Arguing for My $PVCT Investment Thesis (pt. 1)

Fundamentally, I believe the essence of PV-10, management and Provectus, and thus the stock, is innovation over incrementalism, robust over marginal, great technology & product over run-of-the-mill offerings, and changing the world over accepting the status quo. Is this not the essence of a paradigm shift?

The above is where my investment thesis begins and ends: a novel compound, a novel product, and a vast market of unmet need easily, profitably and fully met. No more, no less.

There's much more to consider, however, because technology does not always have to be great to have great impact, and great technology does not always achieve great impact.

In constructing an investment thesis for Provectus, like one would do for any asset (e.g., another stock, gold, a high yield bond, real estate, etc.), there should be a clear, asset-specific value proposition, which should align with a conducive macroeconomic environment, both of which then should set-up a clear trade or investment opportunity.

Starting out, my thesis comprised PV-10's high clinical and business value proposition, in a pharmaceutical industry ravenous for effective oncology product offerings, facing an addressable market whose annual growth rate exceeds other therapeutic areas, that when approved would provide a very lucrative outcome.

PV-10's value proposition is straightforward and compelling:

• Very safe,
• Very efficacious,
• Broadly applicable to numerous cancer indications typified by injectable solid tumors,
• Easily administered,
• Easily manufactured and stored, and
• Highly profitable.

Since then, PV-10's value proposition still is high, if not higher. The pharmaceutical industry still is hungry, if not starving. Market demand still grows, if not globally more. And while the industry has made clinical headway (“We are pretty good at shrinking tumors, but not good at getting rid of them. Immune therapy is a way to begin to approach that.” (Merck senior vice president Gary Gilliland)), current offerings still remain marginal in their efficacy and still incur safety issues.

Part 1: At the outset, however, I did not fully appreciate how novel PV-10 was and would become. I did not fully grasp how much Craig indeed had innovated, although I take comfort in the company I keep: “Back in the preclinical days at Provectus, Craig Dees, PhD, theorized that ablation of tumors with PV-10 might lead to unmasking of tumor antigenic material. I don’t think he anticipated that it would work as well as it does” (Eric, Cancer Watch, Vol 22, 21-23 (2013)).

PV-10's Novelty

The drug is a truly novel compound. Like saying or writing "XYZ is the Holy Grail of ABC," we often inaccurately, flippantly and lazily throw around words like novel, unique, special, etc.

PV-10 is novel across multiple dimensions:

• It is very safe. The active pharmaceutical ingredient Rose Bengal ("RB") has a pristine safety profile,
• It is very specific in its action. PV-10 is cytotoxic ("the quality of being toxic to cells") only to cancer cells,
• It is very efficacious locally (or local-regionally ["loco-regionally"]). Local means, say, for breast cancer, the cancer is confined within the breast*. Regional means the breast cancer has spread to the lymph nodes*,
• It is very efficacious systemically. Distant means the breast cancer has spread to other organs (parts) of the body; the cancer has metastasized*,
• It robustly stimulates the immune system, both locally (loco-regionally) and systemically. Local and systemic immune effects are very evident with PV-10,
• It creates systemic anti-tumor immunity. Cancer recurrence can be mitigated, dramatically reduced or, potentially, eliminated,
• It is both a targeted therapy and an immunotherapy. Targeted therapies provide meaningful survival out of the gate. Immunotherapy wins because of long survival tails, and
• It works on multiple cancers. Melanoma, liver, breast, colorectal, pancreas, bladder, etc.

* From Susan G. Komen for the Cure collateral material on types of breast cancer tumors.

Researchers at Moffitt Cancer Center published a paper this week in PLoS ONE, an open access peer-reviewed scientific journal published by the Public Library of Science, entitled “Intralesional Injection of Rose Bengal Induces a Systemic Tumor-Specific Immune Response in Murine Models of Melanoma and Breast Cancer,” a follow-up to their poster presentation at AACR 2013.

Moffitt establishes intralesional ("IL") PV-10 therapy induces tumor specific immunity in multiple indications (in this paper, melanoma and breast; previously, lung; and elsewhere, colorectal and pancreas).

They support the concept of combining PV-10 therapy with immunotherapy for advanced malignancies (as Provectus proposed on its AACR 2013 poster presentation).

Moffitt suggests PV-10 may be safer than Bacillus Calmette Guerin ("BCG") for local treatment and disease control. I think this conclusion derives from contrasting rose bengal's safety with BCG's efficacy, and RB's efficacy with BCG's [lack of] safety. Recall Dr. Andtbacka's slide from HemOnc Today 2013 where he compared IL therapies IL-2, BCG, Allovectin-7, T-Vec and PV-10. PV-10's non-injected lesion and non-injected systemic lesion response rates trumped those of the other IL therapies. IL-2 and BCG, however, trumped the reported injected lesion response rate for PV-10. Interestingly, PV-10 surpasses BCG locally when enough is used (this observation will be the subject of the data presented at September's ECCO 2013).

They verify PV-10 resulted in regression of untreated bystander lesions in breast cancer and melanoma mouse models, thus verifying the so-called "bystander effect" for multiple cancer indications. The bystander effect occurs because of PV-10's systemic anti-tumor immune response.

Moffitt does not yet know how PV-10 induces systemic immunity. They hypothesize tumor ablation by PV-10 leads to the release of large amounts of tumor debris that is taken up by antigen-presenting cells ("APCs") such as dendritic cells ("DCs"). “DCs are immune cells that form part of the human (mammalian) immune system and whose main function is to process antigen material and present it on the surface to other cells of the immune system. DCs act as messengers between the innate and adaptive immunity” (Adapted from Wikipedia's dendritic cell entry).

They currently are undertaking further studies into the effect of PV-10 on DCs and immune cell infiltration, which should enable Moffitt to understand how PV-10 induces systemic immunity (if they don't already know, as their SSO 2012 poster presentation, the AACR 2013 poster presentation and the PLoS One paper represent the beginning of the work on PV-10 they expect to publish). Immune cell infiltrate has been documented as a predictor of prognosis and long-term survival.

Moffitt verifies PV-10 therapy alone is capable of inducing an effective systemic anti-tumor immune response.

They support the belief of the combination of PV-10 therapy with other forms of immunotherapy may lead to enhanced responses (as Provectus conjectured at AACR 2013).

Moffitt demonstrates systemic anti-tumor immunity in untreated tumor-bearing mice could be mediated by the adoptive transfer of T cells isolated from PV-10 treated mice. Moffitt hypothesized PV-10 therapy may be combined with adoptive cell therapy to boost the immune response in patients subsequently undergoing adoptive cell therapy. Adoptive cell therapy can be an effective treatment for some patients with advanced cancer.

