Tender Offer: Reader E-mails

Updated below.

Reference: Current News page item Cheers (January 1, 2016)

Thank you for your e-mails.

In the news item I wrote: "In other words, if you own a non-tradable warrant, you may exercise it for $0.75, and receive a tradable warrant." Implicit in my thinking was that the exercise of the non-tradable warrant would result in the receipt of the underlying common stock. So, the tender offer, if accepted, would appear to me to be: exercise your non-tradable warrant, irrespective of its original exercise price, for the new exercise price of $0.75 and receive (i) a share of common stock resulting from the exercise and (ii) a tradable warrant (with a $0.85 exercise price and an expiration of June 19, 2020).

The tender offer is a fundraising exercise, so to speak. Provectus requires funding at some point. The amount and timing relate to the reality and probability of operational (e.g., clinical trials, regulatory affairs, etc.) and non-operational (e.g., G&A, lawsuits, etc.) items. Regional license transactions and/or co-development deals may or may not materialize and their timings are uncertain (although some are expected and others are hoped for). This edition of Provectus fundraising is one that approaches existing shareholders who own non-tradable warrants with what is tantamount to a version of the June 2015 Maxim Group-led placement/public offering: a $0.75 unit price that entitles the "purchaser" to one share of common stock and one ~4.5-year tradable warrant (i.e., 100% warrant coverage). Management is electing to seek funds now from existing shareholders, rather than later from whomever.

At values around the current levels of stock (PVCT) and tradable warrant (PVCT.WS) prices, and assuming a positive share price outcome (i.e., a higher share price later), the option/door/scenario of (i) holding one's non-tradable warrant (that is, not tendering), (ii) buying one share of common stock and (iii) buying one tradable warrant presents a better return than either doing nothing (not tendering) or tendering for lower original exercise prices.

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At higher original exercise prices the math is different. Tendering is better than constructing the offering (the "unit") in the open market.

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With the bulk (91% as at 12/31/14) of the non-tradable warrants being at those with exercise prices of $1 (77%) and $1.25 (14%), the math would suggest a couple of million warrants should be tendered for a few million dollars or less of gross proceeds. That amount wouldn't move the needle on Provectus' cash balance given its current and potentially future burn rate (here, the idea of "future" is to spend more to advance current and other solid tumor cancer indications).

The tender becomes potentially compelling to varying degrees to the lower exercise price non-tradable warrant holders should the share price rise between now and February 15th.

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Provectus' CTO Dr. Eric Wachter, PhD and CFO/COO Peter Culpepper's intentions to tender a total of ~933K warrants for ~$700K, on top of their recent stock options exercises of a total of ~265K for $260K (cumulatively, ~1.2 million for $960K), make 1Q16 possibly very interesting.

Updated (1/1/16): As a non-tradable warrant holder, which I am not, I would not solely or even mostly approach a tender decision that included determining whether I could and would replicate the unit more cheaply in the open market, as one blog reader who e-mailed me has (and why I presented some analysis above in regards to his line of thinking), or necessarily involve Black-Scholes option pricing, etc. Maybe another way of writing this is the pursuit of accuracy over precision, in this case and in context.

How do I arrive at a decision of whether to tender my non-tradable warrant or just hold onto it? My decision-making process might include the following.

A. First, what do I believe are the prospects of Rose Bengal/PV-10, Provectus and, thus, the share price? Are they positive or negative from here on out? Binary outcomes help keep things simple, and past performance (or lack thereof) matters. There should be a common thread to how most if not all of us undertake an assessment of prospects, with some placing more or less weight on, among other things, say, management's exercising and amount of exercising of stock options and/or participation in the tender offer. There are, of course, other as or more important factors. Is the share price going to much higher (like $5) from here ($0.39 as at 12/31/15) or go to zero, in the extreme? If you felt the latter for whatever basket of lack of business fundamentals, there'd be no reason to tender.

B. Second, what's my non-tradable warrant's original exercise price and time to expiration? I believe the parameter differences influence the decision. On one side there are the $1.00 warrants (~49 million as at 12/31/14) with a current weighted average remaining contractual life of roughly 2.3 years. On the other there are the $3.00 warrants (2 million) with 3.33 years remaining.

• Time: Maybe there's too much difference between approximately an extra year of expiration. The $1.00 warrants extend from 2.3 years to 4.53 years (2.23); the $3.00 warrants extend 1.20 (4.53 - 3.33).

• Exercise price: The $1.00 warrants reduce by $0.15 ($1.00 - $0.85); the $3.00 reduce $2.15.

If I answered from A. that the business fundamentals from here on out were likely to be attractive, is $0.75 worth a $0.15 exercise price reduction and an extra two years or so in expiration? Is it worth it for $2.15 and about a year? My sense (subject to Black-Scholes option pricing) is that $0.75 is more than the worth of either set of increments; that is, you wouldn't tender -- although you'd be more inclined to tender if you held the $3.00 warrant than the $1.00 one because exercise price reduction probably trumps longer expiration.

C. Third, will there be additional information that would encourage or discourage my decision by or before the tender date of February 15th? Given what we know, today, and I agree with a reader/e-mailer, there's probably no good reason to tender. Certain officers and directors' intention to tender, however, can be construed as a positive signal. Both the do nothing/don't tender option and the tender one currently would be out-of-the-money (OTM) -- OTM $1.00 and $3.00 warrants, and underwater $0.75 stock and OTM $0.85 warrant.

Unless a non-tradable warrant holder saw the tender construct turn from OTM to in-the-money by or before February 15th, which should only happen on the basis of additional information, the decision to tender only would be based on an assessment of the business fundamentals from here on out. Wouldn't there have to be news in the next 45 days or so to change this assessment from what it is today? No additional information would mean assessment_January1st = assessment_February15th. Additional information, depending on quantity and quality, might allow for assessment_January1st > assessment_February15th, which should translate into a higher share price, which would make the math of tendering more attractive than the math of doing nothing.

Reproducibility, the Hallmark of Western Science

[A post written and published January 18, 2016 but backdated to December 28, 2015, the date when I sent the draft article below to Michael Porter, President of Porter, LeVay & Rose (PLR), Provectus' investor relations firm.

Backdrop: (1/19/16) -- As background, Michael called me on December 19th and asked if I could write another article about Provectus for insertion again into MicroCap Review, this time the Winter/Spring 2016 edition. He offered no explicit or implicit compensation to me at the time (nor since) for the proposed work. I agreed to write a draft article, turning it over to him in on the 28th, after which I assumed his Stock News Now/MicroCap Review and/or PLR staff might edit the material or shorten the article prior to printing in or submission to the magazine, respectively.

My draft article, reproduced in its entirely below, appears to have mostly formed the article Reproducibility, the Hallmark of Western Science that appeared on pages 91-94 of the Winter/Spring 2016 edition of MicroCap Review, a magazine published by SNN (although I believe SNN shortened my original article). The last sentence of the magazine articles notes the disclosure: "The company [Provectus] paid consideration to SSN or its affiliates for this article." I believe the consideration was payment to place the articles in the magazine editions. I neither sought nor received compensation (or its implicit or explicit promise) from Provectus, PLR or SNN/its affiliates for my writing.]

Reproducibility, the Hallmark of Western Science

When Provectus Biopharmaceuticals Chairman, CEO and co-founder Dr. Craig Dees, PhD talks about his company’s investigational cancer drug PV-10 (made from century’s old Rose Bengal), he points to a history of reproducible therapeutic features, and reproduced preclinical and clinical results by multiple clinicians and researchers in multiple cancer indications. Craig refers to reproducibility as the hallmark of Western science. If a scientist cannot repeat an experiment’s outcome, and if another scientist cannot replicate that result, the veracity of the original work and claims made from it may be questionable.

