I think the situation with $PFE and $PVCT has escalated

Following the week of June 10th, during which Peter spent a considerable amount of time in New York and Eric later did as well, it appears to me the situation with Pfizer, the relationship, such as it was and now is, changed.

Call it what you wish: The situation or relationship evolved. The relationship was taken to a new level. The situation escalated in a positive way. Etc.

However you wish to describe or frame it, Eric being brought further into the picture points to a discussion that very likely broadened and deepened from what it only was the week before when Peter and Eric were at ASCO with Pfizer's Craig Eagle.

From what I have discerned thus far, and I certainly do not have anywhere near the entire picture, Peter again met with Dr. Eagle, a member of Pfizer's Oncology Business Unit ("OBU"), which is part of the Specialty Care and Oncology organization that also includes the Specialty Care Business Unit ("SCBU"). Eric's visit included, at least, meetings with OBU senior leadership. Peter also met with senior corporate leadership (not, however, Pfizer's Chairman and CEO Ian Read).

There were more meetings, too.

Peter's role encompasses represents the first-line of and continuing business development interaction and communications with potential license partners, both regional and global. Given the demands on Eric's time, bringing him into New York City for further discussions with Pfizer is not atypical of a relationship that has grown, poised to grow or being considered for growth.

The question for me is the nature of the discussions, both the ones Peter had and the one(s) Peter and Eric had. Did discussions include or address regulatory clarity, commercial validation, and/or business strategy of one sort or another? Time only will tell.

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Click to enlarge the picture.

I also understand Peter met with the company's Chinese intermediaries. I believe Pfizer is encouraging, as best it can or in a manner consistent with and in its own interests, a relationship between Hisun-Pfizer Pharmaceuticals, Pfizer's Chinese joint venture with Zhejiang Hisun Pharmaceuticals, and Provectus.

Since no press release was made nor 8-K filed last week, it would seem more work is needed and/or more time is required for a relationship to be consummated, if at all.

Peter leaves for his trip to Japan next week. If a deal is to be had, it will require him to take a side trip to Taizhou Zhejiang, China, where Zhejiang Hisun Pharmaceuticals is headquartered (and where I presume Pfizer-Hisun has its China location, although not necessarily). I think it is more likely Peter returns with an MOU and no upfront payment. Recent chatter suggests the upfront payment is lower than I first expected, at $10 million, but with two healthy-sized, regulatory-oriented milestone payments of $50 million each.

Should Peter secure the MOU, it is possible the company announces the event via a PR on June 18 at the earliest. If this happens, I would not be surprised if Maxim Group equity research analyst Dr. Echo Yinghui He, MD, PhD, then issues a research note describing the deal and valuing it at $1 billion on a net present value (i.e., taking into account upfront and milestone payments, royalties, market penetration, indications, cash flows).

If we hear nothing upon or shortly after his return, then follow-up is required.

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Moffitt Cancer Center has definitively and unambiguously concluded PV-10 has systemic properties and benefits, which the FDA wanted to understand before considering accelerated approval.

We're now trying to digest a larger truth, that local chemoablation of a cutaneous lesion with PV-10 leads to transferable immunity. As described in Provectus' recent white paper, according to Moffitt's Dr. Shari Pilon-Thomas, "We think that when you inject PV-10 into a tumor, it  destroys the tumor, releasing tumor fragments that are then taken up by immune cells. The immune cells travel to the lymph nodes where they ‘educate’ or activate T-cells which can in turn travel anywhere in the body."

The question of PV-10's systemic properties and benefits has been answered. Academics and researchers will read it in a peer-reviewed journal in the coming months, now that the manuscript has been approved for publication.

The next question for Moffitt is how does it maximize the process by which PV-10 generates immunity. Moffitt's Dr. Jeffrey Weber, the driving force behind the approvals of immunotherapy treatments ipilimumab (Yervoy) and vemurafenib (Zelboraf) for Stage IV metastatic melanoma patients (and considered a/the "god" of immunotherapy), is now firmly behind PV-10. The landscape for treatment therapies for Stage III patients is barren, and wide open for PV-10, which is and has been the point of the regulatory path Provectus chose for its drug. Stage I, II and IV are, of course, also in play.

