And the decision(s) is(are)...

I read through Provectus' recent 3rd quarter 2013 10-Q filing (filed on November 12th) and prospectus supplement (November 12th). The changes in and additions of language from/to the 2nd quarter filing (August 8th) and previous supplement (August 8th) are several and, in my view, notable. See my underlining below.

1. 10-Q: Management's Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources 

We are also considering the global licensure of PV-10 as well since it has come to our attention that this is of interest to potential partners. We have provided data on a confidential basis to both potential global and geographic partners for both PV-10 and PH-10 via a secure electronic data room that is monitored 24 hours a day, seven days a week and houses formal data submissions to the FDA as well as various corporate governance related documents. 

We also expect to continue with the majority stake asset sale and licensure of our non-core assets. However, the primary objective of the Company is to strategically monetize the core value of PV-10 and PH-10 through various transactions, leveraging value creation up to and including an appropriate merger and acquisition transaction that includes upfront cash and acquirer stock in exchange for Company ownership as well as a contingency value right to facilitate potential upside post-acquisition. We believe regulatory clarity is determined by specifying the expected approval pathways of both PV-10 and PH-10. This may include the potential for breakthrough therapy designation for PV-10 to treat metastatic melanoma and an accelerated approval path for PV-10 to treat refractory recurrent melanoma. Such clarity will help facilitate transactions with potential partners. Additionally, the existing and forthcoming mechanism of action related clinical and nonclinical data for both PV-10 and PH-10 will further aid in both regulatory clarity and transactions with potential partners.

2. Prospectus Supplement #3: Cautionary Note Regarding Forward-Looking Statements

Risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements include those discussed in our filings with the Securities and Exchange Commission (including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012, and elsewhere in this Quarterly Report on Form 10-Q), and the following:

• Our ability to license our dermatology drug product candidate, PH-10, on the basis of our Phase 2 atopic dermatitis and psoriasis results, which are in the process of being further developed;

• Our determination, based on guidance of the Food and Drug Administration (FDA), whether to proceed with or without a partner with a Phase 3 trial of PV-10 to treat recurrent melanoma and the costs associated with such a trial, unless the path to approval of PV-10 is accelerated, and whether Breakthrough Therapy Designation acceptance is viable and enables an accelerated path;

• Our determination whether to license PV-10, our recurrent melanoma drug product candidate, and other solid tumors such as liver cancer and cancers metastatic to the liver, if such licensure is appropriate considering the timing and structure of such a license, or to commercialize PV-10 on our own to treat recurrent and metastatic melanoma and other solid tumors such as liver cancer and cancers metastatic to the liver; and

• Our ability to raise additional capital if we determine to commercialize PH-10 and/or PV-10 on our own, although our expectation is to be acquired by a prospective pharmaceutical or biotech concern prior to commercialization.

3. Prospectus Supplement #3: Management's Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources 

We are also considering the global licensure of PV-10 as well since it has come to our attention that this is of interest to potential partners. We have provided data on a confidential basis to both potential global and geographic partners for both PV-10 and PH-10 via a secure electronic data room that is monitored 24 hours a day, seven days a week and houses formal data submissions to the FDA as well as various corporate governance related documents. 

We also expect to continue with the majority stake asset sale and licensure of our non-core assets. However, the primary objective of the Company is to strategically monetize the core value of PV-10 and PH-10 through various transactions, leveraging value creation up to and including an appropriate merger and acquisition transaction that includes upfront cash and acquirer stock in exchange for Company ownership as well as a contingency value right to facilitate potential upside post-acquisition. We believe regulatory clarity is determined by specifying the expected approval pathways of both PV-10 and PH-10. This may include the potential for breakthrough therapy designation for PV-10 to treat metastatic melanoma and an accelerated approval path for PV-10 to treat refractory recurrent melanoma. Such clarity will help facilitate transactions with potential partners. Additionally, the existing and forthcoming mechanism of action related clinical and nonclinical data for both PV-10 and PH-10 will further aid in both regulatory clarity and transactions with potential partners.

The company provided new, seemingly prospective "bullish" language before. In Provectus' 2nd quarter 2012 filing (August 8), management wrote in the report's MD&A section:

We are seeking to improve our cash flow through both the licensure of PH-10 on the basis of our Phase 2 atopic dermatitis and psoriasis results, and the geographic licensure of PV-10 on the basis of our Phase 2 metastatic melanoma and Phase 1 liver results in certain areas of the world, as well as pursuing a strategic investment strategy, and continuing with the majority stake asset sale and licensure of our OTC products as well as other non-core assets.

These additions reflected the beginning of discussions with potential partners for regional transactions (China, at the time), and [I can only assume] discussions about a minority equity investment from Big Pharma (Pfizer, at the time, I believe, but Johnson & Johnson purportedly was interested too). No deal for China has materialized yet, and Pfizer's investment in the company's PVCTP "IPO" did materialize either. So, while these quarterly filing or prospectus statements neither predict nor portend the future, they do, however, give us insight into management's regulatory affairs, and business and corporate development activities.

Given how careful management and/or their lawyers are with their language (at times, careful borders on unintelligent), the new language in this week's filing and prospectus is striking when taken in the context of what many shareholders expect, which is a regulatory clarity decision from the FDA. Here's what jumps out at me:

• The reference to the electronic data room. While discussions with global (e.g., AstraZeneca, Amgen) and regional partners (e.g., several in China, India and Japan this year and last) are one thing, entering a data room is another and typically means certain partners have entered into a confidential disclosure agreement ("CDA") with Provectus in order to enter and gain access to substantially more and often very sensitive information. I am not saying any global pharmaceutical company has entered into a CDA with Provectus yet; however, several regional pharmaceutical companies very likely have. The Agency reference likely refers to the kind and amount of data being provided to the FDA in support of whatever the company has asked of it, and thus would be available to prospective partners to review, such as Moffitt pre-clinical (i.e., combination trials involving PV-10 and various checkpoint inhibitors like anti-CTLA4, -PD-1 and -PDL-1 agents) and clinical data in a reporting format acceptable to the FDA, as well as copies of pertinent or germane regulatory communications. It's not lost on me that "formal submission" crops up, as it should be pretty clear by now the company has made an ask(s) of the Agency, for which we wait a decision(s).