They conclude PV-10 therapy leads to a robust anti-tumor T cell response.

Finally, Moffitt concludes PV-10 should be used to treat metastatic melanoma and breast cancer. Given their work with other cancer indications, this should extend to lung cancer, liver cancer, colorectal cancer, bladder cancer, etc.

PV-10 is very safe. What's left to argue on this point? Rose Bengal has a long and pristine safety profile.

“…Rose Bengal…has been…known for [8]0 years as an a liver diagnostic agent…[T]he founders…realized that being a diagnostic agent [Rose Bengal] was already FDA approved for IV therapy and at much higher doses than what would be needed for cancer. Furthermore, thru decades of use, its safety is well established and all preclinical and animal toxicity studies have already been performed historically and are on-file at the FDA. …[T]heir FDA dossier will be significantly easier than if [Rose Bengal]was a brand new agent” (Adapted/quoted from a December 2011 OneMedPlace research coverage report). For example, prior to 1982, the FDA approved Bracco Diagnostics’ Robengatope, which used Rose Bengal Sodium.

Such fundamental safety forms a key foundation and floor under the investment thesis because there should be no or de minimis adverse event surprises when additional clinical trials are run.

The drug is very specific in its action. The specificity of only targeting cancer cells, via lysosomes, is a critical feature of PV-10 (along with its safety and topical route delivery).

There is no denaturing of the cell. As Haas et al noted in their abstract and presentation at July 2013's 8th Melanoma Congress entitled “Rose Bengal - Phototoxicity versus Intrinsic Cytotoxicity,” rose bengal “effects cell death of both proliferating and invading cells, and exerts its toxicity through necrosis without perturbation of the cell cycle” (Adapted from the abstract's text).

“The cell cycle, or cell-division cycle, is the series of events that take place in a cell leading to its division and duplication (replication)...The cell-division cycle is a vital process by which...hair, skin, blood cells, and some internal organs are renewed” (Adapted from Wikipedia's cell cycle entry).

It is this novel specificity of the compound that the average pharmaceutical industry constituent still cannot wrap his or her head around, while key opinion leaders ("KOLs") already have and now heartily embrace. Peter remarked about the sophisticated understanding of PV-10 and Rose Bengal pharmaceutical companies have displayed in his meetings with them, from the U.S. to Europe to India to China to Japan.

It is a very efficacious local therapy. The company demonstrated PV-10's loco-regional disease benefit.

Focusing on the originally desired target group for the sought after label, metastatic melanoma ("MM") Stage IIIb and IIIc patients, Provectus' final MM Phase 2 results presented at ESMO 2012 yielded:

• Target lesion response rates of 32% complete response ("CR"), 60% objective response ("OR") and 79% loco-regional disease control,
• Bystander (non-injected systemic) lesion response rates of 33% CR, 40% OR and 53% disease control, and
• Mean progression free survival ("PFS") of more than 9.7 months (median PFS was not reached during the 12-month study interval).

The company will report substantially higher target and bystander response rates on both individual tumor and RECIST bases at September's ECCO 2013. Earlier this year, PFS was reported to be longer.

Management is highly confidant the agreed upon MM Phase 3 trial endpoints will be achieved should this trial, presumably under a special protocol assessment ("SPA"), be run. It's not hard to concur when assessing historical trial results in the context of greater Phase 3 trial flexibility already agreed to by the FDA, and thus even better CR, OR, disease control and PFS.

Surgery, which is performed to remove a tumor, and radiation, which uses x-ray beams to destroy or shrink tumors, are considered local therapies because they direct treatment to the area where cancer has developed*. We should eventually glean from Moffitt and their Phase 1 feasibility study that they will establish PV-10 is a viable alternative to surgery, and support what other surgical oncology KOLs already have voiced.

Allovectin-7 is an also ran compared to PV-10. Top line data from Allovectin-7's MM Phase 3 trial should be released in Q3 2013, nearly 7 years after the trial began. T-Vec, which entered its MM Phase 3 trial in 2010 and whose interim results were released this year, is closer in comparable value (and trial design outcome), although still marginal relative to PV-10. Some think T-Vec will be approved because of the drug’s significant durable response rate (defined differently from that of the Allovectin-7 trial) and PFS results.

PV-10 and other local agents have had to overcome the skepticism local agents are not supposed to deliver systemic benefit, in addition to the local benefit they provide.

On both relative and absolute bases, by comparing favorably to both Vical's Allovectin-7 and Amgen's T-Vec, the floor of the investment thesis rises again. T-Vec, when it was OncoVex and fully owned by BioVex, was acquired for a top line figure of $1 billion (upfront and milestone payments) in early 2011. I've long established numerically an intrinsic valuation floor for Provectus is $1 billion (in no small part due to management's view they won't sell the company or do a deal below at least this figure). Now, Amgen has been in contact with Provectus. Hearsay would have you believe Amgen would readily challenge Pfizer's purported and supposed pole position when the time comes (i.e., when regulatory clarity arrives).

Management has long and repeatedly stated its desire to achieve a narrow (focused) approval label centered around Stage III patients metastatic melanoma, where there is no standard of care, according to the NCCN Practice Guidelines in Oncology (v.2.2009) for Melanoma, include:

• For sentinel node positive: lymph node dissection or clinical trial,
• For clinically positive nodes: wide excision of primary tumor plus complete lymph node dissection, and
• For in-transit: complete surgical excision, hyperthermic perfusion/infusion with melphelan, clinical trial, intralesional injection of IFN or BCG, local ablation therapy, radiotherapy, systemic therapy (e.g., clinical trial, DTIC, TMZ, high dose IL-2, DTIC- or TMZ-based combination therapy, paclitaxel, paclitaxel/cisplatin, paclitaxel/carboplatin) or topical imiquimod.

PV-10 has the opportunity to become the standard of care for patients with Stage III metastatic melanoma. Should this happen, the value derived from such use over time would be immense. But while PV-10's superior local efficacy provides a foundation for Provectus' monetization value, this value seems somewhat illusory because this path, the path of the SPA, is not what I believe to be the path management seeks despite the thoughtful strategy and good intentions of cultivating multiple regulatory pathway options.

According to management, KOLs and other top clinicians have told Provectus they will readily use it, when the drug is approved for MM Stage IIIb/c patients, for Stage IV metastatic melanoma and other solid tumor indications because the drug is very user friendly (i.e., it's safety profile). This, of course, ties into PV-10's systemic efficacy and disease benefit.

I understand the history of management's pursuit, and cultivating multiple options; however, it's clear accelerated approval ("AA"), whether directly asked for or via breakthrough therapy designation ("BTD"), is the outcome they have been and are seeking first and foremost. The SPA is a consensus design based on the parameters management specified for the appropriate patient population. AA is based on evidence of PV-10's systemic benefit, or its mechanism of action in this case. As management will tell you and will tell you they've told you, they have always simultaneously pursued the SPA (Phase 3) and AA since their first end-of-phase 2 ("EOP2") meeting with the FDA in April 2010 (and the same team: first CDER and now DOP2).