Dr. Pilon-Thomas now searches for answers to questions like “Is it just because you inject the drug and it goes everywhere and then kills tumor cells at other sites? Or is injecting PV-10 inducing
a T-cell response, such that T-cells travel throughout the body and kill tumors in their various locations?”

To Pfizer's Dr. Eagle and his Big Pharma counterparts, none of what Dr. Pilon-Thomas asks matters as much as the massive creation of antigens that PV-10 causes, and how can PV-10 be optimized to treat and cure all stages of cancer.

PV-10 creates antigens. It creates a lot of them. The creation of lots of antigens is the key to the successful, sustainable treatment of cancer and, thus, its cure.

Antigen presentation is a process in the body's immune system by which macrophages, dendritic cells and other cell types capture antigens and then enable their recognition by T-cells.

PV-10 creates an "antigen storm." Provectus' drug compound is more powerful than any other antigen-creating material for the expression of antigens to the immune system.

Dr. Eagle knows this, and his counterparts at Big Pharma are quickly learning this too.

The not-so-incremental innovation of Abraxane's nanotechnology delivery system -- the albumin-bound formulation of, say, paclitaxel may help you understand the paradigm shift that is PV-10 better. PV-10's genius and innovation is its stimulation of the immune system. PV-10's storm of antigen creation is singularly unique.

For Dr. Eagle and others, the question now is how to optimize the use of PV-10 by itself and in combination with other therapies, when, and with what specific therapies for what situation. How. When. With what.

Even when  PV-10 is an approved, Pfizer will be use it in combination (typically for late/end stage patients) until it does not have to because PV-10 is then able to run the entire race and not be handed the baton to cross the finish line. Thus, the very intent of the joint Pfizer-Provectus combination patent application is strategic, financial and commercial.

The Pfizer-Provectus relationship has changed. How much is the question now.

Chinese pharma companies look West

I found this recent China Daily article about Chinese pharmaceutical companies and their partnerships with multinational pharmaceutical companies interesting.

"Hisun got a breakthrough in China's pharmaceutical industry by taking a controlling stake in the joint venture with Pfizer, the world's largest drug-maker by sales. Hisun has a 51 percent share in Hisun-Pfizer Pharmaceuticals Co, with a total investment of $295 million and registered capital of $250 million. Pfizer holds the remaining stock..."The negotiations (between Hisun and Pfizer) took more than a year. It's really tough with rounds and rounds of bargains and discussions. We got stuck on the controlling stake," said a senior executive of Hisun, speaking anonymously."

Provectus' process to consummate a regional license deal in China has been informative. It think its nearing its end.

Hisun-Pfizer Pharmaceuticals Co., Ltd. & $PVCT?

Putting one's ear to the ground, it appears there is belief among several (and notably different nodal groups/sub-networks of) shareholders that Zhejiang Hisun Pharmaceuticals and Pfizer's joint venture entity, Hisun-Pfizer Pharmaceuticals Co., Ltd. ("Hisun-Pfizer"), very shortly will extend an MOU to Provectus. Peter returns from India and will be in the office the week of May 20th, before he departs around the end of the week of May27th for Chicago and the ASCO Annual 2013 Meeting.

$PVCT & Hisun-Pfizer Pharmaceuticals Co., Ltd.

The release of Pfizer's Q1 earnings earlier this week reminded me of the Big Pharma's joint venture with Chinese pharmaceutical company Zhejiang Hisun Pharmaceuticals, Hisun-Pfizer Pharmaceuticals Co., Ltd. ("Hisun-Pfizer" or "HPP").

From Pfizer's September 30, 2012 10-Q, "On September 6, 2012, Pfizer and Zhejiang Hisun Pharmaceuticals (Hisun"), a leading Chinese pharmaceutical company, created a new company, Hisun-Pfizer Pharmaceuticals Co., Ltd. (HPP), to develop, manufacture and commercialize off-patent pharmaceutical products in China and global markets. In accordance with our international reporting periods, this transaction will be accounted for in the fourth quarter of 2012. HPP was established with registered capital of $250 million. Zhejiang Hisun Pharmaceuticals holds a 51% equity interest and Pfizer holds a 49% equity interest in HPP. The parties will contribute select existing products to HPP, which will have a broad portfolio covering cardiovascular disease, infectious disease, oncology, mental health, and other therapeutic areas. The parties will also contribute manufacturing sites, cash and other relevant assets. Our investment in HPP will be accounted for under the equity method."