• The reference to acquisition deal structure. Upfront payments and earn-outs paid later, when the company is not fully acquired only for cash, have been used on several transactions in the sector, such as Celgene's acquisition of Abraxis (a favorite example of Peter) or Sanofi-Aventis' of Genzyme. It may not be significant, or it might be, but there is no mention of payments achieved through clinical, regulatory and/or commercial milestones (or more simply, milestone payments). I am struck by the deal structure language only because it was used in this filing, rather than earlier or later. Like with the emergence of the strategic investment strategy in 2012, which I believe was mostly in reference to discussions with Pfizer, this M&A deal language might provide disclosure comfort (for Provectus management and representatives) should acquisition discussions have taken place, however "informal" they may have been (and may be).

• The specificity of clarity. This specifying of clarity seems like a "staged expansion of labels," with accelerated approval ("AA") or outright approval ("OA") being sought for Stage IIIB-C patients with recurrent melanoma refractory to treatment, and breakthrough therapy designation ("BTD") being sought for metastatic melanoma more broadly with more refinement or definition likely to follow the awarding of it.

• The reference to cancers metastatic to the liver. The Phase 1 liver trial included successful treatment of colorectal cancer that had metastasized to the liver. In the blog's News tab, I noted in July that compassionate use program ("CUP") sites had treated treated ocular melanoma metastasis to the liver, and a neuroendocrine tumor ("NET") that had metastasized to the liver. Together with data from the expanded Phase 1 liver trial, I wonder if data from these cancers metastatic to the liver might form the basis for a liver cancer BTD application, possibly further advance regional transaction discussions for China, and point to an additional effort by management to raise overall valuation through a second indication and its variants.

Above, management wrote they believe regulatory clarity is determined by specifying the expected approval pathways of both PV-10 and PH-10. They further wrote this clarity may include the potential for BTD for PV-10 to treat metastatic melanoma and an AA path for PV-10 to treat refractory recurrent melanoma. Understood. Shareholders should take note.

While the SPA very likely was granted or made available to the company earlier this year, we now know from the 3rd quarter filing's language Provectus has asked for, generalizing, AA/OA for refractory recurrent melanoma, and BTD for metastatic melanoma. We could surmise with some non-trivial degree of certainty these asks were made in October, and might estimate decision timing as December or January, allowing for some holiday slippage.

Management is holding a special meeting of shareholders on December 16th to seek approval for the change of the company's name from Provectus Pharmaceuticals to Provectus Biopharmaceuticals, and the reincorporation of the company from Nevada to Delaware. There is a good amount of literature that weighs the pros and cons of incorporation in both states, and their comparative merits. There also is perhaps some benefit to the subsequent change in stock CUSIP, the alphanumeric code identifying the company's trading ticker or symbol, as it relates to mitigating short interest. Provectus started life in the early-2000s as a reverse merger into a public Nevada-incorporated shell (a so-called reverse IPO). Reincorporation into/as a "clean" Delaware entity might give both global and regional partners extreme comfort of whom they were buying or from whom they were licensing, as opposed to if the company had begun life as a privately held Nevada- or other state-incorporated company. Why change thing(s) now?

Management dramatically increased the expense of lab supplies and pharmaceutical preparations in this year's 3rd quarter (~$259K), "...the result of securing drug substance and drug product for pivotal clinical studies with the newly patented synthesis of Rose Bengal." The figure was ~$32K for 1Q13 and 2Q13 together. Let's say each 5 ml vial of PV-10 cost a few dollars, like $10, to manufacture its contents. Let's further say the average number of vials used by a melanoma patient or a CUP patient afflicted by melanoma or another indication is 6. In 1H13, ~3,215 vials may have been produced for the equivalent use of ~535 patients. In 3Q13, using the same artificial math, ~26K vials would have been for 4,315 patient equivalents. As an aside, I might be high on cost per vial, and number of vials per patient.

Let's explore if production was for pivotal clinical studies such as a pivotal Phase 3 trial. Assuming a 180-patient trial per the most recent SPA trial parameter slide, the above cost and patient use vial assumptions above, and the purported requirement of 3 production runs (for whatever Agency reason(s)). This would yield an expense of about $32K (3,240 vials, 540 patient equivalents), ~13% of the actual expense in 3Q13, which assumes the company conducted these runs in the 3rd quarter. I'm more inclined to think they did these runs in the 1st and 2nd quarters. Why so much product now?

As I wrote above, it seems to me [now] management often or typically utilizes certain MD&A language to provide a measure of disclosure comfort. Strategic investment strategy or M&A deal structure language are, in my view, some examples of this. Why discuss or reference end-game deal structure now?

The FDA may say "Only a SPA for you," or BTD, or AA and a post-marketing study, and BTD, or OA, and BTD.

The company has asked for AA/OA and BTD, and probably thinks they have a very good chance at attaining both asks. I'm not completely convinced they know what they'll get from the FDA, but I think they're confident of the outcomes based on their interactions with the Agency, the Phase 2 data, Moffitt's data, and the feedback from their regulatory affairs team.

Is "now" because they're prepping for what might happen after now? Anticipation among longtime shareholders who have closely followed Provectus, management and the situation is high, so high one easily could cut it with a proverbial knife. I am open to and prepared for disappointment, where disappointment is a full Phase 3 under an SPA, because that "negative" outcome clearly must exist on a Gaussian-like distribution of potential outcomes if management does not know what they'll get from the Agency. But the "positive" outcomes that populate the same distribution likely comprise much if not nearly all of it -- I assume, having pushed past the SPA for some time, management has delivered substantive datasets from their own work and Moffitt to advocate for something more -- provide the thought, belief and hope of something much, much more.

Boom!

Boom indeed.

A More Aggressive Pathway To Approval for $PVCT

A meme making the rounds yesterday relates to an August 2010 article in knoxvillebiz.com about Provectus entitled "Knox company enters clinical trial stage for cancer drug." In it, Eric is quoted as saying of the FDA "If we had an ironclad explanation of this bystander effect that they could understand that it was…real and…why it was occurring, they would be more amenable to a more aggressive pathway to approval."

There was a great deal of consternation regarding my comment in my "$PVCT: A Slow, Hot, Smoky Summer Monday" post that recent information purports to suggest that, as late as last week, more time was needed to submit the breakthrough therapy ("BTD") application. Related frustration later was voiced by some shareholders about the special protocol assessment ("SPA"), the process for which appeared further elongated when management wrote in May in the annual CEO letter that it had every reason to believe the SPA would be achieved in 2013. As recently as March, in Dr. Andtbacka's presentation at the HemOnc Today conference in New York, a presentation slide indicated the MM Phase 3 trial under SPA would begin enrolling patients in mid-2013.

