Seriously

The NDA. On the News tab of the blog, I wrote:

The New Drug Application ("NDA") (December 11, 2013)

In my On the precipice of… post I categorized potential "menus of choices" for clarity (e.g., Outright or Accelerated Approval for Pop 1, Breakthrough Therapy Designation for Pop 1 and Pop n, Breakthrough Therapy Designation for Melanoma). I felt unsatisfied by the impreciseness of this work, however, because it did not do a good enough job of elucidating the FDA process (to gain approval for PV-10) in which management is engaged.

Figure 1. Click to enlarge the figure.

Prior to writing the post, and subsequent to it, I reviewed thousands of pages of NDA approval packages and their associated administrative and correspondence documents (mainly but not exclusively from CDER), together with FDA and third party materials (see, for example, the illustration above), in an effort to understand Agency processes related to NDA and Biologics License Application ("BLA") reviews.

Is the NDA being touched up in preparation for filing? If so, the next step would be to file it with the FDA (a key milestone). Some companies issue press releases when they file their NDAs. Some do not. Preparing-to-file could be a possibility.

Has the NDA been filed? If so, the subsequent outcome (a major milestone) could be FDA acceptance of it. Following filing, the FDA would complete its review and determine whether Provectus' NDA was sufficiently complete to permit a substantive review. In accordance with 21 CFR 314.101(a), if ultimately acceptable, the company's NDA would be considered filed 60 days after the date the Agency received the application. The Agency might grant a Priority Review classification for it. The FDA also would establish a user fee goal date (i.e., a PDUFA date). Companies issue PRs when their NDAs are accepted. A filed NDA could be a possibility. An accepted-by-the-FDA NDA likely is not, as Provectus undoubtedly would have issued a PR if it had been.

Has the NDA been approved? Following acceptance of the NDA, the Agency and the applicant/sponsor engage in collaborative discussions with the goal of and endeavoring to work towards the approval of the drug in question.

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Various topics beyond just safety considerations and efficacy assessments are considered, including labeling, materials validation, supply, etc. If Provectus hasn't issued a PR regarding the NDA's acceptance, it's highly unlikely it has been approved (a much more major milestone).

I will blog about my NDA-related work in greater detail as it relates to Provectus in due course. For the moment, my summary thought is the company is (has to be) engaged at some phase of the NDA review process for PV-10/Pop 1, whether gearing up (post-FDA concurrence) to file an NDA, or waiting to have their NDA accepted by the Agency (and potentially granted Priority Review, possibly together with Breakthrough Therapy Designation).

For some time now I have wondered whether, and if so where, the company is in an NDA review process with the FDA.

Seriously. Think about what I am asking myself. I'm wondering if management is engaged with the FDA to approve PV-10 for, very likely, Stage IIIB-C melanoma patients refractory to treatment ("Pop 1"), rather than if they're still discussing a pivotal metastatic melanoma Phase 3 trial under a special protocol assessment.

Is Provectus at the beginning, in the middle, or near or at the end of an NDA review process with the the Agency?

According to the FDA, "[f]or decades, the regulation and control of new drugs in the United States has been based on the New Drug Application (NDA). Since 1938, every new drug has been the subject of an approved NDA before U.S. commercialization. The NDA application is the vehicle through which drug sponsors formally propose that the FDA approve a new pharmaceutical for sale and marketing in the U.S. The data gathered during the animal studies and human clinical trials of an Investigational New Drug (IND) become part of the NDA. The goals of the NDA are to provide enough information to permit FDA reviewer to reach the following key decisions:

• Whether the drug is safe and effective in its proposed use(s), and whether the benefits of the drug outweigh the risks.
• Whether the drug's proposed labeling (package insert) is appropriate, and what it should contain.
• Whether the methods used in manufacturing the drug and the controls used to maintain the drug's quality are adequate to preserve the drug's identity, strength, quality, and purity.

The documentation required in an NDA is supposed to tell the drug's whole story, including what happened during the clinical tests, what the ingredients of the drug are, the results of the animal studies, how the drug behaves in the body, and how it is manufactured, processed and packaged."

