Triggers/Catalysts (update)

With the corporate advisory board addition, updating triggers and catalysts (from the initial post here) below:

OneMedForum NY 2012

Management is presenting at the OneMedForum NY 2012 conference on July 12. The company's profile by OneMedPlace is here.

FDA Gives Guidance For Provectus To Move Forward With Phase 3 Clinical Trials of PV-10

The above headline comes from a PR Newswire piece that appears to have been produced in May by Provectus' PR/IR firm PLR. The audio can be heard here.

I did not see this until it got picked up by a Google filter of mine yesterday (the dateline of the piece was May 29). A friend of the blog said he saw this a couple of weeks ago, but I think he's wrong. It doesn't appear this "audio news release" was picked up in the same way as traditional PRs by financial or investment news websites and services.

May is Melanoma (Skin Cancer) Awareness Month. With a lead indication of metastatic melanoma, it makes sense for Provectus to put out a multi-media piece like this. Dr. Agarwala's quote is a good one. He seems almost downright giddy. Provectus, through this piece, is participating in the dialogue regarding melanoma awareness. Management wants PV-10 to be part of the solution and they're exercising their voice to do so.

Management's interaction with the FDA has been unusual in a good way. It would appear the back-and-forth between the parties is and has been very regular. This interaction is at odds with what others have experienced or suggest is usual.

It also would appear there are no more details regarding the trial design to be hammered out. None.

If that indeed is the case, then I can only assume FDA has agreed with Provectus on the SPA. That means management has their SPA.

Of course, until management has a formal communication from the FDA saying so, I could also view the situation quite practically as the FDA has not yet agreed with Provectus on the SPA.

I think management has their SPA. And as I recently posted, per management's guidance, it could (should) be formally announced in Q2 (best case) or Q3 (worst case).

Biotech Ideas That Will Change the World: Patrick Cox

LT2011 on Provectus' stock chat board at Silicon Investor posted a link to a Patrick Cox interview (dateline May 31) that mentions the company.

As LT2011 writes, and has been the case whenever Cox has written about Provectus, the share price has popped.

Corporate Advisory Board Member Doug Ulman Tweets

Actually, Doug Ulman retweeted Pete's tweet about adding Doug to Provectus' corporate advisory board.

I retweeted Pete's tweet. You can follow me on Twitter here and @PVCTinvestor.

Doug Ulman, National Cancer Survivorship Advocate, Joins Provectus Pharmaceuticals’ Corporate Advisory Board

Provectus announced today that LIVESTRONG's President and CEO Doug Ulman joined its corporate advisory board. LIVESTRONG is the Lance Armstrong Foundation.

Doug Ulman is a great add for several reasons. I think is quite a coup for management. Come to think of it, "quite" is an understatement.

Mr. Ulman fills or provides the role of patient advocate on the advisory board as (i) a three-time cancer survivor, (ii) someone who already is recognized nationally as a cancer advocate, and (iii) chief executive of the global LIVESTRONG organization and brand.

You can follow Doug's tweets here. As you can see from the screenshot below, he has more than a million followers on Twitter.

His addition dramatically raises Provectus' awareness among several groups of people, including (i) cancer patients and survivors, and their families, (ii) the cancer research community (Doug served a four-year term as the Chairman of the National Cancer Institute Director's Consumer Liaison Group), (iii) the national media, and (iv) charitable and philanthropic organizations.

LIVESTRONG and Doug's use of social media and other Internet-based tools to foster communities of cancer sufferers and their families and serve as a model for other non-profit organizations is well known. See here.

Speaking of brand, Provectus now is associated with Lance Armstrong's global brand, and vice versa.

While its $50.4 million in annual revenue is less than what the 97-year-old American Cancer Society raises in a month, Livestrong has been a catalyst for better cancer care and education across the globe. "It's a force to be reckoned with," says Leslie Lenkowsky, a professor at Indiana University's Center on Philanthropy. Livestrong's help line, guidebooks, and website helped more than 400,000 people last year. Its social-media efforts reach about 3 million supporters. It has pioneered programs here and abroad for survivors; worked to unify the fractured cancer community; and instigated a worldwide crusade, which includes the United Nations and the Clinton Global Initiative, to make the world's No. 1 killer a health-care priority. "I can't think of an organization with the breadth of activity that the foundation has," says Dr. Larry Shulman, chief medical officer at the renowned Dana-Farber Cancer Institute in Boston, "and that includes the American Cancer Society." (source of October 2010 quote here).

LIVESTRONG's board members appear to be as or more prominent, influential and connected as well.

I had the good fortune many years ago to hear a keynote speech by Hamilton Jordan. It takes reminding, by oneself and others around you: There is no such thing as a bad day.