Peter would neither address Craig's comments about BTD (and other topics) after the annual general meeting in June nor my comment above (when other shareholders queried him about it). He also sidesteps SPA and BTD application submission questions, pointing out to shareholders (and the general public) that Provectus will not discuss specifics of the SPA process beyond what management has said in press releases and various corporate and investors presentations on the website and elsewhere.

More specifically, Peter will not address the topic of whether Provectus has or has not applied for the SPA and BTD. He did communicate Provectus expects to work with the FDA to get the SPA, and that the company is considering and very optimistic about BTD because management has been speaking with the FDA all along about accelerated approval ("AA").

I'm not convinced Provectus has submitted the BTD application, but I think the delay is due more to reconfiguration than having to fill a substance gap. When I recently asked Peter if the company had all the information and data necessary to complete the BTD application (i.e., did management feel it had answered all of the FDA's questions about PV-10), he replied it did. In truth, Eric is the only person at Provectus with a "real-time" view on the situation and process with the FDA, but I take Peter's reply to me to be as much of a current snapshot as one could obtain.

Is the right question to ask "when will the SPA and BTD submissions be made" (or, has the SPA and/or BTD application been submitted)? These are questions on the minds of most shareholders. It's clear to me management understands they have not completed the SPA process as quickly as they or shareholders would have liked. Everyone wants the ultimate milestone reached; namely, the SPA and, now, BTD.

I think the better question is to ask "what's needed (or what's left information- or data-wise) to get PV-10 approved." In my "For $PVCT, it's the FDA's move" post, I queried what remains. Safety and efficacy has been established beyond question. MOA, at least from a murine model perspective, has been explained and is understood. Proof of systemic properties and benefit has been shown. I also spelled out potential regulatory clarity outcomes: the SPA, AA, BTD (several options) and outright approval. It's no longer about whether the drug should be approved, but rather how it should be approved.

Segue to another Provectus article that also recently made the rounds again, February 2013's Cancer Watch's "Back to Phase 1: Understanding Systemic Effects of PV-10." In it, Moffitt's Dr. Amod Sarnaik said the cancer research center's focus "...is on discerning the presence of immune cell infiltrate in untreated tumors after PV-10 injections into other lesions. “We are really interested in harnessing immune cell infiltrate as a form of treatment,” he said, noting also that while creating cancer vaccines has been thought of traditionally as one of the Holy Grails of cancer research, cancer vaccines have turned out to be not strong enough to generate an adequate immune response." The literature suggests a a link between the immune infiltrate in several human carcinoma types and prognosis and response to therapy (2011). Later, the potential prognostic and/or predictive role of the immune infiltrate in this setting attracted attention (2012). The concept here is that tumor-infiltrating leucocytes ("TILs") may possess true predictive potential in cancer patients, where in some clinical settings the immune infiltrate can reliably predict if a specific patient will respond to therapy or not (Senovilla L et al. Oncoimmunology [2012, 1(8):1323-1343]). Later, in the same Cancer Watch article, Dr. Sarnaik said of Moffitt's Phase 1 feasibility study, "This is a straightforward study that will give a yes or no answer," which simply means Moffitt and he want to confirm what they already have seen pre-clinically (Moffitt's posters at SSO 2012 and AACR 2013) and in Provectus' prior clinical studies. One wonders if Moffitt's quantification of the significance of the immune-mediated response might further the belief in the independent predictive quality of PV-10-derived immune cell infiltrate for long-term survival of cancer patients.

Which brings me back to the meme I used to open this post. By completing the feasibility study, it would seem Moffitt would have provided the FDA with the "ironclad explanation of the bystander effect" sought by Provectus in 2010. Which then leads to contemplating the resulting "more aggressive pathway to approval." AA, BTD or outright approval? It's no longer about whether the drug should be approved, but rather how it should be approved. When Craig presented in town to biotech and life sciences industry folks, and some investment management people, in early-June, he said the FDA had asked Provectus to submit a BTD application.

If it's not a question of when was the SPA and/or BTD submitted, I think it's a question of when was (and what proportion of) Moffitt's feasibility study data (was) transmitted to the FDA. This remaining item should be what's left, or what remains. Interim results already have been generated. By early-June, before ASCO, the bulk of the work had been completed.

I read Peter's "very optimistic" stance by Provectus about BTD relates to the outcome management thinks is possible or probable. Perhaps they know the outcome, or at least have a good to very good idea about it. As of June 28, the FDA's CDER's performance on breakthrough requests was 98%, where where action was taken within 60 days of receipt of a request for BTD. It's possible for the so-called clock to be shorter than the planned time frame.

If, at best, management surmises the regulatory clarity outcome, or range of outcomes -- outcomes that in all likelihood clearly define the path and time to approval (the "time value of money" to both Big Pharma and life sciences investors) -- it would seem rational to not strike a regional transaction until the regulatory veil has been lifted. Two Chinese, one Indian and one Japanese pharmaceutical companies very recently entered into confidential disclosure agreements ("CDAs") with Provectus. I don't have a sense at the moment about the names of the Indian and Japanese firms, but I think one of the Chinese companies is Hisun-Pfizer Pharmaceutical. China economics for Pfizer continues to interest me: 25% of PV-10 sales if Provectus strikes a deal with a Chinese pharmaceutical company by virtue of owning/receiving that royalty figure, 49% if the Provectus partners with Hisun-Pfizer, and 100% if Pfizer goes it alone in China (since Hisun-Pfizer was established to produce branded generics).

Horserace (updated)

In illustrating the horse race, I mean to convey or say "crossing the finish line" implies a funded transaction. So, while it will be interesting to watch if Provectus inks an MOU with Chinese pharmaceutical company Hisun-Pfizer (or another Chinese company) this week, the funding of this transaction might more likely occur within 30-60 days after the MOU is signed/announced.

The current perspective is an Indian company is more likely to consummate (i.e., fund) a regional transaction, and thus deliver the upfront payment to Provectus first, followed by a Japanese pharmaceutical company. At the moment, it would seem the Chinese upfront payment is viewed as arriving third behind the Indian and Japanese payments.

I will review the situation after Peter returns from Japan.

◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉

The above written or said, a regional transaction may not occur until the FDA provides regulatory clarity to Provectus. As I wrote in my "$PVCT is Going for BTD. BTD is Tantamount to Approval." post, the company sought this clarity through its original, initial pursuit of accelerated approval ("AA"), followed by initiating a parallel path to pursue a special protocol assessment ("SPA") and eschewing a traditional "non-SPA" MM Phase 3 trial. While both paths, AA and SPA, remain viable, the breakthrough therapy designation ("BTD") arrived last year and now appears the more active or likely path to clarity.

While management certainly could be blown away by the pricing and structure of a regional transaction from an interested party, it is not unreasonable to think these companies, as do potential investors, also are waiting for regulatory clarity before they present Provectus with terms and conditions.

As I wrote in my "#PVCT's #China #Arbitrage Opportunity post," on the one hand, while many Western Big Pharma companies are very interested in the drug, they still desire to understand the story of how and why a very effective local agent can have as comparable systemic and immunologic benefit. Thus, we waited for Moffitt. On the other hand. the Chinese (and the Indians and the Japanese) are much more interested in understanding whether PV-10 works and works cost-effectively. Both hemispheres agree the drug is safe, and both acknowledge PV-10 is effective. It is possible, however, that cultural differences might contribute to each party's thinking and decision-making processes. One wants to know why and how, while the other wants to know how much.

But Moffitt arrived in early-April. So what gives?

It is not unreasonable to think these regional pharmaceutical companies are waiting for regulatory clarity before they present Provectus with terms and conditions. It's also not unreasonable to think management also is waiting for regulatory clarity before they accept any terms and conditions on regional and/or global license transactions.

If the path of clarity is a decision of "better" (a truncated MM P3 trial) or "best" (AA), with "good" (SPA) available but not chosen, it strikes me that all parties -- management, regional pharmaceutical companies, Pfizer and Big Pharma -- have their respective reasons and rationale to wait until regulatory clarity is made transparent.

Wouldn't you think the topic of what "we" (Provectus & Pfizer) do after BTD is attained (and then, more specifically, AA or a truncated trial) might have been discussed?

◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉

Take for example the "non-unique" story of a fund that desires to put money into Provectus via an open market purchase of common stock (i.e., the shares you and I own), by dipping its toe in the water to establish an initial position of 1.5 to 4.5 million shares.

Without regulatory clarity, there's no clear exit for the fund and its managers. They cannot and do not buy, but merely wait on the sidelines. As do many others.

To most, including the above mentioned fund, the question of regulatory clarity -- in its mind and most others -- boils down to Provectus attaining the SPA from the FDA and then having to run a $30-$50 million Phase 3 trial. In the minds of this fund, dip its toes in the water now, at 63 cents, and following the clarity of an SPA, suffer 20-40% dilution (roughly) when Provectus raises aforementioned money to fund the trial. Better to wait and buy after the fund raising or, better, participate in it at the lower price with the prospect of warrant coverage too -- a much more attractive risk-reward.

As I previously wrote in my "With the FDA, It's Good, Better, Best for PV-10 and $PVCT," the closer you are to the company, the greater your awareness of Provectus' situation, the higher expectations or anticipation you have of an SPA, BTD or AA. The less familiar you are with the company or situation, the lower your level of expectations. The FDA's decision will validate Provectus and PV-10 in some form and fashion.

The above mentioned fund has done due diligence, but doesn't have the perspective Provectus watchers do. The fund, like its sistren and brethren, invests broadly across a variety of companies, diversifies risk, plays the numbers, is not early, and endeavors to generate alpha (which for the vast majority of such funds merely and actually is beta).

Provectus watchers would tell you they believe the situation now is an outcome between "better" and "best." The consensus view appears to be the company already has submitted a/the BTD application. Opinions vary as to when, from early-May to early-June, which would indicate a result as late as early-August (perhaps early-September if one leaves room for summer vacation and/or the dog days of summer) and as early as "now."

◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉       ⦿       ◉

An e-mail from a blog reader:

My PVCT buddies and I have long since learned to take your predictions with a handful of salt BUT - we're sure going to be prepared when that Great Day finally arrives and it will be because you have prepared us so well in advance. I don't think I need to tell you how very much I appreciate all that you put into the Blog. Reading it every day has made hanging on to this losing position this past year and a half almost a pleasure.

Yes, the forecast is always wrong, but I love receiving e-mails like this. Thank you.

Sell in May and go away? April showers bring May flowers, and June flowers, and July flowers, and...

This is a follow-up to my January 27th March Madness post. I added other items denoted by the + prefix to the bolded item title.

PV-10
Early-April's AACR annual meeting provided the forum for both Moffitt and Provectus to provide definitive clinical relevance for the drug. In the case of Moffitt, tumor-specific immunity. In the case of Provectus, combination therapy effectiveness. In both cases, systemic benefit. Definitive for the FDA. Definitive for Big Pharma.

PV-10 + “other stuff”
I think but cannot fully validate combination therapy interest in PV-10 includes anti-CTLA4 agents (Bristol-Myers Squibb, Pfizer, Astrazeneca), anti-PD-1 agents (Merck, BMS, Roche, GlaxoSmithKline and Teva Pharmaceuticals), BRAF inhibitors (Daiichi Sankyo and GSK), and kinase inibitors (Bayer).

The liver trials
The expanded liver P1 trial report must be complete before the company can apply for BTD for liver. How many of the "up to" number of patients are required; up to 24 patients receiving PV-10 and up to 12 patients receiving sorafenib and PV-10. 24 and 12, respectively? Or a subset? Assuming the company achieves breakthrough therapy designation (see below), would a subset and interim analysis, rather than the full set and preliminary final data, be sufficient as the FDA's EOP2 further builds up their understanding and knowledge of PV-10?

The SPA
Management guidance is Q2. At this point, I think June may be when we see the SPA achieved. Is management submitting applications for both the SPA and BTD (see below)?

+Breakthrough Therapy Designation
The company regularly has asked the FDA for accelerated approval. The manner in which the company has sought to demonstrate PV-10 and PH-10's value proposition (and, thus, rose bengal's value proposition) -- very safe, very efficacious, multi-indication potential -- also is consistent with trying to accomplish an accelerated path to market for the drugs (i.e., efficient and effective use of capital). It seems to me BTD is more like a badge (as the "designation" in the title denotes), and should or must be followed by a pathway. The accelerated pathway may be either accelerated approval or a "faster Phase 3" trial. It seemed Moffitt data presented at AACR was very important to making the case for BTD. Such data may have been available starting in early-April when the AACR conference commenced. Whether the data was transmitted to the FDA then, or remains to be sent in the near-term is unclear. At this point, I think Q3 (July) may be when we see BTD achieved.