The equity method of accounting, "...the process of treating equity investments, usually 20–50%, in associate companies...," means Pfizer's "...proportional share of the associate company's net income increases the investment (and a net loss decreases the investment), and proportional payment of dividends decreases it." Source here.

As Pfizer characterized the HPP in its 2012 annual report: "During 2012, we continued to pursue “bolt-on” business development opportunities to supplement our research efforts and product offerings. These are acquisitions or collaborative arrangements that we can readily integrate and that expand our reach or capabilities...Together with Zhejiang Hisun Pharmaceuticals, we launched Hisun Pfizer Pharmaceuticals Company Limited, a joint venture to develop, manufacture and commercialize off-patent pharmaceutical products in China and global markets."

The stated goal of "[T]he joint venture between Hisun and Pfizer aims to strengthen the  ability of both companies to address health care needs in China and reach more patients with high quality and low cost  medicines in the branded generics arena."

HPP is an investment vehicle, with a limited staff, the senior leadership of whom (e.g., the CFO) appears to be resident in New York City. In many respects, one might view Hisun-Pfizer as, perhaps, a tax-efficient or effective, China-focused and effective operations, pass-through entity of sorts, allowing business in China to be conducted by Pfizer and Hisun but without comparable overhead of either a Hisun or a Pfizer.

The $490 million gain Pfizer registered in Q1 2013 from the transfer of some product rights to HPP puts a finer point on this.

A blog reader wrote to me that it's one or the other, a regional license deal in China or a global license deal but not both. I disagree. There is a legitimate discussion about China influencing global and global influencing China, per my China vs. The World post. The key to a decision, I think, ultimately lies in the answer to this math equation:

d(China) + d(Global) < > d(China, Global), where d(x) is the value of a deal for geography x

China pharmaceutical companies, local players, are interested in PV-10. Global pharmaceutical companies are interested in PV-10 in China. Global players have relationships with local players that include ownership, joint ventures and strategic relationships.

Path A: A deal with a Chinese company could pay Provectus and, thus, its endgame global/Big Pharma acquirer 20%+ in annual royalties.

Path B: A deal with a Big Pharma-related Chinese company would pay 20%+ and {20%+ times the Big Pharma's ownership percentage of the Chinese company}, a number greater than 20%+.

Path C: A deal with a JV like Hisun-Pfizer would pay Pfizer 49% (the outcome could be different for another Big Pharma's China JV).

(The above is a theoretical or academic exercise, and not necessarily overly precise).

A deal for China between Provectus and HPP, rather than a local player or Hisun, is more valuable in the long-term for Pfizer or another Big Pharma with a comparable JV set-up than acquiring Provectus after a deal was done with a local Chinese player.

As such, a deal with Hisun-Pfizer tells much more about the end-game and Pfizer's potential or likely intentions and future action.

$PVCT: $PFE Seeks Alliances in #China

An article by The Wall Street Journal's Kathy Chu.

"Pfizer already has a joint venture in the world's second-largest economy with Zhejiang Hisun Pharmaceuticals to develop generic drugs, which dominate China's pharmaceutical sales. Pfizer also has a minority investment in Shanghai Pharmaceuticals Holding Co., one of China's largest drug distributors, and its animal health division has a JV with China'sJilin Guoyuan Animal Health Co. for animal vaccines."

"As local companies become fiercer competitors, partnering with them is also appealing because of their in-depth knowledge of the China market, according to Mr. Wu."

"The heightened competition can benefit consumers by improving the overall quality and safety of the drugs offered in China, Ms. Wang says. More than 260 million of the country's citizens suffer from a chronic disease, according to data from China's Ministry of Health."

"The Chinese government has made affordable healthcare a priority, spending $125 billion over the past three years to extend insurance coverage to 95% of the population while also improving access to hospitals and clinics."