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Mojo
Thanks. That is a great post.
RRdog
Since I received no direct answer to my query directed to FF, WH, or CJ regarding whether they thought the data in Cotara was sufficient to double or triple one's position (if able) in PPHM during a down period, I will take that as a "no" and offer my own opinion.
The posters seem to have the excellent ability to research and regurgitate data but , in no way to form an opinion about that data as it pertains to PPHM as an investment.
FF seems to be of the opinion that the FDA will 100% move forward with some form of Phase III for Cotara and as soon as that process is "delineated" he expects a bidding war among BP to break out. While I agree with the first part of his opinion and see no reason why the FDA would not want to go forward with an alternate MOA (in a deadly unmet need) that seems better in many ways to SOC, I take issue with the second part of the opinion about the bidding war. While Cotara looks like it can move the needle for a small company like PPHM if it builds to several hundred million in revenue, that size revenue will not move the needle greatly for BP. IMO the so called "bidding war" will be strictly limited by a profit analysis of this market vs BP cost structure not small pharma structure. (The only way I mitigate this opinion is if BP sees a much larger usage for this technology in other hard tumors.)
Since there are only a limited amount of centers in the US that will be able to handle the radioactive materials and perform this surgery, IMO there is a growing probability that PPHM will want to keep the US market for itself and sell other regions of the globe where appropriate. The probabilities are a function of the size of any upfront offer IMO. If an offer is large enough incl of royalties, to fund the company for sufficient time, kill the need for ATM, and kill the going concern letter, then PPHM might take it. If the offer is not large enough PPHM may want to directly market Cotara. Thus far I have not noticed a marketing build up but I think it pays to keep an eye out for any build in that area.
This conjecture heightens the need for sophisticated financial advice and planning for PPHM. So far the company remains very "retarded" in this area both at a BOD and mgmt level IMO. I continue to watch keenly for a build up in the financial capability of PPHM in the same way they have staffed up for scientific, production, and regulatory areas.
Mgmt has been very reluctant to discuss financial planning. This has moved past the point where it is wise. If mgmt believes they have created options for financing (as they should since they are increasing the burn rate), they should be willing to say so. Ditto on the conference calls. If mgmt believes they are on the right track, they should not limit debate and they should be prepared to support their course of action. This mgmt appears to be "hiding" and the market place is giving them a vote of no confidence. There is a "clear line" between giving away proprietary information and having a general discussion. PPHM cc's IMO are bordering on "cowardice". On the next cc PPHM should restrict the usual analyst softball questions and throw the floor open to any and all questions from their shareholder/ownership. The analysts talk to the company anyway and that conversation is reflected in their reports, so we don't need to waste a lot of time with them.
Since conservatively IMO PPHM could do between $300mm-600mm in revenue in Cotara and sell at least at one times sales divided by say 100mm shares, I think Cotara might be worth $3-6/ share "stand alone". (Remember, this is very conservative and Cotara might be worth two times sales IMO if the profit margins warranted it.) Add in something for foreign sales and rights and something for all the other parts of the company surrounding Bavi viral and cancer and my opinion would be to continue accumulating stock--- particularly in periods of weakness.
In a prior post I had indicated I would like to accumulate at lower prices and some how was either misinterpreted or criticized for this objective. The lowest price I have ever been able to buy stock was .25/share pre split or $1.25 in current pricing. Anywhere between $1.25 and $2.00 per share would seem to be reasonable to me as the science is easily many , many times the value it was at the old lows.
I would only increase my pace of accumulation if I saw fundamental improvement in mgmt, BOD, financing, or if I saw major improvement in some aspect of Bavi fundamentals. The longer term potential of Bavi remains staggering if one considers the implications of Thorpe's work on MOA and is still to be known in the fullness of time.
Regards,
RRdog
Firefox,
Indirectly you are answering some of the questions I posed in post 64696 in this last post. It would be very helpful if you would venture your "opinion" directly on all the questions I asked. It is only an opinion. My post is reprinted below.
RRdog Share Sunday, June 05, 2011 4:31:56 PM
Re: None Post # of 64740
Seeking an opinion from FF, CJ, WH (three board contributors who seem particularly tuned in to the science).
Having studied the latest round of science carefully I come to the following conclusions:
1. Cotara seems to be somewhere between equal to and about 50% better than short term efficacy in existing SOC.
2. Cotara seems to be considerably better than SOC re longer term efficacy.
3. Cotara seems to be accompanied by fewer AEs and side effects than SOC.
4. Cotara seems to present a good alternative MOA to SOC .
5. As currently posited Cotara single dose appears to offer some benefits as to method of treatment, time, and cost compared to SOC.
6. Cotara might appear additionally attractive to BP (and perhaps the FDA as well) in combos and in future testing against non relapsed patient population.
Do you agree in general with this assessment and do you think the science is strong enough for the FDA to move forward with Cotara into a phase III as an alternate mode of treatment for this deadly disease? More specifically, do you think the science is strong enough for the FDA to move to any kind of SPA, AA, or simultaneous phase III plus commercial usage??
How committed are you to your answer? Leaving Bavi aside and focusing on Cotara alone, if you were able to, would you double or triple your position in PPHM into this slow time period before Cotara meets with the FDA?
Further conclusions:
1. Though I don't think PPHM would take the FDA for granted or assume anything, I do believe they are in close and fairly constant contact with the FDA and have developed the Cotara MOA to conform to FDA ideas for alternative treatment to SOC in brain cancer (Glio).
2. PPHM itself seems to be extremely confident in their approach to the FDA.
3. PPHM with their personnel beef up in this area seems to be sending BP a message (and unintentionally sending a message to their shareholders) that they do not intend to sell this product cheaply and are prepared to go it alone if they can not get their price.
4. Furthermore PPHM may be sending BP a message that they intend to keep the manufacturing of Cotara for themselves.
Do you agree in general with this set of conclusions??
Do you think the science is strong enough yet for PPHM to reach a satisfactory deal for Cotara prior to an FDA phase III ruling?? What probability 0-100% would you give PPHM of reaching a global or regional partnership prior to an actual FDA phase III ruling? Would such a deal carry enough front money to negate ATM usage and or the going concern letter? Ditto on the same set of questions "after" a positive FDA phase III ruling?
What percent chance do you think there is of PPHM moving up the date on FDA Cotara meeting?
Thanking you guys in advance for your opinions. I do not mean to slight any other contributors on this board, particularly those of negative opinion. I have already factored those opinions into my equation and I believe I can sum them up succinctly as follows:
The long term chart is lousy, the BOD is thin and unconnected to the biotech and financing universe, mgmt has not always lived up to their promises, the PR communication is lousy, the ATM is infantile and self defeating, this whole process has taken way to long, investors (as measured by the MV) do not believe strongly in this new science, and (of course) the ever popular-- BOD and mgmt take way too many options and much too much salary for the job they have done so far.
I agree completely with the conclusions in the above paragraph and as I said I have already factored those into any decisions and am ever hopeful for improvement in those areas.
Regards,
RRdog
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Seeking an opinion from FF, CJ, WH (three board contributors who seem particularly tuned in to the science).
Having studied the latest round of science carefully I come to the following conclusions:
1. Cotara seems to be somewhere between equal to and about 50% better than short term efficacy in existing SOC.
2. Cotara seems to be considerably better than SOC re longer term efficacy.
3. Cotara seems to be accompanied by fewer AEs and side effects than SOC.
4. Cotara seems to present a good alternative MOA to SOC .
5. As currently posited Cotara single dose appears to offer some benefits as to method of treatment, time, and cost compared to SOC.
6. Cotara might appear additionally attractive to BP (and perhaps the FDA as well) in combos and in future testing against non relapsed patient population.
Do you agree in general with this assessment and do you think the science is strong enough for the FDA to move forward with Cotara into a phase III as an alternate mode of treatment for this deadly disease? More specifically, do you think the science is strong enough for the FDA to move to any kind of SPA, AA, or simultaneous phase III plus commercial usage??
How committed are you to your answer? Leaving Bavi aside and focusing on Cotara alone, if you were able to, would you double or triple your position in PPHM into this slow time period before Cotara meets with the FDA?
Further conclusions:
1. Though I don't think PPHM would take the FDA for granted or assume anything, I do believe they are in close and fairly constant contact with the FDA and have developed the Cotara MOA to conform to FDA ideas for alternative treatment to SOC in brain cancer (Glio).
2. PPHM itself seems to be extremely confident in their approach to the FDA.
3. PPHM with their personnel beef up in this area seems to be sending BP a message (and unintentionally sending a message to their shareholders) that they do not intend to sell this product cheaply and are prepared to go it alone if they can not get their price.
4. Furthermore PPHM may be sending BP a message that they intend to keep the manufacturing of Cotara for themselves.
Do you agree in general with this set of conclusions??
Do you think the science is strong enough yet for PPHM to reach a satisfactory deal for Cotara prior to an FDA phase III ruling?? What probability 0-100% would you give PPHM of reaching a global or regional partnership prior to an actual FDA phase III ruling? Would such a deal carry enough front money to negate ATM usage and or the going concern letter? Ditto on the same set of questions "after" a positive FDA phase III ruling?
What percent chance do you think there is of PPHM moving up the date on FDA Cotara meeting?
Thanking you guys in advance for your opinions. I do not mean to slight any other contributors on this board, particularly those of negative opinion. I have already factored those opinions into my equation and I believe I can sum them up succinctly as follows:
The long term chart is lousy, the BOD is thin and unconnected to the biotech and financing universe, mgmt has not always lived up to their promises, the PR communication is lousy, the ATM is infantile and self defeating, this whole process has taken way to long, investors (as measured by the MV) do not believe strongly in this new science, and (of course) the ever popular-- BOD and mgmt take way too many options and much too much salary for the job they have done so far.
I agree completely with the conclusions in the above paragraph and as I said I have already factored those into any decisions and am ever hopeful for improvement in those areas.
Regards,
RRdog
Thank you CJ
I think you and I are on the same page now.
Thanks also to Mojo and Djohn. I knew you guys are better computer researchers than I am and together we may yet get to the bottom of this. It is very interesting and the more one pulls on this thread the more it unravels and the more interesting it becomes IMO.