A very useful document to better understand the NDA review process is CDER 21st Century Review Process Desk Reference Guide, New Drug Application and Biologics License Application Reviews (NDA/BLA Review Process), Version: September 2012 ("FDA Doc A"). There is a similar chart to Figure 1 above in FDA Doc A.

It appears the review process has six major steps.

Figure 2. Click to enlarge the figure.

Media Relations. Biotechnology companies appear to vary in their approach of communicating their strategy about and position in the NDA review process.

In July 2013 Sarepta Therapeutics chose to say, for whatever reason(s) and rationale(s), it was planning to submit its NDA (PR: Sarepta Therapeutics Announces Plans to Submit New Drug Application to FDA for Eteplirsen for the Treatment of Duchenne Muscular Dystrophy in First Half of 2014).

Some companies, like Pharmacyclics in July 2013, elect to inform the stock market they have submitted their respective NDAs (PR: New Drug Application for Ibrutinib Submitted to the U.S. FDA).

All companies issue a press release after being notified by the FDA that their NDAs have been accepted by the Agency, which are memorialized in approval letters.

Pharmacyclics' Experience. There are a number of examples from which to draw information and knowledge about the NDA review process. One such recent example is Pharmacyclics (NASDAQ: PCYC), which announced the following sequence of events related to Imbruvica (ibrutinib) and mantle cell lymphoma ("MCL"):

• February 12, 2013: Breakthrough therapy designation ("BTD") for ibrutinib as a monotherapy for the treatment of patients with relapsed or refractory, and also for ibrutinib as a monotherapy for the treatment of patients with Waldenstrom's macroglobulinemia (in April, PCYC received BTD for ibrutinib as a monotherapy for the treatment of chronic lymphocytic leukemia ("CLL") or small lymphocytic lymphoma ("SLL")),
• July 10, 2013: Submission of a new drug application ("NDAs") for ibrutinib and both MCL and CLL/SLL to the FDA,
• August 29, 2013: Acceptance of the above mentioned NDA by the Agency for both MCL and CLL/SLL, along with the granting of priority review by the FDA,
• November 13, 2013: Accelerated approval of ibrutinib for MCL.

Pharmacyclics's approval packages: CDER Approval Package for Imbruvica (Ibrutinib) approved and dated November 13, 2013 ("PCYC Doc A"), and CDER Administrative and Correspondence Documents for the above mentioned [accelerated] approval ("PCYC Doc B").

The Agency's approval letter (for PCYC):

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PCYC's NDA was dated and received June 28, 2013. Pharmacyclics issued a "submission" PR a couple of weeks later. Prior to the Agency application-dated and received dates, and the submission PR, PCYC made amendments to the NDA (see above). Amendments were made up to and on the date of the FDA's November 13th official action.

The FDA has several types of meetings: "A Type A meeting is one that is immediately necessary for an otherwise stalled drug development program to proceed (i.e., a critical path meeting)...Type B meetings are (1) pre-IND meetings (21 CFR 312.82), (2) certain end of Phase 1 meetings (21 CFR 312.82), (3) end of Phase 2/pre-Phase 3 meetings (21 CFR 312.47), and (4) pre-NDA/BLA meetings (21 CFR 312.47)....A Type C meeting is any meeting other than a Type A or Type B meeting between FDA and a sponsor or applicant regarding the development and review of a product in a human drug application as described in section 735(1) of the Act."

The following can be gleaned from PCYC Doc B (notable communications with the FDA).

End-of-Phase 2 ("EOP2), Type B, March 7, 2012

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EOP2, Type B, December 3, 2012

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CMC, Pre-NDA, Type B, April 9, 2013

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Advice/Information Request, June 13, 2013

NDA Acknowledgement, June 28, 2013: "Unless we notify you within 60 days of the receipt date that the application is not sufficiently complete to permit a substantive review, we will file the application on August 27, 2013, in accordance with 21 CFR 314.101(a)."

Request for Methods Validation Materials, July 7, 2013: "We acknowledge receipt on August 1, 2013, of the sample materials and documentation that you sent to the Division of Pharmaceutical Analysis (DPA) in St. Louis."

