$PVCT: Get Shorty (Update)

Short interest at 2/15/13 (~1.58 million) increased by ~11% over 1/31/13 (1.42 million). Since January 14, 2011:

Since January 14, 2012:

Volume since the last reporting period (through today's market session) has been 1.8 million shares (assuming this OTC reporting from Yahoo! Finance indeed is accurate; as a reminder, I obtain the short interest figure from the OTC website):

Did short interest drop significantly this week? To the extent it may matter, we'll find out the result of the period ending February 28 on March 11.

The rumor mill has started churning. You would figure it was getting close enough to the likely event outcome that it had to start in ernest at some point. I heard several.

The first rumor purports Peter will return with an agreement (but no cash yet) with a Chinese pharmaceutical partner. The agreement -- call it what you wish (e.g., an MOU, an LOI, etc.) -- thus would allow Provectus to issue a PR (because the agreement would be a material event) revealing the name of the Chinese firm and key provisions of the anticipated license agreement that would form the basis for a definitive contract, which likely would be consummated and funded within 30 to 60 days.

The second, which I won't go into any detail, would lead one to think the Chinese partner is Hisun.

Maxim Group's Dr. Echo Yinghui He, MD PhD, a Senior Analyst who also covers Provectus, purportedly accompanied Peter on his China trip.

Finally, a large Hong Kong-based Provectus shareholder purportedly also joined Peter. From what I gathered, the shareholder's purpose was Reaganesque.

Peters returns Saturday. A PR next week? Maybe...

$PVCT's prospective #China #Pharma partner is...

Regular readers of this blog know of my belief that Pfizer ultimately will be the end-game acquirer of Provectus. I have long held, even before I began writing this blog in November 2012, that Pfizer is the most natural and logical of the Big Pharma to acquire the company. It's not a given by any stretch, but I think Pfizer is the leading candidate and then some at this point in time.

Thus far, the two public Pfizer data points are a joint patent application filed by Provectus and Pfizer in March 2012, and the addition of Pfizer's Dr. Eagle added to Provectus' corporate advisory board in August 2011. There are several other data points one can learn about while doing due diligence on the company.

It appears, the latest datapoint has been staring me in the face for a little while.

We know Provectus is currently interacting with potential partners for regional licensure in China, India and Japan, according to recent Craig's Noble presentation. I have written about a China deal somewhat ad nauseam.

Moffitt has to educate the global oncology community about PV-10's clinical relevance. Provectus has to obtain the SPA. And, the company has to get valuation way up through, for example, a sizable regional license deal like in China. From there, and with interim MM Phase 3 trial data, enough boxes may be checked for Pfizer (or another Big Pharma company) to take Provectus out.

If I am Pfizer (Dr. Eagle) and want to keep a close tab on the company, or just keep the company close, I steer them to a friendly in China rather than let Provectus partner up with a Chinese pharma company with whom I have no relationship or that has a relationship with one of my Western competitor. Just saying...

Who are Pfizer's partners in China? Which one of them is the potential or a more likely prospective Chinese strategic partner?

A. Sinopharm Group? Pfizer and Sinopharm appear to have begun collaborating in 2012.

B. Shanghai Pharmaceutical Co.? Pfizer and Shanghai Pharma, in whom Pfizer also invested, begun working together in 2011.

C. Zhejiang Hisun Pharmaceutical? The Pfizer-Hisun relationship may have begun as early as 2010. In early 2012, Pfizer and Hisun announced progress on a potential joint venture ("JV") between the two companies. In late 2012, Pfizer and Hisun announced the launch of the JV. Pfizer indicated the JV also would include "medicines to China to address the country's unmet healthcare needs."

D. Someone else?

Follow the money; that is, the relationship into which Pfizer put more money. Shanghai or Hisun? Investment or working relationship or both? The most invested and substantive relationship Pfizer has in China appears to be with Hisun. If I think Pfizer ultimately will acquire the company, it seems to me consistent to then think Hisun could (will?) be a (the?) potential pharma partner for Provectus in China.

Now, if the partner is Hisun-Pfizer Pharmaceuticals Co., the JV...well, that's a more interesting data point.

$PVCT Poll Results!

Many thanks to those of you who participated in the blog's first poll. We will do more of them. The results of the one-week reader poll are:

More than 4-out-of-10 chose a China deal as the company achievement that would have the greatest impact on share price in Q1.

Provectus is pursuing a $30B market opportunity in China for melanoma and liver, bladder and lung cancer. The deal, if struck, could be worth about $1 billion or more.

The sketch below outlines a very basic outcome tree.