Shelf filings
The two $50MM common stock filings were pulled in early-April (here and here). The $100MM mixed securities shelf remains.

The regional license deal for China
I think Chinese officials, whether governmental and/or pharmaceutical, were present at AACR. I also think Peter met with Chinese officials in Europe during his recent trip there.

+Wall Street vs. Main Street
It will be interesting to see what may unfold in the next 60-90 days. When the share price pushes through $2 and the stock lands on the NASDAQ thereafter, a number of retail investors holding Provectus shares are very likely to close their positions (sell their holdings) between $2 and $4 per share. I think there will be an intense turnover of the company's shareholder base. That is, unfortunately, the way of this capital markets world, as institutional/professional investors (hedge funds, mutual funds, etc.) will buy what retail folks sell. I hope they (retail investors) don't, but I think they will. We are, after all, the "dumb money" to them.

India
A visit to India likely will be made by Peter in the near-term. Japanese-headquartered Daichii Sankyo owns a majority stake in India-based Ranbaxy Laboratories. There are other interested local Indian companies, too. Pfizer India is an autonomous body capable of its own deal making.

Japan
Nearly 20 companies are interested in a regional PV-10 license. Visitors to the blog from Japan are frequent and corporate (pharmaceutical and otherwise) of late.

Moffitt
AACR (see PV-10 above). I think human work is moving ahead faster than expected.

+Value Prop vs. Clinical Relevancy vs. MOA

To me, value proposition is and has been the most important aspect of my investment thesis: very safe, very efficacious and multi-indication potential. It helps to underscore the risk-return of an investment in Provectus. Clinical relevancy is critical to the FDA and Big Pharma's understanding of where PV-10 fits in, as much as MOA is critical.

More valuation-raising work to be done
See below for a sample. I will elaborate on this sketch in a subsequent post.

Peer-based management compensation proposal coming
This was not included in the company's proxy statement.

PH-10
I think translational work done at a world-renowned university in a laboratory whose head has a world-class reputation with the FDA probably now is complete.

+Sell to Cheap? Hardly.

I bet management could and would protect Rose Bengal’s economics in a size and scope commensurate with the depth and breadth of their innovation. There are sufficient blocks of share ownership, when rallied in a coordinated manner, that will support a takeout (end game) valuation management believes is appropriate and sufficient. My reach across the shareholder base is both broad and deep, and growing. Make no mistake of the value of Provectus these blocks recognize and want to see achieved. Make no second mistake of my intensity, determination, capability and competence to ensure this value is realized and monetized...

$PVCT: China vs. The World

Big Pharma interest in a global license of PV-10 steadily grows. Regional license interest in PV-10 also is growing.

On page 20 of the recently filed S-1: "The geographic areas of interest for PV-10 principally include China, India, Japan and Middle East and North Africa (MENA). We are also considering the global licensure of PV-10 as well since it has come to our attention that this is of interest to potential partners."

The world continues to get smaller and smaller. Big Pharma operates where it does and can -- mainly, the U.S. and Europe, and also elsewhere -- but with an eye to so-called developing markets (recall the now or near obsolete BRIC moniker for Brazil, Russia, India and China), and beyond, where it has entered as foreign wholly owned subsidiaries together with partnerships and joint ventures with as well as acquisitions of local players.

I appreciate management's enthusiasm and persistence in pursuing a regional license deal in China. In the S-1 mentioned above: "According to Global Cancer Facts & Figures, 2nd Edition, liver cancer is the fifth leading cause of deaths related to cancer in the world in men and seventh in women. Approximately 750,000 people are newly diagnosed annually with primary liver cancer, also known as Hepatocellular carcinoma (HCC), with China alone accounting for about 55% of the cases diagnosed each year. The world market for liver cancer drugs is projected to exceed $2.0 billion by 2015 and does not include the full impact of the China market potential." Like with most things China-related, it is Big Pharma's new frontier, and a monstrously-sized addressable market at that.

I also understand and appreciate management having to balance enthusiasm for and the potential of near-term cash upfront with China with Big Pharma interest in a global PV-10 license.

I don't want management to do a premature or cheap China deal simply for the cash or to bump up the share price, and diminish the value of a global license and/or the end-game. On the other hand, I don't want management to pursue a global license without taking into consideration sufficiently raising valuation through a string of regional deals before giving way to a global license and/or the end game. I don't think management is doing either.

Rather, regional deals like China (and others) are being considered in the context of a global license and the end game, and vice versa.

$PVCT: What Could A Relationship with Daiichi Sankyo Mean?

Daiichi Sankyo's interest in Provectus might range from something simple or narrow to something more robust.

You can read about Daiichi Sankyo's new 5-year business plan here.

$PVCT: Big Pharma Interest

This blog is one of the primary sources of information about Provectus. 

The blog can see, among several other things, where visitors come from (e.g., IP address, city, state/region, country, etc.) and how often they stay and read (page views, visits, visit lengths, etc.). Anytime you visit any destination on the world wide web, you are being tracked. Unless you use something like Tor to protect your privacy.

About 10 days ago I speculated about Daiichi Sankyo interest in PV-10. Why? Because...

First, folks from Daiichi Sankyo ("DS") in Japan visited multiple times and spent many, many hours on the blog. These visitors' IP address(es) originated from the pharmaceutical company's headquarters in Tokyo.

Then, folks from DS in the U.S. visited the blog. These visitors' IP address(es) originated from the pharmaceutical company's U.S. headquarters in Parsippany, New Jersey.

So, I began connecting dots available to connect; those above, and others. I think DS has been informal (formal, in this context, means one engages the target company) doing due diligence on Provectus. Why? For one thing, simple activities like scouring web-based sources of information and data is merely one way of doing due diligence on a target, without directly engaging the entity in which you're interested. If you spend a lot of time reading a blog about a biotechnology company not written by said company, you're either really bored or really interested. For another, historical information about Daiichi Sankyo does suggest they can and will do global licenses. DS is a global Big Pharma company, with additional regional interests in Japan and India (through Rambaxy Laboratories) and maybe elsewhere in Asia Pacific. For example, in February 2011, Daiichi Sankyo announced its acquisition of Plexxikon for $805 million up-front and near-term milestone payments associated with the approval of PLX4032 (vemurafenib, now Zelboraf) for up to an additional $130 million. The deal closed in April.

