“Only those who attempt the absurd can achieve the impossible.”— Albert Einstein

Having taken further/future punitive fund raising off the table with what should be $20 million of cash on hand (give or take) as of now, what's next for Provectus? Regulatory guidance the week of January 13th, of course. Isn't that what the company's December 18th Provectus Type C Meeting With FDA Oncology Division Held December 16, 2013 press release said or inferred?

The quote attributed to Einstein that also serves as the title for this blog post is apt for Provectus principals. How absurd must it sound for those not close to this situation to hear the company's shareholders speak excitedly about outright or accelerated approval (or, at worst, a smallish Phase 3 trial) for local therapy PV-10 as a treatment of cancer, something so impossible or improbable for so many of these casual observers, skeptics and critics to fathom. After the December 2013 run-up of the stock, it's not unreasonable for short-term traders and those wishing to lock-in profits, hedge positions or mitigate risk in advance of regulatory clarity to sell or consider selling. Next week, to many, is about selling the fact after previously buying the rumor.

What's the risk-reward of holding through versus selling before clarity?

Below, in a bull case for holding my position through clarity, I lay out four potential scenarios with my guess of probability of outcome and the near-term share price that may result: a roughly estimated upside of $3.25-$5.10 per share results (although if clarity is good to great, and communicated well, I think the share price goes much higher). I don't include breakthrough therapy designation because it isn't a pathway to approval; however, approval or steps towards approval emanate from it.

Click on the table to enlarge it.

Below is the opposing bear case for selling a position in advance of clarity using the same options, with a guess of probability, resulting share price, and some associated commentary. I place clarity in quotations to put a finer point on the "buy the rumor, sell the news" scenario of disappointment or an expectations miss that the opposite side of the trade would argue: a roughly projected downside of $1.27 per share.

Click on the table to enlarge it.

These so-called bull and bear cases are illustrative. Depending on next week's outcome or revelation, the share price should soar, or stumble (but not crater). What odds does one attach to "good news" and "bad news" when assessing the reward (or risk) of holding through clarity versus the risk (or reward) of selling before it. The odds depend on how much one projects the stock will run up on good news or drop on bad. To assess these odds, I equated upside and downside in dollars, and used Excel's Solver feature to arrive at the percentages below.

My simple example essentially yields good-bad (reward-risk) of 25%-75% to 50%-50%. You can see that in the upside missed (or gained) from selling before clarity (or holding through it) versus the profit from selling before (or loss incurred from holding through). If my quick 'n dirty assessment of share price reaction is accurate, there's roughly a 3-to-1 reward-risk (upside-downside), or perhaps as low as 1-to-1.

In reality I think the odds for good news are much higher, like 90%-10%, 95%-5% or, well, um, 99%-1%. With this view of reward-risk, it would behoove me to hold through clarity (as if you didn't already know that...). Should management reveal a positive for FDA guidance next week, commercial validation then becomes "what's next for Provectus."