The real question IMO is in understanding the IST "equation" which PPHM for whatever reason does not want to fully explain. It is pretty self evident what the benefits of ISTs are to PPHM but, what are the real benefits of ISTs to the institutions that are conducting the trials??? After all PPHM controls any potential positive outcomes by virtue of controlling Bavituximab supply and manufacture and by patents that are "substantial" not "design" and are therefore much more difficult to circumnavigate. (BTW the more you understand the PPHM position here the more you understand the enormity of their accomplishment and the less likely you will be to refer to them as idiots IMO)
If in IST #4 PPHM and UC/Irvine are splitting the funding, who or what entity is really behind the UC/Irvine half of this?? If you recall this board had an inkling about IST #4 weeks before it was officially announced. I "suspect" there was a bit of bargaining before this became official. It could be "altruistic in the same manner that the "Chao" family funded this whole facility at UC/ Irvine but I suspect there is more going on here. If one of you guys can figure this out you get the first annual RRdog research award (which BTW carries no prize whatsoever).
And then there are IST #s 1-3. Who is funding those since PPHM is less "collaborative" in these and what is the motivation??
My "conjecture" is that PPHM is much deeper in discussions with large biotech entities than we know and that is why they are very understated in their discussion of the IST equation. Of course, I can't prove this but one of you guys may come up with something.
Regards,
RRdog
CJ
Thank you for the very complete answer to the discussion Mojo raised re IST's.
I'll stand by my original thesis:
1. It is obvious that PPHM has to supply all the Bavi and it needs to come from our cGMP facility.
2. In a very technical sense it is possible that PPHM supplied a very , very "nominal" sum (their word) which could have to do with anything including shipping cost or storage cost, or manufacturing cost.
3. However, it is clear the application came from UC/Irvine and that the vast bulk of the "effort" and "time" and cost is being born by the "sponsor" UC/ Irvine.
4. I find that interesting and am interested in why they want to put forward the effort, the time, and the use of their facilities, not to mention corralling the patient population.
5. I also am interested in where the UC/Irvine funding for the vast bulk of this IST is coming from. Is it purely an academic interest for altruistic reasons only??? or is UC/Irvine funded or granted or backed for some more commercial reason. Is the combo drug maker of Cabazitel - in this case Sanofi Aventis-- a source of funding??
6. I am OK with my question and original definition because it gets more to the heart of the matter than the technical answer that PPHM may have contributed some "very nominal" funding.
Thanks again,
RRdog
Mojo,
An IST by definition is an "Independently Sponsored Trial". The word sponsored means "paid for". If PPHM is paying for the study they are misrepresenting it and it should be called a "collaborative" study because the "independence" would be tainted. PPHM in prior releases has stressed the leverage they get from ISTs precisely because they don't pay for them.
Once we understand that PPHM is not a funder of the study then it becomes open sport to follow the money. It is interesting to try to understand why the University wants to take the time and effort to run the study and who or what entity is funding the study. Sometimes the real funding can be hidden in a "block grant" or some other device that obscures the real source of funding.
If there is some technical or legal loophole that allows PPHM to fund this study and still claim it is an IST please advise me and I will adjust my guidelines.
RRdog
Question asked and answered:
For me, the question I posed about the Avid buildup has been asked and answered. The buildup at Avid IMO is clearly for PPHM testing and long sought commerciality and not so much for outside business. This is logical and probable. Any outside business would be gravy. The "feet" moving from serious positions at serious companies to PPHM are very encouraging.
Clearly, everyone from Garnick on down is encouraging the inflow of Personnel IMO only. I agree with other posters that these personnel probably have signed non disclosure letters and have had a close look at the science before making the decision to move to PPHM. If they are as sophisticated as their bios suggest, they should also have assured themselves as to the "ultimate financial viability" of PPHM. As these conjectures are probably true IMO, then it is first rate third party affirmation--something I am always looking for.
As compelling as today's announcement of Mr. Masten's arrival may be in terms of quality people moving into PPHM, I find the "organizational discussion" also interesting (executive committee and reporting lines). At some point in the not distant past there was some discussion of PPHM wanting to become a "small Genentech" in terms of an operational company. I found that discussion uncomfortable because they didn't have the infrastructure to support that vision. They are building infrastructure as we speak. Now I find the discussion uncomfortable because of poor financing mechanism (ATM) and poor BOD/banking situation--two areas in which PPHM is absolutely retarded IMO.
As suggested before, more sophisticated personnel in the house must put pressure on mgmt and BOD to become more sophisticated in their financing over time IMO . There should also be pressure for BOD expansion and connectivity.
IMO there appears to be steady progress on the FDA timeline and commerciality. "DDay" is moving closer and the market is a discount mechanism which frequently can move months in advance of an event.
Everyone on this message board knows what the weaknesses are within the company. The emphasis should now be on searching for positive changes. Besides infrastructure buildup, one such change may be at IR where Amy seems to be much more responsive to shareholder questions and requests for information according to several sources. If this signals a change in attitude at PPHM it is a welcome sign. The best way to clear the path for upward price movement is to "kill the selling" and the best way to do that-- in a company that has a good story-- is to educate your shareholders and communicate with them in the best possible manner IMO. Maybe IR will begin to write more clearly worded PRs
that show the "relativity of data" and the "time lines" of that data re future events. In short, maybe IR will speak not only to the science but to the business relevance of the science.
Personally, I will be looking for anything that even hints at "acceleration" in the Bavi viral program or cancer program. I have no reason to expect such acceleration other than the work being done is in a deadly unmet need and I see how aggressive and FDA savvy Dr. Garnick appears. (Of course I am always looking for change at the BOD, ATM, or in partnering.)
As of today's close, the Russell index foolishness is behind us one way or the other. Looking forward to ASCO discussion. It will be interesting to see what is posted on Cotara.
Regards,
RRdog
Firefox
I appreciate the kind comments. It is easy to feel kind of lonely in your thoughts in a stock like PPHM which has not yet reflected the "real value creation" in the IP underlying the company.
I like your third party immunology expert validation. My own sources also reflect validation.
Your reference to slide #41 of Thorpe's presentation is very interesting. IMO, to best understand slide #41 a shareholder should read the verbiage in slides #39 and #40. In fact, it is a good idea to review the entire slide presentation IMO as I think it one of the best cancer presentations ever given.
I think this stock is going to be a slow boil from here. A lot of the PHD's and other advisors and attendees in Barcelona are going to take this data apart molecule by molecule until they fully understand it.
Some of these experts are advisors to large pools of money and sooner or later this stuff is going to bubble up.
Have a good Memorial Day weekend.
RRdog
"Ode to Dr. Thorpe and Other Conjecture"
Dr. Thorpe is not feckless in his constant multi year quest to understand the underlying MOA of Bavi. The better he can explain the MOA the better the chance of developing a whole new category of drugs around Bavi, the better the chance of improving the action of Bavi statistically, the better the chance the FDA moves forward with Bavi (and the better the chances are that Dr. Thorpe wins the Nobel Prize in Biology for a seminal method of attacking cancer).
IMO this MOA is aimed at mechanisms that are very "primal" in cell development. The same mechanism/biochemistry in mice is present in humans and in some respects all the way down the line of development to fruit flies. This helps to explain why success in the lab has "consistantly" manifested itself in human trials.
If these MOA conclusions came from lesser labs and scientists I would be much more sceptical but, IMO a great deal of respect must be paid to Thorpe and his colleagues at UT Southwest.
Though it is not yet reflected in the "price" of PPHM stock, the implications of Dr. Thorpe's work are awesome IMO.
On another subject, PPHM appears to be undertaking a massive buildup at Avid (lots of expensive personnel with serious bios).
I would like to understand the business plan here. Avid serves excellently to facilitate PPHM testing and clinical trials. A marginal increase in business--say a double--would hardly move the needle and would by necessity be dilutive. Nobody is speculating in PPHM because of Avid which has had very slow and uneven growth as an outside business.
Now, if the business plan inclusive of:
1. Mammalian lines
2. Generics
3. Foreign alliances and business orders (Will Mary Boyd ever surface for any value??)
4. Production of material for Cotara's simultaneous testing and marketing
5. Biosimilars
6. Additional Gov't work
7. All other forms of biomanufacturing for outside contract
was to build this division to a couple of hundred million in revenue with maybe $1/share in earnings then I would like to know about it. That would be very relevant to shareholders.
The BOD and mgmt would be wise to fully explain the business plan at Avid to shareholders. It would be interesting to investors if anyone on this message board -- in a non- facetious manner --
could ferret out what the business plan at Avid might be to justify the time, "energy", and implied funding being spent on this buildup at Avid .
Regards,
Again, I admonish my fellow board members to concentrate on "value" and not become fascinated with "price". Price is set on the margin by needy buyers and sellers. Value will be set by "step function" in deals with partners or versus discounted future cash flow.
The last few years in PPHM corporate history and the future 6-18 months much more important to our analysis IMO than the prior 20 years. PPHM in a much improved position.
Because of certain acknowleged weaknesses, thankfully correctable, of mgmt and BOD the price in PPHM is often set by traders, shorts, etc. that have a very short term profit agenda.
PPHM has no major investment banker with research and a strong trading desk to police the market. IMO this is inconceivably negligent in light of the fact that PPHM is financing by ATM and getting a fair price for stock is important.
Today is another example of PPHM making an announcement that falls like the proverbial "tree in the forest" with nobody to hear it. Either Amy is befuddled as to her role or "tethered" by the BOD and mgmt team--I can not tell which, but she writes like she is presenting to a peer review board at a scientific convention. All well and good. However, in addition, she should write for her corporate investor audience as this is a corporate announcement not a scientific one.
Nevertheless, in the words of Winston Churchill we "keep buggering on". Let me step into this communication void and give my take on the import of this announcement and the way I would like to see it written (IMO only):
1. This "IST" is the fourth "independent" validation of interest in PPHM product Bavi. It is being made by a first rate investigative team out of oncology area at UC/ Irvine. You can't buy third party affirmation like this if you try.
2. Cabazitaxel is a new drug with a full 16 years plus of lifetime that will be in phase I/II trials in combo with PPHM Bavi.
3. Cabazitaxel was developed by Sanofi Aventis which is a major drug company and very aggressive in pipeline development and partnering.
4. For those of you who don't already know, Sanofi Aventis will be at ASCO with I believe (8) presentations including one on this very same Cabazitaxel that is being used in combo trial with PPHM Bavi.
