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The TMTI buget was $248 mil and was slashed to $148 mil. PPHM's proposed contract was $44 mil over five years so I don't know whether $44 mil was part of the proposed $248 mil or whether it was split up into fiscal year allocations so the number would have been about $9 mil for the next year. Either way, taking out $100 mil it was a big cut for the program. Given how flakey our gov is, it's probably better to focus elsewhere. If bavi works, let the gov ba$tards pay retail.
The only good thing I see from this is mgmt now has to scramble and focus on what reall matters, which is getting a commercial drug to market either by selling the company or partnering.
You would think that SK would be on the phone pleading for a break from these folks to release data. One other theory I have is mgmt has a partnership deal in the wings and with the recent news, combined with tax loss selling, a partner could get a bunch of shares below wholesale.
Assuming the cash and AVID are worth $.25 per share, the following numbers value the rest of the package ie Bavi, cotara and other intell property.
PPS Value of other assets less cash and AVID
$.30 --- $.05 --- $11.5 mil
$.35 --- $.10 --- $22.6 mil
$.40 --- $.15 --- $33.9 mil
$.45 --- $.20 --- $45.2 mil
$.50 --- $.25 --- $56.5 mil
$1.00 --- $.75 --- $169 mil
Now the question I ask myself and have posed to mgmt recently (when pps was in the $.60s), "can you sell the company for more than where the pps is trading?" Their answer has been of course and I agree. Given that the 50 to 60 biotech buyouts have averaged over $500 mil for companies with perhaps lessor pipelines (per recent WSJ article) or less blockbuster potential than bavi, my guess is mgmt could get $169 mil pretty easily for all the pipeline.
Let the sky fall Monday. I have a little powder left.
From what I can gather, the proposed budget for TMTI was $248 mil and that got slashed by $100 mil to $148 mil or a 40% cut. Following are some comments on TMTI.
http://proceedings.ndia.org/830a/Stephen_Reeves.pdf
http://www.noahshachtman.com/archives/003279.html
Medical biological countermeasures is the obvious favorite in the program this year (see breakout of funds by area here). You can thank the DOD vaccine program (anthrax and smallpox vaccine buys) and the Transformational Medical Technologies Initiative (TMTI) for that. The vaccine program is spending about $48 million in 2008, while TMTI is spending $248 million in tech base and $69 million in advanced R&D. Both programs' costs will continue to climb through 2013. The TMTI is the latest "good idea" from OSD [Office of the Secretary of Defense], where DoD is basically sending a hell of a lot of money to industry to find "silver bullets" - a therapeutic that will address a broad range of BW threats, instead of a "single vaccine-single disease" approach.
This ambitious project is the latest Holy Grail for CBDP. In the late 1990s, the program promised free protective suits and vaccines for everyone. Then it was stand-off biological detection in 2000-2001. In 2002, OSD decided that every military base should have CB defense gear for antiterrorism, and threw a billion dollars at that problem. Now it's the terrorist BW threat, combined with the worry of "genetically engineered" BW agents, that drives OSD's "good idea" effort. Funny as in tragic. The installation protection effort started in 2004 (PM Guardian) got half its funds taken to kick-start TMTI, had to be reorganized, and is trying to get back on track. More on PM Guardian's failures later.
We're not going to see anything from TMTI for several years though. First, as a warning shot, Congress took $90 million of TMTI money from the DOD CBDP FY07 budget because there was no business plan other than "throw money at industry." Now a plan has been put together, and they're hiring lots of managers. But as with all medical research projects, and this one in particular, there's not going to be a final product ready for FDA approval for six to ten years, if we're lucky. But it's really, really important! To OSD leadership, not the warfighter, mind you.
One last post before I find some mind altering substance. The market the gov had to offer was not the main target of PPHM's plans, ie antiviral as Hep C and HIV or anticancer or brain cancer. Even though the tangential path would have gained validation, it was not the sweetspot for making huge profits. As such, screw the gov and perhaps energy and focus will be better spent on the main target. If those ba$tards get Ebola, charge em triple the price or better yet, make them fill out a bunch of paperwork while they bleed to death.
I'm hoping panic and $.30 cents Monday. With roughly $22 mil in cash ($.09 per share) and AVID value of say $35 mil ($.15 per share), that would value all the rest of Bavi and Cotara at about $.06 per share or about $13 to $14 mil. Please panic so I can load the boat up.
I very disappointed in news. I can't blame mgmt. I'm trying to analyze the impact on my investment decision on a forward looking basis. At first glance the DTRA brought validation as much as anything and a relativley small amount of cash in year one net of estimated expenses. The original contract was about $9 mil per year so if 30% was net cash to the bottom line, that's about $3 mil. If it was 50%, we're talking $4 to $5 mil. All this is WAG on my part. The gov revs in years 2-5 don't matter cause we'll know if bavi or cotara works by next year.