Management has been working on gaining this key opinion leader relationship for more than a year. Note Doug's tweet last April:

Let's put ourselves in Doug's shoes for a moment as he diligenced the company in order to determine whether he would or should accept Provectus' invitation to join the corporate advisory board. If you were him, what questions might you pose to management and its references? Perhaps these:

• How well does PV-10 work? How safe is it?
• What do physicians and the medical community think about PV-10?
• What does the FDA think about PV-10?
• Where is the drug in the regulatory approval process?
• How soon could PV-10 be available to patients?
• How did PV-10 come about? Is it unique? If so, why?
• How does PV-10 compare to other kinds and types of treatment?
• Who are the founders and management team? What is their background, history, and success and failures?
• Who are the members of the board of directors and advisory board?

I have no doubt he conducted a tremendous amount of due diligence. I have to believe Doug needed to be completely convinced his association with Provectus, and by default his associating LIVESTRONG's brand and reputation with the company, was in the best interests of LIVESTRONG and himself.

Doug Ulman joining Provectus' advisory board speaks (shouts) volumes about PV-10, the company and management. I think it speaks to the veracity of management as well.

Blog Reader Question

Do you have a source for and/or a link to the comparable company valuation for Provectus?

The comparable company valuation from this post, here, and the other valuation methodologies were prepared by Provectus using stock price data from May 7.

The most recent comparable company valuation prepared by an equity research analyst covering Provectus was conducted by Stonegate Securities using stock data from May 16.

The mediam market capitalizations and enterprise values are in the ballpark. Average or mean valuations are not; Stonegate includes Amgen, now, because this company acquired the comp Micromet. The addition of Amgen skews the average market cap or EV figure. See below for the comparable company table from late-2011, the valuation metrics for which are (accounting for different share prices) more consistent:

Irrespective of whether one utilizes the company's comparable company analysis or an investment bank's work like that done by Stonegate, there is -- stating the rather obvious -- a dramatic difference between Provectus' valuation (market capitalization and enterprise value), and the mean/average and median figures.

Valuation practitioners will (should) assess a discount to valuation because Provectus trades on the OTC. For private companies, for example, where shares are not publicly traded or, typically, liquid, the discount can range from about 20-30%. While the discount would not be that dramatic, between a company trading on the NASDAQ and the OTC, it is, nevertheless, material. Of course, there is a lack of awareness component as well as a skepticism component related to Provectus that also contributes to a low share price (or increases the overall discount).

A better comparable company comparison should come when Provectus moves to the NASDAQ. After a point in time, it would be useful to revisit the comparison to see how Provectus' valuation metrics compare with comparables then.

Stock Value Proposition (update)

An updated version of the stock value proposition is below. Click on the picture (table) to enlarge it. My initial version is here.

Clinical Value Proposition (update)

An updated version of the clinical value proposition is below. Click on the picture (table) to enlarge it. My initial version is here.

Triggers/Catalysts

You may recall I constructed and posted a similar illustration to the one below in order to elucidate the potential and possible triggers or catalysts for the company (and its share price) along the way to the end-game. I added a few more triggers/catalysts to the original illustration/post.

Click on the picture to enlarge it on your screen.

Of these, the company announced an addition to its board of directors, forming an independent board in the process.

In the U.S., it is Memorial Day weekend, where citizens remember the men and women who died while serving in the United States Armed Forces. With no trading on U.S. stock exchanges Monday, this week there remain 3 trading days in May before the first trading day of the last month of the second calendar quarter.

How time flies...

Picture source here.

My expectations for the remainder of the second quarter? I'm keeping an eye out for:

• The SPA for the pivotal MM Phase 3 trial;
• More Moffitt immunology-related work results;
• Final MM Phase 2 trial results; and
• Addition(s) to the corporate advisory board.

While I don't rule out a dermatology deal, or the process of arriving at such, being announced, I think more time might be required for this item to play itself out.

Should the SPA or two or more of the other items arrive in June, it is possible the share price may hurdle the threshold for a NASDAQ listing.

13th Annual B. Riley & Co. Conference (reminder)

Craig is presenting at the 13th Annual B. Riley & Co. Conference.

Two-bit Hits for May 19

I thought Moffitt was going to have an abstract at ASCO 2012 (see here). I was wrong. I think we will see and hear more from Moffitt soon, possibly later this month and next.

In the last year Provectus management has materially increased its rhetoric regarding the systemic effect of PV-10. As an example:

• In the last 12 months (May 2011 to May 2012), the company issued 26 PRs. In 9 of these PRs, the company and third parties mentioned the systemic effect a total of 22 times (14 and 8, respectively). 
• Prior to that (May 2010 to May 2011), the company issued 20 PRs. In 4 of these PRs, the company and third parties mentioned the systemic effect 10 times (9 and 1, respectively).

What will the reaction be to the final MM Phase 2 data? Or, to PV-10 doing better in compassionate use? Or, to PV-10 doing better than expected in the MM P3 trial?

Awareness grows (a visual representation of blog readership):

Blog Reader Comment

The patients enrolled in the different studies were very different with regard to stage and extent of disease - as a result the data can't be compared in this way, nor can they really be compared to Korn at all. Of the 3 studies, Biovex had the patients with the most advanced and extensive disease, Vical the next, and Provectus the patients with the least advanced and extensive disease. This is reflected in the graphs above, which would have been much the same with respect to PV-10 'looking better' irrespective of any treatment effect for any of the drugs.