5. The reason Sanofi Aventis and UC/Irvine want to test and to "pay for" these trials is because Bavi has tested extremely well in the laboratory with this family of drug. The reduction in primary tumor burden (a fancy way of saying tumor shrinkage) and inhibition of metastatic development (blocking new cancerous growth) has been outstanding in early testing with this family of drug.
Now for the good part:
6. In these trials the primary endpoint is progression free survival (PFS). This is interesting because it moves up the "time line" much more quickly than say median overall survival (MOS) which could take years. In these tests we are looking at PFS after (12) week segments.
7. The second reason we can move up the "time line" faster is that we don't have to deal with the FDA first in this matter. The first line of decision making can be done at Sanofi Aventis.
Does Sanofi Aventis want to sponsor a full phase III trial in this area?. Does Sanofi Aventis want to partner upfront with PPHM in this area? For how many dollars? These are questions which are impactful to PPHM as an investment in a much quicker time frame than FDA approval.
8. Another question which could be answered in a shorter time frame is "what kind" of a deal is PPHM able to make. Is it geographic? Is it "retail" for only this one indication for Bavi? or "must" it be more wholesale for a number of indications??
(PPHM better hurry and hire that Oncology deal specialist. The fact that they are attempting to do so reflects their own acknowlegement of their weaknesses and when they make that acknowlegement they immediately get smarter.).
Enough of this particular exercise. You get the point.
The potential breadth of Bavi applicability is staggering in overall market size (many , many billions) . IMO to develop the
PPHM pipeline as currently constituted at a major pharma would be a minimum, say again a minimum of $750mm. That means replacement value of the PPHM pipeline is approximately $11/ share (750/68).
Looking at it in this light and in spite of all their bumbling and dead end alleys of inquiry, mgmt and BOD have gotten a great deal of value for the approx $256mm of paid in capital. I hate to admit this but, IMO it is true. (If you don't believe this, go and cost out the development of drugs from lab through Phase II in the present real world multiplied by the PPHM pipeline.)
Let's hope mgmt gets their head out of the sand in many of the other areas among that are pet peeves and moves along much quicker. Among these:
1. Financing. This thing is much bigger than the "infantile and self defeating" ATM can handle. Load the BOD with an investment banker that can do this right at "much higher valuation" as previously discussed in other posts. (By the way Sanofi and Cabazitaxel are covered by, among others, the Merrill Lynch analyst. The Merrill analytical team will be at ASCO. They have promoted, as an example, "VRUS" into over a $4 billion market cap with a $7 billion dollar target and I don't think the VRUS pipeline is nearly as good as PPHM) So "wake up" mgmt-- wake up wake up wake up.
2. Look for a partner in "imaging". The diagnostic market is huge and a "new device application" at the FDA can move up the time line much faster than a new drug application.
3. Aside from all his Machiavellian rants, Jake has a sound idea on options. No new option grants for alumni below the valuation of paid in capital. That would put everybody's incentives on the same side of the ledger. In today's example, paid in capital about $256mm and common stock issued about 68mm shares, therefore , no options struck below $3.76 (256/68). That's still a really cheap grant if this pipeline is any good.
If it were necessary to recruit new talent for the overall good of the company, they could get their options at market at time of hire. This is more than fair. Mgmt and BOD would go a long way to improving shareholder relations with this rather straight forward policy and it would be in ES interest as well to encourage value creation and to "incentivize new buying" with less fear of dilution.
Firefox comments on different modes of measurement other than MOS is particularly clear and lucid and I recommend everybody go back and read that post again. Survival beyond MOS could be off the charts re Bavi and SOC and be very relevant to FDA.
To my fellow posters. Stop worrying about minor issues like the Russell index. Though I agree with much of Jake post 64252, we are either right or wrong on the science. If we are right, then worrying about the Russell is analogous to worrying about a hangnail in a nuclear attack. Use weakness for any technical reason IMO to accumulate only what you can dig in with and hold.
See you on the flip side of Barcelona and ASCO.
Best of luck to all.
Once again I am reminded of the huge difference between price (market cap) and underlying value.
Price can be a function of many things (see the squeeze play in the sliver of LNKD offered the market today in a "cornered" fashion). In PPHM case, price can be determined by algorithmic traders, day traders, poor PR, ATM overhang, arcane data, FDA risk, short sellers, "thin and disconnected" BOD, lack of investment banking with sophisticated trading desk and research, as much as anything else.
Underlying value has more to do with what PPHM can really sell/partner this science for or what the future cash flow will be from this science.
IMO there is a larger and larger delta developing between the underlying value (science) and the price and therefore a larger and larger opportunity.
Small stocks like PPHM are not really liquidly traded and fully analysed by the larger marketplace. These types of stocks make it very difficult to apply standard technical analytic tools that might work in a stock like IBM. Instead, they are "quantum", leaping from valuation level to level on news and fundamental developments. In slow news times, companies like PPHM tend to be "buffeted" around by the market. PPHM is coming off a near black out period for news due to a period of option grants to employees and blackout imposed by pending conferences in Barcelona and ASCO.
Apparently, todays news on Cotara Poster was not "hard" enough, too arcane, perhaps "dated" only to be superceded by the "oral presentation" at ASCO. Certainly the IR piece is again about as poorly written as I can imagine -- adhering to the scientific and never clearly stating in plain "investor" English what the signifigance of all this means in the PPHM time continuum. IR could not even proof read the key word in the whole article which is "optimal". This has quite a different meaning from "optional". (Again I note that PPHM had better market value, in a worse market and with far less fundamentals under the old IR regime and IMO a change in this area is long over due.)
Nevertheless, the science is advancing. My sources tell me that the Barrow Neurological Institute is top notch. The co author and authority quoted on this study is William Shapiro MD and vice chairman of neurology at Barrow. These guys IMO are all about "reputation" and therefore I give more weight to this initial study because it has great third party affirmation. I expect that the data will improve as it matures, and , that the method of delivery will also improve. I also suspect that many of the detail type questions posted on this board will be cleared up in the fullness of time. (You guys are good and it makes one realize how tough a job the FDA has in really analysing the value of new drug candidates.)
Dr. Evilivetch appears to have excellent credentials. He comes to PPHM via the family tree of Garnick to Menander to Evilivetch and he is a specialist in nuclear medicine as well as oncology. (Dr. E also--no surprise--has excellent credentials in diagnostics and imaging) He appears to be an excellent "gearing" up for the FDA meeting and is one example of steps needed to be taken and of why that meeting is projected for early 4th calendar quarter rather than more immediately. (IMO I also have a suspicion that the data will mature very fully by that date and be more "black and white" by that time frame. Just a guess.) Dr. E is another excellent third party affirmation. IMO the only reason a guy with his credentials comes to little old PPHM is because he believes there is a big score to be made here.
If you look at the overall size and need for new approaches in the brain cancer subset market, Steve King may have it right when he says that Cotara could easily be a billion dollar drug. That would move the value needle for a company the size of PPHM no matter which geography you partner or keep for the company.
If you must "sweat' every price tick of a dime or more, you may as well also focus on the "overall value creation' proposition. If the science keeps moving, I for one would be hopeful of accumulating more at lower prices and the way this stock trades I will probably get my price. My objectives are of course self serving.
Management and BOD objectives are different than mine. They should want to sell fewer shares at higher prices to finance their effort and ultimately make their stock and newly acquired options worth more. I continue to believe that their weaknesses are correctable and one day they will move in a more rational manner. They are already evidencing this tendency in their previously noted "Linked In" hiring poster for a senior oncology "deal maker". One day they will also realize that top talent costs more and more money and they must get more sophisticated in their financing. In short, the scientific success of PPHM will force the BOD to act more rationally.
I look forward to what Dr. Thorpe has to say at Barcelona re Bavi MOA and what kind of PR and coverage attends that presentation and of course look forward to the "oral presentation" at ASCO. It will also be interesting to learn in the fullness of time whether any of the brain cancer techniques can be applied to other types of hard tumors (inclusive of imaging).
Good luck to all.
Re PPHM Hiring:
PPHM post on hiring a top guy for cancer licensing is very encouraging. I have been advocating for a long time (a really long time) that PPHM flush out the mgmt. Though I am sure the mgmt acted on its own and not on my suggestion, this is exactly in the direction we all want them to go.
This is exactly what I meant when I talked about "correctable weaknesses". PPHM will ultimately be well served if they flush out the BOD as well. What can never be corrected is poor or "me too" science and the science is where PPHM is strong.
If you read the criteria for hiring, it sets a very high bar for the individual candidate. PPHM has been able to attract hi caliber people such as Garnick and Menander and Thorpe before, so I am reasonably comfortable that they will succeed in this endeavor.
If (and this is a large "if") and when PPHM is successful in this hire, such a candidate with the track record in the job description, would have to be well known in the industry, would have to have a "high degree of confidence" in the product placement and get a sizable option package or they would not come to a small early stage company like PPHM. Again, if and when this happens this would constitute a major third party endorsement of PPHM IMO.
In addition, if you read the job description further, you can understand how many routes and combos and geographies there are underlying the Bavi platform. The sooner this candidate is hired and begins to carefully map out the universe for potential product licensing the better.
I note that this hiring description seems to be focused on oncology. This implies to me that they will also need a hire in Bavi virology.
My further suggestion to mgmt is that there are "some aspects of the licensing" that can be done earlier without compromising the crown jewels of the structure and particularly in the virology area.
The paragraph above is in full compliance with my other suggestion that has been on the table for a long time: Get rid of the infantile and self defeating ATM method of financing. Add financial muscle to the BOD that can work on real financing more befitting a company with "first in class and world class technologies". (Come on already guys-- how slow can the BOD be for the lights to come on. Your scientists are going to lose respect for your gray matter so move along on this.)
Moving on: to my fellow message board members and stockholders I again urge you to focus on the bigger picture. We all know the nitty gritty things that need to be corrected and we all know the risks. Thank you again for all the research and scientific posting. It is very informative.
Lastly, I have noticed a lot of talk about positions and when people plan to get out and so on. As I have stated before, if things start to go well with PPHM/ FDA/ research/ personnel hiring, then, the big mistake will be selling too soon. Many shareholders talk about holding this stock for 50 points and more but, we shall see. Among my investors we have an expression--"When they throw a piece of cheese on the floor we will see who the rats really are." It is not so easy to hold for the big move.
