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Just for the record--I think ANDS was also perceived to be in oblivion re HCV with no serious HCV program.
Regards,
RRdog
Didnt anybody ask King about dilution and alternate means of financing, and timing, and partnering, and BOD expansion for more connectivity????
RRdog
Anything is possible, but, I think more one step at a time as the research comes forward would be more likely for Roche and much better for PPHM. A cash infusion for viral with a BP with milestones and royalties would change the whole aura of PPHM.
I don't think PPHM would grant them a right of first refusal in the cancer area either.
As aggressive as Roche is I think a "right of first look" at the data would be sufficient if Roche wanted to launch a preemptive strike on other assets when the time was ripe.
In addition, I think Cotara is a separate deal as well from the main body of Bavi cancer.
Regards,
RRdog
If you have been paying attention to SK comments he could license viral separately.
RRdog
Clarification and recap:
1. Roche covering every base in Hep C which is a huge mkt(10B heading for 15B)
1a. Roche well known to PPHM and key PPHM personnel.
2. Roche acquires ANDS, partnership with Merck and owns a chunk of VRUS, etc., etc.
3. The only stock in the universe ANDS with a worse 10 year chart and price than PPHM essentially sells phase IIb drug septobruvir to Roche for 230mm????!!!!!
3. Septobruvir control arm in the test is a (placebo + ribavirin + interferon). The control arm tests approx 56% EVR with AEs and 44% EVR vs more difficult cases (prior partial responders or relapsers).
4. The PPHM control arm in their Hep C test is essentially the same. Therefore, we can infer they may get a similar "bogie" of 56%-44% EVR.
5. The Septobruvir arm of ANDS test is 78%-76% EVR with similar AEs to their control arm because it is also in combo with interferon and ribavirin.
6. If PPHM test with Bavi and ribavirin is somewhere between (56%-44%) and 78% EVR with few AEs life may become interesting.
7. The one missing piece in all the IP Roche has acquired is an interferon substitute. In addition, Bavi may add efficacy and waterfall strength against relapse.
8. As an aside --"Three" law firms now considering class actions against the BOD of ANDS essentially because they claim the sale of ANDS may be for too small a price.
All above in my IMO, but, it would seem we are entering a pretty well priced neighborhood with a non crown jewel piece of PPHM IP that SK has publicly stated he would like to license.
Regards,
RRdog
DJ and JR,
Thank you for your responses. That data, articles, etc. give me a lot to think about and research.
RRdog
Keep looking at the bigger picture and take a break from penny by penny technical analysis.
Background:
Avastin is one of the largest grossing drugs in the world.
Avastin is owned by Roche by virtue of its acquisition of Genentech.
AVASTIN WAS SHEPHERDED THROUGH THE REGULATORY MAZE BY GARNICK. Avastin is declining steadily in revenue even though it is still throwing off billions of dollars to Roche.
Roche is always looking for new revenue streams and replacement revenue.
Roche is always looking to dominate areas of business and is not shy about spending dollars to acquire property they are interested in.
Roche may look to dominate by acquiring portfolios of IP in areas they have interest so as to be sure they are most likely to secure the new SOC and be the winner.
Roche has demonstrated a willingness to close out competition by acquisition.
IMO Garnick--formerly at Genentech Roche-- is not randomly attached to PPHM.
Connecting some dots IMO only:
Roche offers to acquire ANDS for approx 230mm or $3.70/ share a 256% premium to current price.
IMO this offer is primarily to acquire the Phase IIb drug "septrobuvir".
The Roche offer is formalized and announced today 10/17/11
This announcement is just four days after the 10/13/11 release of positive "12 week" / "interim" data
on the septrobuvir combo drug with ribavirin and "peg interferon" vs genotype 1 hepatitis C patients.
The septrobuvir trial in combo is versus a control of "ribavirin and peg interferon alone" and shows approx 50% better results (cEVR) than the control group indicating septrobuvir activity. All the nasty side effects (AEs) are present in both arms of the trial since both arms use peg interferon. There is no substantial difference in AEs.
PPHM completes patient enrollment also vs genotype 1 hep C in a phase II randomized trial on Sep 26 2011
EVR data also expected after a 12 week cycle. In this trial Bavi is used in combo with ribavirin vs a control of "ribavirin in combo with Peg interferon".
We know from the ANDS trial that the control group using a placebo plus ribivirin and peg interferon (essentially just peg and ribi) achieved a 12 week EVR of 56% so IMO we might infer that the control group in the PPHM trial using ribi and peg interferon may achieve a similar EVR.
If the PPHM trial arm using Bavi and ribi achieves a similar 56% EVR with a much lower AE profile this will be very signifigant according to analysts that follow this trial.
IMO if Bavi is more active than that, i.e. Bavi and ribi achieve a greater EVR than the control (say somewhere between the 56% EVR of control and the 78% EVR achieved using septrobuvir and peg interferon and ribi) then PPHM may really have something. It is quite possible a higher EVR than the control group may be achieved using Bavi since it may upregulate the bodies own immune system to fight the virus.
Bavi may have other advantages as well in cost to patient, ease of admin to patient, time of treatment, cost of production, etc. etc.
IMO only, it would behoove Roche particularly, as well as other BP, to take a close look at Bavi for Hep C.
It is entirely possible that Bavi in combo with septrobuvir and ribi might be the best combo of all. Bavi might not only add efficacy and reduce AEs but by upregulating the immune system might also be helpful against "relapse".
As you can see by the 230mm offered ANDS by Roche for phase II b septrobuvir we are talking in a league "of substantial value". Were Roche to offer PPHM front money and royalties for bavi viral it would surely move the needle.
It should be of great interest to readers of this board that--even though shareholders of ANDS are receiving approx 3.5 times the closing price of ANDS in the offer from Roche--- the law firm of Ryan and Maniskas has begun an investigation on the behalf of some shareholders of ANDS into a BREACH OF FIDUCIARY DUTY BY THE BOARD OF ANDS regarding the sale of ANDS to Roche for only 230mm. (see below)
"Ryan & Maniskas, LLP Announces Investigation of Anadys Pharmaceuticals Inc.
WAYNE, Pa., Oct 17, 2011 (BUSINESS WIRE) --
Ryan & Maniskas, LLP (www.rmclasslaw.com/cases/ands) is investigating potential claims against the board of directors of Anadys Pharmaceuticals Inc. ("Anadys" or the "Company") (NASDAQ: ANDS) concerning possible breaches of fiduciary duty and other violations of law related to the Company's efforts to sell Anadys to Roche Holding AG in a transaction valued at approximately $230 million.
Our investigation concerns possible breaches of fiduciary duty and other violations of law related to the approval of the transaction by Company's board of directors; in particular, whether the Company undertook a fair process to obtain fair consideration for all shareholders of Anadys.Network, Inc. Copyright ? 2004-2011 Comtex News Network, Inc. All rights reserved. "
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IMO-- I just love the ring of those phrases "fair process" and "fair consideration for all shareholders".
Sometime in January or there abouts PPHM shareholders should get a look at data from the twelve week cycle tests vs Hep C 1. I, for one, will be particularly interested in analysing it carefully.
Again, my suggestion is, from this particular time forward, to focus more on the fundamental value of the IP being developed and less on the minute to minute technical action.
IMO be of good cheer and stay the course.
Regards,
RRdog
Under the heading of random musing, history, step functional moves, and just some things to think about:
This Roche bid for ANDS further reinforces my distaste for standard technical analysis in the substandard world of small biotech companies. The market value of a company is set by the marginal trading and is completely divorced from the potential value of the IP. A month ago ANDS was trading for .60 and Friday for $1.04. Today the Roche bid has it trading for $3.65 because they like the results on a particular HCV test. (And, up until Friday I am sure there was somebody on the ANDS message board whining profusely about mgmt and every other thing.)
Strange things happen in the "world" of small biotech stocks. This "world" is as indifferent to standard technical analysis as quantum mechanics is indifferent to Newtonian physics. Hence I dont give much credit to all the penny by penny technical discussion.
The following examples are of some well known biotech stocks that had these similar qualities before their big moves:
1. ALL WERE COMING OFF TEN YEAR LOWS OR NEAR LOWS OR ALL TIME LOWS.
2. All had MISERABLE TECHNICAL CHARTS long, short, and intermediate term, sideways, upside down and any other way one could look at the picture. ALL HAD CHARTS SCREAMING AT SHAREHOLDERS TO SELL THEIR SHARES.
3. All of their managements were vilified by many shareholders.
4. All of them had their biotechnology highly doubted as to viability and versus competition.
5. Some (Pharmasset) have yet to clear FDA or bring any viable product to market. I.E. OVER FIVE BILLION MARKET CAP ON "A PRIORI"
SCIENCE. ( As an aside, for those of you who are annoyed with PPHM BOD and mgmt, this is a real example of the value of "connectivity" to the financial community and biotech world. Some of this market cap is based on scientific achievement but IMO a goodly percentage is based on "connectivity". There is plenty of upside for PPHM shareholders if there is improvement in "connectivity"----but I digress.) (Roche is also invested in Pharmasset)
6. The moves occurred in different time frames and types of markets.
Stock Examples:
Dendreon (Smaller company more recent move)
$2.55 low in Mar 2009 $57.67 high in April 2010 increase of 22.5x
Vertex (A larger company and longer move)
$8.61 low in April 2005 $58.87 high in May 2011 increase of 6.8x
Pharmasset
$3.81 All time low in Mar 2009 $88.52 All time high in Oct 2011 (this month) increase of 23.2x
Human Genome Science
$5.69 low in Sep 1998 $116.38 in Mar 2000 increase of 20.45x
In case you think this could never happen in PPHM-- well it did.
