A Paradigm Shift vs. Obsolescence

In my September 22, 2013 investment letter (you can find it under the blog’s Why I'm Long tab) I wrote:

PV-10, a novel oncology compound being developed by Knoxville, Tennessee-based Provectus Biopharmaceuticals, Inc. (“Provectus” or the “Company”) (OTCMKTS: PVCT), exemplifies innovation over incrementalism, meaningful over marginal, productized technology over hypothetical, and changing the world over accepting the status quo, with not an insignificant amount of serendipity over contrivance. In sum, these form the quintessential essence of a paradigm shift in the treatment of cancer. 

This is where my investment thesis begins and ends: a novel drug compound with a pristine safety profile, a treatment well tolerated by and easily administered to patients, a ready made product inexpensively produced at scale, and a vast addressable market of unmet need that should be fully and very profitably met over time...

PV-10, a 10% solution of small molecule Rose Bengal (“RB”), which already has an established FDA safety profile, is a very safe and efficacious therapy that when injected intralesionally into accessible cancerous lesions rapidly reduces local tumor burden and stimulates the immune system to systemically shrink or eliminate non-injected distant tumors and visceral metastases. Broadly applicable to a wide variety of solid tumor cancer indications, like metastatic melanoma (“MM”), liver cancer or hepatocellular carcinoma (“HCC”), lung cancer, breast cancer, bladder cancer, pancreatic cancer, and colorectal and other cancers that metastasize to the liver, this drug generates tumor-specific immunity tantamount to in situ vaccination against cancer. Bold emphasis is mine.

I believe Provectus' drug is a paradigm shift in the treatment of cancer. By that I mean utilizing local agent PV-10 and its active pharmaceutical ingredient ("API") Rose Bengal ("RB") to treat cancer by injecting and killing accessible tumors (ultimately harnessing body's own immune system to attack and kill remote tumors), rather than applying systemic therapies like radiotherapy, chemotherapy and some immunotherapies that require the patient's body to be toxically bathed in these treatments.

I think the FDA eventually will approve PV-10 for the treatment of recurrent melanoma on a local-regional basis, with no cancer grade or stage specification or requirement, because there still remains a very large unmet need for this disease, PV-10's pristine safety profile and robust local-regional efficacy has demonstrated its ability and potential to help meet that need, and the drug's efficacy per unit cost is very high (high efficacy, low cost).

On Thursday Adam Feuerstein published an article about Provectus entitled The Obsolescence of Provectus' Skin Cancer Drug Means Current Speculative Run Ends Badly. The article cast Provectus and PV-10 in a negative light.

Feuerstein's use of the word obsolescence ("thing of the past") is striking because it is the antithesis of my use of the phrase paradigm shift, which is about the future. His characterization of PV-10 and its prospects could not be farther or more diametrically opposite from mine. He writes Provectus has nothing comparable to Merck's lambrolizumab, an anti-PD-L-1 agent, nor will Provectus have anytime soon. I contend PV-10, which in a local-regional disease control setting (for now) can prevent recurrent melanoma from becoming metastatic, is like nothing Merck or any Big Pharma currently possess.

It seems to me the themes of Adam's article are: PV-10 is obsolete, PV-10 will get neither BTD nor accelerated approval. More generally, the drug will not receive an accelerated path to approval from the FDA, and Provectus' share price and market capitalization were too high, and far from warranted.

I think what speculation there is and currently continues to be relates to whether Provectus might receive either breakthrough therapy or accelerated approval for recurrent melanoma; more specifically, for local-regional control of the disease before it becomes metastatic.

Provectus' business strategy as it relates to PV-10's clinical development and regulatory affairs has been to demonstrate the drug's ability to arrest or destroy local-regional melanoma lesions and tumors before the disease goes metastatic, using a drug whose API has an established safety profile with the FDA for prior human use in a previously FDA-approved product (future use of halogenated xanthene progeny that further extends patent life, drug utility and profitability of course would require more clinical trial testing).

Here's the thing about PV-10 today: Hit a tumor with enough drug -- either a suitable injection by volume relative to the size of the tumor, or more than one injection if the tumor still abounds -- and the tumor goes away, entirely.

It is incredible for a bulletin board stock with less than 1% institutional investor ownership to have Moffitt Cancer Center issue a press release in August 2013 entitled Single Injection May Revolutionize Melanoma Treatment, Moffitt Study Shows, and two Pfizer executives on its corporate advisory board, Dr. Craig Eagle, M.D., head of the oncology therapeutic area global medical group, and Bob Miglani, senior director of external medical affairs.