Hearsay would have you believe the FDA told Provectus in 2010 to return with proof of PV-10's systemic properties and benefit in order for PV-10 to be considered for AA. Further hearsay then would have you further believe the FDA affirmed for Provectus, at least after AACR 2013 (and perhaps earlier), that such proof had been achieved.

The construct of BTD now significantly increases the likelihood of getting AA.

For what, then, is Eric waiting, if the FDA told Provectus to submit a BTD application either sometime last year or early this year?

In excavating the remains of the failed PVCTP “IPO,” I wrote in my “The Beginning of the End[-game] for $PVCT” post that as early as July 2012 (in my estimation) management must have been assured the FDA would agree to or provide the SPA sometime in Q3 2012. Provectus used the second half of the ESMO 2012 press release to highlight SPA trial design parameters to which they had agreed with the FDA.

As a matter of good process, whether the FDA or Provectus': No SPA three quarters after management first thought they would receive it, and based certain activities, like the "IPO," on this calculation. Current guidance is that it should arrive in the next two quarters. Five quarters. Still more questions, more information requested, more application iterations, more something related to the SPA?  Was/is something "wrong?" Management could do better than: “While preparation for submission of our SPA has taken longer than expected, it is crucial to remember that oncology presents a moving playing field.” Taking nearly 8 quarters (starting from when the FDA informed Provectus no further EOP2 meetings were necessary and ending in 2013) to “[f]ine tun[e]...the study design...to mitigate clinical efficacy risk, optimize patient accrual, and increase FDA's confidence that the study design and protocol...ensures the best possible outcome for...[their]...pivotal trial” seems uncharacteristically excessive, ineffective and inefficient, unless you're not really focused on that pathway.

Nevertheless, cultivating multiple pathways is about risk (and risk management). Focusing on what you think you can or should get is about return.

Were/are there different questions, different information, something different, etc. related to the BTD application from the same CDER/DOP2 team reviewing the SPA application? Did BTD, which was signed into law as the Food and Drug Administration Safety and Innovation Act ("FDASIA") in July 2012, ultimately supersede the SPA process at the FDA's behest?

The investment thesis has a foundation in the SPA. It rises dramatically with AA.

Hearsay would have you believe Eric was waiting for approval of the manuscript of the PLoS One Moffitt paper above before finally submitting the BTD application. Is the question simply "what more information does the FDA need?" At this point, management says "nothing more."

* Taken from NCCN.com (NCCN Guidelines for Patients).

PV-10 is very efficacious systemically. As we know from Moffitt's AACR 2013 poster presentation and the paper above, they verified PV-10 therapy alone is capable of inducing an effective systemic anti-tumor immune response.

Provectus' final MM Phase 2 results already had established that bystander (non-injected systemic) lesion response rates of 33% CR, 40% OR and 53% disease control were achieved by Stage III metastatic melanoma patients.

Focusing on MM Stage IV patient results from the Phase 2 trial presented at ESMO 2012:

• Target lesion response rates of 0% CR, 22% OR and 33% loco-regional disease control,
• Bystander (non-injected systemic) lesion response rates of 8% CR, 17% OR and 40% disease control, and
• Mean PFS of 3.1 months.

Late stage patients are where the FDA and the pharmaceutical industry mostly focus.

Chemotherapy, which sends cancer-fighting drugs throughout the bloodstream to all parts of the body, is referred to as "systemic" therapy. Hormonal and biological therapies, other big guns in the cancer arsenal, are also considered systemic therapy*. 

While not nearly as impressive as the results for Stage III patients, Stage IV patient results compare very favorably to alternative approved (e.g., DTIC, TMZ), soon-to-be-approved (e.g., Yervoy, Zelboraf) and under investigation compounds, particularly considering the inflexibility of the Phase 2 trial design. When more PV-10 is injected more frequently into as many accessible lesions and tumors as possible, the results appear to be astounding: up to 80% of compassionate use program patients are cancer free (hearsay).

Provectus' June 2013 white paper entitled “Evidence for Systemic Effects Moves PV-10 Toward Further Clinical Trials” further expanded on PV-10's systemic benefit for later stage patients. The paper describes that PV-10 works very effectively by stimulating the immune system. When stimulation is less effective or ineffective, it is primarily due to excessive tumor burden, an assist is needed to reduce such burden until PV-10 can stimulate the immune system. It is possible, however, that enough PV-10 to further chemoablate could be enough without the need for an assist even in the heaviest tumor burden situations, but more trials likely would have to be run to maximize PV-10's utilization on its own through the entire race.

Moffitt's PLoS One paper establishes PV-10's systemic benefit, as their previous work already had done.

Which returns me to the discussion of the SPA vs. AA. Hearsay would have you believe management thinks they have a material probability of achieving AA. I've heard the perceived likelihood is as high as 75%.

What comprises the other 25%? If 25% is reflective of the probability of not getting AA, then what the related probabilistic outcome? The SPA (and a "regular" Phase 3 trial), a truncated P3 trial (i.e., shorter, in some form or fashion, such as a smaller number of patients), a modified P3 trial (i.e., a single-arm study), quicker response on the SPA trial facilitated by BTD, outright approval, or yet something else?

These discussions with the FDA mean conversation has moved beyond the benefits of a local agent. AA is based on evidence of PV-10's systemic benefit. Thus, the discussion with the FDA is about PV-10 as a systemic agent, which, as a shareholder, is a great conversation for management to be having.

The floor of the investment thesis rises again.

* Taken from NCCN.com (NCCN Guidelines for Patients).

The drug robustly stimulates the immune system, both locally and systemically. Moffitt clearly and unequivocally writes PV-10 therapy alone is capable of inducing an effective systemic anti-tumor immune response. There's more to this story that has to be written and told.

As for the observation and evidence of a local immune response (i.e., blistering) caused by PV-10, this also should be the subject of the data presented at September's ECCO 2013.

In my “$PVCT: Florey, Chain & Heatley” post -- “The development of penicillin for use as a medicine is attributed to the Australian Nobel laureate Howard Walter Florey, together with the German Nobel laureate Ernst Chain and the English biochemist Norman Heatley” -- (Quoted from Wikipedia's penicillin entry) -- I quoted Fareed Zakaria, in a December 10, 2012 interview on Fareed Zakaria GPS of Dr. Ronald DePinho, M.D., President of MD Anderson's cancer center, said "The holy grail for cancer would be to trigger the body’s own immune system to fight off the cancer, so that you somehow stimulate the antibodies in a way that that happens."