Wikipedia’s reproducibility entry provides historical background:

The first to stress the importance of reproducibility in science was the Irish chemist Robert Boyle, in England in the 17th century. Boyle's air pump was designed to generate and study vacuum, which at the time was a very controversial concept. Indeed, distinguished philosophers such as René Descartes and Thomas Hobbes denied the very possibility of vacuum existence. Historians of science Steven Shapin and Simon Schaffer, in their 1985 book Leviathan and the Air-Pump, describe the debate between Boyle and Hobbes, ostensibly over the nature of vacuum, as fundamentally an argument about how useful knowledge should be gained. Boyle, a pioneer of the experimental method, maintained that the foundations of knowledge should be constituted by experimentally produced facts, which can be made believable to a scientific community by their reproducibility. By repeating the same experiment over and over again, Boyle argued, the certainty of fact will emerge.

In drug research and development there has been longtime and widespread lack of reproducibility. A 2011 Wall Street Journal article highlighted this:

This is one of medicine's dirty secrets: Most results, including those that appear in top-flight peer-reviewed journals, can't be reproduced. [1]

A 2012 Reuters story [2] expanded on the two studies mentioned in the Journal article:

During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 "landmark" publications – papers in top journals, from reputable labs – for his team to reproduce. Begley sought to double-check the findings before trying to build on them for drug development. Result: 47 of the 53 could not be replicated” [3]…Scientists at Bayer did not have much more success. In a 2011 paper titled, "Believe it or not," they analyzed in-house projects that built on "exciting published data" from basic science studies. "Often, key data could not be reproduced," wrote Khusru Asadullah, vice president and head of target discovery at Bayer HealthCare in Berlin, and colleagues. Of 47 cancer projects at Bayer during 2011, less than one-quarter could reproduce previously reported findings, despite the efforts of three or four scientists working full time for up to a year. Bayer dropped the projects. [4]

Some in the pharmaceutical industry may not care about irreproducible work. Drs. Arturo Casadevall, MD, PhD and Ferric Fang, MD observed in their 2010 paper:

There may be no more important issue for authors and reviewers than the question of reproducibility, a bedrock principle in the conduct and validation of experimental science…Given the requirement for reproducibility in experimental science, we face two apparent contradictions. First, published science is expected to be reproducible, yet most scientists are not interested in replicating published experiments or reading about them…This leads to a second paradox that published science is assumed to be reproducible, yet only rarely is the reproducibility of such work tested or known. In fact, the emphasis on reproducing experimental results becomes important only when work becomes controversial or called into doubt…The assumption that science must be reproducible is implicit yet seldom tested, and in many systems the true reproducibility of experimental data is unknown or has not been rigorously investigated in a systematic fashion. Hence, the solidity of this bedrock assumption of experimental science lies largely in the realm of belief and trust in the integrity of the authors. [5]

In Rose Bengal, PV-10’s active pharmaceutical ingredient [6], Provectus’ co-founders discovered a small molecule lying around in plain sight of Big Pharma for more than 130 years – from Rose Bengal’s creation by Gnehm in the 1880s [7], to American doctor G.D. Delprat’s anecodatal patient-reported outcomes in the 1920s [8], to Japanese researchers Ito et al.’s preclinical observations of dose-dependent increases in survival in the 1980s [9], to the co-founders’ formal discovery of Rose Bengal’s tumor inhibiting properties in the 1990s [10].

Explaining how PV-10 worked was a secondary consideration for Craig who fervently believed Provectus had a ready-made drug product from the outset that worked very well. His fact-based belief, however, belied the arduous, not so straightforward, lengthy and opaque FDA drug approval process all drug companies must traverse, irrespective of Craig’s further belief that approval did not require explanation of mechanism. More daunting was the reality of attempting to bring to market the chemical-oriented cancer therapy of this forgotten compound that had not only an unappreciated treatment delivery route (intratumoral or intralesional), but also two unrecognized mechanisms of action (one local and one systemic).

Craig and his fellow Provectus co-founders, President Dr. Timothy Scott, PhD and CTO Dr. Eric Wachter, PhD, were outsiders to the pharmaceutical industry at the outset of this journey. Hailing from Tennessee’s Oak Ridge National Laboratory, a U.S. Department of Energy multi-program science and technology facility with a rich history of discovery and innovation, they had been technology inventors and R&D 100 Award winners [11]. But if, as Casadevall and Fang wrote, the value of science is inextricably linked to the integrity of the scientists and researchers experimenting on it, and if reproducibility, according to the Journal, Reuters and others [12], is a fundamental challenge for the pharmaceutical industry, how could Provectus’ outsiders convince the FDA, the medical community, Big Pharma, healthcare-focused Wall Street, biotechnology investors, and the media of the veracity of their claims about PV-10 and its potential groundbreaking therapeutic benefits for treating solid tumor cancer?

One way was to generate more data that further argued for PV-10’s clinical value proposition. Another was to conclusively demonstrate the reproducibility of Rose Bengal therapeutic benefit.

Provectus presented preliminary full study data of its Phase 2 trial of PV-10 in patients with advanced melanoma at the Melanoma 2010 Congress.[13] Final data were presented at the European Society for Medical Oncology 2012 Congress.[14] A 2015 peer-reviewed article about the data was published in the Annals of Surgical Oncology:

For target lesions, the best overall response rate was 51%, and the complete response rate was 26%. Median time to response was 1.9 months, and median duration of response was 4.0 months, with 8% of patients having no evidence of disease after 52 weeks. Response was dependent on untreated disease burden, with complete response achieved in 50% of patients receiving PV-10 to all of their disease. Response of target lesions correlated with bystander lesion regression and the occurrence of locoregional blistering. Adverse events were predominantly mild to moderate and locoregional to the treatment site, with no treatment-associated grade 4 or 5 adverse events. [15]

Eric, who has led all aspects of Provectus’ clinical development program, met with the FDA in 2010 for the first of three end-of-Phase 2 meetings related to the company’s melanoma work (the others were held in 2011). He was told a consensus Phase 3 trial randomized against a control was necessary. [16] Eric continued to collaborate with the FDA on PV-10’s initial pathway to approval, ultimately reaching a 2013 agreement with the Agency on the indication of locally advanced cutaneous melanoma (Stage III disease). [17] Despite denying Provectus’ request in 2014 for breakthrough therapy designation for this indication [18], the FDA subsequently allowed the company’s pivotal Phase 3 trial that began treating patients in 2015. [19] The hypothesis of this trial is that the spread of melanoma from Stage III to Stage IV may be forestalled or prevented if all disease is treated with PV-10.

Provectus presented preliminary initial study data of the company’s Phase 1 trial of PV-10 in patients with hepatocellular carcinoma and cancer metastatic to the liver at the 2015 European Society for Medical Oncology World Congress on Gastrointestinal Cancer [20]:

For the current study two cohorts of patients, one with non-resectable HCC (n=6 patients overall, 7 tumors injected) and the second with other forms of cancer metastatic to the liver (n=7, 3 colorectal tumors, 2 non-small cell lung, 2 melanoma and 1 ovarian) underwent a single percutaneous injection of PV-10 guided by CT to one target lesion in the liver at least 1 cm in diameter…For the first analysis of five patients (six tumors) who had longer-term assessment, two patients showed no evidence of disease at more than 40 months follow-up according to RECIST and EASL criteria… Furthermore, at up to 54 months follow-up 10 out of the initial 13 patients were alive, with one death due to cardiac comorbidity, one to serious adverse events and one to HCC progression. [21]

Returning to melanoma, in 2015 Provectus began a Phase 1b trial combining PV-10 and Merck & Co.’s approved immune checkpoint inhibitor Keytruda (pembrolizumab) in patients with advanced melanoma (Stage IV disease). The approach of this combination study, where not all tumor burden is accessible to PV-10 injection, would be for the latter to enhance the systemic immune response generated by the former. PV-10 elicits a functional anti-tumor T cell response in patients, while Keytruda increases the anti-tumor function of their T cells.