The next course action would be to ask various questions of Provectus management and gauge their responses, should of course they respond to questions about this topic.


At his presentation in New York in March, Craig noted Provectus was in the due diligence process of a pharmaceutical company for a global license. One presumes he did so because this Big Pharma had formally approached Provectus and were in formal due diligence with the company.

Is DS in formal due diligence with Provectus yet? If so, DS would make at least two Big Pharmas with a stated interest in the company.

If one assumes Pfizer has stated interest through Dr. Eagle's presence on Provectus' corporate advisory board, that would make three Big Pharmas. 

There's a fourth. It's IP address(es) comes from...

$PVCT: Daiichi Sankyo

It appears Daiichi Sankyo is interested in Provectus (based on some very specific information I unearthed that leads me to speculate this). It is not yet clear whether such interest is limited to Japan (and possibly India, through its ownership in Ranbaxy), or whether the Japanese global pharmaceutical company's interest extends to a global license of PV-10.

In February 2011, Daiichi Sankyo announced its acquisition of Plexxikon for $805 million up-front and near-term milestone payments associated with the approval of PLX4032 (vemurafenib, now Zelboraf) for up to an additional $130 million. The deal closed in April.

Other acquisitions include Zepharma (2006), the OTC drugs unit of Astellas Pharma, a majority stake in Indian generic drug maker Ranbaxy (2008) valued at ~$4.6 billion, and U3 Pharma (2008) for the company's anti-HER3 antibody. (See Wikipedia)

$PVCT Pricing Power

Last week, when news surfaced about Biogen Idec setting the price for its new multiple sclerosis pill, a blog reader who informed me of this asked about Provectus' pricing perspective for PV-10. Tecfidera, Biogen's drug, is more commonly known as dimethyl fumarate. A good read about Tecfidera's pricing comes from Corante's David Lowe: "It [Tecfidera] joins the (not very long) list of industrial chemicals (the kind that can be purchased in railroad-car sizes) that are also approved pharmaceuticals for human use."

Management thinks it has significant pricing flexibility and thus tremendous pricing power for both PV-10 and PH-10 because of the compounds' manufacturing cost structures. Treatment cost, particularly in the context of evidence of PV-10's clinical superiority (as well as that of PH-10's), undoubtedly will be an important aspect of Provectus' discussions with prospective pharmaceutical partners, whether Big Pharma or pharma in China, India and elsewhere around the world.

Management understands and expects any pricing of PV-10 and PH-10, however, will be driven by Provectus' partners, up to (i.e., partners in regional license transactions, and the sale/license of the dermatology business) and including when the company is acquired by Big Pharma.

In other words, management will not set PV-10's price independent of partner guidance. More than likely, any PV-10 pricing will be determined after Provectus has been acquired, at least insofar as being publicly stated. Price points that management currently is considering solely are being used for business valuation purposes and done in consultation with prospective regional and global partners.

I have long been aware of and understood the cost structure underlying PV-10 (and PH-10); specifically, potential gross margins and costs of goods sold. Rose bengal's cost to manufacture and potential treatment prices, together with the drugs' efficacy and safety, make a very compelling value proposition.

Take melanoma, for example. The company surmises what each 5 ml vial of PV-10 a partner might price the vial at depending on the region of the world (e.g., U.S., European Union, Japan, Latin America, China, India, etc.). Management also can surmise the average number of vials per melanoma patient required. Such information, combined with the drug's superior clinical benefit, suggests PV-10's total value proposition (price + efficacy + safety) could very well fracture the competitive landscape of cancer treatment.

$PVCT: Regional Licenses v. Global License vs. Endgame

As management continues to work towards regional license deals in China, India and Japan, and sees growing interest from Big Pharma in a global license, it is interesting to note a few things.

Pfizer India is an autonomous organization that can and does enter into transactions in India as it deems appropriate.

Relationships Pfizer has in China are more state-governed, requiring more direct contact between Provectus and local pharmaceutical players there.

Should Provectus enter into a global license with Big Pharma, it neither precludes regional license transactions being contemplated in certain geographies from being done nor does it prevent another Big Pharma from acquiring the company entirely (i.e., the end-game).

#China License vs. Global $PVCT License Interest

Many shareholders expected Provectus to announce an MOU with a Chinese pharmaceutical company following Peter's return from China. None yet has materialized. Keep global license interest in PV-10 in mind, however, as management works through geographic license interest in China, India and Japan. The level of seriousness in a global license appears to have markedly increased (Craig's reference to a Big Pharma in due diligence is only one data point), requiring management to balance whether and how to consummate a global license transaction with Big Pharma with whether and how to consummate regional license transactions.

Trying to Connect $PVCT Dots to Pfizer

As readers of this blog know, I've been trying to connect the dots from Provectus to Pfizer for a while. I think the larger company ultimately acquires the smaller one. When Pfizer would move to acquire Provectus is unclear, in the absence of a bid for the company by another Big Pharma, and whether it would do so certainly is not certain. Nevertheless, I think there simply are too many dots. The public ones are the corporate advisory board's Dr. Eagle and joint Provectus-Pfizer patent application.

Management denies Pfizer made an all cash $7 per share bid for the company in 2011, valuing the company around $1B. Since no 8K form was filed (formality, language, materiality), no bid was made, right? That year, melanoma treatments vemurafenib/Zelboraf (Plexxikon) and talimogene laherparepvec/T-Vec (BioVex) were acquired for $1B top-line figures. Interestingly, partial T-Vec MM Phase 3 trial results caused Amgen shares to rally last week, while the takeaway from the HemOnc Today conference in New York this past Friday and Saturday was systemic benefit from injectables is a keen area of focus.

Is Pfizer a passive spectator on Provectus' sidelines, or is it more vocal and active than we know?

I had hoped to connect another dot between Pfizer and Provectus through more information about a China deal. China is a unique market, and partnerships with local players rather than in-country Big Pharma subsidiaries appear to be the way to go. A vocal Pfizer might encourage Provectus to partner up with Sinopharm or Hisun or maybe Shanghai Pharma, Chinese pharmaceutical companies with Pfizer relationships of one sort of another. Interestingly, injectables are the preferred route of administration for oncology drugs in China.