It creates systemic anti-tumor immunity. Doesn't "systemic" mean "body-wide?"

After all, chemotherapy, which sends cancer-fighting drugs throughout the bloodstream to all parts of the body, is referred to as "systemic" therapy. Body-wide immunity would suggest, within context and, I presume, with caveats, cancer does not come back. No cancer recurrence. No cancer recurrence?

The floor of the investment thesis rises again, in my view.

PV-10 is both a targeted therapy and an immunotherapy. How novel is it for a drug compound to be both?

Targeted therapies demonstrate a meaningful or material survival difference out of the gate, but the differential dissipates over a longer time period. Immunotherapies demonstrate a meaningful or material survival difference over a longer time period.

I previously highlighted Ribas et al's slide at ASCO 2013 illustrating the effects of immunotherapy and targeted therapy on melanoma, quoting Adam Feuerstein: “This isn't a chart of real data but it's the best slide of the ASCO meeting because it explains why cancer immunotherapy is winning over targeted therapies, particularly in melanoma. It's the long survival tail! Targeted therapies work fast but responses tend to be transient as cancer cells develop resistance. This means that early, impressive survival benefit aren't sustainable. Cancer immunotherapy, on the other hand, works slower. It takes time for the patient's immune system to identify and kill cancer cells. But once a patient's T-cells get a taste for cancer cells, their appetite is insatiable. That means tumor responses that are more durable and (hopefully) sustained and prolonged survival.”

PV-10 is an immuno-chemoablative agent. The process of immunization (immuno-) is unlocked by PV-10 chemoablation (-chemoablative), which causes the rapid, durable necrosis of the tumor lesions. PV-10 is both a metabolic agent (a chemoablative, and in the same general class as inhibitors) and also an immunotherapeutic agent (in the same general class as immunomodulatory agents like ipilimumab, tremelimumab, PD-1, PD-L1, etc.).

The drug works on multiple cancers. Thus far, Provectus has generated clinical trial data for metastatic melanoma (publicized), liver (publicized, but more data available under CDA/NDA) and breast cancer (not publicized in detail, but available under CDA/NDA), and pre-clinical data (not yet publicized in detail) for bladder cancer, pancreatic cancer and several other solid tumor indications.

Moffitt has generated clinical trial data for metastatic melanoma (not yet publicized), and pre-clinical data for metastatic melanoma (publicized), breast cancer (publicized) and lung cancer (publicized), and several other solid tumor indications (not yet publicized). In the paper above, Moffitt concluded PV-10 should be used to treat metastatic melanoma and breast cancer. Given their work with other cancer indications, presumably this extends to lung cancer, liver cancer, colorectal cancer, bladder cancer, etc.

Should or when Provectus achieve BTD for metastatic melanoma, management would seek BTD for liver cancer and other indications (like Pharmacyclics did with ibrutinib). This would assume that CDER/EOP2 finally would have become comfortable with PV-10's MOA and the plethora of data Provectus provided the FDA about the drug. These applications will take time and effort, however.

The floor of the investment thesis rises again.

Is it a delivery system or facilitator, too? Management has not yet spoken in great detail about PV-10 and orthogonality.

Orthogonality, where PV-10 can be combined with literally any other treatment for the benefit of patients, clearly has enthralled KOLs like Moffitt's Dr. Jefrrey Weber.

Questions arise for me from Moffitt's paper, such as the prognostic and predictive (of long-term survival) nature of PV-10-generated immune cell infiltrate, a PV-10-version of adoptive T cell therapy, etc.

Remind me. What floor are we on now?

NEXT POST: The Magnitude of PV-10's Economic Opportunity. At the outset, I also did not fully appreciate the magnitude of economic opportunity PV-10 would present. I did not understand nor grasp that Provectus has an opportunity bigger than anyone has surmised insofar as harnessing the immune system.

The Beginning of the End[-game] for $PVCT

The title of this post started out as “Is $PVCT a private or public company?” As I wrote more of it, framing the content through the filter of investment analysis rather than merely reporting or describing, I decided to change the title to “The Beginning of the End[-game] for $PVCT.” For some blog readers, this smacks of timing. The company has yet to receive regulatory clarity on its lead indication and here I am writing about the beginning of the end of management's journey to attain drug approval for PV-10.

I’ve tried to convey in recent posts that querying “timing” isn’t necessarily querying "when," but more about milestone achievement and thus "what." In order to assess the remainder of the path to monetization, I (we) need to understand what's left to demonstrate or prove to the FDA the value proposition of a local-regional therapy in PV-10 with systemic benefits as well as the ability to stimulate the immune system.

You’ll recall I wrote in my “$PVCT: Moving On, Moving Up” post there has been an evident shift in management sentiment. On the cusp of regulatory clarity, with whatever commercial validation should follow based on the specific clarity received, there has been a palpable shift in the sentiment emoted by management, individually and collectively. Although I’ve noticed it grow over the last few months, I observed aspects of it even before that. Others have noticed it too. It would seem we've been there before on one or two previous occasions, but is this time different? It very much seems so.

Management has long been confident about their innovation. They’ve generally been single-minded in their go-to-market strategy and its implementation, with the occasional zig here and zag there. February 2013's Cancer Watch's "Back to Phase 1: Understanding Systemic Effects of PV-10" article quoted Eric about Craig that captures this approach: “Back in the preclinical days at Provectus, Craig Dees, PhD, theorized that ablation of tumors with PV-10 might lead to unmasking of tumor antigenic material. I don’t think he anticipated that it would work as well as it does.”

Take this sentiment and approach further. If you (Craig, Tim, Eric and Pete) had and/or you (Craig, Tim and Eric) had innovated a cure for cancer, or something akin to it, how would you feel? How would you act? How would you play for the end-game?

Confidence and arrogance are different sides of the same coin. “How can we define confidence? What separates it from arrogance? Where are the lines blurred between positive and negative personality traits? Arrogance, or cockiness, in an athlete and in the sporting world more generally, is most often viewed as a negative trait. However, the very qualities that can result in arrogance clearly help to make the great ones great at their craft” (Quote source here). Imagine the confidence or arrogance of Craig, Tim, Eric and, some years later, Peter, to think they could cure cancer, and embark on a journey to attempt to do so. Alternatively, imagine the confidence or arrogance of those who think they cannot.

Why does one climb a Mount Everest? "You've climbed the highest mountain in the world. What's left? It's all downhill from there. You've got to set your sights on something higher than Everest" (Willi Unsoeld). After you’ve reached the summit, achieving internal conclusion, and travel along what remains of the path to reach external conclusion, how do you feel? This presumes you have validated and have had validated your summit reaching efforts and outcome, and that you then know you have a cure, or something close to it. How do others observing or hearing of the climb and summit clinching effort feel? How do you act when you return to base camp?