Peregrine itself underwent just such a move (when it was still Techniclone and for no reason that I was ever able to discern other than false expectation or price "manipulation".) At the time of the move PPHM had worse mgmt and BOD (IMO) than currently, worse balance sheet, much worse science, no imaging technology, much worse patent position, no regulatory expertise, little manufacturing expertise, no viral expertise, no index listing such as Russell, very small market cap, no partners.
Peregrine:
$1.25 low Dec 1999 $83.12 high March 2000 increase of 66.5x (based on post split prices) Pre split, when the move occurred, the actual spread was $ .25 to $16.62)
How strange this biotech world is when you analyse it closely and there are many more examples both lesser and better known that would qualify for such a list as above. One such example was Syntex in the "birth control" area. Syntex did most of its testing re birth control in Mexico, its results initially were highly suspect, and (for those of you that fret about the RS in PPHM) Syntex actually went "bankrupt" several times before having one of the largest stock runs of all times and ushering in the "sexual revolution".
It will be interesting to watch what happens to the "current day" PPHM should it ever slip a puck past the FDA goalie, or partner, or change its method of financing, or improve its BOD, or sell or license peripheral assets (HCV) or IP, or in general start to be credited "a priori" for its large body of IP.
IMO, step back every now and then from all the craziness, view the bigger picture, and stay the course.
Best Regards,
RRdog
sentence should read "to try and eliminate the need for interferon". Sorry for the typo.
RRdog
A general comment on the Roche bid for ANDS:
IMO it seems that Roche wants to place bets all over the HCV roulette board before they spin the wheel. PPHM and Bavi have to be definitely in their sites. (Garnick is not at PPHM by chance.)
The ANDS bid was made shortly after the release of ANDS trial data released on 10/13/11. This data is based on the same 12 week EVR cycle that PPHM is currently embarked on and the ANDS trial was in combo with Ribavarin and Peg Interferon. The ANDS drug Setrobuvir exhibited high amounts of "rash" in many patients probably due to the interferon component.
If the PPHM 12 week cycle data which should be released by Jan 2012 is relevant, PPHM should be of interest to Roche and others because it does not use interferon. Roche, specifically, is in partnerships in many areas of HCV, so I would definitely not rule them out. Roche could even license Bavi from PPHM to use in combo studies with ANDS to try and eliminate need for Bavi.
This would jibe with SK comments about being very interested in licensing the viral area.
Best Regards,
RRdog
This award to Siro (the Indian Clinical Co.) and the mutual admiration with PPHM has a "connect the dots" feel to it. IMO only---Gupta ran the trials for this company and PPHM and ran them meticulously well. Something about the way he placed the catheters or some other technical factor gave Gupta outstanding results.
Gupta speaks in the US at Neurosurgical Conference which has reason to want to hear his remarks.
Neurosurgeons desirous of a new surgical technique to treat GBM and do more business.
PPHM in a very "PC" position at the FDA with both the NIH (developer of the catheter/convection technique) and the Assoc of Neurosurgeons behind this approach at the FDA.
FDA desirous of a new method to treat this most deadly of disease for humanitarian reasons.
FDA is " highly probable" IMO to grant PPHM a reasonable PHase III pathway that would be acceptable to prospective partners.
FDA IMO now better than 50/50 to grant SPA.
IMO,believe CP comments on this board about the FDA receiving all data first, then submitting questions to PPHM before scheduling meeting essentially correct. This is the most efficient way to proceed.
Looking forward to further developments in this particular area.
Best Regards,
RRdog
Sure sounds like you are advocating I sell my entire position at $1.10 or less because PPHM is not acting technically well. It has sounded like that insistantly for a long time now.
Regards,
RRdog
Except for all the drug companies like VRUS that have no product yet and less pipeline than PPHM and have market cap in the billions because they understand how to promote and how to finance.
Regards,
RRdog
When "price" separates from "value" it can not only drive you nuts but it can make an investor question their whole investment thesis. The truth IMO is that the price in PPHM can go almost anywhere, but, in the end, will be "deal determined". As an example, PPHM was about $1.10 late in 2008 and then rose to $5.65 by May of 2009 without a real fundamental driver. (With current dilution a similar move would be more like $1/ share to about $3.5) Since that time, the fundamentals (clinicals) are clearly improving and the stock has gone nowhere but down mostly due IMO to dilutive financings. If I thought the price movement was reflective of bad science, then, I would be worried. However, IMO the science is valuable and the price is reflective of poor mgmt.
Wall Streets' whole game is to beat you for "value" by clubbing you with "price" and "time". However, you may have heard the expression that "nothing is as powerful as an idea whose time has come" and IMO that timing is getting closer. When the timing is right you need to be already long because it will be difficult to acquire shares without paying up substantially. That is the game IMO. Squeeze every last investor out that you can due to price pressure and then run the stock. In case you have been under a rock, the smartest, meanest investors in PPHM are "buying" illiquid stock, on balance, in size. These guys are not worried by price pressure and time. They have the courage of their convictions. They plan to be there if something good happens.
I see a couple of current schools of thought running through this message board that are appropo to the above paragraphs.
1. Somehow the BOD is going to screw shareholders out of their proper upside with some bizarre maneuver like an attempt at going private. IMO , for too many reasons to go into, that would appear to be the last thing to be obsessing over. ("Perp walk" comes to mind and what about all the high end personnel that are coming to PPHM for "public options" incl of Garnick, Marsten, Menander and many others.)
2. IMO the above "going private" scenario is about 100 rungs lower in probability than the second idea that the science is "suddenly" no good. And, this idea is not too good in its own right. I am sure it is possible that every IST doesnt go perfectly but, one of the things I happen to like about PPHM (remember there "are" reasons we are all in this investment) is that the science has been "remarkably" consistant across a broad spectrum of apps. Also remember, the number one reason a new drug fails at the FDA is for reasons of safety and side effects. The area where PPHM products have been the most consistant is in improved safety, side effects, methods of delivery,time of dosing etc.. In addition, while mgmt/BOD are rightly criticized for their financial and PR "passivity" , they are increasingly "aggressive" in expanding the clinicals. These guys "love the science". (Note today on 5 more sites for pancreatic cancer). The FDA, all the ISTs, our top regulatory team, the top scientific team led by Thorpe et al all love the science. So calm down. Don't let "price" send you the wrong message-- for reasons that have to do with market conditions, poor financings, poor mgmt planning etc.,---regarding "value" that has to do with science. THE UNDERLYING PREMISE IN ALL SCIENCE IS THE ABILITY TO REPEAT THE EXPERIMENT. EVERY TIME PPHM REPEATS THE EXPERIMENT THE RESULTS ARE CONSISTANTLY GOOD AND ACTUALLY IMPROVING AS PPHM IMPROVES THE METHODOLOGY AND IMPROVES ITS UNDERSTANDING OF MOA.
Now, my last real time example and then a short "imagination experiment" and I am going to dinner:
I trade OXY and write calls against it in my IRA. Today OXY (with about 812MM shares outstanding--that's right 812mm shares) rallied nine points on the "benign" announcement that it would report its qtr on Oct 27th WITHOUT ANY NEGATIVE PREANNOUNCEMENTS. That's right, it rallied nearly three quarters of a billion dollars on that news and an up market. That shows you what a piker the movement in PPHM really is.
Now close your eyes and imagine that PPHM "announced" it had reached an agreement with the FDA on a definitive path for a registrational Phase III in Cotara. It might not be worth the 750mm move in OXY but, it should be worth something. Further imagine (50/50) that the FDA granted PPHM an SPA. That might be worth more market value. Further imagine that some time in the 1st or 2nd qtr of 2012 PPHM announced a BP partner in brain cancer for Europe that gave PPHM some front money and paid for the PHase III trials. That might be worth some more market value.
Further imagine that during the trials, PPHM was selling the drug under the SPA in the U.S. or India or Europe-- while the trials were ongoing-- and killing PPHM burn rate. That might be worth some more market value. Imagine that PPHM did an ATM for thirty or forty million dollars between 3-5/ share. How would the company look then???
No part of the above thought experiment is beyond the realm of possibility or even probability and there are better possibilities, much better, coming behind Cotara.
IMO stay the course.
Confusion to our enemies and regards,
RRdog
There are times when price divorces from value. Then you look for stocks that have catalysts so they are not "value traps".
PPHM would seem to fit both categories. If it ever starts to act better technically to confirm the value and the catalysts, then I would continue to average.
1. average to price
2. average to value which I believe being created at a much greater rate than dilution.
3. average to maintain percentage vs dilution-- say 10%
4. Average to have low priced trading stock in case of any upside surprises
All IMO only.
