely probability of a transaction being closed.

There usually is exclusivity; that is, a period of exclusivity. This clause (exclusivity) and period (exclusivity period) with the party that extended the term sheet allows the parties to negotiate, finalize and consummate the deal (and enable one of the lucky parties, eventually, to get money!).

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