A McKinsey & Co. practice interview question goes something like this: Your client has an orb or sphere that turns water into crude oil. How do you value the sphere? As a Provectus shareholder, what is a cure or something akin to a cure for (solid tumor) cancer worth (i.e., total value or valuation) and worth to you (i.e., the share price at which you may or will sell your holdings)?

At this point, put into context your views on and feelings about management’s compensation, which for those who have them are very likely exclusively and highly negative, because the emotion and near singular focus (unless rooted in objective analysis) can cloud perspective. Compensation is but one of many items you should take into consideration when analyzing this investment opportunity. Management has a drug that works so well it’s mentioned by others in the same breath and sentence as the Nobel Prize. These lofty comments are hearsay, but have bubbled up and been circulated as rumor or near fact over the last several months. If you think Provectus has “got the goods,” what is it worth? What is it worth to you?

A very large shareholder called me this week on a matter related to Provectus (I had conveyed a query of mine to him, and he replied). In the course of the conversation he said (paraphrasing) it's a good thing the drug is a "10" because management is a "2." It's an unsurprisingly disingenuous statement given he's very likely been nothing but supportive of (obsequious with) management in his interactions with them. Management has its flaws, individually and collectively. We all have flaws. For some of us, they're deep. But, these flaws merely are a piece of the puzzle the investment manager tries to place and solve on the way to affirming or refuting his or her investment thesis, particularly if the manager makes the assessment the flaws are non-fatal.

I observe my own journey (I refer to it as such because the outcome has the potential to be transformative in several different ways) as an investment manager with a sizable equity position in the company might be described, in part, this way: “You will be wrong about many things in life. And it’s easy to fall into the trap of trying to confirm all of your biases. But what if we all started to recognize that improvement often starts with understanding how to be wrong? Imagine how much more we’d all get accomplished. I say embrace being wrong. And more importantly, be open-minded enough to learn and adapt around being wrong so you can be right more often” (Cullen Roche, Pragmatic Capitalism).

Throughout my career I have tried to balance the investment manager’s need to be right with the manager's requirement to relentlessly question whether he or she is wrong. I reached the conclusion that Provectus has innovated an oncology drug that works like nothing the industry has recently or, perhaps, ever seen. I have an extremely good sense or estimate of what that is worth (which of course is different from and not yet proven to be what management ultimately can monetize). More importantly, I know what it’s worth to me.

A topic for a future post, there is more than sufficient public and publicly-stated information, observations and comments for me to arrive at the above mentioned conclusion. This is especially so if one complements the aforementioned data with answers to a broad and deep array of questions of management and third parties, all of which they would provide to anyone who thoughtfully and diligently asked them. One then bounces the conclusion off of other thoughtful, intelligent, intellectually honest folks in hopes of seeking agreement on or destroying it. Inevitably, true material difference of opinion is what proverbially makes a market. On one side, buyers. On the other, sellers. Everyone else, on the sidelines. Players play, coaches coach and owners own. Everyone else (who cannot or will not) are fans, critics or bystanders.

On the surface, it might seem odd to think of Provectus as anything but a publicly traded company. Technically speaking, it is, trading as an over-the-counter (“OTC”) equity security under the ticker symbol PVCT and falling under reporting requirements set out by the Securities and Exchange Commission (“SEC”). Stock exchanges have respective specific financial and reporting guidelines that govern companies whose shares are listed for trading on these exchanges. One positive that emerged from October 2012’s failed PVCTP “IPO” was meeting the NASDAQ’s corporate governance listing requirements. At the time, Provectus also had met the exchange’s financial and liquidity requirements. All of these financial, liquidity and corporate governance requirements are necessary for a company to have its stock listed on one of the NASDAQ’s three tiers of markets: Global Select, Global Market, and Capital. According to Peter, as of Friday’s close, save for the stock’s closing bid price, Provectus meets all of the listing requirements for the NASDAQ Capital Market. To actually list, the bid price must exceed $2 for 5 consecutive trading days.

The public-ness versus private-ness of the company, I think, centers around or is a function of Provectus’ liquidity, which has meaning beyond “…an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value.”.

Some private companies act like public companies, insofar as they provide liquidity of varying degrees to employee shareholders and, more than likely, have some level of SEC reporting. Facebook and other high profile, typically Silicon Valley tech companies have had their shares traded on secondary markets. Some investment firms and funds provide liquidity for employee stock options.

Some public companies act like private companies where value is illiquid to varying degrees, partly or not fully reflecting intrinsic value. That is, there is some degree of divergence between intrinsic value and market capitalization (extrinsic value).

Liquidity, or its opposite, illiquidity, doesn’t just happen. There are reasons and causes for it, such as but not limited to tier of stock exchange, market capitalization, equity research coverage, ownership, etc., all mostly obvious. There are some un-obvious reasons, too, that also should make you contemplate liquidity further. Wall Street and other investors apply a liquidity discount of varying degrees to their valuation of any asset, and factor a level of liquidity into their investment thesis for it. Liquidity, or some lack thereof, should influence your perspectives of an investment opportunity's risk and return.

Provectus has been, continues to be and should remain for a time an illiquid, private-like public company, requiring you to think (and have thought) differently about the shares you hold until such time as it becomes a more public company, requiring you then to think differently about those shares.

Publicly traded Provectus stock provides illusory liquidity for shareholders. Shares can be bought at any time in order to buy into the company’s story, or sold at any time should investors need to raise cash or no longer deem the story true or worthwhile. For several liquidity-related reasons, however, I think the company’s market capitalization does not reflect Provectus’ true value or valuation.

The liquidity offered by its stock, such as it is, has provided management a pathway and thus the means to raise the necessary capital it needs to achieve a full monetization or sale of the company (i.e., the endgame) without having to lose effective control of Provectus.

Let’s do a quick 'n dirty bottoms up analysis. For the sake of argument and to make the math easy, let’s assume the company’s market cap it about $100 million (Friday’s market cap was about $78 million, although the figure below is a tad dated showing a $77 million figure). Provectus has neither regulatory clarity nor commercial validation. The market supposedly discounts the company for several reasons including but not limited to distrust of or disbelief in management, lack of equity research coverage, presence on the OTC, and lack of awareness. As such, the market then distrusts or disbelieves Provectus and its third party partners’ array of pre-clinical and clinical data.

These reasons contribute to a wild ass guess (“WAG”) of a 67% liquidity discount. That is, pre-Phase 3, Provectus might or could trade around or at a market capitalization of $300 million.