Regards,
RRdog
When you have a cash flow dilutive problem, salaries and BOD fees should be "deferred" until the "burn" is reduced and a non dilutive cash infusion from a deal is effected. This is business mgmt 101.
Regards,
RRdog
Gupta speaking at the surgical conference is of interest to us especially if his surgical technique is superior. His results in the clinic were the most impressive.
Regards,
RRdog
IMO this message board is still too concerned with every stock tick up or down. The technicals are still bad. Today was a perfect example of negative alpha. So, let's move on.
Attention, IMO, is better focused on dilution/ BOD and business mgmt that needs strengthening re financing and deal making.
In answer to your question:
"Compassionate" usage during Phase III for Cotara would be an "SPA". If PPHM was awarded an SPA the deal for Cotara IMO would be larger than otherwise. However, after parsing all the announcements and language, it sounds like an SPA is 50/50 at best and PPHM wants a Euro partner while hoping to retain US rights. Under this scenario (which personally I hope will change and morph into US partnering as well since PPHM has never demonstrated any marketing expertise) I could envision the geo partner paying for an extensive 2 year phase III (relieving PPHM of this burden) and giving PPHM some front money, milestone payments and a fair back end. I do not anticipate enough front money to alleviate "going concern letter" or the ATM strategy.
Under this scenario there should be some benefit to PPHM from the viewpoint of overall credibility. If U.S. Cotara rights were also licensed, then this situation would be improved IMO (though not yet in the opinion of PPHM.)
The Bavi viral testing is of more interest to me. Firstly, this announcement re completion of enrollment was on schedule. Secondly, the market for Interferon and viral writ large is so big that a licensing partner for Europe, Asia, US or combo of all three could actually move the needle on GC letter and ATM as well as vastly improve overall corporate credibility. The timetable is obviously 1st qtr for results of the enrolled, "randomized", Phase II. I have near 100% confidence that the safety profile will far exceed Interferon but, I am not convinced yet that the efficacy data will be enough for licensing. We may need to run additional randomized testing. Since these viral tests are much faster than Cancer testing, I would watch this area closely.
On the other hand, SK is flat out telling you he is open to licensing this viral area and is viewing it as a "specialty " that would not interfere with Cancer platform negotiations. "Earlier stage licensing" would be possible in this area since the milestone step up payments would be somewhat obvious.
Still looking forward to "randomized" results in NSCLC.
Still do not hear further clinical plans or partnering plans for "imaging". Still do not hear further clinical plans for Metastatic Breast Cancer. Of course, such forward looking clinicals require money and put more pressure on PPHM to develop a financial Plan B. (For the life of me I can not understand why, if PPHM BOD and Mgmt are incapable of working this financial problem out why they don"t bring in some smart people who do know how to work it out the same way they bring in good regulatory people. It is in there self interest to do so and there are many ways to approach the problem without a change of control.)
Example: This evening Kramer interviewed Junius at IMGN re TMD-1 which is their drug for Metastatic Breast Cancer. Their Phase II results so far do not sound better than the results PPHM posted nor does their drug sound as broad in application. However, PPHM could never get this kind of publicity because it has no balance sheet, no credible BOD and no partner. In the case of IMGN their partner is the very same Roche/Genentech from whence all of our fine people come. (I am sure this last fact has not escaped Dr. Garnick and is part of his calculus.)
IMO the only real benefit of a lower stock price is that it puts more and more pressure on PPHM to cut deals.
Regards,
RRdog
Sorry. My source was incorrect. It is Roswellcapitalpartners.com
Regards,
RRdog
In case anyone on this board would like to pass anything on to the BOD and Mgmt of PPHM:
cjohnson@roswellpartners.com
ericswartz@roswellpartners.com
sking@peregrineinc.com
plytle@peregrineinc.com
Regards,
RRdog
What are we worried about?? Those of us who are still here are prepared to go to zero with this stock and there's only about a point to go. So what is there really to worry about? The damage has been done.
Well, one thing I worry about is whether or not to keep averaging and increasing position slowly to offset dilution. (As an aside, one reason I accumulate so slowly is that I have not found one "alpha trading day" for months) Therefore:
Let's talk about "various" types of valuation-- just so we don't get too confused by market price.
1. There is the valuation set by the weak and strong hands "marginal" trader. This is where you set valuation, in a small stock with poor market making and sponsorship, by the last trade of the "weak handed" trader. We all suffer from this valuation aided and abetted by a recessive market and a "tone deaf" board and mgmt that have not grasped the fact that stock price is a "fundamental". While PPHM is still funding, "stock price" is one of the most important fundamentals.
(Note to mgmt. Since you will be presenting at JMP conference to "stock investors" not scientists, you might mention the dollar size of each of the markets in your product pipeline and what various percentages of each market could mean in future revenue to PPHM. In none of your presentations have you ever talked about the business implications of the scientific achievement. In none of your presentations have you ever discussed what comparable products have been partnered for in front money and royalties. This is an investment crowd so talk a little business. This goes double for possible business partners that may be in the audience or bankers of such partners.)
2. There is the "funding" valuation. This is the value PPHM can get through ATM sales and Pipe sales because PPHM is poorly financed and needs funding to continue their brilliant scientific program. Again, because of poor BOD, mgmt and poor planning we all suffer from this valuation.
The players that funded the last pipe are very sophisticated and because there is great uncertainty as to FDA, partnering, time to commercial events, illiquidity , and there is uncertainty to ultimate dilution-- these players extract a very deep discount to value #3
3. Value #3 is the "current" straight line discounted future value adjusted for risk. PPHM is currently trading somewhere between one fifth and one tenth of this value. We know this value is "theoretical" because it assumes many milestones at FDA and commercial partnering and success. Since this message board is sophisticated it knows we suffer from this valuation because the stock does not trade as an ascending straight line but trades as a "parabola" with long tails and jumps in step functions up or down vs milestone events.
4. Value number 4 is the commercial value of various products being developed by PPHM. Paradoxically, some of these products can have more value than multiples of the whole market capitalization. These values are unfortunately hidden until revealed by certain milestone events. We all suffer from this opacity.
5. Enterprise value. This is normally not a very important value. The "small version" of this value might be the assets minus the liabilities. PPHM has next to zero liabilities, about 28mm in cash and I guess about a 60mm value in Avid. (Avid's value , without getting too detailed, is some function of profitable outside sales and the 10-15mm / year it saves PPHM in burn--60mm sounds conservative). The only thing that is interesting about the "small version" of enterprise value is that the stock is trading close to this value.
5 b. Enterprise value writ larger-- if you include the entire IP platforms and patents. You can put your own valuation on this one. Recently, we have seen what the market can value IP for in some of the acquisitions.
The key issue from here is how much dilution will we have to take getting from point A to point B where point B = zero ongoing capital dilution? A subset of this question is: will management be able to find any other method of finance (such as leverage, or earlier stage product sale, or sale of non-core assets as examples) that will be non-dilutive to capitalization even though possibly dilutive to future cash flow??? So far mgmt and BOD have been unimaginative, and uncreative in this area so this is difficult to answer. The one positive in lower stock price is that even sub par mgmt can see the dilution trap and begin to think about Plan B financing ideas.
To give you a good example of how bizarre this particular PPHM situation really is I offer the following "thought experiment" leading to valuation #6
6. Theoretical "new issue" value (IPO) assuming a qualified BOD with Wall St and Biotech connectivity and a reasonably flat market place at time of IPO. I.E. what if PPHM were private and for the first time came public now??? Again, assuming such a BOD would be able to tell the remarkable pipeline story and find a major IB, it wouldn't surprise me if they could sell 30% of this company for $300mm and proceed to finish clinical trials and find commercial partners. This is just "theoretical" but, it gives you something to think about. (If you think this is crazy just think about the valuations many biotech companies have come public for with much less pipeline. AS an example look at the valuation and limited pipeline of VRUS)
Remember, this is just IMO re value #6 and I might be high but , most of you would probably agree with me if I used 300mm-500mm as such an IPO valuation. (These are valuations that even PPHM as we know it used to trade)
Even after fully acknowleging all the flaws at PPHM that have been very eloquently discussed on this board (and I am in agreement with most of this discussion):
IMO, future dilution may be tempered by improving sales at Avid and by product sales and partnering at various early stages and in various regions of the globe. Dilution also may be tempered by milestones that upvalue the stock and allow for funding at higher prices. IMO I do not anticipate so much dilution as to divert PPHM from reaching a value many, many multiples of current price. You can pick your own valuation targets. I am sure my own targets will be revised milestone by milestone. IMO I would stay the course but, you don't need my advice since you are already doing just that.
Best Regards,
RRdog
Jake
I enjoy your posts from time to time so I am going to answer you and then I'm going back to work and we'll just have to see what happens.
Lytle is now justifying this last sale of equity by "touting" the increase in new Institutional buyers (26%). So, if in the past he has told you something else, he is singing a different tune now.
What they really want (no matter what Machiavellian scenario one subscribes to) is a run up in stock price to $5-$10 a share (only 1-2 pre split) and then knock out 10-20mm shares and lets get on with the job. Financially speaking--- the price of the stock is A KEY FUNDAMENTAL.