Methods Validation Materials Received, August 1, 2013: "We acknowledge receipt on August 1, 2013, of the sample materials and documentation that you sent to the Division of Pharmaceutical Analysis (DPA) in St. Louis."

Information Request, August 1, 2013: "We are reviewing the Quality section of your submission and have the following comments and information requests. We request a written response by August 9, 2013, in order to continue our evaluation of your NDA."

Information Request, August 8, 2013: Impurities, etc.

Advice/Information Request, August 14, 2013: Container labels, etc.

Proprietary Name Request Conditionally Acceptable, August 16, 2013

Information Request, August 16, 2013: "We are reviewing the Quality section of your submission and have the following comments and information requests. We request a written response by August 23, 2013, in order to continue our evaluation of your NDA."

Mid-Cycle Communications, page 150, August 19, 2013

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Filing Communication - No Filing Review Issues Identified, August 27, 2013: "We have completed our filing review and have determined that your application is sufficiently complete to permit a substantive review. Therefore, in accordance with 21 CFR 314.101(a), this application is considered filed 60 days after the date we received your application. The review classification for this application is Priority. This application is also subject to the provisions of “the Program” under the Prescription Drug User Fee Act (PDUFA) V (refer to: http://www.fda.gov/ForIndustry/UserFees/PrescriptionDrugUserFee/ucm272170.htm). Therefore, the user fee goal date is February 28, 2014."

Late-Cycle Meeting Background Package, September 25, 2013

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Information Request, October 4, 2013: Trial efficacy issue

NDA, October 9, 2013, Type C

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Information Request, October 21, 2013: Post-marketing requirements (PMRs), Post-marketing commitments (PMCs)

Late-Cycle Communications, October 28, 2013

The Major Process Steps of an NDA Review. These include (quoted directly from FDA Doc A):

1. Ensure Readiness for Application through Pre-Submission Activities: The first step in the process is composed of activities that applicants can take advantage of to improve the quality and content of their NDA/BLA application prior to submitting it to FDA.

2. Process Submission: Applications are received and processed by document control room staff and then distributed to the appropriate review division. The RPM conducts an initial assessment of the NDA/BLA to assure that certain regulatory requirements are met and that a user fee has either been paid, the fee waived, or the application exempted. Reviewer assignments are made at this time.

3. Plan Review of the Application: The review team conducts an initial assessment of the NDA/BLA and associated labeling. Each discipline makes a recommendation on fileability of the application at the filing meeting that is held by day 45 of the review (day 30 for priority reviews). If the application is found fileable a planning meeting is held to further discuss timelines and review activities.

4. Conduct Scientific/Regulatory Review of the Application: During the review phase, the primary reviewers analyze their assigned portion of the application and write their reviews; team leaders interact with reviewers and provide guidance on a regular basis. For PDUFA V “Program” reviews, a late-cycle meeting is held between the review team and the applicant. An additional two months is available for PDUFA V “Program” applications to address complex review issues and attempt to remedy minor problems with the application.

5. Take Official Action on the Application: Based on the signatory authority’s review of the Action Package and on discussions with the review team, the signatory authority determines the action to be taken on the application. The final action decision is conveyed to all team members.

6. Provide Post-Action Feedback to the Applicant: The focus of this activity is on learning from the review experience. This optional meeting can take place as either an End of Review Conference, typically held following an action other than an approval, and/or a post-action feedback/lessons learned meeting. These two meetings can be combined into a single meeting if appropriate.

Provectus. Where, if at all, is the company in the NDA review process? Step 1? Step 2 or 3 Somewhere along Step 4? Waiting for Step 5?

Management continues to say clarity will be achieved before year-end. They seek outright approval, accelerated approval and/or a single arm trial, in that order. How does seeking and achieving regulatory clarity conform with an NDA review process? The answer may (should) lie in what management says next. Lots of things have been said, but we're still left guessing as to whether, and if so how, they fit into an NDA process.

Good (Probably): Management will file an NDA.