Peter travels to China in late-February (the week of February 25th):

• He returns with no deal after however long the duration of his trip is, which would suck!
• Peter returns with a consummated license transaction reasonably or objectively valued at more than $1B (and potentially much higher). It is possible the deal and its component parts (i.e., upfront, milestone and royalty payments) are much lower than expected, but probably unlikely. A $1B+ deal would, of course, rock!
• Alternatively, he enters into, on behalf of Provectus, an exclusive letter of intent with the Chinese strategic pharmaceutical company partner for a regional PV-10 license.

The signed letter of intent should be a material event that is important to shareholders, and thus the company would file a Form 8-K.

When Celsion entered into a technology development agreement for ThermoDox for China with Hisun and anticipated the eventual completion of a commercial license, the company filed a Form 8-K and issued a PR that detailed the key provisions of the anticipated license agreement negotiated and agreed to by Celsion and Hisun. Those provisions would provide the basis for a definitive contract between the two parties. As I wrote before, the Celsion deal essentially was a license transaction call option owned by Hisun. Positive ThermoDox results were necessary for Hisun to exercise its option to further negotiate an eventual license transaction for China, Hong Kong and Macau. The two companies never finalized, completed and funded the license deal because Celsion's Phase 3 trial failed and Hisun thus neglected to exercise its option.

For Provectus, should the company announce entry into an exclusive letter of intent to complete a commercial license with a Chinese partner, some 60 days or perhaps less could elapse before the deal is finalized, funded and completed. By or before late-April?

I cannot imagine management would do anything other than a traditional license transaction with the Chinese strategic pharma partner (that is, no Celsion/Hisun or Opexa/Merck Serono call option licensing deal). We'll know soon enough after Peter returns to Knoxville from China. I'll keep an eye out for Provectus 8-K filings on the SEC website starting the week of March 4th.

$PVCT: $CLSN? It's Time...

The Conservative Party must make its choice. Every leader is leader only with the support of his party. That is true of me too. That is why I am no longer prepared to tolerate the present situation. In short, it is time to put up or shut up. -- Sir John Major, Former British Prime Minister (c 1995)

Celsion announced today it "had signed a technology development agreement with a Chinese company by the name of Hisun in an effort to manufacture and market its lead-drug candidate better known as ThermoDox in China, Hong Kong and Macau." CLSN, a sub-$250MM market cap company prior to today's announcement, saw its share price increase more than 10%.

A regional oncology deal in China between Provectus and a Chinese Big Pharma company has been in the works for several calendar quarters, the makings of which emerged in the fall. Provectus has, together with its agent, worked through a considerable process of due diligence, evaluation and negotiation to arrive where it is today and where it might be in February.

Zhejiang Hisun Pharmaceutical ("Hisun"), Celsion's strategic partner in China, did not appear on a 1Q2011 list of the top listed local (Chinese) pharmaceutical companies according to market capitalization.

Celsion's two-pronged agreement with Hisun deal break down this way (source: Roth Capital Partners):

• Part 1: Hisun pays Celsion $10 million divided into two parts:
• $5 million immediately as a technology development agreement with Hisun to further advance Hisun's manufacturing initiatives for ThermoDox, and
• $5 million to be paid (following Chinese regulatory approval) where Hisun pays for a 60-day exclusive option to sign a commercialization agreement with Celsion for China (including Hong Kong and Macau).

• Part 2: Pending positive HEAT Phase III data:
• A $25 million non-refundable upfront payment, less the $10 million paid in Part 1 of the agreement.
• $55 million in upfront and regulatory milestone payments, which if HEAT is successful, are anticipated to be received over the next 18 months.
• $45 million in sales milestone payments
• Escalating double-digit royalty payments on net sales of ThermoDox in China projected to top out in the mid-20% range.

Twitter awareness, discussion, excitement and skepticism of the Celsion-Hisun deal was prolific today. This story still has to play itself out.

Provectus' potential China deal appears to compare very favorably to Celsion's, not the least of which is all of Provectus' potential strategic partners are on the above list.

Provectus management is keenly aware of the critical importance of closing a good to great deal transaction of the scope, size and scale currently being contemplated in China: a much higher share price, greater market credibility, more funding resources for key and pivotal trials, and an increased market capitalization in the direction of management's end-game valuation expectations.

Follow China by deals of comparable scope, size and scale in India and Japan (as Craig communicated in his Noble presentation today), and the perception, conversation, and seriousness of Provectus' situation changes immediately, immensely and very dramatically: "Champagne would fall from the heavens. Doors would open. Velvet robes would part."