August 15, 2016

Seeking Co-Development

Updated below: 8/17/16.

The company's CTO, board of directors member and a co-founder Dr. Eric Wachter, PhD said several things in regard to PV-10 as an immunotherapy on Provectus' August 10th 2Q16 business update conference call.

Among them, in no particular order:
  • "After a long haul, it is now clearly accepted that tumor ablation with PV-10 can lead to stimulation of a useful anti-tumor immune response."
  • "...over the last several years we have worked with colleagues at Moffitt Cancer Center, we have done some work internally, and we have done some work at the University of Illinois-Chicago to show that PV-10 unambiguously triggers that first step, the destruction of tumor. And that event performs all of the expected downstream signaling of the immune system, leading eventually to a functional immune response against an untreated tumor."
  • "So, when we started this work in Australia in the clinic in 2005, we described that as a an bystander response, which was the common terminology at the time. Immuno-oncology was not particularly well regarded at that period. It got to be even less of an important area of investigation as we approached the end of the first decade of the 21st century. And then, it became a very hot area with the approval of anti-CTLA drug Urvay [sp] and subsequent approvals of a number of anti-PD-1s and presumably eventually anti-PD-L1s, all drugs that harness T cells to have a functional--or improve their functional response against tumor tissue."
  • "So, I think that the story [that ] is now very well documented in the literature. We have shown that this occurs in [unintelligible] models of melanoma. We have shown this occurs in [unintelligible] models of colorectal carcinoma. We have evidence to show that this happens in [unintelligible] breast carcinoma. And, most importantly, we have shown that key elements of this signaling are occurring in melanoma patients."
    • "Our next tumor on the radar will be hepatocellular carcinoma because there are challenges in HCC that are comparable to those in melanoma. We already know that we can destroy HCC with this ablative process and the hypothesis that that should lead to similar signaling, which can have implications for--well, single-agent therapy [unintelligible] HCC, but more importantly for combination with things like anti-PD-1 [unintelligible] . We have already shown that the basic immunology occurs in HCC models, so I would say that--one of the things I’m highly confident in, I’m highly confident that we will show that this same functional immune signaling functions in HCC."
    As I noted under Church (August 15, 2016) on the blog's Current News pageDr. Sally Church, PhD wrote a Biotech Strategy Blog post entitled "Beyond T-Vec - a look at oncolytic viral immunotherapy." Dr. Church does not appear to be either an innovator or an early adopter (as labeled on the technology adoption life cycle). Rather, her professional experience, among other things, biases her (which is neither "right" nor "wrong") towards early or late majorities (I'd lean towards early). I think it is worth paying attention when she begins to opine on a newer or novel category of drug. In the case of oncolytic viruses (OVs) (she does not categorize them explicitly as intralesional or intratumoral presumably because OVs have been explored via both intralesional and intravenous administration), she is commenting as the majorities begin to pick up on what the innovators and early adopters (e.g., Agarwala, Andtbacka, Weber, etc.) have been saying for a while. She is, however, rightfully wanting to know more about durability of responses and survivability, which these innovators and early adopters also have been wanting to see as well.

    Two thoughts crystallized quickly [in my head] but only after reading Dr. Church's blog post. The second one is the field of melanoma, and for Provectus, what immunology in other indications they must show to secure a co-development transaction more on their terms than not. This is represented by the screenshot from her post below, and which is the subject or focus of this blog post.
    Click to enlarge. Image source
    First, the threshold for differentiating one's combination therapy for melanoma appears to be, in Dr. Church's mind, is the approved combination of anti-CTLA-4 ipilimumab (Yervoy) and anti-PD-1 nivolumab (Opdivo).

    Second, is combination data of PV-10 and pembrolizumab in advanced melanoma sufficient to get any co-development deal for Provectus, let alone the deal management presumably desires? Probably not, and I believe they already have recognized such. Big Pharma also may want certain immunology (and not just ablation) data for other indications, such as hepatocellular carcinoma.

    Updated (8/17/16): For some time Provectus' COO and interim CEO Peter Culpepper has publicly and routinely described the kinds of co-development combination therapy deals there could be and he seeks. As recently as the 2Q16 quarterly financial statements filing, the company noted:
    "An interim transaction could be a co-development deal like Roche-NewLink, Bristol-Celldex or AstraZeneca-Incyte. The Company is not in discussions regarding the sale of its business, and there can be no assurance that the Company will be able to monetize PV-10 or PH-10 in the manner described herein."
    Setting aside both Peter and Eric's immense historical difficulties with expectation setting (e.g., in the case of co-dev combo deals as early as June 2014 that one could be/was coming), the above quote is endemic of their historical challenge with guidance (see Forward Guidance (August 14, 2016) on the blog's Current News page).

    What is it that you mean? What do you want to say, and why do you want to say it?