Best of luck to all.
RR
Thurly
You are missing the whole point of this discussion.
PPHM needs to do all the groundwork now re IB. It will take them months to get the right guy on BOD. Then, if you get a "go" on something fundamental, Phase III Cotara for example and maybe a coincident marketing arrangement during Phase III, and the market place gives you opportunity to sell equity close to fair discount value PPHM will be in position. It's a big job to raise $150mm-250mm and requires institutional buyers, road shows, real respected research, etc.
You will remember once when PPHM traded close to $15/ share pre split and pre any real fundamentals the company completely missed that opportunity to finance.
Secondly, expanded BOD will likely lead to higher market cap in case of any interim ATM financing needed to bridge and a whole host of opportunities bred of better connectivity to the biotech world.
As far as I am concerned you have nothing to apologize for and I don't take anything personally. We are all just stating our views.
In this second version you again state how easy it would be for you or PPHM mgmt to talk to major banks. I suggest you or PPHM get on it because it will take some time to secure the type of banking relationship that will really do them some good. (see previous rrdog posts)
There is one other myth we should dispel if we intend to have a rational discussion. Every public company has had a banker do a
primary offering or a secondary offering or both,---that is thousands of companies--- and none of these companies are being run or controlled by the bank that did the offering.
Adding a first rate banker to the BOD should in no way cede control.
Wild Horses response to the suggestions of thoughtful message board participants would carry some weight if he were on the planet Mongo where everything was pure theory and the only inhabitants were biotech scientists and academics who had decades to run endless experiments and endless dollars to finance their efforts.
Back on Earth in the real world, things are not so "theoretically" smooth, patience is not limitless even in "grasshoppers", and most important there are practical things PPHM can do to help itself while it waits for some of those experiments to fully bake and awaits FDA progress.
It is counterproductive to characterize shareholders that seek an expansion of talent at the BOD and mgmt levels after ten years, that seek professional investment banking and financing, that seek and end to a decade of "going concern" letters and self-defeating ATM financing as "nincompoops".
Now let's talk specifically about Investment Bankers since you think this is so easy.
First of all, what I am advocating is a major secondary of between $150-250mm at between $7.50-$10/share. A financing like this would set the company up to pursue all of the many generations of IP they have achieved and keep a large piece of profits in house. It would also allow company to set up a whole separate division in imaging. It would give PPHM a real balance sheet and allow it to become an operating company.
To set something like this up with a major banker will take time, incentives, education, meetings, and real scientific understanding so that their analysts understand that PPHM could really have a market cap in the 10 Billion dollar range and up from there. The big bankers are deal hungry right now and would make millions of dollars in fees on such an offering and could make "serious" money on their option positions going forward. PPHM holds plenty of contingent "cards" to play and their discussion will only grow in value at each milestone while they are in process. In addition, PPHM could bring in heavyweight regulatory personnel like Menander and Garnick and heavyweight scientific talent headed by Thorpe. Any bank would listen to this story.
Time is of the essence here since PPHM still diluting by selling large percentages of cap as ATM transactions at one third to one fourth of analyst consensus fair discounted value. Just the act alone of putting a major banker on the board of PPHM would raise the price by at least several points IMO as it would be an act of "validation" and the street would smell much larger events coming and much larger sponsorship. Then, even if ATM needed in small amounts to bridge finance, it could be done at twice the valuation and half the dilution.
If I were to undertake this matter I would need:
1. The full support of the mgmt and board
2. The full availability of mgmt and scientific team for meetings (post Barcelona).
3. A letter of full authorization from PPHM to discuss Investment Banking arrangements.
In addition, I would charge PPHM a large fee in options, contingent upon success.
Since WH thinks this is so easy and would cost the company nothing he should go ahead and do it. Remember , time is of the essence. The education of a bank and multiple meeting setups will take months. Just to turn a non-disclosure agreement (NDA) around will take at least three weeks for each bank you talk to.
Actually, this is really the job of the CFO. Again, this would cost the company nothing if it is so easy to accomplish. To date that officer has shown nearly zero imagination or creativity beyond the ATM process and that is why I suggest again he be replaced or that the investment banking negotiations be taken up by other mgmt members or BOD members.
If during the process of accessing a major Investment Bank and putting a banker on the board there should be a major fundamental event, PPHM can always adjust the price of financing.
The time to start the process is now. Ditto on the process for a new COB. Ditto on the process of mgmt augmentation. A good banker would be very helpful with these secondary matters as well as with partnering introductions and negotiations.
At the time of this "post" the science continues to look stronger re the revised description of Bavi as "tumorcidal" to be fully discussed at Barcelona conference. The seventeen cent up move while technically interesting is IMO trivial. Think bigger.
Regards to all
The I Hub message board on PPHM appears to be two announcements ahead of the company.
1. They have picked up from Govt filing site a new IST for Prostate cancer being done at University of Irvine, in California , using PPHM Bavi in combo with SOC drugs (2). Apparently, University at Irvine has not started to recruit patients for the study yet and therefore has not officially made any announcement about this matter. PPHM has also been "silent" in this regard deferring the announcement to Irvine. (This represents the 4th such independent study and as such IMO is a serious endorsement of interest in PPHM work by outside institutions that is almost unprecedented for a small company.
2. The second govt filing picked up by the message board regards the completion of a Phase II study in NSCLC begun in 2008 using Bavi in combo with two SOC chemo agents. The top line data from this study is intuited to be good (IMHO) based on public comments by Garnick and PPHM during the study and their move to implement and fund additional testing in this area as well as subsequent communication with the FDA.
Of these two announcements the one that interests me most for the time being is the IST. I fully understand the benefits of ISTs to PPHM but the company has never fully explained the benefits of the IST to the institutions carrying them out.
I could understand an institution that was the cutting edge in a particular disease like prostate cancer wanting to maintain that position and funding an IST, or a hospital really struggling with AEs for interferon looking for an alternative, or even for pure research, but these are rather "soft" reasons. I would prefer to "follow the money" which would be a much "harder" reason. Does the IST improve the Federal grants profile for the institution or, better yet are the ISTs funded by makers of the SOC drugs that are looking for product improvement and increased market share????---- It would be interesting if any of the researchers or moderators on this board could discover the funding sources on PPHM ISTs. This could shed a great deal of light on PPHM "partnering profile".
There is considerable conversation, rumor, scuttlebutt to the effect that PPHM now open to discussion of a major investment banking relationship. They have paid lip service to this issue before so it will be interesting to see if anything comes of it.
BOD and mgmt also appear stung by the many verbal assaults on the quality of mgmt and board and the infantile and self defeating method of financing the company uses and may be open to discussion of alternate methods of finance. Ditto as regards broadening mgmt and board to include heavyweight personnel interconnected with the biotech universe writ large. In the past BOD and mgmt have paid lip service to these issues as well but the timing appears more critical now as the science is driving PPHM forward and they face "embarrassment" on the business level and balance sheet (going concern) and market cap. Again, IMO highly skeptical until there is a hard event.
ATM program is rumored to have found some modest success in placing shares directly with institutions rather than on the open market. IHub board researchers should be able to ferret out any truth to these rumors as it would be reflected in rising percentage of institutional ownership and or new institutional owners. IMO would view such an increase very favorably as it is professional buying likely to put stock away and not add it to the float, long term, and buyers able to increase their positions as subsequent fundamental events catalyse action.
Some members of this board are being censored. I don't see anything on here that is egregious in nature and I like to see other opinions. It reminds me of the way PPHM tries to censor its cc's. If the case is so weak that we are afraid of negative comments the longs should be out. That having been said, most of the negativity seems mired in the past and repetitive. Just as "past performance is no guarantee of future success" neither is "past failure a guarantee of future failure". I have made this point before. If there were no failures prior to success there would be practically no success. The fundamental case is clearly improving and IMO would use weakness to accumulate from here forward. It is irrelevant IMO whether or not prior accumulation was successful. Any of the negatives re PPHM that are well known to message board members, if corrected, would be highly bullish.
I am aware of the discussion about foreign testing vs domestic testing. If you follow that discussion, the differential at the FDA is constantly being narrowed. For some reasons PPHM chose to focus first on foreign trials. Perhaps it was cheaper or faster to enrollment and more accessible. Perhaps they wanted a lot more data before progressing in later phases in US??? Difficult to say.
However, in my model/discussion I was essentially valuing Bavi at zero and leaving it for later (this is obviously too low) and really concentrating on the more current developments coming in Cotara.
The Bavi model will get updated for value as the four sets of randomized data come on stream. Cotara data doesnt have to be blinded or randomized as it is difficult to do that if you are drilling holes in someones' skull. Also, the Cotara data is more of a "hard" mathematical type having to do with absolute survivability or length of survival. Cotara is high unmet need, rapidly fatal disease and PPHM is already "orphan drug" status and "fast track". If PPHM can progress at FDA into phase III this drug would seem easy enough to partner even for a mgmt and board with little direct connectivity to the biotech universe.
Regards
IMO it's time to stop worrying so much about relatively unimportant issues and how annoying mgmt and BOD have been and instead----- start focusing on really making money between now and the end of calendar 2011.
In the card game "Bridge" there is something called "trump". Cards in the "trump suit" beat all the other cards in other suits no matter how high. At PPHM the 'trump suit" is the science and it outweighs all the negatives that I and others have talked about on this message board.
For example:
1. Stop worrying about indigenous populations when the MOA is more about bio-chemistry than genetic predisposition.
2. Stop worrying about being fooled by mgmt. ("You can fool some of the people all of the time, and all of the people some of the time, but, you can't fool all of the people all of the time."--A Lincoln.) I'm sure PPHM could fool me but it is unlikely they could fool a total of (19) scientific, medical, and viral board advisors. It is unlikely that PPHM could fool six top medical institutions. It is unlikely PPHM could fool the top regulatory team of Garnick and Menander. It is unlikely that PPHM could fool four IST teams. It is unlikely that PPHM could fool the FDA panels that have green lighted all of the testing. And, it is unlikely that PPHM could have fooled the hundreds of patients tested who have suffered fewer side effects and AE's, experienced better pharmakinetics, and in general experienced better efficacy against their collective conditions.
3. Stop worrying about major dilution and low priced option grants. The average option grants of the 4.5mm odd appear to be between $3.5-5 range and are expiring about as fast as new grants. Dilution continues at a slow and steady drip and will hopefully lessen as to percentage and rate with price appreciation.