Ergo , they need to do everything possible to stimulate that kind of a run and IMO they have the ammunition to do it. The sooner the better.
Regards,
RRdog
Geo,
I have a great deal of respect for your posts as well but, I know exactly what I am saying on financing and I really have to disagree with you on this one. Everyone knows that the small loan with the big lien on IP is easy to reconcile (in fact it runs off in the next number of months) but, it is symptomatic of the larger poor thinking in the financing area.
For ten years now this same BOD and same Mgmt have carried a "going concern" letter because they have never properly financed this company ---ten years-- a decade. The modus operandi is to defray some cost with Avid and to keep selling equity through pipes or ATM. THAT GAME IS OVER whether they know it or not. Let's say for example that they have created three billion dollars worth of potential value in future product. They just sold 10% of that for $6mm. If they stay on this course they are going to sell 20% for the next $6mm -- everyone knows that the last money in when you need financing is the cheapest. Just look at the history of the last ten years.
I'm just trying to goad them into some other course of action. Leveraging or partnering up even prematurely in a "loss leader" on some part of the pipeline is preferable to giving the whole company away as a sub dollar stock. Or sell "imaging" or (as even SK raised the issue) license viral. Anthing is preferable to this moronic sale of the company for less and less value.
I know you love the science as much as I do, but surely you realize this course of action can not continue if the shareholders are to realize any large value. I'm just trying to goad them to move on "plan B". If they have a better idea than any of us that would be fine but it is time to talk about "plan B" because "plan A" logically leads to a sale of the whole company for next to nothing.
Regards,
RRdog
I have to agree with Jessme on the issue of this loan.
The clear implication by the PPHM BOD and Mgmt is that they are developing IP with literally BILLIONS of dollars worth of value and that this value is getting ever closer to being realized in several areas i.e. Cotara, HepC, Imaging, Phase II randomized testing in Bavi Cancer.
Therefore, the sooner PPHM clears up this silly little loan which has a lien on all this IP then the sooner PL can go into a real investment bank and figure out how to borrow a much larger amount of money vs IP or Avid or whatever. A small loan makes no sense what so ever. If a loan in the neighborhood of $50mm-$60mm was doable that would carry the company for 1-2 years without much dilution. The loan should be without onerous prepayment penalties as PPHM would want to pay it down with proceeds of any deal capital/front dollars or sale of equity at much higher prices (over 5).
If PPHM cant make a large loan then no loan would be much cleaner and preferable in the sense that it voids any possibility of mishap and takes the issue off the table in any future negotiation.
Early stage deals are doable on multiple fronts for PPHM. I call your attention to the multi billion dollar initiative GE is announcing today in the imaging and breast cancer area. They would be an excellent candidate for PPHM to open discussion since they make the screening/scanning equipment. PPHM only discusses imaging in the smallest perspective that has to do with the diagnosis and prognosis for their own therapies. However, imaging could be much larger if you look at it as a screening process for cancer in general in the same sense that people take colonoscopies for colon cancer early detection. PPHM should realize that the insurance companies (the money key to this whole area) are highly in favor of screening procedures as it is much, much cheaper than paying off on the disease.
Other large companies involved in imaging are ABT, JNJ,BAX, BDX.
In light of this kind of activity why have IP tied up for nothing.?????
Regards,
Rdog
One of the Apple think tank guys, Kay, used to say "The right perspective is worth 80 IQ points". Boy, was he ever right re aapl and IMO I think the same logic will ultimately apply to PPHM.
There are a bunch of guys on this board with about a "5 minute and 5 cent perspective" that think they know what they are talking about and think that repeating their position a few hundred times either will make them right or convince others to sell their stock. The really insidious part of their argument is to keep pointing to the ten year chart. Seven to eight years of that chart are irrelevant to the current fundamentals and personnel and the one issue that is accurately portrayed is "dilution". The day the dilution issue begins to be solved and dissolved this negativism will also dissolve (think of the wicked witch in the Wizard of Oz when somebody finally pours a bucket of cold water on her).
The reward vs. risk in PPHM is billions of dollars on the upside in new product creation vs. about $120mm dollars or $1.25 on the down side. Do the math, IMO stay with your position and don't be seduced into trying to catch .10-.20 cent trading swings.
As poorly as small stocks "chart" and trade against "technicals", they are even worse against "straight line discounting from imputed future value". Small stocks in the value creation business trade in "step functions" vs news or regulatory hurdles. Their charts don't rise from left to right in a straight line but rather, they are "parabolas" with long tails to the left that can suddenly soar into almost 90 degree upward moves on news.
This is how they should be. These stocks are unproven and "unapproved" and until step functions occur they trade way below "discounted present value". Some of this boards' members are getting wise to this and looking at such stocks as DNDN and others and observing how they traded prior to and after proving out.
Now let's talk about this issue of dilution. Even Roger Adams--the last of the Mohicans-- finally asks on the cc in a timid, stuttering voice about "partnering" vs Cotara as a way to "relieve some of the downward pressure on the stock price from constant ATM selling". Steve's answer on the call is almost as complex and obtuse as Rogers' question. No "one size fits all" answer, but, lots of ways to go. Then Steve begins to answer a number of questions that Roger "didn't even ask". He talks about Bavi partnering mostly "ex-US" (a euphemism for foreign partnering), "to drive US developments". Then Steve refers to HCV partnering--"just outright license to someone" because it's a "specialty".
Many people in the stock market in general complain of high speed algorhythmic trading. One of the little known aspects of this trading is that the "bots" are picking up on specific words as well as math. The word "partnering" was used on this conference call more times than I can ever remember. In one sentence Steve actually refers to "our partner" in the present tense. He must have partnering on the brain. Either we have a partner (which would be a material fact and PR) or we don't. Steve shouldn't delude his shareholders and worse he shouldn't delude himself but, HE SHOULD GET PARTNERS. If our scientists were this sloppy they would be laughed at in peer review papers--- thankfully they are not. ( As an aside, Garnick did not use the key word "SPA" even once--perhaps he is conservative when it comes to FDA matters-- and Lytle never used the number "$1.11" or the word "dilution" even once--perhaps he just thinks he is fooling someone).
The real takeway from all this is that "partnering" in one form or another is now front and center on the agenda. I have been ranting about this for years and am gratified that even this mgmt and board are coming around. More specifically, I have been lobbying for "vertical" partnering and "geographic" partnering rather that "platform" partnering. Necessity (not my ranting) may be driving mgmt and BOD to a position of "earlier" partnering. They may have gotten the idea of "outright licensing" of non core assets such as Bavi HCV. One day they will come around to partnering "imaging" as it doesn't interfere with PPHM larger efforts at all. Their brains seem to have at last clearly grasped the benefits of "geographic" partnering. One day they may even bring in mgmt that understands the "tricky area of vertical partnering in the Bavi cancer platform".
In case anyone on the BOD or mgmt reads this stuff or in case it is FORWARDED --partnering is the key. Going it alone "underfunded" is ridiculous. One of the reasons that our CFO is so universally detested (besides the fact that he insults our intelligence by boasting about his recent stock sales) is that he thinks his job is "to carefully match" PPHM funding to need. Actually, his job is to "anticipate" funding needs not "match" them. A sixth grader could match needs. If , for example, we need another $50mm there is a big difference between a sale of stock at $1/share or 60% of capitalization and a sale of $50mm of stock at $5/share or roughly 12% of the cap. (That IMO, could be accomplished for even more cash after partnering) Eric S. should really be the guy on the cc timidly asking the question about dilution not Roger. IMO the CFO has cost PPHM an extra 25%-45% of share dilution since the reverse split by "matching" not "anticipating" PPHM needs.
Of course the best way to capitalize the company is to SELL A PRODUCT. That's what businesses do. SELL A PRODUCT. That way you capitalize with zero share dilution. It is business 101 that you get more from selling retail than wholesale. I.E. it is better to sell something for less than top dollar (but with a future royalty) than to "wholesale the company" by selling 10% at $1.11. By emphasizing and repeating the word "partnering" PPHM BOD and mgmt appear to be finally getting the idea. It looks to me like their favorite course of action will be foreign sales. The course and the arc of research and clinical trials and regulatory events are supportive.
Another thing the CFO might suggest would be to restructure the debt to add working capital without dilution and adding debt or partnering to Avid (Steve brought up Avid unsolicited in the context of slowing dilution). Certainly, tying up all the IP vs about 1.5mm in debt is inane.
The analyst at MLV raised the question of "imaging" in what appeared to be a "staged" question and thus put partnering of this technology front and center. Steve's "prepared" answer (IMO) was in three flavors implying that a lot of thought and planning is now occurring re imaging. IMO imaging should be partnered as soon as possible. BTW PPHM always talks about either "retaining" a technology or partnering it. That is just a negotiating ploy IMO. They have no choice but to partner IMO.
I remind members of this board that the market may start to reflect value six to nine months ahead of expected events and that products do not need regulatory approval to be partnered. I continue to average in stock slowly and IMO still think a double to triple is quite possible sometime before end of first quarter of 2012.