A blog reader contributed the above comment in regards to my post PV-10 vs. OncoVEX, Allovectin-7. Thank you.

⊃ The patients enrolled in the different studies were very different with regard to stage and extent of disease...Of the 3 studies, Biovex had the patients with the most advanced and extensive disease, Vical the next, and Provectus the patients with the least advanced and extensive disease.

I agree (comparing all MM P2 trials, below):

Provectus management has maintained their focused label approach throughout the clinical trial, which is to apply PV-10 as a local-regional (loco-regional) treatment for early stage patients (Stage 3 and early-Stage 4 (i.e., 4a). As I recall, PV-10's MM P1 trial comprised 20 Stage 3 patients.

⊃ ...- as a result the data can't be compared in this way...

I agree. Even if one attempts to make an apples-to-apples comparison, which in the case of the reader's comment would be, at a minimum, to compare stage-by-stage rather than study-by-study numbers, if that, it would not be a true comparison and there is only so much information one can gain from it (i.e., the information should augment your thesis, long or short, not substantiate it. Comparisons, like analogies, should not be taken too far.

But, if we're comparing...

⊃ ...nor can they really be compared to Korn at all.

I disagree. Korn et al.'s graph was from the authors' meta-analysis of 42 phase 2 metastatic melanoma studies. The authors of this study did compare, by definition (i.e., confidence intervals). I think it is indeed valid for BioVex and Vical to compare themselves on this graph. Further, both BioVex and Vical chose to compare their results to Korn et al.'s study because they, BioVex and Vical, felt the comparison provided beneficial information (in reality, promotional in nature) to the medical and investor communities.

It is interesting to note Provectus management did not make such comparisons. Rather, they left it to the medical community to make their own comparisons and draw their own conclusions, however obvious such are or should be.

⊃ This is reflected in the graphs above, which would have been much the same with respect to PV-10 'looking better' irrespective of any treatment effect for any of the drugs.

Maybe, maybe not. The reader's comment appears to suggest that increasing stage and extent of the disease leads to lower efficacy, and that the stage and disease extent of patients in the respective trials dictated the companies' placement on the Korn et al. graph. Perhaps. Higher disease or tumor burden is an important concern for the patient and his or her physician.

But, what if inferior performance contributed to placement on the graph? If OncoVEX and Allovectin are not as good as PV-10, then they will reside lower on the graph. That is, OncoVEX and Allovectin produce lower overall survival than PV-10 because PV-10 is more efficacious.

Melanoma Awareness Month

May is May is Skin Cancer Awareness Month‎.

An article was published today that mentioned Provectus: Melanoma Awareness Month Investment Opportunities: AMGN, ONCS, PVCT.

Some takeaways:

• Nice, interesting article.
• The author is promoting OncoSec.
• She is comparing OncoSec Phase 1 trial results to Provectus' Phase 2 trial results.
• Amgen shut down BioVex's other phase 3 trial, a head and neck cancer, for OncoVex (author: " Success there may validate the therapy’s approach for other cancers as well, such as the same drug for head and neck cancer also currently in phase III clinicals.")
• Good comment: "In order for biotech investors to make a decision on efficacy comparisons, the data set needs to be broken down for Provectus to determine how the patients responded as a whole in terms of complete response rate." That is why Dr. Sanjiv Agarwala's presentation of MM Phase 2 trial final data at the 2nd European PostASCO Melanoma Meeting 2012 in Munich on June 22 bears very close watching. 

The biggest takeaway for me: When investor-oriented people and articles compare and criticize PV-10 results, you know the company has arrived. It's called punching up.

Question: How do the psoriasis Phase 2c results compare to other gels (not systemic treatments)?

A question from Mammon's list.

A good comparator would be a mid-potency corticosteroid ointment, such as fluticasone propionate 0.005%.

I'll get around to making comparisons in a subsequent post.

Blog Readership

In nearly 6 months, this blog has received more than 9,000 visits from the U.S. and 33 other countries. Adjusting (guessing) for randomly, inadvertently or mistakenly arriving at Connecting the dots..., the top non-U.S. blog visiting countries include:

• The U.K.,
• Switzerland,
• Spain,
• Denmark,
• Canada,
• Australia,
• Japan,
• South Korea,
• Netherlands,
• Germany,
• France and
• Norway.

In the U.S., this blog has been visited by readers from 41 states and 324 cities. Readers average nearly 4 minutes per visit. Top blog visiting states include:

• New York,
• Florida,
• Vermont,
• Ohio,
• Illinois,
• Texas,
• South Carolina,
• Idaho and
• New Jersey.

Top blog visiting U.S. cities include:

• New York (NY),
• Knoxville (TN),
• Rome (NY),
• Springfield (VT),
• Bradenton (FL),
• Maryville (TN),
• Hilton Head Island (SC),
• Anna Maria (FL),
• Boise (ID) and
• Chicago (IL).

