i.am.a.pvct.inv...'s  Instablog

Taken From Connecting The Dots...Provectus Pharmaceuticals (May 19, 2013).

Shareholders are closer to the end-game for the stock than to their journey's beginning. The company's life sciences technology is head and shoulders above its peers. The lead compound presents a compelling clinical value proposition capable, perhaps, of indeed shifting the paradigm of cancer treatment (and treatment of inflammatory skin disorders). The drug already is productized, with a product business proposition to match that of the underlying technology. Provectus appears to be nearing transparency regarding regulatory clarity for oncology. The company also appears to be nearing certain license deals that will provide initial market validation. In sum, management, Provectus and its shareholders are nearing the end-game.

Provectus' technology is a game changer, productized to effect the change, and can be delivered and scaled to profit from the change to come.

The technology, PV-10 for oncology, is an effective local treatment capable of as effectively treating distant disease and visceral metastases. The drug, through expression of antigens in context in tumors into which PV-10 is injected fortifies the immune system against cancerous agents. Immunization occurs because PV-10's chemoablation causes rapid, complete, durable necrosis of tumor lesions.

"Scientists have been trying for decades to understand why the body's immune system didn't see cancer cells as the enemy and attack them. Recent discoveries revealed that tumors are adept at cloaking themselves by hijacking the body's own mechanism for preventing the system's T-cells, the infection- and disease-fighting cells of the immune system, from running amok against healthy tissue."

The above quote from Wall Street Journal (WSJ) article New Cancer Drugs Harness Power of Immune System (5/15/13) is not quite on-point. Rather, the quote below from Bloomberg article Human Immune-Boosting Cancer Drugs Seen Extending Lives (5/12/13) is more to the point.

"Now many believe that by strengthening the immune system's ability to identify and kill cancer cells, they can broaden the attack so it will fight any dangerous malignancy. "You're setting up a fair fight" with the disease, said Nils Lonberg, a senior vice president at Bristol-Myers, in a telephone interview. "The immune system is just as adaptable as the cancer.""

How do you strengthen the immune system? Medical science has done it before with infectious diseases. Immune systems can be overwhelmed and, thus, are unable to help the human body fight back. Antibiotics themselves do not cure patients of infectious diseases that have afflicted them. Rather, the immune system cures the hosts with the help of antibiotics. Treating infectious diseases requires that antibiotics should have near absolute specificity for the infectious agent. Tough infections require multiple agents.

I think it's a good time to be a Provectus shareholder.

The volume of the conversations about immunotherapy has grown much, much louder. Take Xconomy's Luke Timmerman's article Genentech Follows Fast at ASCO as Cancer Immunotherapy Picks Up (5/15/13) for example.

"Genentech made its name in cancer by creating targeted antibody drugs that zero in on tumor cells while mostly sparing healthy tissue. Now it's seeking to compete in the next wave of cancer immunotherapies, which are designed to spark the immune system to attack tumors like a virus."

Or take NBC's Nightly News report Immunotherapy targets cancer cells with remarkable results (5/15/13).

"Cancer cells typically put up a chemical shield to protect against the body's disease-fighting T cells. But immunotherapy can break down the shield and let the T cells get to work."

The more the biopharmaceuticals industry, investing community and general public talk about immunotherapy, the better the environment or atmosphere for PV-10 and Provectus to flourish.

From the same WSJ article above: "More broadly, Leerink [Swann, a middle market investment bank] believes the "immuno-oncology" drug market could amount to a $20 billion category annually, putting it on a par with the cholesterol-lowering statin market at its height."

From dendritic cells (Dendreon's Provenge) to antitumor antibodies (Bristol-Myers' anti-CTLA-4 agent Yervoy) to immune checkpoint blockades (ASCO 2013's anti-PD1 and anti-PDL-1 agents):

"The immunotherapy of cancer has made significant strides in the past few years due to improved understanding of the underlying principles of tumor biology and immunology...[t]he pillars of human cancer therapy have historically been surgery, radiotherapy, and chemotherapy, but a fourth modality of immunotherapy has been well documented since 1890..." (Kirkwood et al.).