Best of luck to all,
RRdog
Analysing the JMP analysis (particularly for those who were unable to obtain the entire report.):
Given that everyone has their own slant on things and their own idea of what is important, the JMP report seems overly focused IMO on Bavi for NSCLC and Pancreatic cancer. This report appears to me somewhere between overly conservative and inane. The report has a target price of $5/share and, though I assume that is over the next year, it is not clear to me what the time frame is precisely.
Essentially the analysts base their entire valuation on a double discounted valuation of these two aforementioned bavi indications in an out year and only for "domestic" market and assuming only a 10% market penetration?? Even with this abysmal market penetration they project 920mm of revenue by 2019 with a launch date of 2016 or earlier in these two domestic indications??? IMO bavi will either fail or get much more than 10% market penetration.
Strangely:
1. The report puts a $73mm "enterprise value" on PPHM which as best I can discern seems to be a combination of cash and Avid??
However they do not add this to their inferred future valuation which is solely derived from a discounted cash flow. This inferred valuation is what leads them to their $5 target??? (For any ATM conspiracy experts the report has five million more in cash than last reported at 23mm)
2. No value for Cotara in this model though Cotara is noted as one of their "catalytic" events for Q411 and 1H12 ???? No potential value for Cotara platform vs any hard tumor type other than brain cancer.
3. No patent portfolio value though the analysts believe PPHM IP provides broad coverage into the mid 2020's. (This seems odd in light of recent financial events.)
4. No value imputed for any foreign sales of anything??
5. No value imputed for Bavi viral though this is also listed as a Q411 catalytic event?? HCV "randomized" phase II trial expected to be fully enrolled in Q3'11 (within 30 days) with EVR data expected in Q4'11 but no imputed value in this model.
6. No value for Bavi Metastatic Breast Cancer though recent results are "compelling" MOS and subject IMO to possible regulatory surprise.
7. No value for Bavi Prostate or liver??( I mean come on --if the thesis is MOA on a broad spectrum platform why target only NSCLC and Pancreatic cancers???)
8. Zero valuation for imaging and diagnostics.
9. Also, strangely, a very quick discussion of balance sheet and funding immaturity and no discussion of BOD isolation. No discussion of increase in rate of dilution. No discussion of alternate funding methods.
10. No real discussion of the "quality" of regulatory team and quality of basic scientific talent starting with Thorpe. Management profiles and discussion do not mention such people as Menander and Garnick and other recent recruits in manufacturing, etc..
11. Small discussion of value boost from potential partnering (one or two sentences). No discussion of various types of partnering ie. verticals or geographic. IMO, a partnering discussion should have been a large part of the conversation with PPHM mgmt and a large part of this report as it would lead to balance sheet improvement, improved credibility in the market place, improved position at the FDA, removal of going concern letter, less dilution, possible improvement at the BOD.
This report is almost as surreal as the current market valuation in PPHM. It will be interesting to see if this sponsorship adds meaningful institutional interest.
Regards,
RRdog
Congratulations to PPHM for the JMP sponsorship via report and healthcare conference. (I, of course , agree with the wag post that JPM would have been better.) JR may have a point about a possible Stifel Nicolaus report as well. Mgmt finally doing something about increased sponsorship. Will really be interested in the "percent of institutional ownership" over the next while. That's where the efficacy of all this sponsorship will show. Also, watch to see if there is a change in the quality of the buying. Does the stock do better in the pm session?? Can the stock cross the 20 day and 200 day MA's.
As an aside to mgmt and BOD, JMP recently did an IB raise of about $45mm for a small biotech. At $4-5/share they could do the same for PPHM if the company needed it.
Also, am very pleased about the presentation at the imaging conference in S.F.. I have been pushing this imaging area for a long time. There are issues about technique and cost but, people have been known to pay up for the finest things in life (see Tiffany stock and reports in a recession). If PPHM technique can become the "finest early diagnostic technique" for hard tumors, this area is big enough to become a "tail that can wag the dog" and it is absolutely getting a zero valuation re stock value. Kudos to mgmt for moving this area forward.
Lastly, have been delving more closely into the metastatic breast cancer data. IMO (really just a swag) there is a modest possiblity of a regulatory surprise after the third signal seeking test reports MOS. It is possible that the randomized, double blinded studies could be designed as a Phase IIB or Phase III requiring a second FDA meeting. This would then beg the question of vertical partnering or regional partnering to finance a larger, more complicated study, perhaps encompassing multiple combo drugs i.e. doxy , paxy, etc.. Again this is just supposition on my part. However, as the JMP analyst notes, the MOS data is "compelling" (sic).
Regards,
RRdog
I am encouraged by the recent announcement re Metastatic Breast Cancer. Perhaps more on that and other fundamental valuations later. For now prefer to focus on the market activity and BOD options.
The whole up move to $1.88 took place on about 775m shares of activity and less than about fifteen minutes of trading. The entire rest of the day was sell off activity on balance for about 1.7mm shares.
The "disguised" shorts/mm's/traders certainly are active. IMO, they have figured out how to "play" this BOD and mgmt team perfectly. They know mgmt has its head into the science and the clinicals and is not paying attention to market issues. They know BOD has "bovine" intelligence, has not solved the balance sheet question "in over a decade" (imagine that--over a decade without a real financially secure balance sheet) i.e. the going concern letter, and the ATM method of financing by slow cuts, and has severely limited PR and communication skills. Lastly, the disguised shorts/traders are aware that PPHM has a great story and is in control of the news releases.
Since the "disguised" shorts/ traders can't short without an uptick and really don't want to short strength, they sit for weeks and months between announcements on the bid slowly accumulating a position. When there is an announcement, IMO, they wait for buying to dry up and for any net unhedged shorts to "stop out and cover" and then they begin to sell. Since they are selling accumulated long stock, they are what I call "disguised" shorts as they can sell and if necessary pound the stock without an uptick. If there is no resistance, the pressure continues. They will pound the stock lower until they are out of all long stock at higher than average cost and then begin to accumulate all over. They want their accumulation for trading purposes to be as low as possible and IMO a distorted valuation. True longs would never pound the price IMO but instead, try to distribute in a more subtle manner.
IMO, I call them "disguised" shorts or just "good traders" if you prefer but, the "point" is they care little about the fundamentals of PPHM and a great deal about "short" term market trading conditions.
Given this bizarro market world my recommendations for the BOD would be:
1. Change the PR. It is obvious the job is not getting done as the institutional ownership has "plateaued" for a long time now while the clinical data is outstanding and continues to improve. This matters because the higher the percentage of institutional ownership coupled with ES position and Dart position the less room there is for these traders to operate with impunity.
2. PPHM is really ripe for a banker --Stifel Nicolaus if BOD likes. Bankers want to make fees and upside wts. PPHM has such a great story and clinical data bank that it qualifies for aggressive new research and a secondary at much higher prices.
The bankers make big fees and wts which could net them a fortune. PPHM only has to sell 10mm-20mm shares between 3- 5/share to solve their financing (prior to partnering when it can really do PPHM some good), curtail ATM, and remove going concern letter. This isnt all that big a deal if well planned and executed over intermediate time. Deal should be in place before supported by third signal seeking trial data, FDA Cotara date, Bavi NSCLC data etc., etc.,etc.
3. If the BOD really believes what the scientists and mgmt are telling them about the value of their platforms, then I would raise the level of the poison pill by at least 300%. It is currently set at a ridiculously low valuation. That's right, I would raise the level.
4. Triple ditto re this loan to midcap. I would want a much larger loan. To have potential billions of dollars of IP tied up as collateral versus a couple of million dollars of loan is beyond absurd. I suspect, IMO, that this loan has more to do with "control" of the company than it does with need. If that is the case, then renegotiate it for a much bigger amount that can defray dilution for a long period of time, or if it can't be renegotiated, pay it off and negotiate a much better loan with another third party, where the BOD still have control, versus this collateral. This is doable.
5. Even if BOD thinks they have a "tacit" partnering deal or is afraid of losing control they should still bring in two heavyweight bio- universe connected new board members to add credibility and visibility and open up new horizons. This would not threaten control. At the least they should be adding such connected heavyweights to BOD advisory committee and signal that they mean "business".
If you are on this message board, agree with me, and want to take some action, forward this message to the BOD and mgmt. You all know their email addresses. Maybe if they see the suggestions a hundred times, it will dawn on them that there are effective actions they can take that ultimately will be much less dilutive as the science moves forward.
Regards,
RRdog
Additional thoughts and comments:
PPHM appears to be in virtual lockdown on all communication. IMO this is due to Garnick fear of offending the FDA and Garnick and BOD fear of any inside info leakage that might offend the SEC. There is too much at stake to take any unnecessary risks. In some weird , paradoxical way this may be bullish.
The negative result of this policy is that a shareholder can't ask a question of IR and PPHM doesn't put out the frequent PRs of yesteryear. I suspect they may not even announce the FDA Cotara date as it is not a material fact. The inverse of this is , of course, if they do say anything it will be material.
This communication policy leads to huge stock trading volatility, rumor, and investment frustration. Look for "alpha" where PPHM actually does better than the market. If IMO, you can pick up a trend, buy the trend on dips only, as there will always be ample opportunity in this brave new world for the MMs to find reason to sell the stock down.