Starting in 2010 Eric also commenced a parallel effort to elucidate PV-10’s dual mechanisms of action. His goals were to fully validate the so-called bystander effect, whereby non-injected, distant tumors shrank or were completely destroyed as a result of injecting tumors elsewhere, and to assess immune markers in patients’ peripheral blood and tumor tissue. [22]

During an ASCO 2010 investor presentation, Eric presented about the bystander effect, which is a tumor-specific response brought on by PV-10 treatment:

Response in untreated proximal and visceral lesions consistent with immunologic process. PV-10 chemoablation yields immediate reduction in tumor burden. Ablation appears to recruit immune cells to exposed tumor antigens. [23]

He sought to have a translational cancer research organization undertake arm’s length reproduction of Craig’s original murine model work, and what was being clinically observed in human trials, to independently establish PV-10’s bona fides. This work commenced in 2011 when Provectus agreed to have Tampa, Florida’s H. Lee Moffitt Cancer Center & Research Institute carry out this necessary initial research (after also considering MD Anderson Cancer Center in Houston, Texas). In 2014 Eric added the University of Illinois at Chicago to his list of stringers.

In the early-2000s, Craig Tim and Eric, while at Photogen (the precursor company to Provectus) and when they believed Rose Bengal required photoactivation to elicit its therapeutic benefit, published that the physical chemistry of the small molecule generated both local and systemic responses in multiple cancer indications [24] [25] [26]. A short time thereafter Provectus’ co-founders had their Eureka moment upon realizing Rose Bengal did not require light activation.

PV-10’s truly multi-faceted clinical value proposition comprises safety and sparing of tissue; local and systemic effectiveness, the investigational drug’s two-prong approach to fighting cancer; multi-cancer indication viability; synergy in combination with other cancer therapies; supportiveness of patient compliance; ease of use, re-use, shipment, storage and handling; and globally affordability. The key aspect of this proposition is the drug compound’s local effect of tumor ablation upon injection (the first of its dual mechanisms of action) that produces the systemic effect of a tumor-specific immune response and eventually anti-tumor immunity (the second mechanism).

At the 2012 annual meeting of the Society for Immunotherapy of Cancer, Craig, Tim, Eric and others presented:

PV-10 (10% Rose Bengal in 0.9% saline) has been used to chemoablate a wide variety of tumors in human clinical trials and in animal patients when delivered by intralesional (IL) injection…Tumor models examined include: hepatocellular carcinoma (HCC), melanoma, pancreatic and colon adenocarcinomas. PV-10 was found to chemoablate all tumors tested with no apparent side effects…Untreated tumors in the opposite flank of mice completely regressed or were reduced in size in immunocompetent mice (i.e., 8/8 untreated HCC tumors)... [27]

At the 2013 annual meeting of the American Association for Cancer Research, Moffitt Cancer Center presented:

PV-10 is a 10% solution of Rose Bengal that is currently being examined as a novel cancer therapeutic. In melanoma patients, intralesional injection (IL) of PV-10 has led to regression of injected lesions as well as distant metastases… In BALB/c mice bearing MT-901 breast cancer, injection of PV-10 led to regression of injected and untreated contralateral subcutaneous lesions (p<0.05 compared to IL-PBS-treated mice)…MT901-bearing mice treated with IL-PV-10 demonstrated enhanced IFN-gamma production (992 ± 453 pg/ml) compared to splenocytes from PBS-treated mice (174 ± 105, p<0.05)…Treatment of the subcutaneous lesion with a single injection of IL-PV-10 led to regression of the injected lesion as well as distant B16 melanoma lung metastases. In B16-bearing mice, treatment with IL-PV-10 led to the induction of T cells that produced IFN-gamma in response to B16 tumors but not irrelevant tumor (p<0.05) and demonstrated specific lysis of B16 (p<0.01 compared to T cells isolated from PBS-treated mice). [28]

A member of the Moffitt PV-10 study team called iFN-gamma/γ the “quintessential antitumor cytokine”. [29] Cytokines are the messengers of the immune system; in cancer therapy cytokines are used to enhance immunity. [30]

At the 2015 annual meeting of the Society of Surgical Oncology, the University of Illinois at Chicago presented:

Early phase studies using intratumoral injection of PV-10 (10% Rose Bengal) have shown regression of in-transit melanoma deposits and non-treated bystander lesions. The effects of PV-10 on colorectal cancer (CRC) cells and established tumors is unknown…To determine an underlying immune mechanism, a murine CT26 syngeneic CRC model was utilized…Treatment of subcutaneous tumors with a single injection of intralesional PV-10 led to near complete responses in all animals within days of exposure and significant regression of the injected lesions compared to controls (n=6 per group, p=0.027). PV-10 treatment was associated with occasional bystander responses in contralateral untreated tumors and trended towards a decreased rate of growth in these lesions. Splenocytes isolated from tumor bearing mice treated with PV-10 displayed enhanced tumor-specific IFN-γ production compared to splenocytes from PBS-treated mice (p = 0.025). [31]

Moffitt Cancer Center and the University of Illinois independently, and independently from each other, reproduced Craig’s original work, which first demonstrated PV-10’s two-prong approach to successfully fighting cancer in multiple indications: Tumor ablation, the local effect of destroying injected tumors; a tumor-specific immune response, the systemic effect of destroying non-injected tumors; tumor-specific IFN-gamma/γ production; and multi-indication viability in at least melanoma, breast cancer and colorectal cancer.

Other affiliated and independent researchers around the world have noted the cancer-fighting benefits of Rose Bengal. Their observations and conclusions have been consistent with those of Craig (US), Moffitt Cancer Center (US) and the University of Illinois (US) as well as Delprat (US) and Ito (Japan): Koevary (2012, ovarian cancer cells, US) [32], Nascimento et al. (2013, melanoma cells, Australia) [33], Tan et al. (2013, clinical refractory scalp sarcoma, Australia) [34], Zamani et al. (2014, gastric cancer cells, Iran) [35], and Panzarini et al. (2014, cervical cancer cells, Italy) [36].

Consider Wikipedia’s reproducibility entry’s opening:

Reproducibility is the ability of an entire experiment or study to be duplicated, either by the same researcher or by someone else working independently. Reproducing an experiment is called replicating it. Reproducibility is one of the main principles of the scientific method.

Provectus management has some way to go in their stewardship of the company to converge its market capitalization with its intrinsic value. There should be no disagreement, however, about the veracity of their claims about Rose Bengal/PV-10 and its therapeutic benefits for the treatment of solid tumor cancer. After all, Craig, Tim and Eric’s original work achieved [global] reproducibility, the hallmark of Western science.