Big Pharma is tacking closer to the ultimate goal, but they mostly still are sailing wide of the objective.

"If the new generation of immune therapies lives up to its promise, "this is going to be a paradigm shift for treating cancer," said Merck senior vice president Gary Gilliland in an interview. "We are pretty good at shrinking tumors, but not good at getting rid of them. Immune therapy is a way to begin to approach that.""

Yes, Big Pharma is pretty good at shrinking cancerous tumors, but not yet good enough at making them go away.

Craig's postulation that you treat cancer like you treat an infectious disease requires a/the drug treatment to possess near absolute specificity for diseased tissue (spare normal tissue and clear rapidly from it) and induce a host response (combined apoptosis-autophagy of treated targets because intralesional delivery produces a "vaccine-like" systemic effect that enhances normal human body defenses) over a very wide range of activity (broad spectrum antibiotic-like)

PV-10 chemoablation causes rapid, complete, durable necrosis of tumor lesions.

I think it's a good time to be a Provectus shareholder.

The general discourse at the moment about immunotherapies, however, is far from well understood or a consensus. Take last week's exchange on Adam Feuerstein's Twitter feed @adamfeuerstein below.

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Feuerstein had been explaining the fundamental bear case for Vical's Allovectin-7, but aside from perhaps some valid trial design questions, his "red flags" included a lack of positive statements by melanoma experts and institutional healthcare investors as well as a lack of immune-related toxicity by Allovectin-7. Church is not a fan of immune-related toxicity because of the long-term dangers of altering the immune system in order to use it. All of this despite the on-point replies of other respondents: directing T-cells to attack tumors rather than a broad uncontrolled response, the beauty of local treatment is limited toxicity, revolutionary if the local treatment works on visceral mets, etc.

Many monoclonal immunotherapies do cause terrible toxicities, which are related not just related to "taking the brakes off" the immune system. Their target antigens are not only on/in the immune cells they wish to suppress. Just like chemotherapy agents, immunotherapy agents also can cause collateral damage with more adverse side effects like cancer and death.

The nature of the conversation Feuerstein, Church and the others need to have has to be deeper and more substantive. It's too simplistic to say Allovectin-7 does or will not work. Whether it's Allovectin-7 or talimogene laherparepvecone (T-Vec, formerly OncoVEX), or PV-10 itself, one has to balance positive effects with side effects. Think of it as a biological signal-to-noise ratio. One can titer up dosages until one sees bad things happen.

I think Pfizer probably refused to do this with its anti-CTLA-4 agent tremelimumab, which is why it has a greater failure record in clinical trials than it's Bristol-Myers' ipilimumab. Bristol-Myers probably had a higher tolerance for "bad things to happen" in order to suss out the optimal or near-optimal signal-to-noise or benefit-to-side-effect ratio.

Remind yourself of Provectus' combination therapy work at AACR 2013 utilizing PV-10 and a systemic anti-CTLA-4 antibody. The highest dose of the latter killed the murine subjects more quickly. Lower doses were less effective but also less dangerous. Interestingly, the results the company concluded that while PV-10 is highly effective when all existing tumor is accessible for injection, for visceral or other inaccessible disease the combination of PV-10 with CTLA-4 blockade has important potential synergy. Nevertheless, the apparent toxicity at high doses of the anti-CTLA-4 antibody markedly reduced the effect of the antibody alone and the combination of PV-10 and the antibody.

If an immunotherapy is working, there has to be some response (e.g., inflamation, redness, blistering, itching, etc.). These "side effects" come with the territory, and merely are signs the immune system is now in the game. So, while one indeed is generating a toxic response by recruiting the immune system, the key is focusing this toxicity as much as possible.

The problem with Yervoy, and perhaps immunotherapies like anti-PD-1, anti-PDL-1 agents and other treatments, is the collateral damage they cause to the body. PV-10's great strength has been and is its ability to the target only what it kills and kill only what it targets. Another strength is the drug's ability to generate a very specific, targeted, immune response with very little collateral damage to anything but the tumor itself. So, some blistering occurs, body temperature rises, etc. Nothing more.

