March 13, 2016

Fourth Quarter, Year-End 2015 Business Update/Conference Call Prep

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Provectus's 4Q15 and CY2015 business update conference call is scheduled for Wednesday, March 16th at 4 pm EDT.

Topics I'd like to hear and read about (or more about) include the below. The list of items and questions is by no means exhaustive.

1. Cash balance, Cash burn, and Stockholders' Equity
  • What was the cash balance at 12/31/15?
  • What was the fourth quarter's [monthly] cash burn?
  • What was stockholders' equity at 12/13/15?
  • What was the research and development expense for the quarter?
  • What was the lab supplies and pharmaceutical preparations expense?
From 1Q14 to 3Q15, the company averaged a monthly cash burn of $1.3 million. This figure was $1.4 million (per month) from 4Q14 to 3Q15. Using a 9/3015 cash and cash equivalents figure of $18.9 million, and a $1.4 million monthly cash burn, Provectus' 12/31/15 cash balance could be $14.7 million.
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Maintaining Provectus' listing of both its common stock and tradable warrants requires the company's stockholders' equity (SE) to remain above $6 million. SE equals assets minus liabilities. Net worth (another way of referring to SE), ex-cash for the quarter ending 9/30/15 looks like the below:
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Tracking net worth, ex-cash over time provides a cushion of some amount above the mere cash balance to potentially exceed the $6 million SE threshold.
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Thus, it is quite possible Provectus' CFO/COO and interim CEO Peter Culpepper does not have to "officially" raise money until well into 3Q16 (i.e., 2Q16 SE might be in the range of >$6 million to $11 million+), rather than the April/May timeframe I originally had projected. Fundraising in this theoretical sense simply compares cash balances, and cash burn and burn rates. In practice, you want to get out ahead-to-well ahead of crossing the threshold, which is what the tender offer is trying to accomplish.

Since pre-clinical, clinical trial and regulatory-related work is reported under research and development on the income statement, it's worthwhile to track, at least or at a minimum, quarterly figures for both research and development expenses, and the sub-expense of lab supplies and pharmaceutical preparations.

From 1Q14 to 3Q14, the company averaged a quarterly research and development expense of $1.2 million. This figure was $2.2 million from 4Q14 to 3Q15.
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From 1Q14 to 3Q14, Provectus averaged a lab supplies and pharmaceutical preparations expense (i.e., for both drug substance [Rose Bengal] and drug product [PV-10 and PH-10]) of $200K. This figure was $324K from 4Q14 to 3Q15.
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Setting aside of ignoring the mathematical gymnastics in gray above*, the most pertinent observations might be that lab supplies and pharmaceutical preparations expense has increased quarter-over-quarter for the last 6 quarters.

* The above was a very quick 'n dirty calculation that does not include the cost of PH-10 preparation, nor the variation in the number of vials a patient requires based on tumor burden and indication, nor other factors and items.