The company delivered a clear press release on December 18th, followed by an associated 8-K filing. Provectus management expects to receive either breakthrough therapy designation ("BTD") or accelerated approval ("AA"). The former could require a small additional study, while the same study could be a confirmatory one or post-marketing requirement for the latter. In either case, the endpoint likely could be a symptom-based one related to tumors given PV-10's value proposition of achieving local-regional disease control for patients whose melanoma has recurred -- delay, reverse or prevent progression to life-threatening visceral disease.

Provectus made an 8-K filing on January 15th to say final FDA meeting minutes management hoped to receive by the same date (by virtue of a capitalized byline in their December 18th press release) had not arrived. Management should not have set this expectation for the market by the inclusion of the/a date if there existed even the possibility the minutes would be delayed (for whatever good reason).

Peter should not have canceled the call with Adam once scheduled. Bill Gordon, who is employed by Provectus' investor relation/public relations firm Porter, LeVay & Rose, should not have entertained a discussion with Feuerstein on behalf of Peter in the first place. Gordon is not the company's spokesman.

Why is the notion the FDA would grant BTD or AA to PV-10 absurd, and what does an "'anything goes' biotech investment climate" have to do with the FDA? What is absurd is not analyzing clinical data in comparison to existing approved treatments and those vying for FDA approval for melanoma. There still remains a very large unmet need for melanoma, recent drug approvals notwithstanding. The discussions between the FDA and Provectus relate to PV-10's attractive clinical value proposition of achieving local-regional disease control for patients whose melanoma has recurred -- delay, reverse or prevent progression to life-threatening visceral disease. There is no true standard of care for non-metastatic melanoma patients refractory to treatment.

RB, the API in both PV-10 and PH-10 (Provectus' lead indication for dermatology), has an established safety profile with the FDA for prior human use as intravenous hepatic diagnostic Robengatope, approved by the Agency prior to 1982 (New Drug Application Number 016224), and topical ophthalmic diagnostics Rosettes and Minims®. RB has been safely used in liver function studies for more than 90 years.

RB can be readily bought at chemical supply companies such as Sigma Aldrich. Provectus' synthesis patent Process for the synthesis of 4,5,6,7-tetrachloro-3',6'-dihydroxy-2',4',5',7'-tetraiodo-3H-spiro[isoben- zofuran-1,9'-xanthen]-3-one (rose bengal) and related xanthenes, awarded in September 2013, protects the RB API until 2031, and "...is in accordance with International Conference on Harmonisation (ICH) guidelines for manufacture of API suitable for phase 3 clinical trial material and commercial pharmaceutical use" (Source: company press release Provectus Novel Synthesis Patent Issued by United States Patent and Trademark Office, September 2013). This means Provectus' stuff is the only stuff for cancer treatment.

Further, from the aforementioned Provectus press release, "The patent also covers any hypothetical process that controls the amount of transhalogenated impurities in Rose Bengal through the awarded Jepson style claims." This should mean other companies cannot buy gallons of RB directly from chemical supply companies, maybe or maybe not do something to it, and then sell it for use as a cancer therapy.

It's worthwhile to expand on Provectus data provided in the article. First, what he uses, which is for patients: The 51% overall response rate ("ORR") is comprised of 26% complete response ("CR") -- the tumor went away -- and 25% partial response -- the tumor shrank by at least a certain amount. 18% were labeled stable disease ("SD") -- the tumor did not increase in size. Local-regional disease control -- the tumor is destroyed, shrunk or controlled -- was 69% (i.e., CR + PR + SD). PV-10 kills tumors, much more so than other therapies and treatments.

In September 2013 Provectus provided "findings of several exploratory analyses of data from its completed Phase 2 study of intralesional PV-10 in metastatic melanoma during the Poster Session on "Melanoma and Skin Cancer" on Monday, September 30 at the European Cancer Congress 2013 (ECCO 17- ESMO-38 - ESTRO 32) in Amsterdam, The Netherlands (the poster is here). Here, the company provided patient- and tumor-level data from its Phase 2 study.

At a patient or subject level, focusing specifically on the subset of patients for whom all lesions were treated (i.e., all disease burden), ORR was 71%; 50% CR and 21% PR. Local-regional disease control was 82%. These figures derive from a patient subset, and not the entire patient population, which included Stage IIIB-C and Stage IV M1a-c patients refractory to treatment. I think it's reasonable, however, to focus on the above patient subset only in the context of the regulatory pathway to approval being sought by Provectus: local-regional control of recurrent melanoma.

At a tumor level, the ECC 2013 poster provided insight into PV-10's effectiveness killing, shrinking and arresting tumors. Among 491 target lesions -- that is, injected lesions -- CR was 53% and PR was 5%. Thus, ORR was 58%. "Local-regional disease control," or CR + PR + SD, was 70%.