Alternatively, Provectus might elect to do something with another Big Pharma in China along the lines of what AstraZeneca did with Ironwood. If this happens, Godzilla (Pfizer) might have a fight over the company on its hands.

Like with China, several of the leading local players in India are very interested in PV-10. Pfizer's Indian subsidiary, Pfizer Limited, India (which appears to be a wholly owned but independent subsidiary), may also be a potential player too. Could (would) Pfizer encourage (direct) Provectus to do a deal with Pfizer India, which might not have nearly as many shortcomings or competitive disadvantages in India as Pfizer China has in China (when compared to the likes of Sinopharm or Hisun)?

Can management ultimately optimize ROI, an effort that is no small feat? Any Big Pharma would be hard pressed to pay Celgene-Abraxis upfront money, which is management's expectation, for a sub-$100 million market capitalization company like Provectus is valued at now. Regional license discussions continue in China, India and Japan. Global license interest grows. Moffitt data surfaces in two weeks. Action and time will tell.

$PVCT's 2012 10K

Filed today here. Of note (but not exhaustive):

A. Fund raising. The company raised cash proceeds of $5.2 million in 2013 (see Subsequent Events of page F-33):

• $2.6MM at year-end 2012 placed by Network 1, common stock priced at 75 cents (the share around the time may have been in the $0.50s), 1-for-1 5-year warrants struck at $1.00, and
• $2.6MM in February 2013 also placed by Network 1, convertible preferred stock at 75 cents, 1.25-for-1 warrants struck at $1.00.

Raising more than $5MM was necessary, according to Peter, because BDO (Provectus' accounting firm) was more conservative regarding requirements of cash on hand.

B. Preferred Stock. The figure at 12/31/12 was 2.5MM shares. At 9/30/12 it was 2.9MM. I think this security, aside from what was issued in February, could be near or at zero at 3/31/13, as these holdings have been or are being converted this quarter (trading volume has been very heavy).

C. Lawsuit. There is a [presumably] shareholder lawsuit (see Legal Proceedings on page 21): "The Shareholder Derivative Complaint alleges (i) breach of fiduciary duties, (ii) waste of corporate assets, and (iii) unjust enrichment, all three claims based on the Plaintiff’s allegations that the defendants authorized and/or accepted stock option awards in violation of the terms of the Company’s 2002 Stock Plan (the “Plan”) by issuing stock options in excess of the amounts authorized under the Plan and delegated to defendant H. Craig Dees the sole authority to grant himself and other executive officers of the Company cash bonuses that the Plaintiff alleges to be excessive."

D. Warrants. A warrant reset related to the where the share price was in relation to the strike prices of certain warrants resulted in the issuance of 3.8MM 3-year warrants struck at $0.68 (see page F-26).

E. Regional licenses. In the last 10Q, the company wrote: "We are seeking to improve our cash flow through both the licensure of PH-10 on the basis of our Phase 2 atopic dermatitis and psoriasis results, and the geographic licensure of PV-10 on the basis of our Phase 2 metastatic melanoma and Phase 1 liver results in certain areas of the world, as well as pursuing a strategic investment strategy, including equity sales to potential pharmaceutical and or biotech partners, and continuing with the majority stake asset sale and licensure of our OTC products as well as other non-core assets."

In the 10K, Provectus wrote: "We are seeking to improve our cash flow through both the licensure of PH-10 on the basis of our Phase 2 atopic dermatitis and psoriasis results, and the geographic licensure of PV-10 on the basis of our Phase 2 metastatic melanoma and Phase 1 liver results in certain areas of the world, as well as pursuing a strategic investment strategy, including equity sales to potential pharmaceutical and or biotech partners, and continuing with the majority stake asset sale and licensure of our OTC products as well as other non-core assets. The geographic areas of interest for PV-10 principally include China, India, Japan and Middle East and North Africa (MENA)."

I will watch closely for information and/or PRs related to this item next week.

F. Placement Agreements. Also in Subsequent Events:  "The Company entered into a Placement Agent’s Agreement dated March 11, 2013, with Network 1 Financial Securities, Inc. (“Network 1”) as placement agent, which allows for the sale of the Company’s common stock at a purchase price of $0.75 per share and 100% warrant coverage to purchase shares of common stock at an exercise price of $1.00 per share."

According to Peter, it was necessary to have an "open placement agent agreement" as a placeholder for BDO's going concern opinion. The placement agreement with Network 1 appears to be viewed by BDO much like it views the Lincoln Park equity line of credit agreement.

G. Global license. In the 10K, in addition to expanded and more specific language on regional PV-10 licenses, the company also added language on global PV-10 licensure: "We are also considering the global licensure of PV-10 as well since it has come to our attention that this is of interest to potential partners."

I do not think this refers to Pfizer, but rather several other competitors (at least 2 American and 2 European Big Pharma companies) including one in particular that continues to do clinical due diligence, but may well have wrapped up its business diligence.

$PVCT #Horse #Race (updated)

Last updated here.

$PVCT: March Madness 2013

March Madness 2013 begins on Tuesday, March 19 and ends on Monday, April 8. The Final Four will be played in the Georgia Dome in Atlanta, Georgia. I contend this period (including leading into it) will be an important time for the company, its more mainstream awareness, and the share price.

There is a lot of information to digest, from Craig's presentation at the Noble Financial Capital Markets Ninth Annual Equity Conference to Peter's trip to New York City.

PV-10
Most of Pete’s time lately, probably more than anything else it seems (save for another effort), is focused on communicating PV-10's unique immunotherapeutic characteristics in the context of global oncology. You see this manifested in discussions with Big Pharma (as Craig commented at Noble: "interactions with potential global license partners," and by that he does not include just Pfizer) and continued visiting with life sciences investors (trying to get them off the sidelines and into the stock).

PV-10 + “other stuff”
I think Craig et al.’s SITC work (PV-10 + systemic chemotherapy), their upcoming AACR work (PV-10 + systemic immunotherapy), Foote et al.’s expanded work (PV-10 + radiotherapy), and Craig’s skunk works work on more combinatory explorations (e.g., intra-tumoral GM-CSF, systemic interleukin, anti-PD-1 antibodies/agents, etc.) is opening a lot of eyes at Big Pharma and the FDA very wide.