2. Certain disclosures (among others)
  • What costs and/or cost recoupments, if any, were there or will/could there be related to the resignation of Provectus' Chairman, CEO and a co-founder Dr. Craig Dees, PhD?
  • What is the status of the derivative lawsuits?
3. Stage III melanoma Phase 3 trial
  • Is the timing of the trial's interim data readout/analysis still [early] August 2016?
    • Peter previously said the Phase 3 trial's interim assessment of efficacy and safety would occur around mid-year 2016 or in 2016; however, during the 2Q15 business update conference call on August 6, 2015, he said: "An interim assessment of efficacy and safety will be performed by the independent data monitoring committee when 50 percent of the events required for the primary endpoint have occurred. Therefore, meaningful clinical data are potentially available via an interim analysis on a shorter timeline possibly around this time next year." {my bolded and underlined emphasis}
  • Where is the version of the trial protocol that would include Amgen's intralesional agent (IL) talimogene laherparepvec (T-Vec, or Imlygic) as a comparator?
    • T-Vec would be an investigator's choice of a comparator, together with the trial's other choices of comparator of systemic chemotherapy, either intravenous (dacarbazine) or oral (temozolomide) forms.
  • What is the status of trial site activations in the U.S., Australia, Western Europe (Germany, Poland), South and Central America (Brazil, Mexico), and Asia (China, Hong Kong, Singapore)?
4. Advanced melanoma (Stage IV), combination therapy (PV-10 + Keytruda), Phase 1b trial
  • What guidance is there on the timing, and possibly a potential venue (medical conference), of the presentation of interim clinical trial data?
  • What is the status of trial site activations in the U.S. and Australia?
    • Would these sites, in addition to the single recruiting site to date (long-time PV-10 investigator and medical oncologist Dr. Sanjiv Agarwala, MD's St. Luke's Cancer Center), be part of the Phase 1b portion of the combination therapy program, or the eventual Phase 2 portion?
    • My sense is that currently not-yet-recruiting sites on -- long-time PV-10 investigator and surgical oncologist Dr. Merrick Ross, MD's MD Anderson Cancer Center and Australia's Princess Alexandra Hospital -- and others -- e.g., consultants Dr. Paul Chapman, MD's Memorial Sloan Kettering Cancer Center and Dr. Georgina Long, PhD's Australia's Melanoma Institute Australia/University of Sydney-- will be part of the Phase 2 portion when it commences.
  • At this point in recruiting and treatment, what guidance do you have of the Phase 1b's actual or potential impact factor or effect size or treatment effect?
    • The Phase 1b portion of the combination therapy program could recruit up to 24 patients, while the Phase 2 portion has pencilled in an enrollment figure of 120 -- subject to the impact factor or effect size seen from the administration of PV-10 and Keytruda in the Phase 1b study. The better the treatment effect -- that is, the more effective the combination than Keytruda alone -- the lower the Phase 2 trial's N (i.e., a number less or potentially much less than 120).
    • My sense is N_Phase 2 will be less than 120. But, by how much? 
5. Phase 1 liver cancer data presentation/publication
  • What guidance is there on the presentation and/or publication of more and/or initial [expanded] Phase 1 trial data?
    • Eric recently started referring to work on hepatocellular carcinoma (HCC) (primary liver cancer) and cancer metastatic to the liver (secondary liver cancer) as "hepatic cancers." The initial data presentation revealed treatment of multiple liver mets, in addition to the treatment of HCC: colorectal, melanoma, non-small cell lung, and ovarian. Recently, Provectus initiated a trial program to treatment neuroendocrine tumors (NET) liver mets (see #6 below).
    • My primary thoughts here, as it relates to the HCC program in Asia vs. (and) the U.S. and Western Europe (and, maybe, Australia), are that initiating a Phase 1b/2 program (SAT: SOC + PV-10, RCT: SOC +/- PV-10) may take time because of regional regulatory navigation issues; however, that may not necessarily explain time taken for the U.S. where the standard of care (SOC) is sorafenib -- thus, the Phase 1b/2 program could be a randomized controlled trial (RCT) of sorafenib +/- PV-10 because a single-arm trial (SAT) of sorafenib + PV-10 was part of the expanded Phase 1 trial.
6. Follow-on hepatic cancer trials, including NET Phase 1 study
  • Why did the NET hepatic cancer trial commence before any other hepatic cancer trial, early- or late-stage?
    • In the case of an early-stage Asian trial (a Phase 1b), my sense is that Eric still has to navigate regional regulatory issues in China and/or other Asian locales.
      • The patient population of some form of accelerated path (not accelerated approval, but an accelerated regulatory review and action path) might be patients with HCC that is not amenable to resection, transplant or other potentially curative therapy. Clinically significant endpoints might be objective or overall response rate, changes in markets of hepatic function, and perhaps (informally but not formally?) progression-free survival or overall survival (both of which could form the primary endpoints of a subsequent RCT).
7. CUP data
  • How many patients were treated in the compassionate use program (CUP) (aka the expanded access program) in CY2015?
  • What guidance is there on the timing of the publication or publications of CUP clinical results and data?
8. PH-10 MOA data (psoriasis Phase 2 study)
  • What are the results? What guidance is there on the timing of the revelation of clinical results and data?
9. Psoriasis and atopic dermatitis Phase 3 trials
  • What guidance is there regarding additional (if any) regulatory and/or commercial licensing (if applicable or appropriate) steps before the commencement of one or both of these pivotal studies?
10. Further publication/presentation of Moffitt MOA data and other work.
  • What guidance is there on the timing, and possibly the potential venue(s) (medical conference, journal), of further presentation and/or publication of Moffitt Cancer Center mechanism of action (MOA) and other preclinical and/or clinical work?
    • The next presentation of such work will be at AACR 2016 (April), T Cell Mediated Immunity after Combination Therapy with Intralesional PV-10 and Co-Inhibitory Blockade in a Melanoma Model (Provectus press release source link).
11. Further publication/presentation of UIC MOA data and other work
  • What guidance is there on the timing, and possibly the potential venue(s) (medical conference, journal), of further presentation and/or publication of University of Illinois at Chicago (UIC) MOA and other preclinical work?
12. Other preclinical and/or early stage clinical work, More stringers, More indications
  • What other third parties, like Moffitt and UIC, might be undertaking preclinical and/or clinical work on PV-10?
    • During the 4Q15/CY 2014 business update conference call on March 11, 2015, Eric said: "I cannot comment on other third party work that may or may not be underway with regard to nonclinical work with PV-10. Obviously that is something that might be of interest and if it is and we haven’t disclosed it it’s probably of a sensitive nature." The threshold on sensitivity, as time passes and work is completed, can be lowered if Eric wants to lower it. He could lower it if he understands and truly embraces the thoughtful rationale for doing so.
  • What guidance is there on the timing, and possibly the potential venue(s) (medical conference, journal), of Foote et al.'s clinical follow-up work combining PV-10 and radiotherapy?
    • During the same 4Q15/CY 2014 conference call, Eric said: "But regarding the radiation therapy publication by Foote, that is of record as having led to an investigator-initiated study that you mentioned, 25 patients. That study has been enrolling slowly. It had very specific eligibility criteria at a single center. We have had discussions over the last several months with the investigator about ways to get data from that study available publicly and we anticipate that sometime in the coming months, that is sometime this year, that there will be some presentation of interim data from that study."{my bolded and underlined emphasis}
  • In addition to the melanoma, hepatic cancer and dermatology clinical study and trial programs, what other indications do you expect to commence in 2016?