I think it's a good time to be a Provectus shareholder.

Still, regulatory clarity has to become transparent. Is it an MM Phase 3 trial under SPA powered for for a 6-month progressional free survival for PV-10 vs. 2-month plus PFS for the comparator DTIC?Or is it breakthrough designation therapy and accelerated approval or another accelerated pathway?

Further still, commercial validation through one or more meaningful license transactions (global, regional, dermatology) is required. For example, will it be Hisun-Pfizer Pharmaceuticals in China? Or another company or entity? The Hisun-Pfizer joint venture was established in 2012 to sell off-patent medicines in China and other emerging markets. But economics are economics. Pfizer's 49% equity ownership and thus 49% ownership of any PV-10 sales in China would be a strong inducement to widening the entity's mandate through a license deal with Provectus.

Who will it be in India? In Japan? When will PH-10 be licensed, and to whom?

Provectus is squarely in the eye of key cancer patient advocates. The company participated in Melanoma Research Alliances' (MRA's) Fifth Annual Scientific Retreat in February. In April Peter joined MRA's President and CEO Wendy Selig, LiveSTRONG's President and CEO and Provectus corporate advisory board member Doug Ulman, Moffitt Cancer Research Center's Dr. Shari Pilon-Thomas and some media for dinner.

Key opinion leaders like Moffitt's Dr. Jeff Weber and Dr. Vernon Sondak and Pfizer's Dr. Craig Eagle are enthused about PV-10 as both a monotherapy and combination therapy.

More data is on the way. And data is driving and will drive the deals.

Yes, I think it's a good time to be a Provectus shareholder.

Disclosure: I am long PVCT.OB.

Additional disclosure: I am a large shareholder of Provectus Pharmaceuticals, have not sold any shares as of this Instablog submission, and also author the blog "Connecting the dots...Provectus Pharmaceuticals."

Taken From Connecting The Dots...Provectus Pharmaceuticals (April 26, 2013).

Earlier this month I identified visits from Daiichi Sankyo in Tokyo spending many, many hours on the blog. Later, I confirmed visits from Daiichi's U.S. headquarters in Parsippany, New Jersey. I think Daiichi Sankyo is interested in a multi-faceted relationship with Provectus.

Plexxikon reported interim analysis of its MM Phase 3 trial for vemurafenib (Zelboraf) in January 2011. In February, the following month, the company announced it was being acquired by Daiichi Sankyo. When a corporate approaches a target, the dance generally begins with an introduction typically 3 to 6 months or more before an acquisition, if achieved, is announced. By this math, Daiichi may have begun speaking with Plexxikon around mid-2010. Plexxikon treated the Phase 3 trial's first patient in January 2010.

Daiichi, one could argue, acted aggressively. "Just a few months after Daiichi Sankyo Co. Ltd. purchased biotech Plexxikon Inc. of Berkeley, Calif., for nearly $1 billion, the Japanese pharmaceutical company is reaping the benefits. A drug developed by Plexxikon and now owned by Daiichi, vemurafenib, was approved for treating metastatic melanoma by the U.S. Food and Drug Administration, the company said Wednesday." (Source here)

Think about it. Daichii approaches Provectus before Moffitt's data has been presented at AACR in April. Before Provectus' contemplated pivotal MM Phase 3 trial is finalized -- where "finalization" means the receipt of the SPA -- and well before enrollment is commenced. That should come as no surprise because PV-10 is far superior to vemurafenib (Zelboraf) and has more multi-indication potential already (whereas vemurafenib did not).

Daiichi has the balance sheet to pay what Provectus desires. In 2008 Daiichi announced that it would pay up to $4.6 billion for a controlling stake in Ranbaxy Laboratories, one of the largest manufacturers of drugs in India; this deal valued all of Ranbaxy at $8.5 billion (a 31% premium to its stock market capitalization prior to the announcement).