The main benefit from the gov contract was validation and a faster track for some of the research. Right now mgmt needs to scramble to get validation elsewhere, such as the Duke card or by partnering sooner on some asset or the sale of some asset. Or even the sale of the company altogether. Mgmt does not have the luxury of waiting til mid summer. I still think the company is worth much more than where it's trading now (and even more so next week). The news doesn't change the fact that BP is still hungry for a pipeline. The gov deal did not add much value to the pipeline.
It certainly changes things. I expect some serious selling next week. Mgmt has a limited time to come up with Plan B. No sense in crying about the gov. I expect mgmt is in panic mode and my guess is some asset gets sold before it's ripe.
The overall value of the technology is still intact. The real bad news would be the technology doesn't work but the gov has all the cash it needs. A white knight is needed.
I heard thru a friend that talked to IR that a consultant with experience in gov contracting was hired to help negotiate contract. Have not verified but if so, wise move on mgmt part. I'd never thought I'd say that. OK one smart move amongst many blunders.
The real bone would be no pr, tax loss selling and an opportunity to by at $.40. Yea, short term pain but a 75% to 100% return when the DTRA contact is complete.
If you take the Avid revs and apply a 5 times sales multiplier you get about $38 to $40 mil. Take the cash position and you have about $21 mil ballpark. Add these two and you get about $60 mil. With a market cap of about $100 mil, that values Cotara, Bavi cancer, Bavi viral and all the compounds in developmet at about $40 mil. Do ya think the can package all those assets and get more than $40 mil? What am I missing here?
How low will we go due to tax loss selling? How many shares want out? Does anybody want in?
It's a contract when both parties sign. And I'm sure there's communication as to when each party will sign. Easy process to control by either party.
Not going to happen. Why waste a pr to help tax loss sellers. The real challeng will be to get the stock over a buck and keep it there. My guess is a major effort starting with the DTRA contract followed by other PR's close behind to keep the stock over a buck for ten days.
A rough ride it will be. As for Wall St or institutions having any interest, most (if not all)fund managers will avoid a non-compliant stock - end of story. With 10,000 stocks to pick from, do you think anybody will stand up in front of their boss and the investment committee and say "buy this $.47 stock that could be delisted in 2008". I don't think so and to listen PL say otherwise reiterates my earlier post where my IB friend said these guys are way over their heads when it comes to Wall St. and financial mgmt. Case in point is the PUT they did with the provision where they cannot do a reverse split (which would have cured the Nasdaq issue) and perhaps got some additional attention from institutions. The same players that financed the put are probably preying on the current weakness. This last PUT error ranks up there with the PUT they did just before Russell rebalance two years ago which started the downward spiral.
I stand corrected. Just a little gallows humor. Overall good cc. Still think we're way undervalued for all the potential. When will the fever break?
From transcript:
"I can say however, that we are very pleased with the results of the study so far and that all of the patients in the study say they’re still surviving."
The dead ones didn't say anything so the results - 100% of speaking patients are deemed to have survived making the survival rate 100% of still speaking patients.
Based on PL's outline of delisting, my guess is mgmt is holding off on PR's until next year and hopefully will make an effort to get the stock over a buck for 10 days. India trial approval, cotara results, DTRA and analyst coverage within a short window should do the trick. Tough waiting around. Like watching paint dry but unlike PPHM stock price, paint actually does dry.
I hope you're right. Just tired of it being right around the next corner. Are we there yet? Are we there yet?
I think you could have said the same thing after the past two or three CC's. We're in active discussions and we hope our collaborators are .......
Sorry I'm not a basher but a realist. No reply needed Realist cause you're on ignore. Unfortunately I have more shares than mgmt. At a $6 mil burn rate and $26 mil in the bank, they have one quarter to replenish the til or the going concern question come into play.
Regarding the DTRA, the question I have is the gov working on PPHM's contract or is it part of the rebid process that was posted several weeks ago and PPHM is back to competing with everyone with the expanded scope? I don't have the confidence I once did that mgmt will be forthright. I hope I'm wrong.
My guess is they have to sell Cotara before it's fully ripe. That would be better than the death spiral.
I called and hit *1 and no response. I don't think they wanted the questions. My take is this:
Delays will cause company to go back to the well. They put themselves in this box by doing a put with their friends that now see them bleeding to death and will not help by way of allowing reverse split. My guess is their friend will take advantage of PPHM's weakness and the power the Put players have now.