Great (Possibly): Management is waiting to learn if their NDA has been accepted by the FDA. Other achievements would include granting of Priority Review for the application, and/or BTD for PV-10.

Yippee! (I would be surprised but not shocked if): Management's NDA is approved, which would suggest the principals are much farther along the NDA review process.

Time will tell.

Like Nothing Else

If you write, like I did, "PV-10, a novel oncology compound, exemplifies innovation over incrementalism, meaningful over marginal, productized technology over hypothetical, and changing the world over accepting the status quo, with not an insignificant amount of serendipity over contrivance. In sum, these form the quintessential essence of a paradigm shift in the treatment of cancer," you're placing an oncology treatment far, far above what is available to patients today and in tomorrow's pharmaceutical and biotechnology drug pipelines.

Of course, if you're Moffitt Cancer Center, how do you top, "Single injection may revolutionize melanoma treatment?"

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We approach, we think, a moment of [regulatory] clarity, where having asked (or shortly will formally ask) for outright approval, accelerated approval or a single arm trial, in that order (and, I assume, under the umbrella of breakthrough therapy designation), Provectus management awaits a decision from the FDA about the path forward for PV-10's approval. Anticipation has grown, and should continue to grow as we approach the middle to the end of the month; the share price has grown too: 34% over the last 3 months, 20% over the last one month, 13% over the last 5 days.

Through 2013, up until Moffitt's PR above, Provectus' share price was rather flat.

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In 2012, the stock fell considerably.

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But, with Moffitt's statement and PR, things changed; since August 22nd, the share price has risen dramatically. Moffitt Cancer Center, clearly an ardent champion for and supporter of PV-10, was the 19th ranked hospital for cancer by U.S. News & World Report for 2013-2014.

Other ranked hospitals, where resident key opinion leaders ("KOLs") exist who are supportive or in favor of PV-10 according to management, include Memorial Sloan-Kettering Cancer Center (#2), Johns Hopkins Hospital (#4), Dana-Farber/Brigham and Women's Cancer Center (#5), UCLA Medical Center (#11) and Duke University Medical Center (#18).

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Put into the context of a longer timeframe, like from the beginning of this year, the share price move is notable and noticeable (as is the increase in trading volume).

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Since 2012, too (again, notice the difference in daily trading volume, moving from left to right).

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And, since 2011.

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And, since 2010.

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Déjà vu all over again, or different this time? Sometime in April [I think] 2010 Provectus asked for accelerated approval ("AA"), at the end of April saying: Provectus Reports on Successful End-of-Phase 2 Meeting with U.S. FDA and Gains Clarity for Licensure of PV-10 for Metastatic Melanoma. While they were told no (on the merits of their argument for AA) and/or to elucidate PV-10's mechanism of action, the outcome seemed contrary to management's expectations at the time.

Sometime in December 2013 the company should ask for outright approval ("OA") on the merits of a vast amount of clinical data from Provectus' melanoma Phase 2 trial and Moffitt's melanoma Phase 1 feasibility study (Detection of Immune Cell Infiltration Into Melanomas Treated by PV-10), some precedent (I think Perjeta for neoadjuvant breast cancer treatment) and, it seems, a collaborative relationship with a proactive FDA. It would seem the case for OA is considered strong. But if unsuccessful in gaining this desired outcome, Provectus then should ask for accelerated approval, with a positive result accompanied by a confirmatory study or additional confirmatory data. A single arm trial, "the final ask," might comprise 100 patients and a primary endpoint of progression free survival (although I'd be surprised if the trial was not halted after no more than 20 or so patients were enrolled and treated).

Assuming Provectus indeed gains clarity from the upcoming meeting or call with the FDA, it's not clear what if anything substantive management can or will say about it, via PR. The week of December 16th, or for that matter the remainder of the month of December, may come and go without significant detail about the clarity achieved.

It is interesting to revisit the title of Provectus' first End-of-Phase 2 meeting in April 2010, first noted above: Provectus Reports on Successful End-of-Phase 2 Meeting with U.S. FDA and Gains Clarity for Licensure of PV-10 for Metastatic Melanoma. I wonder what hint of guidance December's PR could give.