4. Stop worrying about Thorpe defecting. IMO Thorpe not only unlikely to defect but he has redoubled his efforts through "imaging", MOA studies, PE and other 2nd gen studies, and by raising his presentation profile at AACR, Barcelona etc.. In poker terms Thorpe is "all in".
5. Mgmt and BOD themselves appear mostly worried about "loss of control" and "job security" in on going PPHM as most major product lines are partnered out, BOD expanded, investment bankers included. Let them worry but, IMO we need to stop worrying and focus on stock profits.
Thorpe is ahead of me re my previous comments on increasing PS on cell surface. This is as it should be since he has the PHD in immunology not me. Not only is he working on methods to increase PS exposure but, also working on new surface targets such as PE and new delivery methods in 2nd and 3rd gen iterations for Bavi. IMO this new research also impacts "imaging".
All the work Thorpe has done on MOA is particularly important in a new class of drug. If a new drug class can not explain MOA convincingly, it is more susceptible to FDA skepticism. The more scientific proof of MOA the better in a new class of drug and this of course has taken time.
Back to my main theme of focusing on stock profits from now to year end:
1. PPHM should produce a "steady stream" of 2nd half 2011 research milestones.
2. Based solely on Cotara obtaining a phase III green light with clearly delineated pathway/ SPA status/ and or "conditional marketing" status, then IMHO would value PPHM at 800mm with a market cap trading somewhere between 50-100% of that number (somewhat higher if PPHM gets SPA). In addition I would be looking for domestic or foreign partners and non share dilutive front funding. 400mm - 800mm market cap equates to roughly $6.15 - $12.30/ share IMO only by end of year. Obviously , this move may not be straight line and could be affected by adverse macro geo-political market forces. (If you don't think macro events mean much to PPHM just look at today's action after S and P downgrade on outlook for US debt.) However, pphm price appreciation should be delineated over time by the underlying fundamental based trend. Though I tend to be overly optimistic, I would still be happy with the lower range of this move as we set up for 2012. IMO this time frame should be a sweet spot for improvement in market cap. (As an example of what can happen even on a massively down day like today see AMRN which appreciated almost 100% on good Phase III data).
My lower case scenario encompasses substantial ATM financing (albeit at much higher prices) somewhat inhibiting my price appreciation by limited dilution. The banking and board changes needed could become delayed under this scenario . Even though the board would be wise to enact change they may not feel forced to move.
Counterbalancing these negatives, the margin restrictions and going concern letter come off and the higher prices allow a whole new category of institutional buyer to enter the bidding.
Technically, the trend lines and moving average cross overs support an upward trend IMO. There is slowly increasing average daily volume and more two way action intra day.
IMO the biggest mistake made by small investors is to sell too soon. If, (and of course that's a big "if" but also what makes the speculation interesting), there is a fundamental upvaluation in process, then I would maintain a base position and trade breakouts with secondary position. It is possible this stock could have a large move that could encompass years. Keep an eye out particularly for Cotara data to be presented at the Barcelona or ASCO conferences for an early indication of how strong the FDA presentation will be.
To conclude:
I am not denigrating all the negatives in the PPHM story so aptly pointed out on this board. These negatives contribute to a much wider delta between underlying scientific value ( ultimately underlying commercial value) versus the current market value. IMO this is a very good time to stay focused on the bigger picture, accumulate on weakness and hopefully catch a sweet spot for up valuation the rest of this year.
Good luck to all of us.
Jake,
I am not an expert in Exel but on a cursory evaluation their market cap vs PPHM says more about PPHM than Exel.
Exel appears to have a good drug in Phase III that may have multiple use in prostate and other cancers. Their pipeline does not appear superior to PPHM.
What does appear superior is their IPO (which raised about 180MM), their use of debt leverage (200mm), their BOD interconnectivity.
In addition, instead of poison pilling, they have a top investment banker (GS) positioning this company for sale as a pipeline supplement or fit for a big pharma like Bristol Myers.
Their whole approach from their private funding, through IPO, through debt funding , etc has been to bring in powerful financial interests that have an interest in making their paper good.
PPHM still limps along as a loner, without interconnectivity. Until recently, their were no large financial interests with any interest in PPHM.
It feels odd to have to keep stating that it is time for PPHM to grow up as a business enterprise. If PPHM likes the current CFO so much then keep him on as an assistant for day to day ops and bring in a CFO really connected to the big investment banks, that has a financial vocabulary larger than three letters (ATM), that understands gap or interim financing, debt in all its forms incl of convertible, that understands big pharma, that understands how to do a real secondary offering at higher prices, that understands how to get the pipeline story (which is really good) across to major financial interests and how to motivate those interests.
I feel sorry for the mice that had to be castrated in the ADT Prostate Cancer Trials. But, this shows me the lengths Thorpe will go to increase PS exposure on the cell surface. All humor aside make no mistake about it, increased exposure of PS is key. The more the exposure the more the immuno reactivation. Immuno reactivation attacks the host cell and is difficult to mutate against.
Intuitively and IMO only, EVENTUALLY THORPE WILL HIT ON SOMETHING THAT MOVES UP PS EXPOSURE BY A FACTOR OF 500-1000 PERCENT. Why do I feel this way, because these researchers are brilliant, they are on to something, they have the bit between their teeth and they won't stop trying different techniques until they find one that exposes a "larger percentage of the possible" which is "defined" IMO by the amount of PS inside the cell surface as the constant equal to 100%.
I continue to be impressed with the progress being made in "molecular imaging" and better understand how this imaging will allow Thorpe researchers to measure the PS exposure discussed in prior paragraph. (Partnering in this area in no way inhibits PPHM use of any of these techniques and might coincidently add large orders for AVID.)
I notice that many people on this board are uncomfortable with the air pockets in the price action of PPHM.
Sellers are emboldened by the "self defeating" ATM mechanism and illiquidity is abetted by the lack of a first rate investment banker possessed of a powerful market maker/trading desk and well respected sell side analyst. These are conditions which can be changed and we should keep lobbying for change. However, I would still rather own PPHM with these "mutable negatives" than a biotech company with a better board, 200mm balance sheet and a "me too" pipeline of science and drug candidates going nowhere.
IMO the question of whether this board is more knowledgeable and quicker to the news has been asked and answered. If the "B" team is represented by "Seeking Alpha" --which can't stay current or get their facts straight, analysts with rediculous "models", the Motley Fool analysis, analysts who rate early stage biotech companies by their cash flow and non existant earnings, BOD which can't figure out a better financing model, and short sellers/traders trying to make a quick buck --- then I'd rather be on the other team with this board's researchers, Drs Garnick , Menander and Thorpe.
Anything else I might add was already said more eloquently by Firefox in post #62887
PPHM can't have it both ways.
The company is way past the inflection point. PPHM can't be "world class" and "first in class" technology with a world class pipeline of new products, a world class regulatory and scientific team, and continue to act like a "pygmy" company at the mgmt and BOD levels and in the financing arena. While the company continues to advance in slow and steady fashion through FDA phases and testing and patenting, it should advance much more rapidly on the business side in preparation of things to come.
Firstly, we are always in favor of higher prices that reflect current discounted value as higher "market cap" is a "fundamental" that makes financing less dilutive.
On the other hand, lower prices present an opportunity to accumulate shares at better values and put pressure on mgmt and BOD to find alternatives to the "dilutive and overhanging" (self defeating) ATM financing. (It is only mildly comforting to know that ES holds the largest amount of shares being diluted and should therefore be open to alternatives.)
In that vein of thought IMHO upward price pressure would be immediately exerted by:
1. Adding a BP guy to BOD
2. Replacing the caretaker COB with a knowledgeable COB that has lots of connectivity to the biotech universe.
3. Adding an investment banker to BOD (particularly one with a track record in financing early stage biotech companies and in partnering biotech assets)
4. IMO Changing the CFO. (How the present CFO can look himself in the mirror after ten years of "going concern" letters is beyond my understanding) The "calcification" and lack of imagination at the CFO level is staggering. Even if the BOD is "absentee or complicit" a new and more knowlegeable CFO could bring more to the table than what we have in place.
5. Regional partnering
6. Earlier stage partnering with lower front cash but better back end. Partnering is validation and validation leads to up valuation.
7. Partnering or sale of non core assets (possibly imaging tech) and patents. PPHM has patents coming out of their eyeballs. Where these patents don't provide protection for core assets --sell the IP to places where it can do some good. (Some of our remarks may be making an impression as I note PPHM seems to have a new head of product development. I hope as part of his portfolio he includes sale of some old product development)
IMHO the CFO is disingenuous when he talks of PPHMs "multiple sources" of funding. From what we can see currently, almost all capital burn is being raised at the ATM at very discounted prices. As we all know, the real beauty of Avid is that it saves PPHM money and time by being "in house" and in that sense "reduces" the capital burn , but---as a third party revenue source it has to be the slowest growing business in America. If you "stop kidding yourself" and look at Avid more clearly in this light then the course is clear. Keep everybody at Avid involved with in house savings and replace the outside sales team with new and aggressive blood and upgrade your product offering.
It would take a book to detail all the various mechanisms available for financing (incl of callable convertible debt with a warrant kicker as a bridge) but, mgmt should be aware of many alternatives by now. If mgmt or CFO can't find the right banker then let them access their "shareholder base", or go through Garnick to Roche/Genentech for "precisely the right referral and introduction".
Or, let them go through Thorpe/UTSW who know a lot of companies that can refer a good banker in the biotech area.
Or, dig up the precisely right banker by referral at one of their endless conferences or private equity presentations. Supposedly PPHM has done dozens of private presentations to various equity groups so they ought to be able to dig up some good leads.
BTW I am not talking about bankers of the R and R category. I am talking about top tier bankers. IMO PPHM BOD and mgmt look at the world with the perspective of a 'Cotara Mab',i.e. --from the inside out.
PPHM underestimates the power of their story, their regulatory team, their scientific team, and the power of their pipeline. It is fact certain that many major investment banks invest in small companies using SPACs and other structures. Many of these subject companies have much less potential than PPHM.
