Wither a Derm Deal?

Does the lack of a derm deal thus far worry me? No deals materialized after the company completed Phase 2 trials in psoriasis and atopic dermatitis (not to be confused with the psoriasis Phase 2c trial), when there was there expectation of a deal.

Deals, or deal interest, do not materialize because (a) there is (are) no prospective or potential party(ies) with whom or which to strike a deal or (b) the deal(s) is (are) not good enough for the company.

I am not worried.

I was disappointed that management could not strike a deal last year in dermatology. A deal, as expected, in terms of the valuation threshold sufficient for management to agree to a deal, would have increased the share price. It was clear to me at the time, however, that the clinical data was insufficient (i.e., benefit or lack of benefit of a vehicle arm) to get prospective partners to extend a sufficiently attractive term sheet or two. Just because no deal was struck does not mean no term sheets or less formal deal terms were extended. I think what the company saw was unattractive.

I am not worried, because management has demonstrated discipline in not accepting any deal, only a deal above a certain valuation threshold.

You'll recall I've previously blogged about management not accepting sub-optimal oncology deals. Do you want them to do a deal because every "real" biotechnology company has, among other things (e.g., a name investor, written multiple peer reviewed papers, has a management team that has brought drugs to market before, etc.), a deal with some pharma company? Or do you want management to do the right deal?

The stakes are raised for Provectus this time around. We are led to believe the psoriasis Phase 2c results, while they have limitations (see here or here), should produce a deal acceptable to management (the assumption is, of course, that the results are of interest to prospective partners). So, while my expectations have not changed, I am, however, expectant.