Waiting for Godot

In the play Waiting for Godot by Samuel Beckett, "...Vladimir and Estragon...wait endlessly and in vain for the arrival of someone named Godot." In his 1956 review of a version of the play Brooks Atkinson writes Waiting for Godot conveys "...the impression of some melancholy truths about the hopeless destiny of the human race." Considered an absurdist play, "...absurdist is a genre of literature...that focuses on the experiences of characters in a situation where they cannot find any inherent purpose in life, most often represented by ultimately meaningless actions and events."

The wait for Provectus from the outside perspective I have at times has seemed absurd. I don't doubt there is not an insignificant amount of reality in this absurdity, and absurdity in this reality. Waiting for what from whom? Regulatory clarity, of one sort or another, from the FDA. Yes, but there was more. This wait appears to be nearing a resolution.

The premise of why I'm long Provectus is a novel drug compound with a pristine safety profile, a treatment well tolerated by and easily administered to patients, a ready made product inexpensively produced at scale, and a vast addressable market of unmet need that should be fully and very profitably met over time.

Provectus’ discussions with the FDA may well be to, first, request some sort of accelerated path to approval (i.e., accelerated approval or outright approval) for Stage IIIb and IIIc patients with refractory, locally advanced disease, believing they have sufficiently demonstrated to the Agency PV-10’s clinical value proposition for this patient population.

According to the company's PR at ECC 2013, "[t]he international, multicenter, Phase 2 study examined the effect of up to 4 treatment cycles of intralesional (IL) PV-10 in 80 subjects with AJCC Stage IIIB-IV melanoma. All subjects had locally advanced disease refractory to a median of 6 previous interventions. Intralesional PV-10 tumor ablation provided, after a median of 2 treatment cycles, rapid locoregional disease control." Bold emphasis is mine.

Prior treatments trial patients received before receiving PV-10 in the study included:

Trial results, particularly for patients with all disease treated ("In subjects where all disease was treated (35% of subjects) BORR further increased to 71% (with 50% achieving CR).") included:

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Intermittently used in the metastatic melanoma ("MM") Phase 2 trial ("PV-10 was only injected intermittently, when tumors were present during the first 16 weeks of the study..."), PV-10 enabled loco-regional disease control (complete response + partial response + stable disease) more than 8 times out of 10 enabled for patients for whom all lesions were treated (i.e., all injectable disease). It would seem reasonable to conjecture:

• If the rumor of 75-80% of compassionate use program ("CUP") patients are cancer free (noting from the ECC 2013 press release that "[i]n addition to the 80 participants in the study, the researchers noted that over 90 additional melanoma patients have been treated with PV-10 under expanded access." -- the reason for noting this is...?) is true and,
• Understanding the CUP protocol for metastatic melanoma is to treat all untreated disease (i.e., all injectable disease) until it, the disease, goes away,...

...that patients could achieve near complete or complete loco-regional control if/when all of their lesions (i.e., all injectable disease) are treated.

I surmise (although I don't have full evidence to confirm it but I think I have sufficient evidence to suggest it, and I think management has sufficient evidence to assert it) that PV-10 can stop loco-regional MM in its tracks.

As Provectus wrote in its ECC 2013 press release: "...[I]ntralesional PV-10 provides a viable strategy to maintain long-term locoregional control of melanoma in patients whose cutaneous and subcutaneous melanoma has recurred." For this patient population -- "...patients who are refractory to all other therapies and who have injectable disease," -- PV-10 enables them to maintain loco-regional control of MM with minimal intervention and delay, reverse or prevent progression to life-threatening visceral disease.

Eric and his regulatory team, and thus Provectus, may be trying to accomplish a "regulatory two-step." Step #1: Ask the FDA for accelerated approval ("AA") or outright approval of PV-10 for MM Stage 3b-c patients who are refractory to all other therapies and who have injectable disease. I think this ask of the FDA by the company, finally, has been made.