Daiichi also has a Japanese cultural approach to M&A that might force Pfizer's hand. That is, it could push Pfizer to act because it has to act to protect an asset (Provectus) it values but heretofore has no impetus to acquire.

"Global studies of M&A point out that once executives dive into the transaction process, they often become so invested in the deal that they cannot pull out even when necessary. In most markets today, however, common wisdom prevails that being able to walk away is a hallmark of M&A sophistication. That notion is rare among Japanese practitioners of outbound M&A." (Source here)

"The demands of Japanese-style consensus building, requiring the hard-won agreement of many parties, make abandoning a deal particularly hard. The potential loss of face in such a decision makes participants reluctant to suggest it, even if the logic of proceeding is undermined by new information."

Daichii was agressive in acquiring Plexxikon, paying more for the company than anyone else offered or was willing to pay. From all accounts, the acquisition is or eventually should be accretive.

If Daiichi executives set their mind to licensing PV-10 (or PH-10) or acquiring Provectus, then Big Pharma (including, in particular, Pfizer) might lose the asset to the Japanese if they're not willing to counter bid.

Disclosure: I am long PVCT.OB.

Additional disclosure: I am a large shareholder of Provectus Pharmaceuticals, have not sold any shares as of this Instablog submission, and also author the blog "Connecting the dots...Provectus Pharmaceuticals."

Taken From Connecting The Dots...Provectus Pharmaceuticals (March 21, 2013).

It is without a doubt a fool's game to predict the regulatory path to approval of a drug. True to form, and in no small part because of a need to be right (a trait that drives my passion for investment management), I tried many times to do so. If I had a much deeper background in life sciences investing, perhaps I could have spared myself and the readers of this blog errors and inefficiency in thinking and analysis.

Then again, while more informed, shrewd and knowledgeable money in this space - classic examples of conventional-thinking money - very often are on the cutting edge of being in the right place at the right time, I do not think they understand paradigm shifts any more than other like-minded, industry-oriented money.

A blog reader asked me to describe how I arrived at my stock position in Provectus. Greatly simplifying the answer, I reply by saying I made a two-bet parlay. First, I bet that management could demonstrate the tremendous, multi-indication efficacy of an incredibly safe drug compound. Second, I bet that management could and would protect Rose Bengal's economics in a size and scope commensurate with the depth and breadth of their innovation.

The risk-reward of my investment in the company eventually matched the clinical and commercial risk-reward of the drug.

PV-10 (as well as PH-10 and the family of halogenated xanthenes) is the culmination of Craig's scientific career, a quest of three principals that (as far as I know) began at Oak Ridge National Labs, was and continues to be facilitated by No. 4, and includes numerous professional, personal, emotional and financial ups and downs.

This company and this situation also represent a quest for me: the eventual realization of a seminal investment in my career to date; the never-ending hunger to be right; the tangible and intangible satisfaction, results and provision of future professional and personal means that only a financial moonshot yield; and, a unique opportunity to continue to successfully build my investment management career as, how and when I see fit if ultimately right.

In further answering the reader's inquiry, there reached a point in my due diligence, analyses and conclusions when and where I found that, over time by periodic buying of shares, I had pushed every discretionary dollar I (we) owned into a capital pool with the express purpose and intent of owning as many shares as I (we) possibly could.

I never imagined the first bet of my parlay would turn out to be epic in nature. On April 8th, Moffitt raises the curtain on PV-10.

Management's next task is to optimize ROI, an effort that is no small feat. And while thus far they have protected the economics of the opportunity, which could be enormous, a great outcome is not yet assured.

I await the outcome of the second bet of my parlay after AACR, because in Vegas you can't cash in your ticket at the window until the results of all bets are tallied.

Disclosure: I am long PVCT.OB.

Additional disclosure: I am a large shareholder of Provectus Pharmaceuticals, have not sold any shares as of this Instablog submission, and also author the blog "Connecting the dots...Provectus Pharmaceuticals."