Jan Koe: A Tactical Move, With Strategic Motivations

I've received several e-mails and blog comments regarding the announcement yesterday of Jan Koe's addition to Provectus' board of directors.

"Mr. Koe, age 61, has a 30-year track record of success in consulting, asset management, real estate and public company governance, and has represented major insurance firms, national retailers and Fortune 500 companies. He is President of GoStar, which is the manager of Real Solutions Opportunity Fund 2005-I and Real Solutions Fund Management LLC and Real Solutions Investment LLC. He is also Principal of Method K Partners, Inc., a commercial real estate firm, which he founded in 1988. He has served on the Board of Directors of ONE Bio, Corp. where he was Chair of the Compensation Committee and a member of the Financial Audit Committee. He holds a degree in Business Administration and Psychology from Luther College."

Mr. Koe's professional history (based on a more comprehensive search of the Web) paints the picture of an entrepreneurial individual who has a good amount of experience and enjoyed success as a principal of and investor in a number of businesses spanning several industry sectors. I think his corporate governance experience is a strength.

The key takeaway is that Koe's addition, which enabled the formation an independent board, is a strategically-motivated tactical move. Simply put, it facilitates the listing of the stock on the NASDAQ in advance of a potential myriad of expected regulatory, business and clinical news that will have greater impact on the share price if the stock is listed on a major exchange rather than over-the-counter.

At a closing price today of $0.865, the stock is well below the $2 per share threshold. One key piece of news (e.g., the SPA, a dermatology term sheet, etc.) should do the trick, thrusting the share price across this threshold.

Just some speculation on my part...

Board member Dr. Kelly McMasters has much more medical and clinical trial experience. Board member Al Smith IV has much more name recognition. The company could have added a much higher profile name than Jan Koe (and, for that matter, Al Smith) in due course. These are not rash actions, but deliberate and deliberated decisions.

Why form an independent board, now?

As I wrote a few days ago, the pipeline of catalysts is backing up, and the clock is ticking on when these catalysts will catalyze the share price: the MM Phase 3 SPA, a dermatology term sheet, more Moffitt immunology data, the Munich MM Phase 2 data, accelerated approval for MM, an addition to the corporate advisory board, and an HCC Phase 2/3 trial suitable for an SPA.

Maybe something or some things (i.e., catalysts) are inbound.

PFE, JNJ

It is interesting to note that oncology contributed less than 2% of Pfizer's Q1 2012 revenues.

For JNJ, the figure is less than 4%.

To the NASDAQ...and beyond!

So Provectus, by virtue of its newly independent board, "...intends to apply for a listing on NASDAQ when appropriate." Craig provides the quote: "This is a natural step for us as our technologies continue to mature and we prepare for a national exchange listing for our company, which should provide us increased visibility in the financial markets."

Substance or cosmetic? In theory, an independent board should be good for shareholders and corporate governance. Independent directors do not have to rubber stamp management's proposals or recommendations, such as for compensation. In practice, independent boards can go both ways. Coming from a private company where the board ousted the founder CEO (purportedly led by the lead [independent] director), who, frankly, was sort of an awesome dude for several reasons), there is more than anecdotal evidence available of independent boards and not-so-independent boards.

Nevertheless, I give kudos to Craig, Tim and Eric, as founders, for making this move, as they cannot predict with certainty what actions McMasters, Smith and/or Koe may take now and in the future.

I also give kudos to Eric for stepping off the board for the greater good and goal of, among other things, getting onto the NASDAQ. More often than not, it is a challenge for founders to relinquish such titular position easily and without hurt feelings.

NASDAQ listing requirements. What is (are) the key listing requirement(s) for the NASDAQ Capital Market for a stock currently on the OTC to list on the NASDAQ CM: A $4 minimum bid price over 90 consecutive trading days?

No. Go figure. In April 2012, "...the SEC approved, on an accelerated basis, a Nasdaq proposal to adopt, as an alternative to the $4 minimum bid price initial listing requirement for the Nasdaq Capital Market, a closing price of either $2 or $3, if certain other listing requirements are met." See this illustrative source here, or NASDAQ Rule 5505(a)(1)(B) here.

A minimum $2 bid, for 5 consecutive days, if certain other requirements are met, including:

• Market Value of Listed Securities standard:
• Market value of listed securities of at least $50 million (current publicly traded issuers must meet this requirement and the price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the market value of listed securities standard)  >>> Yes.
• Stockholders' equity of at least $4 million  >>> Yes.
• Market value of publicly held shares of at least $15 million.  >>> Yes.
• Net tangible assets in excess of $2 million if the issuer has been in continuous operation for at least three years.  >>> Yes.
• Net tangible assets = assets - {intangible assets + liabilities + par value of preferred stock}

And as for being a penny stock per Rule 3a51-1 of the Securities Exchange Act of 1934, "[i]n new Interpretative Material, Nasdaq states that an issuer that qualifies its securities for initial listing under the alternative price requirement would be monitored and could become a "penny stock" if the issuer fails the net tangible assets and revenue tests after listing and does not satisfy any of the other exclusions from being a penny stock." (Same source as above).