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[1] Scientists' Elusive Goal: Reproducing Study Results, Gautam Naik, The Wall Street Journal, December 2, 2011
[2] In cancer science, many "discoveries" don't hold up, Sharon Begley, Reuters, March 28, 2012
[3] Drug development: Raise standards for preclinical cancer research, Begley et al., Nature 483, 531–533 (29 March 2012)
[4] Believe it or not: how much can we rely on published data on potential drug targets? Prinz et al., Nature Reviews Drug Discovery 10, 712 (September 2011)
[5] Reproducible Science, Casadevall et al., Infect Immun. 2010 Dec; 78(12): 4972–4975
[6] PV-10 is the drug product. Rose Bengal is the drug substance.
[7] Gnehm R.Ueber Tetrachlorphtalsäure. Justus Liebigs Annalen der Chemie, 1887; 238: 318-338
[8] The Rose Bengal test for liver function, Delprat, G.D. et al., The Journal of Laboratory and Clinical Medicine, Volume 16, Issue 9, 923-925
[9] Induction of thyroid tumors in (C57BL/6N x C3H/N) F1 mice by oral administration of 9-3',4',5',6'-tetrachloro-o-carboxy phenyl-6-hydroxy-2,4,5,7-tetraiodo-3-isoxanthone sodium (Food Red 105, rose bengal B), Ito et al., J Natl Cancer Inst. 1986 Jul;77(1):277-81
[10] American Society of Clinical Oncology, 2010 Annual Meeting and Rose Bengal: From a Wool Dye to a Cancer Therapy, Alexander, W., Pharmacy & Therapeutics. 2010 Aug; 35(8): 469-474, 478
[11] Oak Ridge National Laboratory Awards and Appointments for 1996, see http://web.ornl.gov/info/ornlreview/rev30-12/text/awards.htm
[12] E.g., Should we believe published scientific research? Luke Timmerman and Meg Tirrell, Stat and Signal Podcast, December 3, 2015
[13] Provectus Reports Full Phase 2 Study Data on PV-10 for Metastatic Melanoma, November 5, 2010
[14] Immuno-chemoablation of metastatic melanoma with intralesional rose bengal, European Society for Medical Oncology 2012 Congress, October 2012
[15] Phase 2 Study of Intralesional PV-10 in Refractory Metastatic Melanoma, Thompson et al., Annals of Surgical Oncology, July 2015, Volume 22, Issue 7, pp 2135-2142
[16] Provectus Reports on Successful End-of-Phase 2 Meeting with U.S. FDA and Gains Clarity for Licensure of PV-10 for Metastatic Melanoma, April 29, 2010
[17] Provectus's PV-10 Path to Initial Approval in U.S. Now Clear Per FDA Meeting Minutes, January 24, 2014
[18] Provectus Biopharmaceuticals Inc. Reaffirms Its Commitment to Bringing PV-10 to Market Notwithstanding FDA Decision on Breakthrough Therapy Designation, May 23, 2014
[19] Provectus Biopharmaceuticals Opens Patient Enrollment; Begins Phase 3 International FDA Comparative Clinical Trial of PV-10 for Melanoma, April 15, 2015
[20] Provectus Biopharmaceuticals' Data on PV-10 for Chemoablation of Liver Cancers Presented at ESMO 17th World Congress on Gastrointestinal Cancer, July 2, 2015
[21] ESMO GI: PV-10 shows potential in hepatocellular carcinoma and metastatic liver disease, Janet Fricker, ecancernews, July 7, 2015
[22] ASCO 2010 Investor Briefing Presentation, Clinical Program Overview, Provectus, Dr. Eric Wachter, PhD, slide 39 of 55
[23] Ibid, slide 42 of 55
[24] Immune-mediated regression of tumors and production of anti-tumor immunity induced by chemoablative or photodynamic therapy, Dees et al., Counsel of Research Workers in Animal Disease, Chicago, Illinois, 2001: abstract.
[25] Use of halogenated xanthenes to specifically target diseased tissue, Dees et al., 29th Annual Meeting of the American Society for Photobiology, Chicago, Illinois, 2001: abstract.
[26] Topical Rose Bengal: Pre-Clinical Evaluation of Pharmacokinetics and Safety, Wachter et al. Lasers in Surgery and Medicine. 32:101–110 (2003)
[27] Generation of an Antitumor Response and Immunity Using a Small Molecule Drug (PV-10), Dees et al., J Immunother. Volume 35, Number 9, November–December 2012
[28] Intralesional injection with PV-10 induces a systemic anti-tumor immune response in murine models of breast cancer and melanoma, Pilon-Thomas et al., Cancer Res. April 15, 2013 73; 1248.
[29] Intralesional therapy for metastatic melanoma, Cheryl Guttman Krader, DermatologyTimes, May 14, 2015
[30] See Cytokines and Cancer Therapy by Dr. Jeffrey Weber, MD, PhD
[31] Intralesional Injection of Rose Bengal Induces an Anti-tumor Immune Response and Potent Tumor Regressions in a Murine Model of Colon Cancer, 2015 Society of Surgical Oncology Annual Cancer Symposium, March 2015: abstract
[32] Selective toxicity of rose bengal to ovarian cancer cells in vitro. Koevary, Int J Physiol Pathophysiol Pharmacol. 2012;4:99–107
[33] Rose Bengal - Phototoxicity versus intrinsic cytotoxicity [abstract]. Nascimento et al. Journal der Deutschen Dermatologischen Gesellschaft. 2013;11
[34] Novel use of Rose Bengal (PV-10) in two cases of refractory scalp sarcoma. Tan et al., ANZ J Surg. 2013;83:93
[35] Rose Bengal suppresses gastric cancer cell proliferation via apoptosis and inhibits nitric oxide formation in macrophages. Zamani et al., J Immunotoxicol. 2014;11:367–375
[36] Rose Bengal Acetate PhotoDynamic Therapy (RBAc-PDT) Induces Exposure and Release of Damage-Associated Molecular Patterns (DAMPs) in Human HeLa Cells. Panzarini et al., (2014) PLoS ONE 9(8): e105778

Special Proxy Vote

A blog post also known as Special Meeting/Proxy Vote, part 5 (Sunday version).

Image source

Provectus is seeking shareholder approval of a proposed increase in the number of the company's authorized common shares from the current figure of 300 million to 400 million. The special meeting of stockholders by which time voting would be completed takes place on October 1st. According to the electronic ballots we received, shareholders appear to have until 11:59 pm EDT on September 30th to digitally cast their votes.

My Ballot

Click to enlarge.

I will vote our shares for the proposal because:

• First, it would be prudent for the company to have enough authorized shares available for issuance to potentially satisfy the company's accounting firm BDO (in regards to maintaining Provectus' going concern status) and the New York Stock Exchange (NYSE) (in regards to maintaining the company's listing status). In additiion, it is possible management could require some of these newly authorized shares to advance their business and corporate development efforts. Resources necessary to further advance the company's clinical development program goes without saying, and

• Second, it is possible-to-probable under certain assumptions that management does not need to raise money until after the interim analysis data readout of Provectus' pivotal melanoma Phase 3 trial. The readout is projected in early-3Q16. The trial's interim analysis is a key catalyst for the company and its share price.

The above decision was based on my analysis of/reflections on discussions with:

• Management in recent days and weeks,

• Two individuals from two different PVCT shareholder groups, who themselves are distinct and different. I believe them to be intelligent and pragmatic with extensive, substantive and relevant experience. They have been involved with Provectus for a long time, have maintained intelligent long-term perspectives for the company and its drugs' prospects (notwithstanding certain management limitations), and also have had discussions with management in recent days and weeks. As an aside, their direct share ownership and influence over additional ownership in sum are greater than what we own, and

• A few shareholders with smaller share ownership who I believe to be intelligent, pragmatic and experienced, have maintained intelligent long-term perspectives too, may or may not vote in favor of the authorized share proposal, and whose views over time I very much appreciate and value (and sincerely thank them for continuing to share and debate such opinion).

Tactical and Strategic Share Availability. I previously wrote the reasons management has given for their proposal are possibilities that may turnout to be potentialities (or even realities). Simply put, I believe, Provectus requires more authorized shares (whether they issue them or not, whether they issue some, most or all of them) for the company to remain viable and relevant to BDO and the NYSE, and provides management more flexibility and less headache & heartburn as they seek to optimize Provectus' extrinsic valuation as peak investibility approaches.

Becoming unviable or irrelevant under this scenario, however, does not mean the end of the world for shareholders or the end of Provectus, or the end of the potential for a good investment return. See Special Meeting/Proxy Vote, part 3 (September 4, 2015) on the blog's Current News page. As such, I question whether management really needs to increase the authorized share number by one hundred million more common shares at this time. What about 50 million or another smaller number? I also don't put much if any stock (pardon the pun) into management's possible anti-takeover effects rationale. Nevertheless, the proposal in front of shareholders is what has to and will be voted upon.

Flexibility for management to make Big Pharma pay, and pay dearly for Provectus' fully owned cancer asset, is reason enough [for me] to vote for the proposal. As the company approaches peak investability, I agree it's not worth distracting management or detracting from their potential business and corporate efforts (i.e., it's not worth voting no [in my view]).

Catalysts, Key and/or Otherwise. Flexibility, less headache & heartburn, few or fewer distractions, not detracting, etc. are all well and good, but they mean nothing if management cannot execute or executes weakly or poorly. Execution specifically means the timely generation of randomized [controlled trial ("RCT")] data, whether randomized data (or RCT data) means data generation in the context of a pivotal trial or data generation in the context of Phase 1b trials that would lead to pivotal ones.

In 2013/14 management established an initial pathway to approval for their advanced investigational
oncology drug PV-10, a new category of ablative immunotherapy and made from active pharmaceutical ingredient Rose Bengal: treatment of [unresectable or unresected] locally advanced cutaneous melanoma — that is, cancer in Stage III melanoma patients. Execution here requires a successful interim analysis data readout in early-3Q16, which requires a sufficient number of patients to be recruited, enrolled, treated, observed and clinically assessed in order to demonstrate statistical significance of progress-free survival curve spearation between the PV-10 treatment arm and the systemic chemotherapy control arm. That is not to say successful execution does not preclude an earlier positive outcome that could result via regular safety & efficacy looks into the data by the trial's indepedent data monitoring committee.