Institutions will not invest in a $.50 stock that doesn't meet compliance. I doubt there are many takers at over $1.00. If they roadshows have been successful, why are we at $.50? doesn't take too many believers to stabilize this thing. Mgmt is scrambling to sell something cause another put will bury the price. Are they going to sell 20 million shares at $.35 to raise $7 mil? I hope not.
It might be time to force a sale. I'm tired of "we're in active discussions" talk.
No additional milestones as of 7 am with earnings release. Same old, same old "we've got multiple opportunities" bs. Mgmt got some dancing to do on the CC. Time for a change? Will the shareholders initiate change? Me thinks so.
I think mgmt knows the stakes at this juncture because there is considerable unrest with the shareholders. Hopefully mgmt delivers Monday or at the least, outlines how shareholder value will be restored. I do know that a sizeable block of shares will be speaking as one voice if mgmt fails. The value of the company is much greater than today's value if sold in pieces. The value is even greater if managed better. The status quo is unacceptable and mgmt knows it.
Must read article in WSJ today. You need subscription to read. Bodes well for BP deal - hopefully sooner than later.
Big Pharma Faces Grim Prognosis
Industry Fails to Find
New Drugs to Replace
Wonders Like Lipitor
http://online.wsj.com/article/SB119689933952615133.html?mod=hps_us_whats_news
They attended this same conference either last year or the year before and mgmt pr'd them. Why no PR this time?
My guess is we'll see a positive pr before the cc. Otherwise they would not have the Q&A session. Why would mgmt put themselves thru a Q&A without something positive to talk about? All IMO.
I agree. Someone doesn't want this thing to run yet. My bet is the R&R boys want to give their clients more time b/f the train leaves the station.
The bid was $.52 and the ask was $.53. Was someone tring to paint the tape. Been happening quite a bit lately.
Save your time and energy. Put Realist on ignore. Works for me. BTW Realist, I won't see your response. Ta Ta
The question is whether mgmt spends some pr's fighting upstream with tax loss selling or waits til it's over.
Because of the pps, I've had to change mine several times during the day. Not fun.
So PPHM looks pretty cheap at $.45 right now. Given PPHM's pipeline and blockbuster potential, we should be able to do better than $537 mil.
Three month delay costs one quarter of burn. Got to keep paying salaries and overhead. My concern is a competitor taking a gov official out to dinner and slipping em some cash or a great job offer or college education for their five kids. Small price to pay for keeping the lid on a competitive drug. Mgmt needs to get the ball moving fast.
The only good news about a crashing dollar is that it makes PPHM cheaper for a euro based BP. Hello GSK. PPHM's on sale.
I just listened to the R&R presentation given on Nov 6. The DTRA contract is mentioned. If the gov had pulled the plug on PPHM, I doubt that SK would say what he said at the cc. Also, looking at Jazz list, PPHM is in pretty good company with Glaxo and others, particulary with the award amount PPHM received. As for assuming one company has a cure at this stage and riding that pony, the gov would be foolish to enter just one horse in the race. Better to have multiple irons in the fire.
Good point. Perhaps BOT could shed light on it. My guess is that it's a big program and there are probably several rfps going out. Since this RFP has been out there since Mid Oct and SK has said on the cc since then and stating that things were moving along, I doubt PPHM is having to rebid. As of two days ago, I heard things were going well and that the deal could be better than originally planned. If negotiations had failed, I would guess mgmt would have file an sec deal cause it certainly would be a material event. Also, per the new rfp schedule and adjusted for the extension, it would be mid Feb b/f award and 60 to 120 days for negotiations.
Anyone else have any insight?
Hearing DTRA will be better than we expect. What are you hearing BOT?
BTW, if I were mgmt I'd let the tax selling go on until the decks were cleared. Why post good pr's and let the sellers keep the pressure on. Unless it's over the top news, why give the benefit to folks leaving the party (funeral is probably better analogy).
As for bashing, I'm hoping mgmt rights the ship by first quarter and shows signs of their competence by the beginning of the year. Any more stumbles and the gloves come off and I'll work hard with others to initiate change or sell the company.
With 220 millions shares outstanding, a terrible performance by PPHM for the year, the end of a decent run for the overall market, a nervous market to say the least, potential distress with some subprime players and year end tax considerations, all these ingredients makes for weakness in PPHM. How many shares get dumped for these reasons? I don't know but even if it's 5%, that's 11 million shares. I don't see the institutions stepping up and retail doesn't have the horsepower.
Prior to the buyout, the market cap was $79 mil with $87 mil of cash in the bank. As for comparisons with PPHM, you need to look at market potential of pipeline versus number of irons in the fire. With more cash than market cap, looks like COLY was a no brainer at $3 per share.