So, what's the upshot of this? Right now, not much, because the share price is well below $2.

With a key piece of news (e.g., the SPA, a dermatology term sheet, etc.), followed up by initial share demand, the share price should hurdle $2. Subsequently, the company would list on the NASDAQ after a week of a sustained >$2 bid.

From there, the NASDAQ, each subsequent piece of news is magnified much more so than if Provectus still to remain on the OTC.

Provectus Pharmaceuticals Forms Independent Board to Meet Corporate Governance Requirements

Provectus formed an independent board, issuing a PR on this today. Jan Koe is added, while Eric drops off. My initial post on this topic is here.

Two takeaways from today's PR: First, the intent to apply for a listing on the NASDAQ when appropriate (more on this later).

Second, Eric's focus (under the shiny new title of CTO) on IP protection, among other things. With two key patents in process (i.e., RB synthesis meeting ICH guidelines, combination therapies), his work in this area remains critical to the value and valuation of Provectus.

Musings on May 13

For a little while I've been trying to pull together certain necessary pieces in order to purchase a large number of Provectus shares at current prices (current = somewhere in the range of where the share price has been for the last 3 to 6 months).

As part of this process, I called the markets makers on Friday looking for pricing on a 5MM share block. The goal is (was) to ascertain what average price they thought could buy (and ultimately, if engaged, would commit to buying) on my behalf such an amount in what reasonable period of time.

It is (has been) easy and straightforward to accumulate tens and hundreds of thousands of shares at a time in the current market. Sit on the bid at various levels during various times of the day, and you get hit. Occasionally pay the offer (buy shares offered at various prices and times of the day), but not often enough to let the price runaway from you.

Why is price important? My expectation and experience suggested it was nearly or effectively impossible to by 5MM shares -- at current prices, this only is $4-5MM -- without moving the price into the $1.50 to $2.00 range, or higher (set aside for the moment the impact of warrants being exercised at these prices, or going directly to warrant holders and negotiating to buy their warrants).

If I think I will get $25-50 or more per share in the end-game, should I quibble over cost bases of $0.80-$0.95 or $1.50-2.00? Absolutely. My ROI gets cut in half or more. The outcome still is robust and I could acquiesce, but it is hard to give in and so I doubt it: "A George divided against itself cannot stand!"

As I expected, the market makers could not follow through. Perhaps when my query is addressed substantively next week, they may have a different response. But right now, I cannot get such size at an attractive fixed price in a reasonable time frame. One market maker observed there were some willing sellers in the 80s and 90s (cents) but not enough to fill my size. If another potential investor wants to do a similar size (to my desired amount), there's not enough to go around right now.

Why is time important? Time matters now more than ever. I can try to sit around and slowly, very slowly,  accumulate my desired position at my desired price target range ($0.80-$0.95). Or, I can more aggressively act.

But the pipeline of catalysts is backing up, and the clock is ticking on when these catalysts will catalyze the share price. Among them, the usual suspects:

• The MM Phase 3 SPA;
• A dermatology term sheet;
• More Moffitt immunology data;
• The Munich MM Phase 2 data;
• Accelerated approval for MM
• Additions to the board of directors and corporate advisory board;
• A NASDAQ listing;
• An HCC Phase 2/3 trial suitable for an SPA;
• Etc.

Time is not on my side.

An interesting cascade effect. Take a look at the current table of outstanding warrants (not including, of course, those issued in Q1 2012) here: nearly 12MM at exercises prices of $0.95 and $1.00, and about 12.5MM at $1.12, $1.25 and $1.50, all at terms or durations of 2 to 4 years (from December 31, 2011)

As the share price runs over the next weeks, months and quarters from the catalysts in the pipeline through these exercise prices, the company enjoys significant cash infusions for contemplated operations when these warrants are exercised.

Blog Reader Question

Why is characterizing why PV-10 works systemically so important?

The HemOnc Today conference last month displayed the momentum in and recognition by the medical community for PV-10's application to systemically treat melanoma. I posted a comparison by Dr. Andtbacka's comparison of IL-2, BCG, Allovectin-7, OncoVEX and PV-10. If you use the search bar along the right hand side of the blog, towards the bottom, and enter keywords "hemonc today," you'll be able several more related posts.

It's clear, and has been for a while, that PV-10 is a robust local regional ("loco-regional") treatment, particularly among intralesional therapies. Local treatments for disease have a place in the oncologist's tool kit, and there is a nice but modest valuation for companies that produce drugs of such limited use.

But when you are able to demonstrate deploying a drug effectively systemically treats disease, the utility and thus the value of the drug dramatically increases. Dr. Zager's presentation from HemOnc Today does a nice job (towards the end of the presentation) illustrating the application of systemic and other therapies (based on systemic tumor burden and and loco/regional tumor burden).

Utility increases because the physician can easily pick out the tool out of his or her kit for the job, rather than having to rummage around. Utility increases because surgery may not always have to be the first or best treatment option. Utility increases because diseases in far flung, remote, hard-to-find or detect parts of the body receive much-needed treatment, and help mitigate relapse or insufficient cleansing.