In 2015 I believe Provectus may have established at least two other pathways to approval for PV-10. As noted above, the first pathway is the use of PV-10 as a montherapy for the treatment of Stage III melanoma patients. The second pathway would be the use of PV-10 in combination with an immune checkpoint inhibitor for the treatment of Stage IV melanoma patients. The third pathway would be the use of PV-10 for both hepatocellular carcinoma (HCC) and cancers metastatic to the liver.

Thus, while the key catalyst for PV-10 as a monotherapy in melanoma is the pivotal Phase 3 trial's interim analysis (a secondary but uncertain one [as it relates to probability and timing] is an earlier positive outcome), other catalysts for PV-10 could be:

• The filing of a Phase 1b trial protocol of PV-10 and pembrolizumab for advanced melanoma (managament's prior guidance is by the end of 3Q15), and the commencement of this trial itself (the end of 4Q15), and

• The filing of the relevant Phase 1b trial protocols for HCC and/or liver mestastses, and (perhaps) the commencement of one or more of these trials.

All of these point to more and more generation of randomized data necessary to potentially move the company valuation higher, of course, and where it needs to be to garner management's end-game monetization expectiations.

A key question for melanoma combination therapy must be, given Keytruda's (pembrolizumab's) reimursability, will management run their own Phase 1b trial?

Management's regulatory and clinical development approach to liver cancers also is not fully clear. Such approach would underscore the veracity of a pathway (or pathways) to approval for PV-10 in liver cancers in the U.S. and internationally. In regards to Asia, how will they approach Asia? We presume they will file an investigational new drug (IND) application in China. But, what geographies could or would be included in an Asian/Pacific Phase 1b trial protocol for HCC?

The expanded Phase 1 trial in the U.S. comprises study work on patients related to HCC and liver mets, and sorafenib. This trial for all intents and purposes seems to me to be a pseudo-Phase 1b trial. Will the outcome(s) of the expanded trial lead to one or more pivotal trials?

Other items on this topic from the blog's Current News page:

• Special Meeting/Proxy Vote, part 4 (Saturday version) (September 12, 2015),
• Special Meeting/Proxy Vote, part 3 (September 4, 2015),
• Tuesday (September 1, 2015), item 3,
• Special Meeting/Proxy Vote, part 2 (August 28, 2015), and
• Pfizer's Just Not That Into You (August 21, 2015), item Mo' shares.

Other topics

H/t InvestorVillage poster Area51: Provectus' lawyers filed their Reply in Support of Motion to Dismiss on September 17th. See Tuesday (September 1, 2015), Item 2. Lawyers on the blog's Current News page. From Area51's post:

Introduction: Because Plaintiff has failed to state a colorable claim for securities fraud under the heightened pleading standards of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), this Court should dismiss this action with prejudice. Plaintiff’s Complaint fails for two reasons: (1) it does not identify a single actionable misrepresentation that Defendants allegedly made during the Class Period; and (2) it fails to allege facts to suggest that any purported misrepresentation was made with a “strong inference of scienter,” a requirement under the PSLRA. For these reasons, the Court should dismiss the Complaint with prejudice. 

As a preliminary matter, this is not a typical motion to dismiss governed by Rule 12(b)(6). In a standard motion to dismiss, a plaintiff must meet the “plausibility” standards espoused in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic v. Twombly, 550 U.S. 544 (2007). Class action claims for securities fraud under the PSLRA, in contrast, must satisfy a more stringent legal standard. Recognizing the potential for abusive, vexatious litigation from investors who lost money on risky investments, Congress passed the PSLRA to heighten the standards of securities fraud class actions. Under the PSLRA, a plaintiff must not only plead facts with particularly to show that the defendant made a false statement of material fact that caused injury. He must also plead specific facts that give rise to a strong inference that the defendant acted with a culpable state of mind with respect to each allegedly fraudulent or misleading act or omission. 15 U.S.C. § 78u-4(b)(2). Federal courts have explained this standard in the following manner: 

The plaintiff must allege and prove that the defendant acted with scienter, which means intent or severe recklessness. “Severe recklessness is limited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusable negligence, but an extreme departure from the standards of ordinary care, and that present a danger of misleading buyers or sellers which is either known to the defendant or is so obvious that the defendant must have been aware of it.” Oppenheim Pramerica Asset Mgmt., S.A.R.L. v. Encysive Pharmaceuticals, Inc., No. Civ.A.H.-06-3022, 2007 WL 2720074 (S.D. Tex. Sept. 18, 2007) (quoting Southland Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 366 (5th Cir. 2004)). 

When determining whether a plaintiff has alleged facts that give rise to the requisite “strong inference of scienter,” a court must find that, after considering all plausible, non-culpable explanations for a defendant’s conduct, a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference that could be drawn from the alleged facts. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007). The Complaint fails to meet this high pleading standard because Plaintiff cannot identify a single misrepresentation made by Provectus during the Class Period. Instead, Plaintiff attempts to construe Provectus’s truthful disclosures and optimistic opinions about PV-10 as fraudulent due to the fact that the FDA did not unequivocally endorse the Phase 2 data used to support PV-10’s BTD application. As discussed herein, and in the Motion to Dismiss, Plaintiff’s allegations do not rise to the level of actionable securities fraud. 

The FDA denied PV-10’s BTD application, which was unfortunate for Provectus and its shareholders. However, this does not entitle Plaintiff, an investor who knowingly invested in a development-stage micro-cap pharmaceutical company, to utilize the securities laws as a defacto insurance policy to recoup his investment losses. Plaintiff fails to state a claim for which relief can be granted under the heightened standards of the PSLRA. Accordingly, this Court should dismiss this entire action with prejudice.

Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part VII

The seventh in a series of blog posts and news items assessing the company's pivotal Phase 3 trial for unresectable locally advanced cutaneous melanoma (Stage III patients, and not metastatic [Stage IV] melanoma).

1. Win or lose: Will the trial succeed in meeting or fail to meet its primary and/or secondary endpoints?
2. Time-to-success or -failure: How long might it take for the trial to succeed or fail?
3. Good or bad process: Are there process steps and aspects thereof that may provide hints of potential future trial success or failure.

This blog news item, 3. Good or bad process: The consistency of melanoma patient outcomes from chemotherapy.

Blog post takeaways

• Stage 3 melanoma patients treated with systemic chemotherapy (dacarbazine or temozolomide) are not more likely to respond than Stage IV patients,

• A 30-year experience overview of dacarbazine in metastatic melanoma (Stage IV patients) noted an approximately reproducible 20% objective response rate (complete response + partial response), and

• Thus, Provectus' pivotal Phase 3 trial for locally advanced cutaneous melanoma (exclusively Stage III patients) should see high rates of disease progression (comparable to trials involving Stage IV melanoma patients) occur quickly in its control arm.

Prior analysis (categorized on the blog as Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Parts I-VI, among other posts and news items) primarily utilized Middleton et al. (2000) — Randomized phase III study of temozolomide versus dacarbazine in the treatment of patients with advanced metastatic malignant melanoma (J Clin Oncol. 2000 Jun;18(11):2351). This work yielded chemo disease progression response rates (PD) of 65-70% and median progression-free survival (PFS) of 1.5-1.9 months in primarily Stage IV patients.

Shah et al. (Correspondence author: Chapman) (2010) — Phase II trial of neoadjuvant temozolomide in resectable melanoma patients (Ann Oncol. 2010 Aug;21(8):1718-22) — noted the following in a study of mostly Stage III patients (14 of 19; 5 Stage IV patients):

• 63% disease progression (12 of 19 patients),

• Of the 12 patients that had progression of disease, progression was detected at week 4 or 8 (a single cycle or less) in 11 of them. One patient with a mixed response received 4 weeks of a second cycle (less than a second cycle) before progression of disease was evident, and

• Most patients (12 of 19) only received a single cycle or less of chemo, where a cycle lasted 8 weeks. Six patients received 2 cycles. One patient, who had a complete response (CR), received 3 cycles.