Taking another look at patents---the world has "suddenly" awoken to the fact that patents and IP in general have real value. Todays pickup is EK which trades for about 5-600mm valuation with patents valued at over 3 billion. Stock up 20%. The Motorola Mobility patents acquired by GOOG appear to valued at about $400,000 per patent on average (17,000 patents+). I suspect one day the world will also wake up to the value of the PPHM IP and patent position and it will come as the same "shock" it was on the Motorola deal. (It reminds me of that scene in "Casablanca" where the police chief(Claude Rains) shuts down "Rick's Cafe" because he is "shocked to find there is gambling going on" and then Sasha hands him his winnings.)
IMO another conjecture: the way this BOD acts, it has already tacitly made its deal contingent on milestones in research and FDA movement. They do not care about the stock action whatsoever. IMO this is a narrow view by mgmt and dilutive but so be it. IMO no amount of dilution ie. 10-30 million shares, matters to mgmt and BOD. The only thing that matters is getting to that tacit deal for some larger number.
It remains my opinion that Garnick did not come to "miserable little PPHM" in a random way. Therefore, my prime suspect for a deal is Genentech/Roche. My first inkling of this came in an early cc with Garnick, when he was not familiar with PPHM ATM methodology, and he assured people that PPHM would have no trouble funding their trials. IMO, if PPHM needed to borrow some money down the stretch, it will be available. So far, no need.
PPHM has an interesting presentation coming up at a Stifel Nicolaus biotech conference in Boston on Sept 7-9. Stifel is a new name for PPHM and better quality than some previous conferences. Big institutional following. Also Stifel was involved with "HALO" which is a client of Avid and Stifel was involved with Genentech as well. IMO PPHM could get lucky here and pick up some new institutional buyers particularly if they use this forum for any news. It will be interesting to see the transcript of this presentation.
Regards,
RRdog
Still "here" and sticking to my prior position that PPHM was probably a trading double between now and Feb 15 from $1.80 and possibly a triple if it moved lower. Bot a couple of thousand shares every nickle down to $1.20 as did many I "assume". This is still a trivial amount compared to my overall position and I will use it for trading over the coming months. Traded out of some today.
Am at full speculative position size. Though I would like to double or triple that size into investment grade, it is impossible without real, hard fundamental change. (In all fairness biotechs have been known to fail in phase III no matter how many shots on goal they have and many of PPHM shots are linked to same compound.) Such fundamental change would include some combination of the following:
1. BOD strengthening (see 18 prior comments for detail)
2. Early stage partnering with enough cash to remove "going concern" accounting notation and strengthen balance sheet.
3. Early stage partnering with enough cash to suspend ATM
4. Complete overhaul of PR, IR and communication strategy.
5. FDA date for Cotara leading to a defined phase III and or SPA.
6. Great interim randomized data for Bavi in NSCLC.
7. Great data in viral apps
8. Imaging deal
I am very encouraged by the aggressive pursuit of prostate cancer
by the scientist/regulators/mgmt. signalled by the opening to recruitment in prostate testing on the gov clinical site. (I can not for the life of me understand why this does not merit a one sentence PR.)
The pursuit of prostate cancer carries two positives from my perspective. One, it is an absolutely huge market dwarfing brain cancer for example. Two, it signals again mgmt committment to proving Bavi as a broad spectrum drug with an entirely unique mechanism of action.
As an aside, this week witnessed GOOG buy Motorola Mobility for 12 Billion dollars (!!!!!) largely to bolster their patentable position in order to defend their market. The 12 billion may prove cheap at a multiple. As I have stated before PPHM has done an A plus job in surrounding their technology with patents (I believe over 400 by now). "If" parts of the PPHM platforms confirm our suspicions re cancer and viral activity or combo activity this patent position re the cell surface and PS technology going forward is massively valuable.
"Time" re FDA Cotara and timing re seasonality continue to be on the traders' side of the equation IMO. My technical work indicates a short term technical breakout to the upside at $1.41 with a short term target of between $1.79 and $1.90. Instead of selling rallies I would now be buying dips as long as $1.17 is not taken out (if I were purely technically trading the pattern). If market gets real nasty and $1.17 taken out, then IMO I would go back to slow accumulation every 5-10 cents lower as we get closer to FDA Cotara.
IMO only , todays buying did not have the characteristics of short covering. Since there was no real news and it was a selling day, the shorts that want to cover usually sit on the bid and, if shown enough size to make a difference, might come up a penny. This looked like real long buying on significant buying volume to create the breakout. Time will tell but PPHM should work higher in steps. The day we see a strong PM session in the stock will be an interesting day.
Good luck to all
RRdog
I hate hiccups because they cause delay and imply further dilution. However, when Garnick saw enrollment difficulty he brought in Menander and PPHM retooled the protocols and sites were expanded (and perhaps scope of the label as well). I like his aggressive approach and response. Sometimes hiccups happen and the "response" is important. The response here was excellent with no structural damage. (Remember PPHM lived through a hiccup with the US Govt where at first they failed on the contract and later acquired 10's of millions of dollars in business). This stuff happens. Garnick is demonstrably better, more aggressive management IMO.
It has become obvious to me and others IMO that the "driving force" in mgmt and direction is Dr. Garnick. Of course , things funnel back through SK so he can channel back and forth with ES and the investigative scientific team headed by Dr. Thorpe, but the driving force is Garnick. Garnick comes to PPHM with the ability to sort through the science-- re its relevance at the FDA-- and the proven ability to "kill" a program he doesnt like. He likes what he sees and quickly the trials are tooled up aggressively on five fronts. Again, I like his aggressiveness. IMO, he will go for the SPA on Cotara if the FDA discussion gives him the slightest opening.
In case Dr. Garnick reads this board , I again suggest he become more aggressive in the area of "imaging" and other ancillary IP and (in the same mode as Menander) Garnick hire an ex DNA guy that is an expert in leveraging IP and that reports directly to him. It does not matter to me whether PPHM gets large dollars upfront, delayed milestone payments or even more modest dollars because there are clearly some major benefits to trying to commercialize IP i.e. imaging:
1. It shows that PPHM can commercialize "non crown jewel IP"
2. It shows that PPHM can partner with substantial ( imaging) companies.
3. Imaging is similar to "device" approval at the FDA which is a much less strenuous process than NDA. Real efficacy is proven in the marketplace.
4. The FDA and oncologists in general should welcome a technique that could advance by a large increment the diagnostics on hard tumors.
5. PPHM Avid unit could pick up large and lucrative manufacturing business from imaging.
6. PPHM could pick up copious amounts of ancillary safety data from use of Bavi in imaging.
7. Partnering here would mean "no costs" to PPHM to leverage this technology.
8. Partnering "imaging" could prove the template for licensing
other "non core" IP. IMO PPHM has scores of non core patents that could be sold.
9. PPHM becomes familiar with more companies in the biotech universe via this contact.
10. Best of all--IMAGING IS A HIGHLY LUCRATIVE BUSINESS--and could mean large royalties to PPHM not dependent on a drug.
Clearly all the short term traders were disappointed on their speculation prior to the CC that drove the price up. After no new blockbuster announcements the traders have spoken and the price is lower. However, under rule 201 shorts seem limited to only selling into upticks (strength) which is a very dangerous proposition in a small biotech. Therefore, once all the selling is over re the CC, I envision (IMO) both a "positioning" opportunity and a "trading" opportunity in PPHM. From here through Feb of 2012 --- a period of time which encompasses both a lot of news for PPHM and the seasonally strongest time for performance (January effect)--- IMO one could easily get an intermediate trade of between 100% from current price and 300% if the basis goes a little lower.
I am predicating my opinion on the belief that it is a high "probability" that Garnick can take PPHM to the FDA re cotara in the fourth calendar quarter and get a reasonable Phase III protocol. Therefore:
1. THE BIG NEGATIVE IN THE STOCK TECHNICALLY IMO IS THE ATM AND THAT IS DRAWING TO A CLOSE AS PPHM GETS CLOSER TO PARTNERING. If you view this as a "straight line rate of change" between now and the first quarter of 2012 this facility is running off. Every day is one day closer to the end of this ATM. IMO if this derivative changes the "stock price" should do much better.
2. Deals of regional or national nature are possible.
3. The total dilution through the first quarter of 2012 is manageable from here even if undesirable.
Up or down a point is "not really the point" however. Even a trade of 100-300% is not the point. I prefer to stay focused on my "first" long term objective which is 1-1.5 billion in market value or roughly $15 per share. That's why I am taking the big risk in PPHM and I assume that is why everyone else on this board is taking risk. As part of this first objective I include "partnering" that:
1. improves balance sheet
2. Improves ability to conduct large scale trials
3. improves manufacturing performance at Avid
4. kills the ATM and "going concern letter".
5. Completely changes the credibility and aura of the stock trading in PPHM
Too early to talk about secondary objectives without more trial results in Bavi.
Biotech is in some large part a regulatory game. PPHM seems to have assembled the best regulatory team in the industry and one that believes in the various products.(BTW they now seem to be assembling one of the best manufacturing teams as well) That IMO is worth some speculation in size.