Management is contemplating an MM Phase 1 trial combining PV-10 and ipilimumab (while Craig mentioned this in his Noble presentation, I also followed up). Perhaps the protocol might include the assessment of safety and efficacy in a number of patients with metastatic melanoma (Cohort 1 receives PV-10) and in a number of patients who are taking ipilimumab, an approved treatment for MM (Cohort 2).

As I wrote earlier this week, this combination work of PV-10 + ipi  clearly targets and is in response to serious interest from Big Pharma: Bristol-Myers Squibb & ipilimumab/Yervoy and Pfizer/MedImmune-AstraZeneca & tremelimumab (MedImmune in-licensed tremi from Pfizer in 2011 for global development rights to the drug while Pfizer retained rights to specified types of combination therapies).

The liver trials
Let's segue from combination therapies to the expanded liver P1 trial, and what the likely results will mean for the design and very likely outcome of the liver P2/P3 trial. I think there is enough information to speculate (of course, the foundation of the speculation merely is a framework, and not overly substantial) or project success of PV-10 + sorafenib (a systemic drug, so see PV-10 + other stuff above) over the sorafenib-alone treatment arm. Interference studies and other work confirm PV-10 is orthogonal to sorafenib (and lots of other drugs, too): PV-10 does not interact negatively with sorafenib, and appears to enhance sorafenib's benefit by PV-10 first boosting the immune system.

When Provectus announces -- via an upcoming PR -- that patients have begun to be enrolled and treated in the expanded liver P1 trial, the timeline of results making their way to the FDA should not be lengthy. The same FDA group of folks reviewing Provectus’ pivotal MM Phase 3 trial design suitable for an SPA, Division of Oncology Products 2 (DOP2), are the same folks (i.e., DOP2) who will review the company’s liver Phase 2/Phase 3 trial design suitable for accelerated approval.

The hard work, time, energy, resources, expense, etc. exerted to get the SPA for MM should pay-off when it comes time for management to request AA for liver.

The SPA
Barring another eleventh hour request or issue, it appears the SPA should arrive around March 15.

While it certainly is possible that the SPA arrives earlier, I am setting my own expectations for the Ides.

Shelf filings
The pulling of the two $50MM common stock filings still are in process with Provectus’ attorneys. Management believes the act of pulling them is form over substance, since the company will not be using them. I think communicating their intended action to pull them and/or the actual act and notification to the market of pulling them is substantive.

The regional license deal for China
Work continues, and the process of arriving at and consummating a deal progresses. Should Pete travel to China again (he visited there in late-November 2012), it would be to close the deal, the announcement of which should follow via PR and 8-K filing.

In terms of setting my own expectations for this item, a deal could get done by or around late-February. If Celsion's China deal is worth several hundreds of millions of dollars (per the analysts and others commenting on valuation), by comparison I think you're looking at a Provectus China worth at least $1 billion (perhaps as much as $2 billion) with higher upfront, milestone and royalty payments.

India & Japan
As a result of a completed China deal, Provectus’ visibility should be much more pronounced. Deals in India and Japan could follow thereafter, but more of the deal process must progress before I would speculate about timing. India could be accelerate given the level of interest of the top Bio-Pharma players in the country. For now, I’m not setting any expectations.

Moffitt & Reproducibility
Craig expanded in some detail about Moffitt's work in his Noble presentation: their reproduction of his work, his reproduction of their work, their upcoming data release and presentation(s), etc. According to Craig, Moffitt's immunological MOA characterization work results (mouse and human) will be revealed imminently. I think Craig's comments related to reproducibility, particularly in the context of creating and making a product (i.e., PV-10, PH-10), were very important and very true.

I think it is easy, at this point, to connect the dots so as to speculate (identify) about which conference Moffitt will present their highly anticipated results. I still expect forthcoming visibility about these Moffitt results in late-January, and some data released in stages in March, prior to the full dataset being released at the expected conference in early-April.

More valuation-raising work to be done
When I wrote my blog post entitled $PVCT: Immunologic Potential, and thus Value, I set a very lofty valuation for the company, particularly as it related to the expectation of management for an upfront payment ($3 billion at last check) at the end-game. You don't get from $67.65 million (Google Finance's market capitalization for the company as at 1/25/13) to $3 billion in one leap.

Rather, Provectus arrives there in several leaps and bounds, together with perhaps some end-game auctioning momentum and exuberance: China, India, Dermatology, momentum share buying, etc.

Peer-based management compensation proposal coming
As management noted in a previous filing, a peer company-based bonus compensation structure should be part of a new compensation plan that management should introduce with Provectus' next proxy filing likely in late-April.

PH-10
From a review of history, it appeared Provectus was on the cusp of securing a deal to license its dermatology business (i.e., inflammatory skin disorders) in early-2011. Up to that point, management's valuation expectations, on a net present value (NPV) basis, were about $500 million.

No term sheet materialized from the most serious prospective partner, which would have triggered the official hiring of the financial adviser (Bank of America Merrill Lynch) and an auction process involving the other prospective partners. I think the lack of certain desired information at the time, since fulfilled by the Psoriasis Phase 2c trial, created a valuation gap between the prospective lead and Provectus that prevented the parties from coming together on suitable top-line term sheet parameters. Hence, the prospective lead declined to extend a term sheet it knew would be turned down management.

As time progressed (i.e., as the psoriasis Phase 2c trial was completed), a process appears to have been established that paralleled Moffitt's work on PV-10. Namely, a world renowned cancer research center engaged in work, initially at their own expense, to explore and characterize the immunological mechanism of action of Provectus' oncology drug.

In addition to better understanding PH-10 immunologic MOA, and on a related note, more insight into the drug's distinct lack of toxicity is necessary to better inform the FDA and assist in the design of the eventual Phase 3 trial.

It is not unreasonable to analogize PV-10's path to PH-10's, and thus potentially explain the delay in getting to a dermatology license or sale transaction. Immunologic mechanism of action characterization work is being done on PH-10 by a world-class institution to complete the understanding of certain prospective dermatology licensees before they fully commit to jumping into the pool. I think management's NPV figure for the dermatology business has increased significantly to at least $750 million (perhaps as much as $1 billion).

As for expectations, Craig did note in his Noble Presentation that we should look for the company to request a end-of-Phase-II (EOP2) meeting with the FDA. Presumably this announcement, if one is made by the company, or step precedes or signals the extension of a term sheet for dermatology is imminent, inbound or at least very close at hand.