Do another thought experiment:
Close your eyes and imagine PPHM brought a first class investment banker on the board from a firm that had real buy side clout, a strong trading/market making desk, and a strong biotech analyst. Further imagine that PPHM allowed that bank to buy a modest amount of stock from the ATM for their private equity account. Keep your eyes closed and further imagine we give this bank modest amounts of five year wts all the way up to $7.50/ share against a subset of modest milestones. (read that as research reports, market making, etc. ) Further imagine we give this bank a balloon load of wts above $7.50 if they get off a secondary for the company between $7.50-$10/ share for $150mm. Let all those wts carry a "right of registration" if said secondary is enacted and of course they get paid for the secondary. Now all the incentives are in the right place. Remember wts are only exercised if the price is above their strike and represent additional capital placed directly on PPHM balance sheet.
The equity begins to lift just on news of the Banker .
Support this bank with a steady stream of testing data and FDA progress over the next 6-12 months until PPHM positioned for the secondary. Hope PPHM gets an SPA for Cotara from FDA or fantastic viral data and secondary can be done higher.
Now, open your eyes. How does PPHM look now??? One thing you can't see is that big "going concern" letter hanging around their neck. You can't see overhanging ATM stock. You see a stock that is over $7- 10/share, marginable, and one that meets the buy requirements, balance sheet etc. of a whole new cadre of buyers. You see a company-- rather than intimidated by short term traders-- that has market makers that are themselves intimidating, a company with a banker that can bring in major buyers from time to time. You can see a company well financed and empowered to move forward on a lot of fronts. (The only thing that would mitigate this opinion would be price appreciation that allowed ATM to finance between $7.50-10/ share and even then I would think PPHM would vastly benefit from a first rate banking relationship re further financing, spinoffs, mergers, acquisitions, and deal making/ partnerships incl of foreign partners)
I find all this a lot easier to imagine than it was to imagine an FDA "new drug approval" when PPHM started down that path. If PPHM was bold enough to go after the latter then lets go after the former.
Now some may say "perhaps" we already have a deal in Cotara contingent on an SPA from the FDA and we don't need a banker. Maybe, perhaps, who knows exactly when??? How much burn?? Who knows whether the deal will hold up or not?? Perhaps PPHM can make a better deal if we were financially stronger. Therefore, why not do both?? There are enough billions of dollars at stake here a little insurance would be prudent would it not??? PPHM has burned almost $250mm in paid in capital -- a little insurance might be a good thing.
My thanks to Wildhorses and Cloaked Protector for their comments about my "conjecture" on the gov't RFP. I enjoyed their added thoughts, experiences, and conjecture on stockpiled material and added revenue for Avid.
For Golfho --I don't consider the Stason/Apec deal a true early stage deal. IMO it appeared to be more of a settlement. The front money never noticeably moved the balance sheet meter and no royalties yet. Stason may not really move until PPHM is finished with Cotara at US FDA.
Golfho is correct in his assessment of my Buffett "paper company" analogy. Buffett correctly figured the paper company was worth more than its valuation with or without the forest land it owned. Eventually, the forest land was worth an additional couple of billion dollars when it moved from the "zero to a whole lot" category to the "usable" asset category. As far as that relates to valuing PPHM, I still can't put a correct valuation on PPHM assets or future assets. I believe these assets are worth somewhere between "zero and a whole lot more" and I am willing to speculate on that belief. By "a whole lot more" I mean up to at least $10 billion more IMO only.
In my low ball calculations for example, I put the interferon market at "several billion dollars" and hope PPHM gets a good percentage of that market over time. I note in a current report that Jeffries and Co. is putting the interferon market at 15 billion dollars. That is a large magnitude greater than what I have been deliberately using as a conservative mark. On the other hand:
1. It is difficult to know which assets clear the FDA and when.
2. It is difficult to predict competition or useful lifespan of each product PPHM produces.
3. Are the PPHM products limited in label and usage or can their use be vastly expanded??
4. Does bavi have real potential as a vaccine and or immuno booster in cancer or heaven forbid in viruses??
5. Is Cotara limited to brain cancer or can some variation of the technique be expanded to other hard tumors??
6. What are foreign rights worth??
7. Will PPHM get additional gov't contracts and can they precede large stockpiling contracts??
8. Can PPHM partner and develop a unique imaging product??
9. What is the real value and potential of the viral app for bavi??
10. What are second and third generation products like PE really worth??
11. Will bavi actually replace billions of revenue spent on interferon??????.
12. Will the BOD and mgmt ever have the maturity to morph into a really effective fighting force???
This list could go on ad infinitum. I do believe that domestically more than $300mm/annum (and this could be way lowball similar to my interferon mark and just IMO) could be generated in diagnostics if the product is as good as Thorpe thinks. Heck, they charge me several hundred dollars a pop just for a sonogram every time I go for a physical.
Sorry , can't be more helpful. Really hope Golfho is close to the mark in his valuation of Cotara.
IMO there was nothing earth shattering in the EASL data. It looked like good safety confirmation and part of the continuing process and we are pleased about it.
IMO of much greater import will be the AACR releases and we particularly look forward to Thorpe on "immuno reactivation" and "imaging".
Should PPHM ever become a home run my firm will hold a get together for Message Board researchers and I can assure you it will not be in "Cambridge Mass at the Starbucks"??? New York or Las Vegas would seem more appropriate and the entrance ticket will be your message board "handle". I would like to meet some of the researchers on this board as I think they do excellent work.
Lastly, I hope this "message" is passed on to management and BOD. Whether or not they pay attention, little or no harm can come from repetition of ideas where PPHM needs to act and some fresh input.
Regards to all
Random thoughts and some "pure conjectures":
I note some concern on the board re Thorpe and UTSW's take on PPHM rate of advancement on Bavi, etc., technology. IMO this is the last thing PPHM shareholders have to worry about. There is enough technology patented and assigned and otherwise locked into PPHM to last the company three shareholder investment lives.
Though nobody is an indentured servant and PHD's could certainly divert their efforts elsewhere, the current situation is likely to continue. Although Steve King is criticized for many reasons , one of his "strengths" is that he is a Thorpe protege, and speaks "lab language" and relates well to Thorpe. Thorpe is currently raising his profile and speaking on PPHM CC and at various conferences in behalf of research done for PPHM.
Furthermore, there is more than one way to skin a cat. If you look closely at the 6mm granted by Cprit to the Thorpe lab group almost all the funding is directly related to research supported by PPHM studies. This pays a lot of salaries and is not trivial to this Lab or UTSW.
In previous messages I first picked up on Thorpe interest in "imaging" by reading his take on Bavi as a top "three dimensional" imaging system. I liked this because it was so applicable to all hard tumors. Thorpe then "doubled down" on the CC by again talking in "glowing" terms (no pun intended) about imaging and adding the possibility of "predictive imaging". This has very lucrative implications. In his latest conversation Thorpe is "tripling down" by using the code words that the imaging system will meet "a high unmet medical need". Feels like he has been hanging out with Dr. Garnick.
I mention all this about imaging since Thorpe will be speaking about it at AACR conference and it is the subject of one poster. I am particularly pleased about this as it may lead to commercial inquiry IMO from imaging companies. This is not a core technology or "crown jewel" for PPHM and could be stand alone partnered. The use of the phrase "high unmet medical need" is a signal to the market that the trip through the FDA for the imaging system may not be that tough.
Lastly, I never completely understood or believed the mumbled PPHM discussion about the terminated gov't contract under defense protocols. It was clear to me and probably everyone else on this board that Bavi couldn't boost the immune system quickly enough to save an orang injected with a lethal pathogen. The govt didnt have to spend $24mm to get to that conclusion.
PPHM has had good relations with the govt in the bio terror arena and had in prior discussion talked about working further with the gov't in other areas. When I read the new govt RFP for "Development of Technologies that Accelerate the Immune Response to Biodefense Vaccines" it looks like it was written for
PPHM specifically (and IMO only, with the help and consultation of PPHM ). This RFP is roughly for about $44mm over several years and will be let over the next couple of quarters. When you add the requirement in the RFP that the candidate use a cGMP facility for production, I can't think of any other company in the country other than PPHM that could fulfill this RFP. This conclusion is so startling I feel I must be in error. I would be interested if some of the researchers on this board could find such a competitor company or companies that would have the tech and want to put the time and effort into this RFP. It seems too small and esoteric an area for BP so it would probably have to be a development stage company.
Therefore, IMHO, I would not be surprised to see PPHM come up with a new gov't contract more specifically designed to play to PPHM strengths and more likely to eventually lead to stockpiling.
The beauty of an RFP is that the gov't already has the funding for the project.
Gov't projects are not the reason to invest in PPHM but, they always add credibility and positive cash flow and corporate IP. The intelligence with the way this RFP was developed would speak well for PPHM were I to be right (?) about their consultative imput. If this RFP proved to be applicable for the gov't response to bio terror then stockpiling would be a different matter and could really move the fiscal meter for a small company like PPHM.
Moving on---we look forward to info from EASL, AACR, Barcelona, ASCO , etc,etc, and from the trials. We look forward to the FDA meeting re Cotara. The clock is ticking and the market generally moves ahead of events (??? sometimes).
The great weakness of PPHM IMO continues to be the immature method of financing and balance sheet. This issue is of course tied to mgmt and BOD strength. The science has far outgrown the financing and it would be feckless of management and BOD to continue to address the current needs of the company in the old manner. IMO mgmt and BOD should be much more forthcoming about partnering, investment banking, etc. as it is the crucial missing component. Imagine how much better PPHM would look without a "going concern" letter from the CPA hanging around its neck. I suspect this issue will be addressed as it must be addressed.
Strangely, this is no time to rant at management.
I share the general frustration with this mgmt and BOD, and, if I had not mitigated the "waiting time' by trading, I would be even more frustrated. Part of this frustration is with my own "misunderestimation" (with a nod to George Bush) of the time lines in this investment. I'm sure others can see themselves in that error. However, IMHO it seems that this would be a very good time to be looking forward rather than backward. To this point, there is a general investment disclaimer to the effect that "prior track record is no guarantee of future success". The RRdog corollary to this disclaimer is:
"PRIOR FAILURE IS NO GUARANTEE OF FUTURE FAILURE".