If we think about this clearly, this PPHM team has devoted their whole life to developing very high level skills and chosen to come to PPHM (????) when they have proven they could take that skill set almost anywhere in the biotech universe. They are definitely not coming for the BOD or the balance sheet. Therefore, they must "really" love the science in all its full ramifications. They are listening to Thorpe and USW Texas and these are very smart people as well.
This regulatory team has the wisdom to be FDA driven , FDA sensitive and communicative, as well as product driven. Again, IMO, this indicates a high degree of confidence that they will be able to present the product to the FDA in an "acceptable form".
(One does "yearn" for the day when some of these listening and communication skills will rub off on mgmt in regards to shareholders).
I continue to be disappointed in the quality of the BOD. They appear "arrogant". They are particularly arrogant in their attitude toward their own shareholders. When you are arrogant you better be dead right because it implies a rigid, inflexible, and limited way of thinking about a problem. If they are afraid of loss of control or are saving seats for partners they could AT LEAST ACQUIRE SOME "ADVISORS" TO THE BOD OTHER THAN SCIENTIFIC ADVISORS.
Clearly some BOD advisors with the following expertise would be helpful:
1. Expertise in gov't procurement. It is impossible to calculate what opportunities PPHM is missing in this area.
2. Advisors with prior biotech mgmt experience who are sophisticated enough in biotechnology to accurately question mgmt proposals and to suggest alternatives to mgmt.
3. Advisors with heavyweight connectivity to biotech financing or BP domestic or Intl partnering. There is no calculating what possibilities PPHM is missing due to this lack of expertise.
4. Advisors with PR expertise.
The PR and shareholder relations continues to be a disaster area. IMO if PPHM wanted to add two points to price and lessen dilution they could replace current IR with the old Gendel /Lindheim team.
On a more positive note:
I am very positively impressed by the patenting effort.
I am very positively impressed with the new hires.
I am beginning to come around to the viewpoint that Cotara has broader implications in hard tumors which make a deal more likely if we can start with brain.
Furthermore, IMO this message board is seriously underating the "approvability" of both Cotara and Bavi as we focus only on degrees of efficacy. The efficacy so far appears good not great, better than SOC in general and still improving. However, putting efficacy aside, both products have tremendous "peripheral" and "alternative" advantages that may make them very attractive to FDA and ultimately the marketplace. Among these are:
1. side affects
2. ease of deliverability
3. cost
4. new and different MOA
5. long term survivability
6. Treatment time
7. Ability to treat percentage segments of the market unhelped by SOC
Garnick seems to be a master in this peripheral realm.
IMO there is a big difference between "breakthrough" drug and "blockbuster" drug. Blockbuster refers to "sales revenue" and most blockbuster drugs (starting with our favorite Avastin) are incremental improvements. One side note: remember, to be a blockbuster drug for a small company like PPHM takes a lot less revenue than for a BP. What may augment, improve, or add to a BP line of product could really move the needle big time for PPHM.
Bavi looks better to me against viruses than the market place gives credit for as it does not look to compete with a whole host of drugs in this area but to augment. IMO there is little or no market value built into PPHM re virus area. This may change in shorter time frames than we think as virus testing moves much faster than trials in cancer.
I note a lot of argument on this message board re various types of financing, biotech stock comparisons, strength of BOD and stock purchase timing. It is clear to me that JR and JD have a point. In recent years PPHM has underperformed most biotech fair comparisons and PPHM is poorly financed and poorly staffed at BOD level. There really isn't much to argue about on these points. Let's just accept that or sell the stock. It is important to understand these negatives. It is because of these conditions we are afforded the "current" valuation and the "current" opportunity. IMO a better use of time and energy, rather than arguing the obvious among ourselves, is to continue ferreting out information, debunking the ridiculous, and suggesting better ideas. (see messages from random board visitors)
The "time frame" for comparisons about biotech stock performance is an interesting question. I choose the average price between now and Sept 30 of 2011 as my entry point. I always hope for higher prices because of my long bias but I am prepared to average lower. Let's compare the percentages going forward from that average point within that time frame. Then this game could be fun.
IMO the weight of the scientific achievements will eventually lead to partnering and this will "trump" and hopefully eradicate a lot of the negatives.
Regards,
RRdog
Golfho,
The banking thing is not complicated, is SOP, and suffice it to say any incentivising wts would be a "small" fraction of the dilution PPHM constantly suffers from ATM sales at 25% of discounted fair value as currently computed in at least three analytical reports. Since PPHM mgmt and BOD show no inclination to make any signifigant changes in this area let's save the whole detailed discussion for some future time when it may be relevant.
Epilog to my previous technical comments:
PPHM actually went through my $1.90 price objective but it was more like floated through the number with no volume confirmation in what was until today an extremely strong market background.
What is clear from this IMO is the tremendous pressure the stock bears from the ATM. After the quarter ended so there was no balance sheet advantage to be gained for the CC IMO and in the window in time to several weeks after the CC there is really no natural seller against the overall scientific value creation and discounted present value.
If there were to be any real good fundamental news in this time frame and volume were to come into the stock IMO it would move substantially higher on a percentage basis but, that is a big if.
What is increasingly clear IMO is how undervalued this scientific portfolio is because of the corporate financing posture. I still look forward to a change in this posture re alternate means of financing or partnering. IMO this will unlock the real value of the overall scientific achievement.
IMO I would not worry about all the detracting comments based on past stock performance. When the value is unlocked it can come in the form of a huge percentage change in a very short period of time.
Good Luck
RRdog.
Mojo,
I thought that was exactly what I was saying with the caveat that the drug passes the FDA. Of course the physicians decide and in this case IMO the decision will be clear cut.
IMO Avastin will be under increasing attack on more than one front. This is a big melon and a lot of companies in a lot of usages are going to want a slice.
Re Entdoc comments I am glad you feel so strongly that this platform will be commercial ultimately.
The "when and the why" question is the age old issue of timing that plagues all speculation. That is what we have been wrestling with and with a BOD and mgmt that are spectacularly uncommunicative to their own shareholder/ownership base, whose mistakes have been time extending, and whose chosen method of financing favors ATM dilution in small slices rather than early stage partnering. We will see in the fullness of time whether they were wise or not.
Regardless of mgmt reasoning on lack of communication re your issue as to who will benefit from PS technology IMO PPHM has an excellent patent position covering this whole area and it is "substantial" which is stronger than merely "methodological". This is to mgmt credit and highlights their double (Janus like) profile and MO. The better question is probably along the lines of whether PPHM and its technology will be absorbed by some other corporate entity and at what price and or to what extent they will remain independent.
Thank you "Until 2000" for that excellent pick up on Pemex not being used for refractory NSCLC. IMO once PPHM gets its nose under the tent in a 2nd line usage the options and the price for partnering becoming myriad and steep respectively.
IMO continue to accumulate if the stock shows volume strength through $1.90
Good luck
RRdog
A couple of guesses:
I think this message board is being way to negative. Sometimes a small product advantage translates into an enormous economic advantage especially for small biotech companies.
It is not only the FDA--which from our discussions appears to be clearly looking for alternatives (to Avastin for example). Supposing PPHM bavi presents a 10% efficacy advantage and an 80% side effect advantage with a different MOA. The FDA should like that but, the oncologists in the field that have to treat these human beings with the problem should absolutely love it. Ergo, from a marketing perspective a small edge could be enormous.
Garnick is saying that from his conversations with the FDA that things are A plus and he has been directed as to what path to proceed and he is on that path.
Second guess re technicals: It has historically seemed IMO that Lytle/PPHM sells as much ATM as he needs into the quarter and annual close to keep his cash balance neutral or slightly rising relative to the comparable quarter and year. After the quarter closes by calendar and prior to the cc very little ATM sold historically. ATM generally starts again several weeks after the cc. IMO I would look for technical strength if PPHM stock gets above $1.90/ sh in short term.
I agree with other posters that lament the following:
1. No smarter financing than a self defeating ATM
2. No Partnering
3. No BOD expansion to correct lack of connectivity to national or intl biotech world, to senior financial world, to govt procurement.
Regards,
RRdog
Re Avastin decision:
In general, IMO, if the final Avastin decision is in line with the committee 6-0 decision to withdraw from breast cancer there are three possible positive long term effects for PPHM.
1. More room for breast cancer alternative drugs
2. More room for the FDA to continue with accelerated approval of new drugs because they are demonstrating the political spine to withdraw such an approval if subsequent use and trial do not bear out the AA. If the FDA were blocked from correcting an
AA action it would be much more difficult to achieve AA status.
3. It appears clear that the revenues from Avastin have peaked and are declining. Avastin represented about 20% of the value of the Roche buy of DNA. Roche/Genentech may become more aggressive in acquiring new product to plug any revenue leaks. Since personnel at PPHM are well known to Roche, this may work well for PPHM in the long run.
There is some opinion that Garnick is not at PPHM by random selection and has had a good idea where he was ultimately going to find a partner before working for PPHM. The problems with Avastin both in efficacy and in AE's have been long known among
knowlegable people in the biotech industry.