The Shah et al. (inc. Chapman) study outcome is consistent with outcomes in earlier studies despite the earlier stage of disease and the aggressive treatment regimen.

In another study, Rietschel et al. (Correspondence author: Chapman) (2008) — Phase II Study of Extended-Dose Temozolomide in Patients With Melanoma (J Clin Oncol. 2008 May 10;26(14):2299-304) — noted the following in a study of both Stage III and IV patients (25 Stage III/IV M1a/IV M1b patients in one cohort, and 25 Stage IV M1c patients in a second):

• Objective response rates (CR + PR) in both cohorts were 12.5% (no CRs).

In Serrone et al. (2010) — Dacarbazine-based chemotherapy for metastatic melanoma: thirty-year experience overview (J Exp Clin Cancer Res. 2000 Mar;19(1):21-34) — the authors noted:

• 13 trials involving single agent dacarbazine for advanced melanoma,

• Objective response rates varying from 12-25%, and

• Observing, overall, an approximately reproducible 20% objective response rate with median response duration of 5 to 6 months [f/n 1] and complete response rates of 5%.

[f/n 1] Response duration refers to the durability of objective responses, CR and PR, and is not the same as PFS.

Previous entries in the series:

1. 3. Good or bad process: Patient enrollment. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part I (July 13, 2015) on the blog's Current News page,
2. 3. Good or bad process: Designing an interim analysis for efficacy into Provectus' pivotal melanoma Phase 3 trial. See July 16, 2015 blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part II,
3. 3. Good or bad process: Patient crossover. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part III (July 20, 2015) on the blog's Current News page,
4. 2. Time-to-success or -failure: Triggering the interim analysis. See July 23, 2015 blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part IV,
5. 3. Good or bad process: Patient-reported outcomes. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part V (July 24, 2015) on the blog's Current News page, and
6. 1. Win or lose: Predicting outcomes, (ii) 2. Time-to-success or -failure: An unusual response in one of the randomized controlled trial arms, and (iii) 3. Good or bad process: Multiple triggers. See August 4, 2015 blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part VI.

Clinical & Business Value Proposition Pillar #5

Image source

On Provectus' August 6th 2Q15 business update conference call, the company's COO/CFO Peter Culpepper introduced five clinical and business value proposition pillars for PV-10:

1. Intellectual property
2. Drug supply chain (both substance and product)
3. Regulatory support
4. Mechanisms of action
5. Rational clinical study designs for randomized data generation

Blog post takeaway

• The focus of this post is pillar no. 5, more data generation, and specifically data generation related to the combination of PV-10 and an immune checkpoint inhibitor (pembrolizumab, and maybe other co-inhibitory blockade agents) in patients with advanced melanoma (Stage IV).

• Randomized data generation is a process, which starts with a dose escalation component (in this case, the escalation of PV-10's dose in context given the approved Keytruda dose).

• I'm looking to Provectus' 3Q15 business update conference call potentially in early-November (e.g., Thursday, November 5th) for the company's CTO Dr. Eric Wachter, PhD to discuss and/or have filed the combination therapy Phase 1b and 2 trial protocols. Whether one refers to it as a Phase 1b/2 (as was the case for T-Vec + ipilimumab) or a Phase 1b/3 (T-Vec + pembrolizumab), the second part of the clinical study process is a randomized controlled trial (RCT).

We assume generating randomized clinical data already has started with the commencement of the company's pivotal Phase 3 trial of PV-10 versus systemic chemotherapy in patients with unresectable locally advanced cutaneous melanoma (Stage III). More data is more than likely required to potentially further increase company value.

For advanced melanoma (Stage IV), step #2 of randomized data generation — the RCT component of the melanoma combination therapy two-step clinical study process — starts with step #1, single-arm data generation from a dosing (of the intralesional agent [IL]), safety and response rate evaluation of a pairing of compounds.

On Provectus' March 13th 4Q14 business update conference call Eric said:

"Throughout our consultations with key clinical opinion leaders, we’ve also been attuned to the need to address the needs of patients with more advanced disease. With enrollment now complete in the mechanism of action study of PV-10 of Moffitt Cancer Center, and initial results reported on that study and on the companion nonclinical study to assess combination of PV-10 with immune checkpoint inhibition, we are making progress on design of our proposed study to assess PV-10 in combination with immune checkpoint inhibition in patients with advanced melanoma. 

We continue to expect this to be structured as a Phase 1b/2 study with a modest sized single arm Phase 1b component and expedited safety and efficacy endpoints supporting expansion to a larger randomized Phase 2 component. Endpoints for Phase 1b are likely to comprise acute safety as a combination regimen and objective response rate at three to four months. For Phase 2, we anticipate endpoints of progression free survival at overall survival. With three agents now approved in the US and also available in other key locations abroad, I expect to have very concrete details on this work to discuss at our next quarterly conference call. Importantly now that we have options for this systemic agent, this study can commence with or without the assistance of a partner." {Underlined emphasis is mine}

On the company's May 7th 1Q15 call he said:

And in addition to the progress on the combination therapy patent front that Pete mentioned, we've also made substantial progress towards commencement of our proposed clinical study of PV-10 in combination with immune checkpoint inhibition. We have identified the investigators who will lead this work, the agent to be used in conjunction with PV-10, the patient population and the dosing schedule for both agents along with the study end-point. To assess potential benefit of PV-10 for patients with advance melanoma, this phase 1b/2 study will incorporate a modest sized single arm Phase 1b component with expedited safety and efficacy end point supporting expansion to a larger randomized Phase 2 component. 

End points for phase 1b are expected to comprise assessment of acute safety of the combination regimen and objective response rate at three to four months. For the Phase 2 portion, end points will be progression-free survival and overall survival. 

Once the protocol addressing each of these areas is complete, we believe the pieces are in place to commence clinical work on this important second development path for PV-10 and melanoma. Since the checkpoint inhibitor we expect to use is licensed in the U.S., we can commence this study with or without the systems or a partner." {Underlined emphasis is mine}

By protocol I think Eric means both Phase 1b and RCT protocols (whether one refers to the latter as a Phase 2 or Phase 3 trial).

On the company's August 6th 1Q15 call he said:

"Turning to the other primary component of our development plan for melanoma, we've continued to move towards commencement of a post-clinical study of PV-10 in combination with a new checkpoint inhibition in patients with advanced metastatic melanoma. After thorough consultation with leading investigators who will conduct this work, we have a study design that is undergoing final investigator review and anticipate completing the protocol before the end of the present quarter. 

This includes comprehensive definition of patient population, dosing schedule for both agents, and the study endpoints. As I've indicated previously, to assess potential benefit of PV-10 for patients with advanced melanoma, this Phase Ib/II study will incorporate a modest-sized single arm Phase I key--Phase Ib component of 24 patients with expedited safety and efficacy endpoints. 

Completion of this initial phase is expected to support expansion to a larger randomized Phase II component having an estimated 120 patients. The actual size of the Phase II component will be determined by modeling and response data among Phase Ib participants, that is the socalled observed effect size. 

Endpoints for Phase Ib will comprise assessment of acute safety of the combination regimen and objective response rate at three to four months. For the Phase II portion, endpoints will be overall survival, progression-free survival, and objective response rate. 

We anticipate using the anti-PD1 drug pembrolizumab, also known as Keytruda, as the checkpoint inhibitor. This class of drug has been shown to work favorably with PV-10 in mouse models with melanoma, as presented by our colleagues at Moffitt last November at the Annual Meeting of the Society for Immunotherapy Cancer, and as anticipated in our allowed drug patent application with Pfizer, the two drugs have largely unrelated or orthogonal side effect profiles. 

These factors provide justification for conducting the study. Also, since pembro is standard of care for the study of patient population, it is standard practice to conduct these kinds of studies in an add-on mode where all patients receive standard of care. 

