June 10, 2013

How Could A $PVCT-$PFE Story Unfold?

I hope to have some fun with the first part of this three-part post. Indulge me.

As you know, I beat the drum from time to time about Provectus and Pfizer. The relationship, as I see it, has steadily grown in depth, but has not yet been consummated.

November 2010: Craig Eagle first engaged Provectus when he traveled to Australia for Dr. Agarwala's presentation of preliminary MM Phase 2 trial data.

Early-2011: Pfizer and Dr. Eagle proffered a unique deal to Provectus that ultimately did not materialize.

Summer/Fall-2011: There is/was the rumor of a cash bid by Pfizer for the company, which management denied (to me) was made and that would have valued Provectus at approximately $1B ($7 in cash per share) at the time. Earlier that year, BioVex (T-Vec) and Plexxikon (Zelboraf) were acquired by Amgen and Daiichi Sankyo, respectively, for approximately $1B (top-line figure) each.

August 2011: Craig Eagle joined the company's corporate advisory board.

March-October 2012: The joint patent application, for combining local and systemic immunomodulative therapies, worked its way through Pfizer (legal) before being filed.

September 2012: The company made an SEC filing for a preferred stock offering, the rationale and structure of which purportedly was to facilitate a strategic equity investment by Pfizer in Provectus.

October 2012: Pfizer supposed role as co-lead on the PVCTP "IPO" did not materialize.

Yet, the stock price has refused to budge upwards, and in actuality has fallen a lot. I previously wrote about disbelief.
The stock market, some/many in the Wall Street community, some/many potential investors and some/many existing shareholders do not believe in nor trust management, and thus do not believe in the data. If they did, they would buy or buy more shares. These disbeliefs, the first more problematic and resulting in the second, have led to the obscuring of value that clearly exists in Provectus and that Big Pharma very much sees and desires. 
Although disbelief in or lack of trust in management mostly results from self-inflicted wounds, these wounds are far from fatal, and there should be no doubt about the immense value management has created in its innovation of PV-10. 
Simple, angelic or divine regulatory clarity will transform disbelief in both management and PV-10 overnight.
One has to assume disbelief of Provectus extends to or has enveloped the notion and reality of a Pfizer relationship, too. Clarity about a monetary relationship with this Big Pharma also will additively transform disbelief in both management and PV-10 overnight.

June 2013: Which brings us to last week and Provectus' Empire State of Mind, where there apparently/purportedly were several meetings between Provectus principals (Peter, Peter and Eric) and Pfizer folks (broadly speaking), as there has been since the relationship began. I think I have a good idea of who, what, where and when, but not why.

It's fair to say there is no small amount of anticipation or expectation brewing for something to happen, soon, whether it is some portion of regulatory clarity or commercial validation through a regional license transaction.

I can't help but think of, anticipate or expect a monetary relationship finally being put into place between Provectus and Pfizer. Without regulatory clarity of any sort (e.g., SPA, breakthrough therapy designation, accelerated approval), it's too early for a global license with or the end game by Pfizer.

But how does Provectus get from here to there, from Friday's 63 cent share price to a multi-billion dollar upfront payment from Pfizer? I wrote the Empire State of Mind post to clarify some things. I also understand there was some chatter about a strategic equity investment by Pfizer last week. I would have to believe the topic of investment has been a longstanding discussion between the two companies.

Maybe, now, whenever now becomes today, and today becomes a PR, there might/could/will be an investment in Provectus by Pfizer (or possibly but less likely some other Big Pharma). Why "now?" With regularity clarity in the offing, potentially simple leading to angelic or divine, an investment from Pfizer assists Provectus to get from here to there.

A substantial investment (say, $25-$75MM) investment by Pfizer at a significantly higher share price (say, $3.50-4 per share) should put a floor under the stock.

The upcoming annual meeting of shareholders on June 27 potentially will help resolve the issue and company proposal to increase the number of shares of common stock Provectus is authorized to issue from 200-250 million shares. As of March 31, the total shares of common stock issued and outstanding and reserved for issuance for outstanding warrants, options and preferred stock totaled 188 million (no shares of common stock are held in treasury), leaving about 12 million shares for a strategic equity investment by Pfizer (or another Big Pharma). Maybe 11,853,076 unreserved shares of common stock available for issuance is enough.

If an equity investment starts the ball rolling, then one hopes that event is followed by some regulatory clarity, like the receipt of the SPA. Leveraging Provectus board member Al Smith, among others, to build greater awareness in the financial and investment management communities creates more momentum. A regional license deal or two, next, like for India and then China, or for China and then India, helps more. More regulatory clarity, like BTD or AA, speeds up the ball's rolling. And then...

But it's very early Sunday morning at my favorite Starbucks (this blog will post Monday morning at midnight EST), it's just the here and now, and I'm having a little fun.

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A Chicago stockbroker organized a conference call for his clients holding Provectus stock with Peter before ASCO 2013. The broker also invited me to join the call, which lasted about an hour. There were about 50 people on the call. Peter used the company’s website presentation as his talking points, providing informative comments about the company's progress or situation on several fronts. Below are notes that, while not meant to be an exhaustive description of the call or a transcript of it, essentially were a list of things Peter said that I found to be interesting to varying degrees.

Peter used the company’s website presentation as his talking points, providing informative comments about where the company is several fronts as well as some very candid commentary.

The mechanisms of action of PV-10 for oncology and PH-10 for dermatology are not the same but have interesting similarities and high profile researchers are currently investigating.

The synthesis patent application has been approved. Peter described some of the implications of the now approved patent. Provectus will issue a press release next week where I expect the company will describe several key aspects that drive significant shareholder value.

A Phase 3 trial under the SPA that should be agreed to with the FDA, should such a trial ultimately be run, would have treatment without any limits of any concern (i.e., as many retreatments of as many visible tumors as necessary).

In addition to breast cancer and melanoma for which Moffitt (a) confirmed from its murine studies that PV-10 chemoablation resulted in both a direct effect on injected lesions as well as a systemic response that leads to regression of uninjected subcutaneous and lung lesions and (b) concluded intralesional PV-10 treatment led to the induction of tumor-specific immunity, Moffitt also has done work in other indications.

Moffitt seeks to finish its Phase 1 feasibility study of human patients as quickly as possible.

The FDA and Big Pharma realize that to kill cancer one has to effectively kill tumors in a clinically relevant manner.  PV-10 is singularly unique in the approved and emerging cancer agent universe.

Peter mentioned they are having license talks with global and regional pharmaceutical companies, including active dialogue with Dr. Craig Eagle of Pfizer.

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