The conference call is set for July 14th.
The following e mail addresses are pertinent:
Ericswartz@roswellcapitalpartners.com
Afigueroa@peregrineinc.com
Sking@peregrineinc.com
"As a shareholder/owner of Peregrine Inc. I request that this conference call be open to any and all questions with no time restrictions on the conference call."
I note that many major companies have open calls. Warren Buffett. for example, at eighty years of age and head of one of America's premier corporations, actually takes the stage in front of all his shareholder/owners and answers questions until there are no more.
Rather than seeing this request as a negative, PPHM mgmt might find such an open forum a good opportunity to explain their business plan, clinical trial strategy, timing, financing, value build, etc. This might be an excellent opportunity to educate and broaden their shareholder base in a simulcast with no individual advantage.
I will be sending this petition to the above e mail addresses.
I invite anyone on this board to copy this petition and forward it to Peregrine and then remit to the board that the action has been taken.
Regards,
RRdog
My take on the viral trial is that even though a small (N) and a large patient population to recruit from, considering it was PPHM from a standing start it would take at least three months to recruit. PPHM would want the full complement of data so that would be another three months (12 weeks) from the last patient recruited. Then, even though no MOS in viral and end point clearly measurable against "viral load", another month or two to evaluate data. That takes the trial out to end of year and is a bit more conservative. You can take it a bit further if they want to run any kind of analysis on "staying power".
I expect Bavi to be "best of breed" on side effects, AE's what have you because it consistantly tests well against all SOC in this area. If it tests as well to efficacy as was indicated in the gov't testing with Ribivarin, then PPHM would have to assess whether to run a larger phase II B or petition the FDA for a Phase III.
Knowing Garnick's MO I would expect him to want to move the drug ahead aggressively. Though nobody on this message board can accurately evaluate the Bavi potential against all players in the viral field past , present , and future we are fortunate to have some men on our staff that can and they believe Bavi is more than competitive in this area IMO. This is the scientific area where the company is strong not the business side where PPHM is weak.
IMO everyone is looking for an interferon replacement because of the nasty side effects we continually talk about. If PPHM Bavi should get to some form of definitive Phase III with Ribivarin or with a bunch of combo possibilities it would seem to me to be an eminently partnerable drug for a company like Merck or Vertex. Vertex should be very interested in something like this if it could combo with Bavi because it would make its drug much more easy to market and the market is huge. At the very least, Vertex should not want any other company to have the Bavi combo.
When I started thinking about the size of the market and the possibility of getting to a partnerable position in 2012 it became very exciting. Since the stock currently is only $1.80 representing about 130mm in market cap either "nothing of this story is in the stock price" or I am completely wrong in my assessment. I believe the former possibility that nothing of this story is in the stock price more probable and therefore QED PPHM is more undervalued than previously thought.
The negatives in the company, i.e. BOD, financing, PR, ATM, etc. still outweigh the positives. The sellers, shorts still are in control as far as I can discern. They are often right in the short run that's why they are called "shorts". IMO the big move in this stock will be a long term upvaluation when some of the weaknesses are eliminated and more data matures at the FDA.
I continue to accumulate.
Regards,
RRdog
There is always "incidental" value for any company to recruit with undervalued shares. IMO am sure that all of the high quality personnel that are coming to PPHM have signed non-disclosure agreements and taken a real hard look at the data. They would be foolish to come to an unproven company with poor financial architecture without real incentive and as such I take this as multiple high quality scientific third party endorsement.
I also believe these personnel are smart enough to ask how PPHM plans to finance its burgeoning scientific program and products. I continue to be of the opinion that the "enormity of scientific achievement" will force mgmt and BOD to move to plan B and C.
All that having been said, it is now much more to mgmts adavantage to have a higher stock price --$5-10/ share. It is long past the time when they can fly under the radar and sneak up on the competition. IMO new personnel would do very well with options at $10.
Regards,
RRdog
It's never easy is it????
When people make fun of others who can not fathom even the simplest concepts they use the phrase "This isn't brain surgery you know."
Unfortunately, PPHM is brain surgery ---literally.
Now is the time when you really "earn" your money either by "sitting it out" or by averaging in more stock if able. Really big money is made most often with a "combo" (like cancer drugs) of not only brains but of guts.
Brains are much more common than guts. "Guts" are the key ingredient.
The twin cousin of "guts" is "identity". Shareholders of PPHM have to know who they are as an investor. Hold an amount of shares where you can afford the risk and can remain cool and patient under fire. If you don't really know who you are as an investor it will be hard to have the "guts" to win in PPHM (and really hard to win large).
Nothing has changed in the story except it continues to get better and grow larger on balance.
If holders on the "margin" or "on margin" as the case may be, sell for many, many exigent reasons, then so be it. Early stage biotech stocks are violently volatile which I am sure is not news to PPHM shareholders.
The message board keeps pounding mgmt for benefiting from a lower price. This is "patently" absurd IMO. Though mgmt gets some opportunistic benefit from a lower option price, Mgmt would benefit much, much, more from a higher price. There is nothing unusual in the option awards at PPHM vis a vis other biotech companies. BOD IMO appears to have made a strategic decision to continue a "bleeding" dilution through ATM until they are able to find another funding method. Apparently they feel they are closing in on dramatic news. I agree with many that they are still immature in their approach. Where I disagree is that I envision BOD being "forced to mature due to the enormity of the scientific achievement".
Do the math on this option thing. If you are ES or SK or any other Mgmt member it works the same. Let's take Evilivitch as an example since he recently received about 150M calls at something like $2.13 strike. It doesn't much matter whether he strikes at $2.13 or $1.50 or $3.50-- as far as the dilution it is the same. What E wants is to be part of the team that propels this stock to $70/ share. His option strike give or take a dollar is incidental. That's why he is risking coming to an early stage and under financed company. He likes what he sees in the science. The quickest way to get to $70/ share from Mgmt perspective is with the fastest milestones and the least dilution. (I use $70 purely for example)
I agree that the ATM is self defeating and have long advocated mgmt and BOD look for more sophisticated ways to finance. There is, however, some positives to institutions taking size ($5mm type positions) in ATM:
1. These institutions are very diligent in high risk situations. The fact that they are willing to buy an illiquid position is good third party verification.
2. Just like in IPO's the institutions often have, IMO, "tacit"
agreements to raise their positions by multiples if certain milestones occur. Even if there were no tacit agreement they would increase holdings anyway if events unfold positively.
These instituitions represent huge latent buying power if and when the time is right fundamentally.
PPHM can only go to zero and that is not likely. By far and away the most likely reason for small companies to fail is because they can not service their debt. PPHM has almost no debt and has multiple ways to raise cash so failure is unlikely in the foreseeable future.
The world is awash right now with scare stories. One of the things I like about PPHM is that it is a "product/wealth creator" not dependent on a myriad of economic events out of corporate control. I am not saying that capital markets are unimportant as far as short term price movements. What I am saying is that the ultimate price at PPHM will be determined by the sale and market value of products PPHM develops and not by macro economic events.
One more point. Now that the Russell silliness is behind PPHM shareholders I see a new "B" movie horror scare with the old, old story of Dr. B. For the record there have been a lot of horror stories at the FDA --the worst of these have been sins of commission but also, sins of omission. For the record, many independent biotech companies have succeeded at the FDA. There are also many biotech companies that trade at literally billions of dollars of market cap that are not as far along as PPHM at the FDA and are also independent.---"When" you partner is important. Smart posters on this message board have already listed a dozen companies with potentially valuable new drugs that have not partnered yet. The fact that PPHM is not partnered yet does not mean that it will not have partners going forward.
To the same point, IMO, I remain impressed by the PPHM scientific board and their understanding of and "experience" with the FDA. Ditto with PPHM regulatory people and clinical people and manufacturing people. IMO, I would put the "B" horror movie behind us along with the Russell.
Memo to Steve King. It takes one neuron to know that PPHM is still ATM financing. It takes another neuron to know that the price of ATM is important. Tie these two neurons together across a synapse and think about what you say before you say it.
Think about how to communicate in such a way that the real value at PPHM is more clearly enunciated to the investment community at large. Don't be afraid to answer questions from your shareholder/ownership.
Memo to ES: IMO, all you really have to do to double or triple PPHM share price and kill your dilution is to bring two heavyweights, one bio universe connected and one bio financing connected, on the BOD. You'll still have control but you'll also get a breath of fresh thinking, credibility and contacts and you will send a message to the investment community that you believe in the science and that you are serious about capitalizing on it.
IMO, stay focused on:
1. BOD expansion
2. Financial plan "B"
3. Scientific developments
4. Mgmt expansion (re deal making capacity)
5. Partnering
6. New markets like imaging.
I know these are difficult times for all. I only offer my thoughts and opinions. For myself, I add on every lower close. I do not yet see any technical signal that would tell me to increase pace so I am adding slowly because the price is in my target range. IMO, technically I would get more active on a cross first above $2.00 and then $2.25 on high volume. Fundamentally, IMO, I would want to double or triple my position if the balance sheet issues, financing issues, BOD issues become addressed.
Regards and luck to all shareholders.