Step #2: I don't understand precisely how Provectus is seeking breakthrough therapy designation ("BTD") in the context of a request for AA or outright approval. Is management seeking BTD for both the population set identified above and late stage patients? Or, is it seeking it only for Stage IV patients, where “sped up” discussions with dedicated senior Agency staff via this accelerated pathway could help design trials to show the immediate benefits of PV-10 in combination with approved MM drugs like ipilimumab (Yervoy) and vemurafenib (Zelboraf) for late stage or heavily diseased patients? Or, it is seeking BTD for both Stage IIIb-c patients and Stage IV patients, but asking for AA or outright approval for the Stage IIIb-c folks under the BTD umbrella, and discussing more trial work with the FDA to demonstrate the benefit of combining PV-10 with certain other drugs like ipi for late stage patients?

Ultimately, the mechanics of the ask(s) don't matter now, but rather the ask(s) itself (themselves) and outcome(s).

If Step #1 of the regulatory two-step is asking for AA or outright approval for patients who are refractory to all other therapies and who have injectable disease, Step #2 could be asking for BTD for Stage IV patients, with the path to approval of PV-10 for this additional population subsequently to be determined through further discussion with Agency staff and/or additional trial work.

Both in the ECC 2013 poster and press release, the company highlighted several things related to late stage patients:

• "Regression or stasis of untreated Visceral Disease observed in subjects with OR of Target Lesions; 44% 1-year survival in Stage IV(M1c) subjects,"
• "Second, its safety profile makes it an attractive candidate as a combination strategy for treatment of advanced disease," and
• "PV-10’s unique mechanism of action, alone or in combination with existing or emerging therapy, has the potential to shift the paradigm in oncology, where an intermittent intervention can dramatically reduce disease burden and may prod the immune system into preventing or arresting the formation of life threatening metastases."

I think the ask of BTD of the FDA by the company, finally, also has been made.

Although the first ask may appear to be a focused or "narrow" label -- patients who are refractory to all other therapies and who have injectable disease -- more broadly speaking it is far from narrow. The addressable market for loco-regional disease is very large because it represents nearly all incidences of melanoma. Localized melanoma, which is confirmed to the site of the disease, represents 84% of incidence (by stage distribution). Regional melanoma, where the disease has spread to regional lymph nodes, represents 9%. These statistics are from National Cancer Institute Stage Distribution and 5-year Relative Survival by Stage at Diagnosis for 2003-2009, All Races, Both Sexes data. Distant melanoma is 4%.

Of course, the first tool out of the oncologist's tool kit for early- and initially/originally-identified melanoma (local and, perhaps where resectable, regional) typically is excision or surgical resection, particularly when it is recurrent melanoma. Aggressive loco-regional therapy would be in order to reduce the risk of relapse, and the negative impact on prognosis and overall survival after loco-regional recurrence. For physicians, PV-10, as user friendly as it is, from safety and drug administration perspectives, and because of its ability to stop loco-regional disease in its tracks (if not cure it), might turn out to be the first tool out of their tool kit.

Best: Can management succeed in securing the first step of the regulatory two-step from the FDA? The outcome of "yes" is game-changing for the drug, the company and the stock. An outcome of BTD as a second step simply adds to the magnitude of the game-change. Better: An outcome of BTD, with a further discussion of the hows and whats, still is good. Good: An outcome of an SPA, which I have no doubt already has been agreed to with the FDA, is indeed is good but, given my diatribe above, would be disappointing yet essentially sufficient because it still is regulatory clarity.

A cursory Google search yields Michael Sinclair's attempt to explain the play: "The purpose of human life is an unanswerable question. It seems impossible to find an answer because we don't know where to begin looking or whom to ask. Existence, to us, seems to be something imposed upon us by an unknown force. There is no apparent meaning to it, and yet we suffer as a result of it. The world seems utterly chaotic. We therefore try to impose meaning on it through pattern and fabricated purposes to distract ourselves from the fact that our situation is hopelessly unfathomable. "Waiting for Godot" is a play that captures this feeling and view of the world, and characterizes it with archetypes that symbolize humanity and its behaviour when faced with this knowledge. According to the play, a human being's life is totally dependant on chance, and, by extension, time is meaningless; therefore, a human's life is also meaningless, and the realization of this drives humans to rely on nebulous, outside forces, which may be real or not, for order and direction."