Do all or a lot of the above, and the drug's value provide tremendous valuation for the company that produces it.

Aside from the clinical demonstration of such systemic success, Moffitt's immunology-related work is helping to characterize that PV-10 works systemically, and works very effectively systemically. Thus, better for physicians and their patients, and, eventually, better for shareholders.

When does Provectus' share price start representing its true (or intrinsic) value?

With the stock in a ridiculous holding pattern (I am being subjective with the duration of the stock pciture below), now is as good a time as any to answer a question from Mammon's list.

Per Google Finance, the current market capitalization at closing Thursday was $88.75MM.

The true or intrinsic value of the company may well lie in the eyes of the beholder. The graphic below highlights the outcome of different valuation methodologies.

Setting aside a rather geek-filled discussion regarding "fully diluted," which relates to per share value, the value of Provectus might be in the range of $5-10B using a discounted cash flow analysis.

Comparable company valuations yield a lower enterprise value for Provectus.

But, as in my introduction in this post, Provectus trades at a significant discount to its peers.

Recent or precedent transactions provide a higher valuation.

So, how does Provectus' valuation get from $88.75MM to $5-10B, and when?

The company's valuation begins to get where it needs to go by steadily increasing in step function-like jumps in share price because of: the MM Phase 3 SPA, a dermatology term sheet, more Moffitt immunology data, the Munich MM Phase 2 data, additions to the board of directors and corporate advisory board, a NASDAQ listing, liver progress, etc.

These step-ups likely will be exaggerated by market euphoria or exuberance. That means higher share prices at points in time.

When does the share price represent the company's intrinsic value? When Pfizer buys Provectus. That event will represent the largest and final step function jump in share price.

As shareholders or prospective shareholders, we must ask ourselves: When do we get in?/When do we buy?

And also: When do we get out?/When do we sell? Or do we?

10-Q for Q1 FY/CY 2012 (update)

Recall in the 10-Q that certain consultants received more than 1MM warrants. The company has issued common stock and warrants to consultants in exchange for services in the past. Read the 10-K for instances of this in 2011 (see pages 17-18).

Provectus has issued large amounts in the past: 641,500 warrants in Q1 2011, 649,518 in Q2 (to Network 1 Financial), 293,500 in Q3, and 752,000 in Q4.

Warrants outstanding as of the end of 2011 are below. This table should become much more relevant later, and I will blog about that in due course.

Who are these consultants, because 1MM is a large number?

• Is it one consultant, or more?
• Is it Network 1? If so, why not say so, as management did in the paragraph noting the Q2 2011 capital raise in the 10-K?
• What kind of consultant or vendor could or would warrant (pardon the pun) the issuance of 1MM warrants?
• Is the Q1 2012 issuance related to the Q4 2011 issuance, or previous issuances of warrants?
• Etc.

Lots of questions. No answers quite yet.

Reuters: U.S. may speed approval of "breakthrough" drugs

An article making its way around (forwarded to me earlier today, and posted on a PVCT stock chat board), which is an interesting read.

Get Shorty (update)

Initial post here.

Short interest through April month-end (click on the chart/illustration to expand it):

Trading volume is dropping to levels last seen in October 2011.

Provectus Pharmaceuticals' PV-10 Phase 2 Final Data To Be Presented At 2nd European PostASCO Melanoma Meeting 2012 on June 22, 2012

The company issued a PR today regarding the June Euro postASCO conference.

This will be a key presentation. I will have to more to say in a subsequent post about the data validation process utilized to finalize the MM Phase 2 trial data.

10-Q for Q1 FY/CY 2012

The 10-Q is out. Several points of observation:

The cash balance is approximately $5MM as at 3/31/12.

Management does not appear to have concerns over liquidity (i.e., available funds for operations).

Who were these consultants that received more than 1MM warrants?

Payroll looks slightly lower in Q1 2012 vs. Q1 2011, but not materially or by much.

Quick Hits for May 5

Due to certain professional interests, I will blog less prolifically [if at all] over the next several days.

Some quick hits before I withdraw...

I am very (extremely) interested in the company information coming out of the 2nd European PostASCO Melanoma Meeting 2012.

Did Pete suggest during his recent webcast that the so-called MM Phase 2b, or human melanoma MOA trial, by Moffitt had commenced (or would shortly commence)? If so, I would expect such a trial to last a few months, with results available thereafter.

ASCO 2012 abstracts are available online on May 16. Will Moffitt be among them?

The company continues to broaden the international scope of patent protection, which allows it to safely entertain geographic-specific, indication-specific oncology license interest in PV-10.

The typical or traditional trajectory of efficacy, [generally] however measured, is downward as clinical trials progress from early to late-stage. What happens if efficacy goes up in PV-10's pivotal MM Phase 3 trial? Houston, we have a [good] problem.

Leaning forward into a stiff Lake Michigan wind this evening, I can't help but reflect that Provectus already has brought it, so you ain't got no alibi, you...

Blog Reader Question

Why hasn't the company yet released their phase II psoriasis derm results to interested pharma companies?