In excavating the remains of the failed PVCTP “IPO,” I think Pfizer was prepared to lead/co-lead the offering, invest a good amount of money (say, $10 million plus) and effectively value the company at about $1 billion. Although the "IPO's" Series “A” 8% convertible preferred stock with Series “D” warrants offering was filed on September 4, 2012, work to create and develop the offering started in July, at which time management had to be assured Pfizer would lead the investment round and the FDA would agree to the SPA sometime in Q3. When the exact date management realized the SPA was not going to arrive to catalyze the “IPO” and for whatever associated reason(s) is hard to say (and management may never disclose), but sometime in September is not unreasonable. No SPA meant Pfizer would not invest because no regulatory clarity meant illiquidity for it. Said differently, Provectus was not sufficiently de-risked for Pfizer, and Pfizer could not sufficiently assess its time value of money (i.e., the time necessary to elapse before PV-10 would be approved). With the loss of the “IPO’s” strategic investor(s) (there was discussion about Johnson & Johnson's potential involvement), the privates (rumored to be OrbiMed Advisors and Aisling Capital as significant players) withdrew their interest or declined to lead, co-lead or substantially participate in the investment round. Management undoubtedly tried to shake the trees for interest to invest at the terms and conditions to which Pfizer had agreed. They perhaps used, in part, the second half of the ESMO 2012 press release to highlight SPA trial design parameters to which they had agreed with the FDA in hopes of rallying investment support around the preferred share price, approximate billion-dollar valuation and warrant coverage terms.

Management had no intention of going through with the “IPO” if the terms it had agreed to with Pfizer were not generally met by the private investment firms to which they also were speaking. What transpired thereafter in terms of the share price action is a matter for a history book. Let’s be clear about this: Provectus had to fully expect it would receive the SPA from the FDA and Pfizer would lead the “IPO” when it embarked on this offering.

Positing at least a $1 billion for the company, we add to the list of reasons lack of regulatory clarity.

This further reason contributes to a WAG of a 90% liquidity discount. That is, pre-Phase 3, Provectus might/could trade around a market capitalization of a $1 billion, but doesn’t for lack of regulatory clarity. It’s a very simplistic analysis that highlights the key value driver for Provectus at this time which remains regulatory clarity. A rather obvious statement, regulatory clarity has been key and desperately sought by management and shareholders since Provectus said in January 2012 the FDA guided it to submit its Phase 3 protocol for review, either via standard review or a request for an SPA.

As illusory as Provectus’ liquidity has been, it is not an overly negative issue. Pfizer appeared prepared to value the company at or around $1 billion. As a private-like public company, its market capitalization mostly is irrelevant because management will not commit the company to a partial monetization or sale at anything less than the valuation they seek. At the time of the “IPO” it was $1 billion for “a partial sale.” Management repeatedly states it is several billion dollars for a full sale (i.e., the end-game).

But, as a public company, its share price is very relevant. The ability for management to gain liquidity (i.e., offer it to shareholders in return for money) through its Network private placements comes at a cost: valuations that in no way reflect the intrinsic value of the company and merely reflect its market capitalization at the time, unfortunate warrant coverage terms and a poor capital structure. Management’s relatively effective use of capital to advance the clinical value propositions of both PV-10 and PH-10 has been, for many people, overshadowed by their un-fundability.

Historically, there have been many investors who would have invested in Provectus, but who would require management to be replaced and have control wrested from them. No professional investors have stepped up to invest in the company at anywhere close to a valuation commensurate with its intrinsic value without regulatory clarity and without terms and conditions acceptable to management. A pristine safety profile, efficacy never seen before and proof of systemic properties and benefits have not been sufficient without leadership replacement.

Liquidity matters differently to different Provectus economic constituencies. It matters usually based on different time frames. For Big Pharma, liquidity means the ability to market and sell PV-10. As such, liquidity requires regulatory clarity, and the amount of liquidity over time depends on the specifics of clarity. For life sciences investors, liquidity means the ability to monetize their positions in the company's stock. As such, their liquidity also requires regulatory clarity. Holding potentially (in hindsight) losing positions are not palatable to fund investors when describing quarterly returns to limited partners and investors.

For retail investors liquidity depends on personal circumstance. We all are different, and thus our assessment of and need for liquidity is different. Publicly traded Provectus stock provides illusory liquidity for retail folks. Shares can be bought at any time in order to buy into the company’s story, or sold at any time should investors need to raise cash. True liquidity is not yet attainable because because management will not commit the company to a partial monetization or sale at anything but the valuation they seek. The lack of planning for this reality and eventuality hurts retail investors, like it would hurt professional or institutional investors in their respective circumstance. The 2008-2009 credit, financial or whatever-you-want-to-call-it crisis is an example of how not sufficiently preparing for illiquidity can hurt badly. Really badly. At the time, the desperate need for liquidity caused grown men and women to urinate in their pants and skirts and resulted in rash actions by them to gain liquidity.

From the beginning, management has strived to hit a home run, and not merely play for a string of singles or doubles. You have to understand that, first, and be comfortable with that, second, if you're going to understand how long-term illiquidity will turn into vast liquidity upon their success. That PV-10 is a fully owned oncology asset is rare. To listen to them describe their feelings about the current situation, you'd think they had hit a home run out of the park where the baseball had not yet landed.

Many investors and observers wished or opined that management would or should have taken a more traditional route to value creation and monetization. Do this, raise the value. Do that, raise the value further. Another large shareholder opined (paraphrasing) Provectus is the textbook example of how not to build a company. While I understand the perspective, it isn't particularly helpful in part because what the textbook says doesn't matter to management. I've never known textbook ways to build companies because stuff happens along the way. Of course, one should contemplate whether the exception proves the rule or the rule proves the exception. Again, it's merely a perceived flaw that is just a piece of the puzzle the investment manager tries to solve on the way to affirming or refuting his or her investment thesis. Despite his complaint, the shareholder soldiers on as an owner of a lot of stock. I'm not so sure one can hold their nose and make and hold a Provectus investment without a deleterious effect down the road (i.e., selling early). While management is not a "10," I think they're far from a "2." Innovation matters, and protecting the economics of that innovation (which a management team largely is responsibly for doing or failing to do) matters even more.

The company’s liquidity dramatically increases once Provectus gains some measure of regulatory clarity. I think we're nearing or are at the cusp of this clarity.