Shareholders seem to have been waiting for the FDA to show up. Waiting for Godot conveys our lives are meaningless, and the realization of this drives us to rely on nebulous, outside forces, which may be real or not, for order and direction. At times, it's felt like Provectus' pursuit of regulatory clarity, opaque as it has seemed, incomprehensible as it has been communicated, has lacked meaning. For what and/or whom are we waiting? It might be that we've been waiting for management as a whole and Eric in particular, more than we've waited for the FDA. Godot, in the form of Eric, seems to have arrived, so to speak.

PV-10 exemplifies innovation over incrementalism, meaningful over marginal, productized technology over hypothetical, and changing the world over accepting the status quo, with not an insignificant amount of serendipity over contrivance. In sum, these form the quintessential essence of a paradigm shift in the treatment of cancer.

Some consider Google a paradigm shift in how individuals explore and utilize the Internet through its search engine, as Microsoft was a paradigm shift in the use of personal computers through its operating system. There were competing operating systems around the time of MS-DOS and Windows, as there were competing search engines. It would seem a paradigm shift is more so, now or at least recently in human history, because beyond the victorious technology/technological change there usually is a readily identifiable individual or corporate victor (or victors) who is (are) measurably monetarily successful.

Irrespective of how technology cycles, cycles of change and/or cycles in general have materially shortened literally in front of our eyes (say, over the last couple of decades when I have been old enough to pay attention), some of us think we're capable of seeing and identifying a shift in paradigm. I think, in reality, because human activity, ours that is, on a day-to-day basis seems to have sped up, it provides the rationale to support this contention that we are able to see change in so-called real-time. Maybe it's the case we are able to see paradigms shift because we can see more quickly this change or shift after an inflection point is reached instead of as it happens.

More to point, however, I also think we ascribe the certainty and greatness of the shift to a successful individual or company because they are monetarily or otherwise successful in that moment in time.

Provectus: Four transplants from Knoxville, ostensibly with no prior meaningful experience or track record of bringing a drug to market, or building a private or public company, trying to demonstrate their technology does shift the paradigm in the treatment of solid tumor cancer, eschewing to pursue and communicate development in a less than standard way.

It is this "less than standard way," whether conscious and premeditated, the inevitable result of shortcomings and experience, or some combination of both, that, together with the innovation and inexplicability until now of the mechanism of PV-10, has limited the embracing of the drug, and thus its creators, as a paradigm shift in the treatment of cancer.

I recently wrote to a biopharmaceutical industry individual, now a consultant (but with broad and extensive, operationally-focused, industry experience, particularly in drug development itself and, notably, with an approved oncology drug of significant fame) about his or her views on peer review publication (in light of Eric's completion of Provectus' final metastatic melanoma Phase 2 trial study report): "So anything reputable in oncology such as NEJM, JCO, Blood, Nature, Science, BMJ, The Lancet, Lancet Oncology, any AACR publication etc would indicate a high quality article with peer review. What one is ideally looking for is a body of work by top thought leaders in high impact journals demonstrating a solid track record of data...If doing due diligence on a drug or company I would be nervous if the company only ever published with, say, third tier thought leaders in second rate oncology journals. At some point, if the drug is good enough they have to step up to the plate and allow more in-depth scrutiny by peer review. Does it matter as an investor? It really depends on your level of risk. Personally, I like to see a solid track record across a number of key areas, including high impact journals." Bold emphasis is mine.

Coming from a predominantly (but not exclusively) non-"all things biological" background, I earnestly thought data publicly available, other found through diligence, and connected in a thoughtful (but obviously non-industry based way) would have been sufficient for others to draw what I had determined were obvious conclusions.

Thankfully, management finally will meet the peer review criticism this year with the publication of the final study report of the MM Phase 2 trial in a top tier journal (i.e., at the top of the above list). Ironically, if the expected regulatory clarity arrives before the article's publication, any bump in share price directly related to people buying into PV-10 and its clinical value proposition as a result of publication in a high impact journal may be an incremental one.