I think the full data set from the results of the psoriasis Phase 2c trial only were recently shared with prospective partners. Top-line results were publicly released and share with partners in late-March.

I suspect the/a reason it has taken time (since the release of the top-line numbers as well as the conclusion of the trial) to provide partners with the myriad of data from this trial in the electronic data room could be due to the data validation process management (led by Eric) conducted on the data provided to the company by the trial sites and principal investigators. I imagine the decision of whether to use a CRO is cost-based, depending on the scope and size of the clinical trial, and based on other reasons both tactical and strategic.

In this regard -- data validation -- it is interesting to note that when Provectus reports full phase 2 study data on PV-10 for MM (here), management presented positive preliminary data for the 80-patient trial.

Questions: How does Provectus compare to other biotechnology companies that have recently been bought out? Is there a chance for accelerated approval given Moffitt's immunology-related work?

Two questions from Mammon's list.

How does Provectus compare to other biotechnology companies that have recently been bought out?

This is a fluid answer, as valuations change based on company-specific, industry (biopharmaceuticals) and market factors, but two companies (or comparables) come to mind:

• BioVex, maker of OncoVex, was acquired by Amgen in January 2011 for up to $1 billion; $425 million in an upfront payment and $575 million in additional development and sales milestones; and

• Plexxikon, maker of the now approved Zelboraf (vemurafenib or PLX4032), was acquired by Daiichi Sankyo in February 2011 for up to $935; $805 million in an upfront payment and $135 million in other milestones.

During the RetailInvestorConferences.com webcast, Pete discussed the BioVex valuation of $1 billion as being the absolute floor for Provectus' acquisition valuation. BioVex was acquired about well into their pivotal MM Phase 3 trial. Enrollment in the OncoVEX trial commenced in April 2009, and was completed in Q2 2011. The Amgen deal was signed in January 2011 and closed in March. Interim analysis, which is expected to be performed at the end of this, only would be released at study completion in 2013.

Is there a chance for accelerated approval given Moffitt's immunology-related work?

The full scope of Moffitt's work (completed, in-process and in the near future) makes AA a real possibility. Pete addressed this topic today during the webcast. He also discussed getting the Fast Track designation following receipt of the SPA.

Blog Reader Question

Do you feel like the negative opinions on Oncovax and Vical has been a factor in keeping Provectus's stock price down? What sort of primary endpoint is Provectus aiming for in its phase III trial?

I think there are two ways to look at drugs like OncoVEX (Amgen), Allovectin (Vical) and PV-10.

First, as treatment options for local disease. Intralesional therapies are beginning to gain acceptance as a potential tool in an oncologist's tool kit to treat his or her patients based on the successes such therapies have demonstrated in Phase 2 trials to date. I found a nice illustrative definition of intralesional therapy: "Intralesional therapy implies injecting a drug directly into the skin lesion for faster action & better results. The concept of intralesional injection is to let the drug pass the barrier zone and establish a sub-epidermal depot thus allowing a higher concentration of the drug to act at the site of the disease."

Second, as treatment options for systemic disease. This is where their inclusion in or association with the "category" of cancer immunotherapy comes into play. The HemOnc Today conference highlighted the ongoing discussions practitioners are having in regards to the suitable role for intralesional therapy in treating local and systemic disease. Their harnessing of the immune system to treat systemic disease allows these drugs to play a more prominent role in the physician's tool kit.

Negative opinions of the prospects of late-stage trials of two of the more well-known intralesional therapies (OncoVEX and Allovectin) relate to the likely (or in their cases, unlikely) success of their respective trials. But such opinions derive from expectations of where such drugs fit into a physician's treatment decision tree, which derives from expectations of the size of the addressable market for which these drugs can be prescribed, which derives from expectations of the valuation the drugs and, thus, the companies can gin up in the public markets (or from prospective acquirers if the companies were private). A labeling of only being able to treat local disease limits the size and scope of the financial opportunity for these drugs and the companies that produce them.

As a result, it is possible that negative opinions of OncoVEX and Allovectin-7 might be weighing on Provectus' share price, but I doubt the weight is meaningful. Rather, the relative nascency of cancer immunotherapy creates skepticism that likely weighs much more. Further, PV-10 and Provectus does not yet have the market awareness that a Vical or, let alone, an Amgen possesses. It is one thing to have the light of investor awareness shone on you, in response to which you wilt or flourish. Is another simply to have the light shone on you. More awareness on PV-10 and the company will begin to take care of the share price.

The primary endpoint of Provectus' pivotal MM Phase 3 trial likely should be a modified progression free survival (PFS), which is a time-to-event endpoint, like overall survival (OS). PFS also is referred to as disease free survival (DFS).

Thus, the "modified" descriptor means Provectus only is concerned with the spread of the disease beyond the local area. Recall that the label management seeks for PV-10 is treatment of local disease. If the patient had systemic or visceral disease by definition, then the endpoint would be PFS or, more likely, OS. Since the patients management proposes to treat in the company's Phase 3 have local disease, Provectus only is measuring the spread (or mostly lack of spread in PV-10's case) of that disease. Therefore, the disease of this patient population is by definition not systemic and PFS is modified in the sense that it only applies to the local disease.