Associated with these figures, consider the company's comments in its ECC 2013 press release: "The investigators on this study describe the effect of PV-10 as "rapid, durable response" but as the photographs have documented, many of the PV-10 treated tumors almost appear to have never been present. PV-10 was only injected intermittently, when tumors were present during the first 16 weeks of the study, in stark contrast to typical clinical studies where treatment is given until either resistance is engendered or patients experience unacceptable toxicity." Bold and underlined emphasis is mine. When a patient's entire disease burden was treated (i.e., all lesions and tumors were injected), local-regional disease control was achieved 7 out of 10 times despite intermittent injection.

Recall Moffitt's August 22nd press release. Albeit a mouse study, which currently has been followed up by a study on humans, Moffitt noted: "In the initial study, researchers injected a single dose of PV-10 into mice with melanoma. The result was a significant reduction in the skin cancer lesions, as well as a sizable reduction in melanoma tumors that had spread to the lungs. The researchers said the dye solution appeared to produce a robust anti-tumor immune response and may be safer than existing immunological agents." Bold and underlined emphasis is mine. 

Key opinion leaders in the medical community have taken special notice of the PV-10 melanoma data. For example, consider Bristol-Myers Squibb's Yervoy-, Roche's Zelboraf-, GlaxoSmithKline's combination of Tafinlar-Mekinist- and Merck's lambrolizumab-investigator Dr. Jeffrey S. Weber of Moffitt Cancer Center. He wrote to me in September 2013 saying: "I think the drug has some serious potential as an immune modulator, and would be very interesting to combine with checkpoint inhibitors." Bold emphasis is mine. "The drug" in his response is PV-10.

As a side note, adjusting for likely operating spend, assuming a small fundraising under usual terms in the first week of October, and estimating the amount of warrant exercises since the 2012 10-K (particularly over the last month or so), Provectus should have up to if not more than $20 million of cash on its balance sheet come January 31, 2014. The company reported $8.3 million as at 9/30/13.

Company management has not agreed to a development partner for PV-10, or a regional license transaction or two for that matter, because no one yet has bid a price sufficiently high enough to reflect PV-10's potential (likely) economics.

I imagine Provectus met with the FDA on December 16th to discuss whether local therapy PV-10 was a viable treatment for systemic disease cancer (melanoma). I think the FDA considered the sum total of the data and information presented to it, and agreed this local therapy could be used to treat cancer (melanoma). It is understandable that casual observers and skeptics consider "no news" to be or mean "bad news." Based on the due diligence I have conducted, no news (as yet) is not bad news as it relates to my investment thesis.

Provectus is mum because the final FDA meeting minutes the company expected, and effectively advertised would arrive by January 15th despite the rather weak caveat of "Under FDA rules, the agency should issue official minutes to the Company within 30 days after such a meeting; in this case by January 15, 2014," have not. When the minutes arrive, I'm sure the company will speak.

The melanoma treatment landscape certainly has changed. More options for cancer patients always is a good thing. Big Pharma is getting better: "We are pretty good at shrinking tumors, but not good at getting rid of them" (Merck senior vice president Gary Gilliland). See also this post. This incrementalism still is not enough.

Despite the so-called huge advances in melanoma care today I think the FDA recognizes there still remains a very large unmet need for this disease. I can understand skepticism regarding the use of PV-10 for late-stage and heavily diseased patients; however, Provectus for now has proven local-regional control of the disease before its turns metastatic is consistently achievable. I believe the FDA told Provectus there is a need for PV-10.

A proper comparison of PV-10 would both Vical's Allovectin-7 and Amgen's intralesional agent talimogene laherparepvec ("T-Vec"), formerly BioVex's OncoVEX, which also is injected directly into tumors just like PV-10 (PV-10, Allovectin-7 and T-Vec are intralesional agents). Robert Andtbacka, M.D., assistant professor, University of Utah Huntsman Cancer Institute historically has compared the Phase 2 trial results of these drugs (see below). The FDA likely is aware that T-Vec, often compared to PV-10, met its Phase 3 trial's primary endpoint.

Click on the figure to enlarge it.

Roche's vismodegib (Erivedge) also might be considered a relevant and more appropriate precedent.

Making comparisons between a systemic drug, lambrolizumab, and a local therapy (with systemic properties and benefits), PV-10, are problematic, particularly when Provectus is seeking approval for its lead compound for local-regional control of the disease before it becomes metastatic. Interestingly, lambrolizumab generated less than 10% CR, below Ashdown and Coventry's presistent CR ceiling. Killing tumors, not just shrinking them, matters because of the malicious virility of tumor heterogeneity. If you don't kill cancer, it comes back angrier.

PV-10 is not obsolete. Far from it.