While I don't expect Eric and Peter to address all of the above in the 2015 10-K filing and on Wednesday's call, I hope they try their best to do so, as appropriate, applicable and necessary. One of Craig's most critical and very apparent flaws as a public company manager was his inability or unwillingness or unpreparedness -- or, more likely, parts of all three -- to walk and chew gum at the same time (despite his many protestations over time to the contrary). By the way, I believe Craig had both great strengths and notable weaknesses. On net, Rose Bengal and PV-10 are where they are today in no small part because of him.

As I previously wrote, Provectus is where it is in terms of progress largely -- perhaps exclusively -- because of retail investors. Most traditional investors, including me in a past life, would have utilized them differently in a command chain (without potentially changing, disrupting or corrupting their medical, clinical, treatment philosophies and other approaches) and on the board of directors, and potentially thrown some of them out on their buttocks.

Walking and chewing gum at the same time means dismissing Craig's long-time assertion -- or at the very least placing it in proper context -- of customer prioritization; that his primary customers only were the FDA (the regulator) and Big Pharma (the buyer). Staying power for founders and managers has come from the [retail, and some early institutional] investor.

Good-to-great public company managers balance the needs, wants and desires of most major constituencies. If/when they are successful, the share prices responds accordingly and in due course.

Eric and Peter, in the post-Craig period of the life and emergence of Provectus Biopharmaceuticals, have a clear and present opportunity to speak directly to the investor: existing shareholders as well as prospective ones. I hope they embrace the situation that now presents itself, and robustly exceed the lowered expectations their prior history has established -- because Rose Bengal and PV-10 only can get to where they need and should be tomorrow in no small part because of Eric and Peter.

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