Question: What a potential dermatology deal might look like?

A question from Mammon's list.

The current expectation is a headline deal size of $500 million for dermatology (to include all indications, clinically, pre-clinically or bench tested, such as atopic dermatitis, psoriasis, acne, etc.). The structure of the deal likely would be very traditional:

• An upfront payment,

• One or more clinical milestone payments (e.g., completed pivotal phase 3 trials),

• One or more regulatory milestone payments (e.g., FDA approval for indications), and

• Royalty payments (e.g., a percentage of sales).

$500 million represents a present value assessment of the deal itself, including upfront payments and future milestone and royalty payments, and is based on several assumptions that of course could change and raise or lower this headline expectation:

• An upfront payment, however structured (e.g., cash and/or stock), might range from $10-$50 million. The range is influenced by direct and indirect factors. A higher upfront payment might accrue because of the increasing value of and potential in PH-10 and/or management's desire to take more money upfront rather than in contingent payments. I do not know management's expectations in this regard, but I would hazard a guess that above a certain cash level, like $10-20 million, they would rather get more cash in the future because of their belief in the efficacy and safety of PH-10 (i.e., more royalties from more sales);

• Clinical and regulatory milestone payments measured in tens of millions of dollars. I cannot really hazard a guess as to a range here, but these payments likely would not be insignificant; and,

• A mid- to high-single digit royalty percent over a 10- to 15-year term. This is facet of the deal is where the clinical and business value proposition of PH-10 is put to the test with the hope of the product earning initial market share and then grabbing more -- much more -- based on robust efficacy, dramatic safety and flexible (and perhaps) predatory [to competitors] pricing. Depending on how high interest is, royalty payments might be low double digits and the term might extend out to 20 years.

This material previously was posted here.

RetailInvestorConferences.com

Pete is scheduled to do a live webcast at 1 pm ET on May 3 (tomorrow) at RetailInvestorConferences.com. According to the PR, "this will be a live, interactive online event where investors are invited to ask the company questions in real-time - both in the presentation hall as well as in the company's 'virtual trade booth.'"

I am always interested in the substance of management presentations.

I am much more interested in the audience uptake during, immediately after and much later after the presentation (etc. website hits, key word searches and trends, stock purchases, etc.).

While I use my writing on this blog to refine my investment thesis, I also an aware of the utility of monitoring blog visitorship (in the U.S., below) as a potential proxy for or indicator of individual and institutional investor awareness of the company.

There are lots of factors involved in driving visits and other pertinent blog statistics; however, at first glance, the information does provide some knowledge.

HemOnc Today - Melanoma and Cutaneous Malignancies Conference (update)

Dr. Robert Andtbacka's presentation at HemOnc Today, entitled Intralesional Therapy for Systemic Disease: Where Will It Fit In?, provided an opportunity to distinguish PV-10 from its intralesional therapy competitors. Dr. Andtbacka, who has no affiliation or association with Provectus, appeared to provide an independent assessment of intralesional therapies and their role in treatment Stage IV melanoma patients.

The key comparison table is this one, which I previously had summarized here:

Dr. Andtbacka, later in his presentation, communicated there was no preferred choice of intralesional therapy at this time:

Many at the conference as well as others in the medical community, to whom I have spoken, recognize the recent resurgence in intralesional therapy has created real potential (potential now, tools later) for doctors to help treat their melanoma patients more successfully and sustainably.

Dr. Sanjiv Agarwala authored a recently published article, entitled PV-10, aka Rose Bengal: Intralesional Therapy For Metastatic Melanoma, in The Melanoma Letter (Spring 2012 Vol. 30, No. 1). His article discussions intralesional therapies like BCG, OncoVEX, Allovectin and PV-10.

A consensus appears to be developing about the opportunity to use intralesional therapy for systemic disease. Of course, more information is desired and required about these treatment options.

Provectus hopes to commence its pivotal MM Phase 3 trial in the second-half of 2012. Designed for a 30-month duration to complete collection of OS information, it's expected the comparator arm will collapse in a couple of months and those patients transferred to the PV-10 arm for more successful treatment.

Amgen changed their guidance, during their Q1 2012 earnings call, regarding disseminating OncoVEX's interim pivotal MM Phase 3 trial results and analysis from late-2012 to some time in 2013 after the trial was completed. Amgen terminated OncoVEX's other Phase 3 trial for patients with head and neck cancers. In addition to the speculation of poor trial results, industry people also have questioned the comparator in the OncoVEX trial. The primary end point for trial is durable complete response, but Amgen increased enrollment in hopes of observing an overall survival signal.

Vical faces similarly bleak speculation about the outcome of Allovectin's pivotal MM Phase 3 trial because of its choice of durable response rate (tumor response at 24 weeks) for the trial's primary endpoint. You can read an example of a negative viewpoint on Vical and Allovectin here.