We're optimistic that we can leverage existing investigator and site relationships to commence this study by the end of the calendar year. And since pembrolizumab is licensed in the US, we can commence this study with or without the assistance of a partner. If ongoing negotiations with prospective corporate partners lead to interest in testing PV-10 with a different checkpoint inhibitor, the study is designed to facilitate use with other drugs to enable such testing in a straightforward manner. {Underlined emphasis is mine}

With the Phase 1b and Phase 2 protocols not ready (and thus fileable on ClinicalTrials.gov) all Eric could say was the above. When filed on the .gov site both the T-Vec + ipilimumab and T-Vec + pembrolizumab protocols were two-step ones, as shown below, respectively:

Click to enlarge. Image source. Fuzzy purple emphasis is mine

Click to enlarge. Image source. Fuzzy purple emphasis is mine

In extending my door analogy from August 12th blog post The Door, Eric would have to had to design and construct the first door, design as well as perhaps mostly construct the second in consultation with the FDA (with emphasis on the second door, a presumably pivotal study). There would be placeholders (specifically the size of Phase 2 trial N) for the second door that would be modified pending the outcome of the initial Phase 1b study: "The actual size of the Phase II component will be determined by modeling and response data among Phase Ib participants, that is the socalled observed effect size." (Eric's comments, August 6th business update call).

Securing the keys to the doors from the regulator would require reaching the threshold of each door. I would wonder if yet assume Eric has discussed the path to and through the first door and the path to the second with the FDA. Maybe it's the [paths'] the utilization of a portion of the data (a fraction of the trial N) from the Phase 1b trial — if successful and appropriate — to apply for breakthrough therapy designation, followed by commencing the pivotal study, and the utilization of a portion of the data (a fraction of the trial N1) to be considered for accelerated approval — if successful and appropriate. Of course, maybe that's not entirely or actually the process.

And discussing cost and how to fund these paths (i.e., pros and cons of available and potential options) in the greater context of the company and its overall burn rate is an important matter for another discussion and post.

The Door

Image source

Opaque as the Agency's process may appear to non-life sciences investors like me, and obviously highly generalized as my analogy below is, it's an understatement to say Provectus' past, present and future has been, is and will be more about the process (with current emphasis on the step of finally generating randomized clinical trial data). This is especially so for a molecule like PV-10 and Provectus' approach to treating cancer, the former being very novel and the latter being historically unsuccessful (i.e., treating the disease locally in order to defeat it locally and then [in so doing] systemically).

A door is built when a company achieves a consensus design for a pivotal Phase 3 trial with the FDA. The door is closed of course, but with its design and construction complete the drug company can commence a registration study in pursuit of the key the regulator holds to open it. A successful study that also leads to drug approval yields the key from the Agency to unlock the door, opening into the room of a market opportunity for the company to commercialize its therapeutic. Drugs fall down before they reach their doors' respective thresholds by failing their pivotal studies, and thus they're unable to get the key.

Unremarkably and yet, I suppose, obviously, designing and building the door, traveling the path to secure the key from the FDA, opening of the door, and entering the room are just parts of or steps in the Agency's process. Everyone does not follow the process all of the time. When they do, and if they are successful, the process works. The FDA's process could be observed as almost agnostic to the drug going through it.

1986. After a cursory review of the literature, the first I/O door that appears to have been designed, constructed, unlocked and opened was Interferon alpha (IFN-α) [1].

2010. The second I/O door built and unlocked could be for Provenge (sipuleucel-T) [2].

One could argue for other doors such as Bacillus Calmette-Guérin's (BCG) approval in 1990, Herceptin [trastuzumab] in 1998, Gardasil in 2006, and Xgeva [denosumab] in 2010.

2011. The third door might be for Bristol-Myers' anti-CTLA-4 agent Yervoy (ipilimumab). Pfizer's tremelimumab, a related compound, fell down before the threshold by failing its pivotal Phase 3 trial.

2014. The fourth and fifth doors then would be those for anti-PD-1 agents Keytruda (Merck U.S.' pembrolizumab) and Opdivo (Bristol's nivolumab).

Other similar doors may be designed, constructed and unlocked for companies entering pivotal trials of their anti-PD-1 or anti-PD-L1 agents. One also might consider Perjeta's (pertuzumab) approval in 2012.

2015. A sixth door has been designed and built for but currently remains unlocked to Amgen's talimogene laherparepvec (T-Vec).

April's 22-1 advisory committee vote in favor of the drug should encourage the FDA to give Amgen the key in or by October 27th (the drug's PDUFA date). This outcome, while probable, is not certain. Unlocking T-Vec's door, irrespective of the debate about the size of the room into which the opened door permits entry, could and should be a catalyst (in context) for PV-10. 

Provectus' CTO Dr. Eric Wachter, PhD designed and built PV-10's door last year and this year for melanoma (specifically, unresectable locally advanced cutaneous melanoma) by working with the FDA to achieve a consensus pivotal study design. In so doing he convinced the regulator the drug could be a viable treatment option for patients if the trial successfully meets its endpoints.

For Provectus unlocking T-Vec's door could substantially further discussion about or potentially lead to a license, co-development and/or collaboration deal with and/or an minority equity investment by Big Pharma. The issuance of the joint Pfizer-Provectus combination therapy patent allowed in April, more pivotal melanoma Phase 3 site activations, and/or the presentation/publication of Moffitt Cancer Center's PV-10 mechanism of action study also could contribute to the discussion or potentially lead to a deal or deals.

T-Vec and PV-10's doors are similar and different. While T-Vec's door is similar to those of Yervoy, Keytruda and Opdivo in that they have metastatic melanoma labels, PV-10's door possesses the different feature of treating patients at an earlier stage of the melanoma disease cycle. Its pivotal study embraces the potentially more profound outcome of being the local agent with the opportunity to prove that, delivered locally, PV-10 can forestall, prevent or stop the spread of the systemic disease that is cancer (melanoma).

[1] FDA-Approved Cancer Immunotherapies and CRI’s Impact, April 9, 2015, Alexandra Mulvey
[2] Issues Impacting Stakeholder Adoption of Immuno-Oncology, February 16, 2015, AJMC, Dr. Bruce Feinberg, DO

Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part VI

The sixth in a series of blog posts and news items assessing the company's pivotal Phase 3 trial for unresectable locally advanced cutaneous melanoma (Stage III patients, and not metastatic [Stage IV] melanoma).

1. Win or lose: Will the trial succeed in meeting or fail to meet its primary and/or secondary endpoints?
2. Time-to-success or -failure: How long might it take for the trial to succeed or fail?
3. Good or bad process: Are there process steps and aspects thereof that may provide hints of potential future trial success or failure.

This blog news item, (i) 1. Win or lose: Predicting outcomes, (ii) 2. Time-to-success or -failure: An unusual response in one of the randomized controlled trial arms, and (iii) 3. Good or bad process: Multiple triggers.

Blog post takeaways

• Provectus' pivotal melanoma Phase 3 trial should be successful, meeting its primary endpoint of progression-free survival (PFS).
• Meeting the secondary endpoint of overall survival (OS) in the context of PFS as a surrogate for OS, assuming the beneficial support of patient-reported outcomes (PROs), is worth a separate discussion and blog post or news item,

• It appears the single planned interim analysis for efficacy and safety (based on a prescribed number of events) is very unlikely to (can't) be triggered. There [probably] won't be enough events. As a result, trying to project the timing of trial success, on an interim data readout basis, ultimately must rely on speculating what triggers, boundaries, safeguards, etc. have been designed into the trial to compensate for PV-10's non-normal or unexpected distribution of events to assure a timely readout of interim study results.

• If Provectus management believe they can adequately predict the outcome of the pivotal trial, then such adequacy may extend beyond whether the trial would be successful to when they think it could be so. Fundamental to these beliefs is the trial's actual enrollment rate.

An article like Seeking Alpha contributor Steven Giardino's June 2014 one (h/t InvestorVillage PVCT poster leave_the_gun) discussing the role, responsibilities and mandate(s) of a pivotal trial's data monitoring committee (DMC) could encourage us to take a step back when assessing Provectus' Phase 3 trial, before rejoining more analysis and opinion-making as well as prior deep dives.