At the outset of this journey of mine, I hadn't fully appreciated the challenges faced by management to not only overcome the very high level of skepticism of a local agent having a systemic benefit, but to overcome the very high level of skepticism of itself.

I did not require the data to be published in a top tier journal. As the individual above appropriately concludes, "Does it matter as an investor? It really depends on your level of risk." I'm comfortable with the level of risk at the time and now of Provectus. Others, however, are not, as evidenced from the wallowing of the share price. Lack of publication of in a top tier publication is not the sole reason for where the share price is. There are other mitigating circumstances or explanations, like presence on a minor stock exchange, capital structure, manner of fund raising that ultimately lead to problems with capital structure, etc. The peer review publication issue, unfortunately, is endemic of management's "less than standard way." Don't doubt that less than standard has temporary and, potentially, permanent valuation implications.

Fighting the good fight of proving PV-10's systemic properties is one thing. It might constrain valuation in the interim. Fighting it with one hand tied behind your back, by being circumspect, by choosing to fundraise in certain manners (because of whatever certain reasons or circumstances), etc., has the potential to reduce valuation with the risk that some of the reduction never ever returns. I'm sure management understands by now if they didn't understand it at the outset, that $125 million raised at a $75 million [pre-money] valuation is not as good as the same amount raised at $250 million.

Should Craig ultimately be successful in having PV-10 and PH-10 approved for multiple oncology and dermatology indications, such as those as displayed in Alan Ross' Seeking Alpha article Provectus Pharmaceuticals Up 17% In A Month; Potential Still Huge last week, the team and he will find themselves (even after adjusting for the additional costs still required to gain approval for many of those indications to market, and which will incurred by Provectus' acquirer) very near to or at the bottom of Forbes' Matthew Herper's list of R&D Spending Per New Drug, which is exceedingly high praise for their possessing the unique combination of innovation and cost effective development. It's not quite a list of R&D spending per approved indication, but it gives you a sense of magnitude nevertheless, and Provectus' relative success.

Through it all, however, management has protected the economics, but "protecting the economics" can be hard to grasp. In my investment letter of September 22, I wrote: "Investors often misjudge risk in the context of return. That a so-called safe asset or security should provide a safe return does not mean the expected return is commensurate (high enough) for the risk incurred. Conversely, a so-called risky security that may have the potential to generate a robust return does not mean the associated potential risk is commensurate (too high) for the amount of return expected."

One measure of risk in biotechnology is the weighted average cost of capital ("WACC"), which is "...the rate that a company is expected to pay on average to all its security holders to finance its assets." Said another way, it's a measure of return you would expect to garner each year for every year you hold Provectus stock. Consider the table below:

Click to enlarge the table.

Let's assume a biotech WACC of 20%. There are several studies that have analyzed the WACC for the biotechnology, and been more specific as it relates to the size of the biotechnology company, and report a range of 8-20%. Let's assume Peter achieves something close to a Celgene-takeout-of-Abraxis payment, as he mentioned in one of his September interviews. Factor in the number of fully diluted shares outstanding. Establish a share price range at which you might sell your shares ($2-12 per share in the table above). Determine the number of years you've held the stock (1-8 years in the table above). Determine your cost basis ($1 per share in the table above). Calculate your annualized return (as shown). The table is a quick 'n dirty attempt to illustrate the protection of Provectus economics for a range of exit share prices and a range of holding periods.

I further wrote in my investment letter: "Provectus’ stock’s risk-reward profile is out of whack. The return opportunity is more than commensurate with its potential risk from here on out." Whether you're a longstanding shareholder, measured in a holding period closer to 8 years or thereabouts, a recent shareholder, and thus have a holding period of, say, one year or less, or someone in between, like me, depending of course on what value management sells Provectus for, your annualized return should be exceed the return required for the risk you took. In professional sports, generally speaking, the outcome only matters. Did you win or lose? An end-game in the range of most scenarios above is a win for shareholders and, thus, for management.