March 21, 2013

A Fool’s Game, A Grand Quest, and Part I of An Epic Outcome

It is without a doubt a fool’s game to predict the regulatory path to approval of a drug. True to form, and in no small part because of a need to be right (a trait that drives my passion for investment management), I tried many times to do so. If I had a much deeper background in life sciences investing, perhaps I could have spared myself and the readers of this blog errors and inefficiency in thinking and analysis.

Then again, while more informed, shrewd and knowledgeable money in this space – classic examples of conventional-thinking money – very often are on the cutting edge of being in the right place at the right time, I do not think they understand paradigm shifts any more than other like-minded, industry-oriented money.

A blog reader asked me to describe how I arrived at my stock position in Provectus. Greatly simplifying the answer, I reply by saying I made a two-bet parlay. First, I bet that management could demonstrate the tremendous, multi-indication efficacy of an incredibly safe drug compound. Second, I bet that management could and would protect Rose Bengal’s economics in a size and scope commensurate with the depth and breadth of their innovation.

The risk-reward of my investment in the company eventually matched the clinical and commercial risk-reward of the drug.

PV-10 (as well as PH-10 and the family of halogenated xanthenes) is the culmination of Craig’s scientific career, a quest of three principals that (as far as I know) began at Oak Ridge National Labs, was and continues to be facilitated by No. 4, and includes numerous professional, personal, emotional and financial ups and downs.

This company and this situation also represent a quest for me: the eventual realization of a seminal investment in my career to date; the never-ending hunger to be right; the tangible and intangible satisfaction, results and provision of future professional and personal means that only a financial moonshot yield; and, a unique opportunity to continue to successfully build my investment management career as, how and when I see fit if ultimately right.

In further answering the reader’s inquiry, there reached a point in my due diligence, analyses and conclusions when and where I found that, over time by periodic buying of shares, I had pushed every discretionary dollar I (we) owned into a capital pool with the express purpose and intent of owning as many shares as I (we) possibly could.

I never imagined the first bet of my parlay would turn out to be epic in nature. On April 8th, Moffitt raises the curtain on PV-10.

Management's next task is to optimize ROI, an effort that is no small feat. And while thus far they have protected the economics of the opportunity, which could be enormous, a great outcome is not yet assured.

I await the outcome of the second bet of my parlay after AACR, because in Vegas you can’t cash in your ticket at the window until the results of all bets are tallied.

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