If this corollary were not true, there would be little or no success. Everybody fails and frequently multiple times. An "intelligent persistence" is the quality most to be prized in management. If this management has one trait, it is persistent. The management of PPHM reminds me of Winston Churchill's comment about his war time ally-- "The United States always gets the right answer after it has exhausted all the others." This management has gone through so many changes, down so many blind alleys and through delays and changes of delivery methods and changes of FDA approach it is positively dizzying. Again, IMHO they are finally getting smarter, more intelligent in approach.
RRdog corollary #2--Don't confuse "price" with "value"
Price is determined by buyers and sellers on the margin who act for a million reasons not necessarily relevant to our discussion. True value is a whole different matter. We want the price when it is way below where we perceive the value to be headed. Real value is frequently revealed by a large transaction. Imagine for example, the sale of the entire Cotara platform as the type of transaction that would begin to reveal value. If Cotara moved rapidly ahead at the FDA and PPHM were to get half a billion to a billion dollars (just to pick a number for purposes of discussion), what would that do to price???
The big winners in PPHM,-- if this whole adventure works at all (and we all know it is highly speculative)-- are going to be the investors who are as "fanatic as Japanese soldiers defending small islands in the Pacific after WWII is over". IMHO dig in "on your own little island" with an amount of stock you can hold. Prepare, if possible, to increase your position to offset any dilution. Play for a large move in cap size. Don't worry about the market as a whole as a success in PPHM would far transcend market action.
The more "shots on goal" a small biotech has the better we like it. It would be wise not to discount the latest shot on goal--- "imaging". While imaging is "diagnostic" and cheaper than treatment it has the advantage of not applying to just the small percent of the population that has cancer but, of applying to the whole population. If the PPHM diagnostic is also "predictive" as Dr. Thorpe posits, then its value is huge. If you can "predict", then it is only a short leap of imagination to "prevent". One thing that might be "preventive" would be Bavi to increase immune response to early stage cancer cell development as a form of vaccine. Diagnostics have a much less onerous path at the FDA than new drugs and a much shorter one. The opportunity for partnering in "imaging" seems quite real to us and the amount of money to be made in this area could really move the needle on a small company. The beauty of "imaging" is that PPHM doesn't even have to get past the FDA for a single new drug app in order to have massive cap upside.
Now that management is getting smarter in generating new shots on goal and with their regulatory approach and their clinical work it would behoove them to get over any fears of loss of control and grow up along with their own company. It is time for management to get much smarter about investment banking and financing, about board and management interconnectivity with the rest of the biotech world, about the quality of their communication, about early stage partnering or regional partnering where possible. There is no unwritten law that says PPHM has to be in this all the way alone. I don't even think PPHM makes more money ultimately if they retain 100% of the pie. Bigger partners and larger pie are always interesting. IMHO this management is positively phobic about early stage partnering. There are great early stage deals with massive milestones being made in the biotech world all around them. People that post on this board are better than I at digging up the many examples of this over the last two years. Partnering is "validation" and validation leads to up valuation.
In response to "golfho" question as to whether we have "modeled" a potential valuation for PPHM the answer in the specific is that we find that impossible to know. To paraphrase Buffett when he was acquiring a "paper" company and trying to evaluate their forest lands that had not cleared environmental hurdles-- "they were worth somewhere between zero and a whole lot." If everything went perfectly IMHO, PPHM could have a capitalization in the tens of billions divided by whatever amount of shares it takes to get there and tempered by the time it takes to get there which could be years.
We prefer to focus more finitely. S King is on record saying NSCLC could easily be a billion dollar drug?? I can live with that. A capitalization of one times revenues divided by 100mm shares would be about $10/ share. Maybe its worth two times revenue?? Maybe its a two billion dollar drug and Steve is just being conservative?? Maybe if Bavi works in one indication the marketplace starts to add value for multiple indications??
Cotara is probably ahead of NSCLC in timing. Do we sell European rights and retain the US?? Who knows??? Since these examples are only a small part of the story, you can see why it is fruitless to model on. One note is that markets frequently misvalue equity. IMHO the "efficient market " theory is mostly hogwash particularly in small companies. As much as a small biotech company can be undervalued for years, if it suddenly comes into vogue it can become way overvalued.
Stay focused on the big picture.
This is a knowlegable and interesting answer. However, in the "brave new regulatory world" things may not be so simple.
The question really concerns itself with the Phase III trial itself and not bringing the product to market by other parties.
This concerns us because PPHM is not conducting a trial for a "surfactant" like a skin balm. Rather, it is conducting a trial where the FDA may want hundreds of subjects, that uses dangerous radioactive material that if misapplied could be hazardous not only for patients but also for medical personnel. The material has to be manufactured properly, labeled, transported and secured. It then has to be surgically inserted into the brain using a new and NIH developed technique which can be appplied at only specific certified facilities.
We believe the FDA will be very interested in the "ability" of the applicant company to comply fully with every aspect of the test. PPHM has a going concern letter from their own accountants carrying it only as far as Oct 31, 2011. Regardless of the "letter of the law" so to speak on the regs, the ability to finance this trial is going to be an important consideration IOHO.
Jake, that is a really great question. I think it's even stronger put the other way. Wouldn't the FDA want to know how PPHM plans to finance the trial and how they would plan to "finance" radioisotope sales and market since this stuff is tricky to handle??????? It's a little analogous to allowing an airline to fly without being sure it has enough money for maintenance or other safety measures.
The reason I think the question is better put the other way round is because there is only one FDA and many possible partners.
As a practical matter, we leave it to Garnick and Menander to finesse this situation. Perhaps they have a partner ready to go or perhaps they get a provisional SPA. Either way, you get what you want which is more "pressure" on PPHM to partner intelligently and sooner.
RRdog Share Tuesday, March 15, 2011 4:05:13 PM
Re: None Post # of 150127
Sometimes, I like PPHM because of its' weaknesses --- that's what makes it a great value. Same long bias as last letter. IMHO only and take it for what its worth. I respect all the counter arguments and share some of the frustration.
The first weakness is, of course, market and investor "tone deafness". No one who listened to the moribund conference call will ever accuse this management of "hype". If ever there was a co. that could not communicate in plain English, this is it. Whether this is by design --- I doubt it because it is counter to corporate and board interest --or by genetic predisposition --- a more humorous but also more likely case --I don't know. What I do know is it works to produce lower valuation and a better long term opp.
One wonders exactly what value is added by the IR dept at PPHM. I note that with all the advances PPHM has made in the last year, it traded at a higher market cap under the Gendel/ Lindheim IR tenure. (and the market averages were all lower at that time as well)
The rumor is that the present IR department is adept at setting up institutional meetings for PPHM. If they really wanted to be effective,--- they would help position the next 3mm share private placement with the "investment arm of a major pharmaceutical company" . By analogy, Facebook was ventured by a number of other hi tech companies such as Goog. If you can't do exactly what they do, you can be smart enough to know a good idea when you see it and invest in it. Such an investment might give a pharma extra incentive should they want to partner something.
To sum up on this matter: doing a Fri 4:30 CC--the equivalent of slinking off in the middle of the night----, reading scientific treatises with no emotional enthusiasm, not translating events into clear investor English, and restricting Q and A to a short time span and the two analysts is, IMHO, just a silly way of doing things. Hence more long term opp.
Apparently, Bavi does a good job of up potentiating the immuno system but, not quickly enough to save an Orang that will die in 5 days from a lethal dose of Ebola.
Of more importance was SK statement that the 10-12 million dollar contract extension was mostly earmarked for third party sub contractors and has little effect on PPHM cash flow.
IMHO and as previously stated, PPHM still needs a head of Gov't contracting of the caliber of Dr. M and Dr. G on the regulatory side. Besides RFPs there are also RFFs. The largest problems the army officer corps faces are breast cancer in women and prostate in men. It would seem if we could drum up 24mm for HF/ Ebola (about 6mm an unfortunate Orang-- in my guess), we might drum up a lot of dollars in those two cancer areas.
The "bad batch" at Avid is truly a hiccup. Its good that PPHM caught it, will learn from it and it sets revenue back in time about 2mm+. Such is life in the fast lane. Any overly emotional reaction to these events spells opportunity IMHO.
Now for the more important info to be gleaned from the call :
1. The trials appear roughly on schedule. Nothing is easy. It may take a couple of extra months. If it was easy, biotech companies that succeed wouldn't be worth billions of dollars in market cap.
2. Data flow and conferencing appear robust over the next six months visibility.
3. The regulatory/clinical trial environment is becoming more tricky and "artful". Here, I think PPHM
has a clear advantage over most smaller biotech companies. They have a top regulatory team bolstered by Dr. M to help them navigate and communicate with FDA, and, they have a big head start with all the clinicals that are already cleared by FDA and in progress. In plain English, PPHM may be the "leper with the most fingers left".
4. I agree with other posts that the Cotara FDA meeting may be more sophisticated in approach than previously perceived. PPHM wants to go into FDA with much more than collated data. They also want to be prepared with labeling and a radioisotope partner, a manufacturing plan, a marketing plan, and a decisive phase III plan. I applaud PPHM mgmt for this and IMHO it moves the company closer to positive FDA rulings, SPAs, and commercial partnering. (see #1- it may take a bit more time)
5. Re Dr. Thorpe:
Dr. Thorpe is about to embark on what amounts to a scientific "tour de force" speaking in rapid succession at AACR, Informa Recombinant Antibodies Conference, etc., etc.. This is profile raising stuff in front of his peers. If Dr. Thorpe's work is ultimately successful, he is a lead candidate for a Nobel Prize in medical research. If he is wrong after ten years of research, he will look foolish. I've personally heard Dr. Thorpe speak and he is no fool. His lab at UTSW is highly respected. For him to want to raise his profile now is very interesting IMHO. Dr. Thorpe is extremely effective when speaking to his peers in medical language and settings.
Therefore, IMHO he has potentially "catalytic" (a Roth analyst word) material he wants to discuss in the proper setting for maximum effect.
Dr. Thorpe has "already" patented (assigned to PPHM) the "PE" approach which is the sister to PS.
Ultimately, this may be of tremendous value and is hidden in the PPHM IP I have previously alluded to.
Dr. Thorpe "doubles down" and moves "all in" re my previously commented upon "Imaging" patents.
He goes even further by talking about a "diagnostic that is also predictive". The value here continues to grow. My only difference with PPHM is that I would be looking for a major diagnostics company for immediate partnering. This is a whole different field and PPHM can barely handle what's already on its plate. My opinion on this would only change if PPHM raised 75-100mm from a commercial partner and could afford to set up a separate division devoted solely to imaging. Imaging , IMHO, is worth a fortune to PPHM.