When Craig presented in town to biotech and life sciences industry folks, and some investment management people, in early-June, he publicly confirmed my supposition (through observing visitors and visit to the blog) in front of folks attending the event that Amgen was interested in some way with Provectus (e.g., learn more, conduct more due diligence, etc.). The two companies have been in contact in some form or fashion for months, I think, but of course there is no guarantee that any deal of any sort will materialize. Still, Amgen is Amgen. More recently, Amgen and Onyx Pharmaceuticals have been in the news because of the former's unsolicited bid to acquire the latter, causing Onyx to engage in a strategic review and consider a sale (i.e., auction) process. Some folks have commented on what they believe to be Amgen's sloppy bid for Onyx. Others suggest Amgen merely acted the way it did to flush out other potential suitors and put Onyxx in play to more publicly force management to make a decision one way or another. Onyx, through Nexavar (sorafenib), leads the treatment of liver cancer. PV-10 going head-to-head with sorafenib should be closely watched. Management thinks Amgen's unaccepted (thus far) bid bodes well for shareholders and them because it highlights Amgen's intentions as well as Provectus' opportunity for eventual monetization.

Peter and Eric travel to Europe next week to attend the 8th World Congress of Melanoma, organized in conjunction with the World Meeting of Melanoma Centers, the Post-Chicago Melanoma Meeting 2013 and the 9th Congress of the European Association of Dermato-Oncology, and engage in more business development meetings. I think there are at least two presentations discussing PV-10 by Provectus principal investigators (Thompson, Agarwala), and would expect a comprehensive press release thereafter (i.e., the week of July 22nd).

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).

$PVCT: A Slow, Hot, Smoky Summer Monday

I appreciate the comments and e-mails from blog readers I received over the last week. Thank you. I realize some of you would visit once or a couple of times a day, while others would visit 15-20 times during their daily waking hours. I'm still blogging, but not nearly as much as I used to (as I transition the blog per my "$PVCT: Moving On, Moving Up" post).

A blog reader commented, in regard to my "For $PVCT, it's the FDA's move" post, that although I wrote the ball is now in the FDA's court, Craig's recent remarks, including his letter to shareholders (May 13) and reported comments at the annual general meeting (June 27), suggest Provectus has not yet made an application to the FDA for some process that would result in an approval, whether for an special protocol assessment or breakthrough therapy designation ("BTD"). The reader went on to write: So, in a sense, the ball in is the company's court to first file [some application] with the Agency. I say it's the FDA's move because regulatory clarity is what is needed by Provectus, and I think the company has provided answers to all of the Agency's questions. Of course, the FDA cannot move if the company has not submitted an actual application for which a decision from the Agency is required. A consensus of opinions I solicited over the last couple of months pointed to the belief management had submitted an application for BTD sometime during that period. Recent information purports to suggest that, as late as last week, more time was needed to submit the application.

I've been trying to wrap my head around the role(s) Maxim Group's Dr. Echo Yinghui He, MD, PhD is playing for/with the company. Her position with Maxim is as an equity research analyst, and she provides coverage of Provectus. Dr. He's last company update note was dated January 29, and she is expected to provide another one after Moffitt's peer-reviewed article is published. It appears she has an additional role of some sort with the company as it relates to Provectus' efforts to seek and secure a regional transaction in China.

$PVCT: Moving On, Moving Up

It's now time for the blog to transition.

Let me start by reiterating my investment thesis. At a July 2nd closing share price of $0.64 and a market capitalization of $78 million, Provectus is an exceptional long idea.

When I consider any investment opportunity, I routinely explore risk, reward and the potential and likely relationship between the two.

From here, I think the company's risk-reward profile is very compelling, at a $0.33 share price on the downside with upside of $15-20 per share. This translates into a 50% downside/roughly 1,500-2,000% upside scenario, which for me is a sufficiently commensurate potential return for the potential risk I believe I am taking by owning Provectus stock.

To be clear, the 50% downside scenario is mostly if not exclusively theoretical. I don't think it is likely. Perhaps better put, I think it's an improbable outcome. It's not impossible, however, because there's no certainty in trading or investing (just ask Long Term Capital Management). Such additional dramatic dilution, the primary reason the stock would fall to or reach that price point, essentially assumes the company, for whatever reason(s), has no choice but to raise tens of millions of dollars primarily for trial work in order to arrive at sufficient regulatory clarity from the FDA to reach suitable commercial validation through licenses with prospective global and regional oncology and dermatology companies.

The 1,500-2,000% upside scenario is a tad illustrative. I've written about this price range before. So, just to be consistent, I'll stick with it. What this would mean, practically speaking, is I think Provectus' intrinsic value has more than outpaced stock dilution since I espoused this price range several years ago. Even at half that (say, an upside of 750-1,000%, or $7.5-10 per share), the stock's return potential still is more than commensurate with the risk one takes by owning shares from here.

Time, of course, is important to any investment outcome and its ROI (IRR). From here, the risk-reward profile is very attractive in, say, a 12-18 month timeframe, and sufficiently attractive in a 36-month outcome assuming the theoretical dilutive scenario noted above where management raises money and runs additional trials to arrive at sufficient regulatory clarity. At $7.5-$20, even those who've been in the stock for 8 or more years (depending on their respective cost basis) should exceed in IRR (time-based ROI) the biotechnology industry's WACC, the microcap equity risk premium or the market equity risk premium.

I think the stock's upside is much higher and the situation will resolve itself much sooner, but that's my own analysis and expectations.

The wisdom of crowds has been very useful. The blog's most popular post is entitled "The Wisdom Of Crowds." The governing premise is that a diverse collection of independently-deciding individuals is likely to make certain types of decisions and predictions better than individuals or even experts. The wisdom of crowds should not to be confused with crowd psychology.

I was first introduced to the company in 2006, which is when I began my due diligence on Provectus, and began buying shares in 2007. I've engaged key shareholders along the way, too. As much as I have regularly interacted with management over the last 4 or so years, I've also had the good fortune to communicate with nearly all large shareholder groups (with the exception, for example, of the Danish and Texas contingents). Their wisdom, or in certain rare cases lack thereof, has been useful. I've also had the pleasure, and in certain cases displeasure, of communicating with a number of smaller shareholders who also mostly have added to my knowledge. To all of you: Thank you.

Although I had read stock chat boards where the company was discussed, utilizing these venues among others to learn more about Provectus, I signed onto SiliconInvestor in 2008 as "pvct investor" to test (so as to further refine or refute) my investment thesis.

Unremarkably, the thesis' component parts effectively remain the same today as when I established them at the outset: The drug was (is) safe and effective, and could (can) be sold into a large addressable market.

As time elapsed, the drug has proven more effective, and is presented with a much larger market opportunity.

My posting on SiliconInvestor ended in 2011 (ironically in July), probably at least a year or more than it should have lasted, because the wisdom of that crowd was insufficient to refute my thesis, other than raising [what I believed then and still believe now to be true] non-fatal issues I already had surfaced: a non-traditional biotechnology company management team with flaws and weaknesses, and a less than typical path for the drug to regulatory clarity.