    I don't believe they are saying things that are not true, or that they don't believe; however, in trying to communicate strategy and tactics, Provectus management often conflates the desire to provide genuine insight into what is going on (Peter, Eric) with poorly set or communicating expectations (Eric, Peter) and ineffective (Peter) or ideological-driven approach to providing (Eric) guidance. Eric's comments on the August 10th 2Q16 business update conference call regarding PH-10 are another example:
    "Turning to PH-10, we're sorting through the immunologic and histopathologic data from our mechanism of action study of topical PH-10. I, unfortunately, can't go into detail yet about what we're learning, but in general, my assessment is that these results will be as important to PH-10 as the Moffett work has been to PV-10. 
    When new kinds of therapy come along, everyone likes to understand the biologic story underlying clinical observations, and it appears that this may be a very interesting story that explains observations we've made throughout clinical development of the drug. I look forward to sharing details on this with our stakeholders in the next few months."
    While Eric's first paragraph is more appropriate to describe his perspective of the PH-10 mechanism of action (MOA) results that Rockefeller University's Dr. James G. Krueger, MD, PhD and his Laboratory for Investigative Dermatology have arrived at thus far, Eric's second paragraph conveys his excitement about the results (imprecise as those comments are by phraseology like "very interesting"). Eric is saying Rockefeller's MOA work and results should be as important to PH-10 as Moffitt's work/results were to PV-10, which established the oncology use of Rose Bengal as immunotherapeutic (i.e., "After a long haul, it is now clearly accepted that tumor ablation with PV-10 can lead to stimulation of a useful anti-tumor immune response") and that is of assistance in discussions with Big Pharma (among other preclinical and clinical work/data).

    So, when Peter "talks" Bristol-Celldex, AstraZeneca-Incyte and Roche-NewLink (in chronological order), what does he mean? What does he want to say, and why does he want to say it?

    Whether you agree with this or not (I agree with him in context), to the get the valuation he wants for Provectus Peter believes the company requires an interim value-creating (-recognizing) transaction. This transaction, in his view, is more likely a co-dev combo deal/relationship rather than a geographic license deal/relationship because of factors such as size, scope, validation, etc.
    Click to enlarge.
    His illustrative co-dev combo deals provide a range of potential outcomes for Provectus and the prospective Big Pharma partner, and thus for Provectus shareholders:
    • Deal type A (Bristol-Myers/Celldex), where there would be clear recognition of the partner's interest in Rose Bengal as a promising component of the pairing/combination regimen. A combo collaboration begins,
    • Deal type B (Genentech-Roche/NewLink), where there would be much, much stronger recognition of the partner's interest by its licensing of PV-10 for cancer combo therapy, or
    • Deal type C (MedImmune-AstraZeneca/Incyte), where there would be overt or tacit recognition of the partner's interest or acquiescence but with no strings attached.
    Provectus of course understands there is no reason now to enter into a type C because the company's combination therapy study work already is underway (i.e., PV-10 in Combination With Pembrolizumab for Treatment of Metastatic Melanoma), together with prior work such as that of Moffitt's (e.g., "Efficacy of Intralesional Injection with PV-10 in Combination with Co-Inhibitory Blockade in a Murine Model of Melanoma"). A recent type C deal (August 15th) is Bavarian Nordic's drug supply agreement with Bristol-Myers of anti-PD-1 nivolumab (Opdivo) for use in a combination therapy clinical study of the former's vaccine CV301 and the latter's checkpoint inhibitor for patients with previously treated non-small cell lung cancer (NSCLC).

    The difference between type A and B deals is the prospective partner's interest to dip a toe into the pool, or to dive into it. The decision of how wet to get probably depends on how much data each Big Pharma requires for whatever degree of waterlogged-ness they seek or with which they are comfortable. Both types, however, can co-exist with an eventual transaction to buy the company because Provectus management wants to advance the therapeutic use of PV-10 as a monotherapy and in combination with other cancer treatments.

    The co-dev combo relationship Peter has been seeking for some time (i.e., the company ineffectively stated strategy) comprises something to the effect of:
    • A multi-indication collaboration (e.g., melanoma, HCC, NSCLC, etc.),
    • An upfront payment and/or paid-for study/development costs. No upfront payment but paid-for costs could be a nice second. Peter understands the stock market and industry recognize validation is seen with Big Pharma dollars in the deal, whether soft, hard or both,
    • Trial sponsorship is an interesting topic because I would imagine Eric would want to have Provectus conduct (control) it; however, Big Pharma might want to do it in a more expeditious manner than for which Eric has been known,
    • Non-exclusive clinical combination would be preferable to Provectus since PV-10 is orthogonal to the class of PD-1s (and PD-L1s); that is, PV-10 would be synergistic to any checkpoint inhibitor, as management has publicly stated of Keytruda and Opdivo. Why not do combination therapy trials with both PD-1s? Because non-exclusivity might/would not be preferable to the prospective partner, and
    • Time-limited right of exclusive negotiation for licensing rights likely would be a given. If Provectus can get what it wants (vis a vis core business terms), the prospective partner would like a right of first something.
    The 2016 "version" of the 2014 Bristol-Myers-Celldex type A deal (aside from some stuff related to the historical relationship prior to the combo co-dev transaction that may have manifested themselves in the co-dev deal) would appear to be the Bristol-Myers-PsiOxus transaction. The latter essentially is the sentiment and structure of what Peter is seeking on behalf of Provectus. There will be continue to be an open question from many-to-most company shareholders (and I would imagine the Street, the stock market, and the industry ecosystem at large) about whether he can get the deal Peter wants for Provectus, however, until he answers the question and does.

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