Lastly, the most important business issue for PPHM still needing to be addressed is financing. Until this is addressed, shareholders are faced with the steady drip of ATMs. Once again, IMHO, this silliness gives longer term investors tremendous value opportunity assuming this issue will ultimately be dealt with.
As an adjunct to the last paragraph, PPHM really needs a first class investment banker. If they truly have first of class technology moving into phase III then why not walk into a major banker instead of the small firms they talk to. Smart bankers can see future potential in small companies--especially if there are billions of dollars in market cap at stake. There are numerous superior structures for financing at higher market cap value than PPHM is currently getting for ATM. Really would like to see mgmt wake up to other possibilities. After a decade of ATM its a little analogous to "Libya"--time for a change.
IMHO, PPHM moves closer to partnering, which must inevitably happen, and they have more partnering possibilities. Public Reply | Private Reply | Keep | Last Read Edit Msg (1 min left) | Previous | Next
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This is a first time post from a long time investor/ trader in PPHM.
Bias:
As a firm, we have traded PPHM since it was called TCLN and we were there for the "mythological" move to $15/ share in 2000 and for several other moves over 300%. We have taken our losses from time to time but over all have made a great deal of money in PPHM.
We are long side biased. We are never short this stock on balance. IMHO, given the risk and reward in a small biotech with this story, an investor would have to have "mathematical rocks" in his head to be a net short at these levels.
From time to time we have been extremely opposed to mgmt policy and have not been shy about voicing our concerns.
Our great frustration has been that PPHM has yet to complete its mission which would not only make a great deal of money for many long side investors but, might also do a lot of people some real good in a medical sense. Nevertheless, we are always hopeful.
At this moment in time, no matter how actively we trade PPHM, we always maintain a large long side position on balance. We have no proprietary inside information nor do we want any.
.
So much for biases. Readers can view our comments from that perspective.
We have long enjoyed the debates that rage on IHUB and see the merits of both sides of the debate. In addition, we find IHUB has some first rate contributors that are faster to the news than almost any other source and really dig deeply into various sources.
Recently, we have enjoyed the debate on compensation. Of course, IMHO, this board is overpaid. The BOD also appears rampant with cronyism, and to a man has no heavyweight credentials in Govt Contract Procurement (who knows what countless millions have been left on the table), no credentials in domestic biotech universe be it large or intermediate pharma, no int'l credentials, and worst of all no credentials in early stage or late stage partnering and financing. The financing methodology seems to us to be particularly infantile for a company with this much scientific and regulatory strength--- especially after ten years.
We all know that price per share and market cap are fundamentals particularly in a company like PPHM that funds through use of an ATM process from time to time. There are three or four analysts that follow PPHM at various small firms and they do some very sophisticated modeling to determine that PPHM has a present discounted value of between $7.50 and $10 per share. So PPHM is trading somewhere between about a third to a fourth of their own analysts valuation.
We also note that PPHM is trading for only about half of "total paid in capital" which now exceeds $256mm. Worst of all, IMHO, PPHM is trading for what we estimate to be less than 10% of pipeline replacement value. All these cool experimental tests PPHM runs get more and more expensive to duplicate year by year.
Management, has done a fantastic job in some ways, but clearly,
as far as communicating the real value of PPHM to the investment community writ large, they are an unmitigated disaster. We hope for a major strategic shift in the way they communicate immediately as it affects dilution of investor/ owners as well as mgmt owners, and board owners.
If mgmt cannot communicate the true underlying values in PPHM they should shift their strategic thinking about "earlier stage" partnering. There have been a number of early stage partnering deals that have been positive block busters Sure, PPHM may give up some front money but most of that can be made up in milestone payments. There are many ways to accomplish relatively non-dilutive financing without giving away the crown jewels. Two quick examples:
1. PPHM could make a "regional" sale for Japan or Europe in some part of the pipeline such as Cotara or one of the viral products.
Wouldn't a limited loss leader of this sort be better strategically than selling large percentages of the "whole" company at deep discounts. Again, the math is compelling so even the management thinking at PPHM may turn more flexible.
2. PPHM has huge untapped IP with literally hundreds of patents that were painstakingly applied for and the majority of which are not germain to PPHM core programs. If this IP were marketed intelligently to companies that do have special interest in the areas covered IMHO millions of dollars of value could be harvested. You think not?? Well consider the patents covering diagnostics. Dr. Thorpe believes that Bavi which adheres to the cell surface of tumors may lead to the finest three dimensional diagnostic imaging process ever developed. Diagnostic companies make a lot of money. This is an area that could be partnered and in our opinion worth tens of millions of dollars to PPHM, and, an excellent example of hidden value in this stock.
We can think of at least half a dozen other ways to obtain financing without large percentage dilution if mgmt cannot raise the price through better communication. Given the dirth of pipeline at big pharma this is almost a "no brainer" and we believe mgmt will wake up to reality.
All the aforementioned having been said. PPHM appears to be potentially one of the great investment opportunities of our time "even if diluted another 30-50%".
"Watch the feet":
When heavyweights move to a small company, pay close attention to that small company. In my investment group, we are particularly impressed with the addition of Dr. Menander to the PPHM regulatory team. Combined, Dr. M and Dr. G have directly
supported the regulatory process for 32 drugs through the FDA.
If you add the total revenue produced by these drugs it is a mathematical fact --not opinion-- that little PPHM now has one of the top regulatory teams in the country, if not "the" top team, bar none and inclusive of big pharma. And that means the regulatory team "LOVES THE PIPELINE AT PPHM" or why else would they be at this little company.
The best analogy I can think of is, if you add Carmelo Anthony to Amare Stoudemire you are likely to get "more scoring". It doesnt even matter if drugs in the pipeline are approved or not, though, of course it would be much better if the drugs become commercial. (IMHO) PPHM is likely to rise 500 -1000% just on getting into Phase IIIs and partnering. I have complete confidence that Dr. M and Dr. G can move the pipeline into phase IIIs and perhaps with SPAs as well for added benefit in reasonable time. (Some folk think they can accelerate even faster than that but, let's leave that discussion alone for the time being.)
We have observed this phenomenon in many biotech investments. In one of our own early stage biotech adventures our investment rose twenty times over before being finally rejected at the FDA. IMHO, shareholders in PPHM will have ample time, from much higher levels, to decide what percentage of their investment with which to take FDA risk. (By the way, there is always FDA risk no matter how good something looks. The FDA can always say "We like your data and safety but just to be sure go do another couple of years of testing.)
Nevertheless, it is our opinion that PPHM may do better at the FDA than many biotechs because of Garnick's brilliant strategy using unmet need in the most deadly areas to get PPHM "camels nose under the FDA tent". In addition Dr. G and Dr. M know how to talk to FDA and how to set up trials in the most efficient way and they understand the power of an SPA. So again we remain hopeful.
Dr. M's arrival at PPHM suggests some other thoughts as well. IMHO, she has a following not only in the U.S. but, also in Europe, not only corporately but, investment buy side as well. Following the time line, Dr. M comes a year or two behind Dr. G and her arrival is "confirmation" at the highest level of his vision.
These two regulatory experts do not make hasty or rash or emotional decisions. They are late stage in their careers. To continue the basketball analogy, they move where they think they can win. They are very sophisticated about advancing science in both virology and oncology, they look for pathways where they have a high degree of "probability" of regulatory success in a reasonable time frame.
From an investment perspective, these doctors go where they can make option fortunes should they be successful. More important, from the point of view of the outside PPHM investor, they do their homework and diligence. THEY WOULD NOT GO TO ANY COMPANY THEY FELT HAD TAINTED SCIENCE, WAS MALFEASANT OR NON COMPLIANT IN CORPORATE REGULATION, AND THEY WOULD NOT GO ANYPLACE THEY WERE NOT CONVINCED COULD EASILY FINANCE THE JOURNEY OR PARTNER THE JOURNEY. The implied diligence and track record of Dr. M and Dr. G. give me more confidence in my own diligence.
Besides PPHM's regulatory tandem, there are many other "highly informed and scientific" third party affirmations of PPHM pipeline . Most recent of these is the IST at Chapel Hill.
Also among the "highly informed" people that think there is merit in PPHM research, IMHO, are the regulators at the FDA who are kept meticulously informed of developments and that green light much of the pipeline going forward.
In conclusion:
Though there is always a "probability spectrum of outcome" as PPHM or any biotech approach later stages of their pipeline, we believe there is a high probability that PPHM capitalization may move many times higher before the first FDA decision is rendered.
Buffett has an adage -- "It's better to be generally right than precisely wrong". I think people on this message board re PPHM know exactly what he is getting at. Even if certain facts are negative, we have to properly "weight" each fact within the entire argument.
Lastly, I propose a small "thought experiment". Close your eyes and imagine you are the man people on this board love to hate the most. That's right -- imagine you are Eric Swartz. Keep your eyes closed and imagine you are long, free and clear, high and dry , over 3mm shares of PPHM.
If PPHM goes to ten, your position is worth $30mm. This is easy to imagine since 10 would only be about 650mm market cap and PPHM has been at 500mm cap when it had nothing but BS. Further imagine you continue to hold the bulk of your stock and it goes to a hundred after several FDA green lights and new partners. Not impossible. If there were 100mm shares at 100 that would be a market cap of 10 billion --not an impossible number for a successful biotech company. Really imagine this. You would be one of the richest people in the country worth over $300,000,000.
Now, my bet is that even the "message board despised" Eric S will understand as "you" in the thought experiment would understand that for these stakes:
1. It's better to be squeaky clean, quiet, and regulatory compliant than to be dishonest.
2. Less dilution is better than more dilution.
3. Better communication of value to the investment community is superior to obtusely scientific communication.
4. Since the board of directors doesn't have a lot of depth, I better bring in the best people I can to help me with deal strategy.
5. Sometimes an earlier stage deal at less than top dollar in a "small part of the pipeline" might be superior to selling large percentages of the "whole company" at deep discount to real value.
6. That an improved balance sheet is better than a "going concern"
problem with the accountants.
Sooner or later these tensions will be adjusted. I want to take advantage sooner and hopefully profit later. That's just my opinion.
I wish everyone on the message board good luck and look forward to further "debunking" debate.