1. Win or lose: Predicting outcomes 

The trial's outcome of winning or losing, succeeding or failing, may simply boil down to observing that PV-10 just kills cancer, which is how I believe the company's Chairman and CEO Dr. Craig Dees, PhD would see and say it. The preclinical and clinical dataset of PV-10 ablating a cancerous tumor or lesion continues to grow, while also demonstrating the drug's agnosticism to disease presentation: e.g., clinically in potentially different melanomas (mutations or variations, but lesions don't appear to be categorized by Provectus), hepatocellular carcinoma (Hepatitis B and C, cirrhosis), breast cancer, and liver metastases (colorectal, non-small cell lung, melanoma, ovarian), and preclinically in at least melanoma, liver, renal, breast and pancreatic tumors. If PV-10 just kills cancer, then the Phase 3 trial ultimately should win or succeed. If it doesn't, it won't.

Provectus' CTO Dr. Eric Wachter, PhD on the other hand already said "[w]e firmly believe that Phase 3 testing should not be started unless you can adequately predict the outcome" when considering what PV-10 does or can do, what chemo does, the trial's patient population, the primary endpoint, secondary endpoints, etc., all in the context of the company's pivotal trial. If Eric thinks he can predict the trial's outcome, then he clearly also believes the trial will win or succeed.

"It just kills.." or "being able to predict the outcome..." could present itself, in my over-analytical or analyzed manner, as:

• In the melanoma Phase 2 trial the overall response rate (ORR) for patients who had all their existing melanoma lesions injected with PV-10 was 71%, with 50% achieving a complete response (CR) despite receiving PV-10 up to four times over a 16-week period (i.e., week nos. 0, 8, 12 and 16) [1],[2],
• In the Phase 3 trial patients in the PV-10 treatment arm would receive the drug every 4 weeks until CR or disease progression (e.g., week nos 0, 4, 8, 12, 16, 20, etc.).

• In the Phase 2 trial the ORR for the lesions of patients who had all their lesions injected with PV-10 was 80%, with 74% achieving a CR [1], and

• In the Phase 2 trial the progression-free survival (PFS) of patients who had all their lesions injected was 9.8 months [1].

• In the pivotal Phase 3 trial the control arm is systemic chemotherapy of either dacarbazine (DTIC) or temozolomide (TMZ), which have PFSs of less than 2.5 months for DTIC/TMZ [2].

• I believe Eric designed the trial for a 90% power to detect a 70% improvement in median PV-10 PFS (over DTIC/TMZ PFS) — if the trial's DTIC/TMZ median PFS is 1.5 months then PV-10's must be >2.55 months, or if 2 then >3.4, or if 2.5 then >4.25.

[1] Subgroup Efficacy in Patients Receiving Intralesional Rose Bengal to All Existing Melanoma in Phase II Study PV-10-MM-02, European Society For Medical Oncology, Abstract #1120P, September 2014. [2] Janet Fricker, PV-10 delivers greatest effects when all lesions are injected, Pharmiweb.com, October 15, 2014

• As the pivotal trial's principal (lead) investigator, St. Luke's Cancer Center's Dr. Sanjiv Argawala, MD, said last year following ESMO 2014, “The progression free survival of 9.8 months compares favourably with historical progression-free survivals of less than 2.5 months for DTIC/TMZ.” [2]

2. Time-to-success or -failure: An unusual response in one of the randomized controlled trial arms

Compare and contrast PV-10 and chemotherapy above, or the distribution of responses ("events") for chemotherapy and PV-10 below.

Click to enlarge.
See July 23rd blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part IV. 

I think it's fair to describe PV-10's historical objective tumor response results for melanoma as non-normal distribution curve or very likely to produce an unexpected distribution of events, where the baseline of what is or should be expected being chemotherapy's distribution curve. Thus, trying to estimate the timing of early and/or interim readouts of Provectus' pivotal study results must rely heavily on what if any as yet unmentioned multiple triggers, boundaries or safeguards Eric designed into the trial to augment the publicly discussed planned interim analysis for efficacy and safety based on a prescribed number of events (which is probably never going to [won't] get triggered).

In my July 23, 2015 Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part IV blog post I tried to make the argument Eric designed a planned interim analysis of efficacy and safety based on prescribed time, in addition to the planned one based on prescribed events. The analysis suggested the timing of this second trigger (starting in July 2016) was generally in line with (but later than) public comments by management of when an interim analysis might occur ("likely in the first half of 2016"). If there can be two interim analysis trigger, why cannot there be more for a drug with an effect size large enough to withstand the statistical dings or alpha spend of additional efficacy looks?

3. Good or bad process: Multiple triggers

Planned/prespecified or unplanned/not prespecified reviews of safety data of randomized controlled trials do not cause bias or incur alpha spending, and thus do not result in statistical dings of study results. Reviews of or "looks" into efficacy data, however, do incur dings or spend alpha (if you take multiple looks at the data, there is an increase in the risk of Type I error). Thus, if the addition of a second trigger (a prescribed time one) indeed is true (the first being a prescribed event trigger), then Provectus' statistical analysis plan (SAP) would have to address and thus account for three efficacy looks: (i) a final analysis, (ii) the single planned prescribed event interim analysis and [potentially] (iii) a prescribed time interim analysis. As an aside, the aim of an SAP is "to minimize bias by clearly stating the proposed methods of dealing with protocol deviators, early withdrawals, missing data, and the way(s) in which anticipated analysis problems will be handled as well as many other possible issues."

Using current parameters (such as the trial's N of 225), Eric's design yields a 90% power to detect a 70% improvement in median PFS. As I noted above, if the trial's actual DTIC/TMZ median PFS turns out to be 1.5 months then for the trial to win PV-10's actual median must be >2.55 months, or if 2 then >3.4, or if 2.5 then >4.25. PV-10's median Phase 2 trial PFS of 9.8 months (out of a 12-month follow-up period) compared to a 70% improvement of 4.25 over Agarwala's 2.5 month historical median PFS for DTIC/TMZ should mean PV-10 has a lot more alpha to spend if Eric wants to spend it. And if he spends his alpha early (on a much earlier interim analysis than expected) and never has to spend it again (on the planned interim analysis), then he can continue through the final analysis with the planned spend equalling the actual spend.

What might these additional triggers be and when (if at all) could they facilitate earlier study readouts than the interim analysis (prescribed event or time)? My guess tries to keep simple: There may be efficacy looks that of course cost alpha, presumably planned or prespecified but not publicly discussed, that occur after a certain number of events (one event per person). The planned interim analysis requires 113 events for a trial N of 225 (50%). Maybe another trigger is 20 events, 30 events, etc. The analysis of what "early" eventually could be defined as may boil down to the number of patients (and thus events) required to show statistically significant PV-10 and chemotherapy PFS curve separation acceptable to a DMC and/or the FDA. Returning to 2. Time-to-success or -failure above, the timing of success then becomes the sum of (i) the enrollment time of the patients (e.g., 60, 90, etc.) required to generate the smaller number of events (e.g., 20, 30, etc.) and (ii) the separation time required of the last patient treated in that smaller trial n.

Click to enlarge. 20 events.

Click to enlarge. 30 events.

Eric has been repeatedly and consistently wrong in the past with regard to the timing of things. Peter's guidance of a 1H16 interim data readout, based presumably on Eric's guidance, thus is questionable because it requires the trial's actual enrollment rate to track Eric's projected monthly enrollment rate figure. A interim analysis trigger requiring a lower number of events, and thus patients, might fit into Peter/Eric's sense of timing given lower actual enrollment rates. Or it may not.

Previous entries in the series:

1. 3. Good or bad process: Patient enrollment. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part I (July 13, 2015) on the blog's Current News page,
2. 3. Good or bad process: Designing an interim analysis for efficacy into Provectus' pivotal melanoma Phase 3 trial. See July 16, 2015 blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part II,
3. 3. Good or bad process: Patient crossover. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part III (July 20, 2015) on the blog's Current News page,
4. 2. Time-to-success or -failure: Triggering the interim analysis. See July 23, 2015 blog post Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part IV, and
5. 3. Good or bad process: Patient-reported outcomes. See Assessing Provectus' Pivotal Melanoma Phase 3 Trial, Part V (July 24, 2015) on the blog's Current News page.