I have classmates, colleagues and friends in drug development and oncology, so backing an non-traditional team like Provectus' was an eyes wide open undertaking. I think innovation, intelligence and smarts (pragmatism) trumps small company challenges. Nevertheless, I did not fully appreciate how such a regulated industry, as the biopharmaceutical industry, puts an immense burden of proof on smaller companies to the advantage of Big Pharma behemoths.

In continuing to post beyond what time was needed, however, I realized then as I do now that furthering the knowledge of the community on Provectus' SI stock board had overtaken my initial goal/objective of testing (with the hopes of refining or refuting) my investment thesis.

Later, in 2011, I started the "Connecting The Dots" blog to further test my thesis. A blog structure and set-up allowed me to more easily post my thoughts, comments, observations, analysis and conclusions as well as store information about Provectus and my work, all as I continued my own ongoing due diligence of the company.

I also had another goal, which was to utilize a type of social digital media (in this case a/the blog) to measure company awareness, investor interest and other things; a measure of the wisdom of the crowd in another form or fashion. As an example, some Wall Street traders mine tweets to gain a trading edge. Blogging has provided me similar knowledge and in a different context.

Interestingly, I posted about 38 times a month on SI (from December 2008 to July 2011) and averaged 46 monthly blog posts (from November 2011 to June 2013); about a 20% increase, but in reality pretty much the same behavior on my part.

The blog's growth in readers and readership still surprises me. Using Google Analytics statistics, from the blog's inception on November 16, 2011 through June 30, 2013, which is about 20 months:

• The blog has hosted nearly 10,000 unique visitors, received about 70,000 visits, had about 100,000 page views (although the meter on the blog itself reads 163,000 views), and recorded an average visit duration of more than 2 and a half minutes,

• Unique readership averaged 10.6% month-over-month ("MOM") growth in 1H13 and 15.2% over the last 12 months ("LTM"). In 1H13, the blog averaged about 730 unique visitors per month (approximately 660 per month LTM),

• The blog saw readership from nearly 1,800 U.S. (1,333) and international (529) cities,

• Readership in U.S. cities has grown steadily, averaging 7.4% MOM growth (in the number of cities where visitors originated) in 1H13 and 10.1% LTM. Visitors came from all 50 states, and

• Readership from international cities has grown steadily too, averaging 8.1% MOM growth in 1H13 and 11.8% LTM. International visitors came from 93 countries.

U.S. and international city readership grew in tandem in 1H13. International growth exceeded U.S. growth over the last 12 months.

Provectus’ digital media footprint is not high, enabling the blog to capture digital awareness of the company and PV-10. Google “Provectus” and most other drug- or company-oriented terms, and the blog appears in nearly all top 10 search results returned (usually top 5). Blog readership, for all intents and purposes, is a proxy for Provectus and the drug’s mass awareness.

Google "Provectus." The blog, at this point, is the no. 7 search result returned.

Not all visits to the blog, however, pertain directly to Provectus and the pharmaceutical use of rose bengal, which means blog statistics do not capture readership purely related to the company and PV-10.

Blog readership grew steadily even as the company’s share price fell, which I find interesting, perhaps somewhat unsurprising, and reassuring.

I believe there is no refuting the science and technology anymore. As I wrote in my post entitled "For $PVCT, it's the FDA's move," it seems clear the path to regulatory clarity has put questions about safety and efficacy to rest.

Provectus has fully answered the FDA's questions regarding proof of systemic properties and benefit for PV-10, thanks to Moffitt.

I think any discussion between Provectus (Eric) and the FDA recently has been and now is about when to use PV-10, in which situations, and in what combinations with other drugs.

The blog is replete with information about PV-10 (and pH-10) and my analysis.

On balance, management's strengths sufficiently outweigh their weaknesses. In my post entitled "$PVCT's Empire State of Mind," I wrote the stock market, some/many in the Wall Street community, some/many potential investors and some/many existing shareholders do not believe in nor trust management, and thus do not believe in the data. If they did, they would buy more shares.

These disbeliefs, the first (disbelief in management) more problematic and resulting in the second (disbelief in the data), have led to the obscuring of value that clearly exists in Provectus and that Big Pharma readily sees and very much desires.

Although disbelief in or lack of trust in management mostly results from several self-inflicted wounds, these wounds are far from fatal, and there should be no doubt about the immense value management has created in its innovation of PV-10. I also wrote simple, angelic or divine regulatory clarity will transform disbelief in both management and PV-10 overnight.

I learned very early on, and have come to terms with the truth, that management will do this their way. As I have written on this blog a few times, Provectus is a public company that really is a private one (a private company that happens to be public). Management employs mostly very capable, but some incapable, advisors who appear to have mostly guided them the right way.

Management has made mistakes, some because they individually and collectively are who they are. I don't agree with all of their decisions, and have let them know when appropriate. Management will do what they will do: their strategy, their plan, their tactics. They'll do it their way.

And, generally speaking, I'm okay with that. They're the horse shareholders will ride across the finish line.

Provectus has innovated a drug that is a paradigm shift in the treatment of cancer. Peter told me it was fair to say, in his numerous meetings with key opinion leaders as well as regional and global pharmaceutical companies, there no longer was (is) any skepticism about PV-10 or PH-10.

He noted Moffitt, for PV-10, and a leading research facility, for PH-10, had brought a lot of credibility insofar as their respective work on MOA.

No one has seen a drug work so effectively systemically as PV-10. Not the FDA, not Big Pharma, both of whom have acknowledged this.

In striving to continually seek meaningful tests of my investment thesis, there's long been no knowledgeable or material pushback on the drugs' clinical value propositions. It's now time to move on.

There has been an evident shift in management sentiment. On the cusp of regulatory clarity, with whatever commercial validation should follow based on the specific clarity received, there has been a palpable shift in the sentiment emoted by the management team, individually and collectively. I noticed it over the last few months. Others have noticed it too.

For Provectus, it's the FDA's move now. The race to the end-game is far from over, but the finish line is in sight: "It's like in the final leg of the/a marathon where management is past any last remaining walls and it's a sprint to finishing with form, purpose and stamina."

So, the blog now transitions. Transition might mean I will blog less than I historically have. I expect my writing will be more sharply investor-focused, rather than merely blogging about all things Provectus.

I've achieved my initial goal/objective for the blog.

The value propositions that have sat on the blog's right hand side underneath the company's URL have been removed. You still can find the summary and individual propositions here -- summary, clinical, regulatory, business and stock -- updated as of February 2013. I plan to revise them after regulatory clarity is achieved, perhaps waiting until commercial validation also is achieved, or maybe just sometime in the fall or towards the end of the year.

I posted my cost basis of my/our holdings in December 2012. We've added to our position since then. As is regularly updated at the bottom of the blog, I have not sold any of the shares we have accumulated thus far. I commit to blogging (within 24 hours) when and about why I sell, as well as what percentage of the position was sold.