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Pure Speculation
I have no idea what the IB sees.
FWIW, I can tell you what I see. My personal guess is we will have major media coverage on the PPHM story by late fall 2007, which is the time Ph II data will start rolling in on India Bavi Ph II cancer, India Cotara Ph II GBM and Bavi Ph I HIV co-infection.
Personally, I expect to see us at $3-4 by year end and above $5 by the March 15, 2008 CC.
I guess it will unfold like this: Summer Ph II clinical launches, combined with short covering, will take us back to $1.80 by August. This number will double by year end as serious media coverage anticipates the clinical data and AVID revenues are reported. Finally, if the clinical data comes in consistent with Ph I data on EITHER the Bavi Ph II AC trial OR the Cotara Ph II GBM trial, I see us well over $5. Double that if the data comes in well on both accounts or if HIV co-infection trial shows some efficacy.
The big difference is that when an IB analyst does due diligence and confirms Bavi’s potential, we move from being a pure “story stock” to being a new and exciting institutional play. I just can’t see that the May 31 rout would have happened without an IB having first received really solid reports from several analysts/Ph.Ds/medical docs.
That IB “endorsement” may very well be accompanied by handsome AVID revenues.
On top of the IB and AVID, which are quite foreseeable pps drivers, one could get into the crystal ball guessing game and add (1) a series of small regional licenses or co-development deals and (2) the China mystery.
All IMO
In a sense we do get a discount. At least we will get a better price on the IB’s services because he doesn’t spend his money supporting the price at $1.40 before Ph II trials start.
The final cost for the IB, which is ultimately our cost as well, will be a lot less by letting the pps fall back to pre-May 31 levels than if we had to pay the IB to fight the shorts now to maintain $1.40 IN THE ABSENCE OF MAJOR NEWS.
The logical, most cost-effective time for the IB to maintain the price at $1.40 and force the shorts to cover is when the steady stream of news has begun on the many clinical trials starting this summer (i.e. two or three Bavi Ph II cancer trials, HIV co-infection trial, HCV combo trial and Cotara Ph II GBM trial). This new level of Ph II clinical activity should be accompanied by serious institutional buying and hopefully media coverage that leads to retail buying as well. With so many new investors coming into the stock, the IB’s cost (which ultimately is our cost) for stabilizing the price in the $1.40 to $1.50 region will be much lower by waiting until the Ph II PRs are ready to roll.
FWIW, I believe the start of the Indian AC Ph II trial will happen in late June or early July and will be announced together with news of an Indian regional license agreement / project finance agreement to pay for this trial. Just my guess.
What impresses me the most is that the IB bought 4-5 million shares and made the pre-emptive Russell strike on May 31 WITHOUT the start of a heavy-duty news stream to back it up. This tells me (1) there are some analysts who are reporting to the IB that Bavi does indeed have block-buster potential, and (2) the stream of new clinical trials we all anticipate this summer must be fairly close.
__________________________
Here’s another GUESS at what the IB deal terms in the U.S. might look like. Perhaps the IB bought shares on May 31 on the understanding they could also purchase $15 million of the Company’s Shelf shares at a 15% discount below the average price during the month of June, but the deal only has effect if we stay on the Russell, so the IB had to make the first move by keeping us on the Russell.
I would like to believe the Company would be somewhat protected in such a deal because the June price is not likely to drop too low now that the shorts realize they need to cover without help from Russell index sales.
Assuming the June average price is $1.00 and the IB invests $15 million in early July (just before the 10K is filed) to acquire 17.6 million shares at $0.85 each (i.e. a 15% discount off the average June price), and assuming back on May 31 the IB acquired 5 million shares for an average cost of $1.37, then the IB would end up with around 22.6 million shares for a total cost just under $22 million, or just under $1.00 per share. This is a pretty good entry point for an IB who has also locked up big-bucks commissions on all future PPHM financings. All the IB has to do is have a credible analyst publish the potential of Bavi and Cotara in plain English and the HIV and cancer media communities will do the rest of the work as Ph II clinical data flows in during the fall and winter.
Pure speculation, all IMO.
Entirely Foreseeable.
It happened today pretty much as I predicted in Post 14094 (see below). Seems clear to me that a very slick IB (who will be announced soon) wrote the Dios PR and scheduled it for release at 3:54 pm knowing the $50 million figure in the headline would throw the shorts into disarray just as the IB made its big move to drive the stock above the Russell rebalance point. Now the shorts have to cover without benefit of index sales, as we will see in the next few days.
Anyone who thinks today’s action was a fluke or an accident doesn’t know how IB’s work. Thank you God that we finally have one on our team!!
Of course it’s not all good news. As Brandon Cox points out (see his post 14134), we’re all going to be shocked at the price tag for today’s escort services. My guess is that the IB’s stunning performance today was paid for with stock from our shelf sold at $1.00 per share.
Here’s how I predicted it would happen in my May 25 post 14094:
‘”The timing is perfect now for bringing on an IB who can (1) buy in the open market as clinical news is released in the coming weeks, (2) drive the stock to the $1.50 level and, most importantly, (3) keep it there through market stabilization practices until the shorts realize they’ve been had by the IB gorilla now sitting on our side of the table and are forced to cover.
“Of course the IB would be aided by analyst coverage from its own biotech person who tells the Peregrine story for the first time in a credible and comprehensive way that then leads to general media stories.
“This is a classic role for IBs to play. As young debutante companies become eligible for wider market attention, it is most often an IB who escorts them to the coming-out ball. As all of us know, Peregrine is now ripe for such market attention.
“I agree, Jake, that the IB could be picking up a few cheap shares in the market right now in anticipation of the coming-out party, but IMO a more likely scenario is that the Company uses shares from its shelf registration to pay for the IB’s escort services. Once the IB has done its diligence and confirmed the steady stream of clinical news the Company will have over the next six months (i.e. two or three Bavi Ph II cancer trials, HIV co-infection trial, HCV combo trial and Cotara Ph II GBM trial), it’s a no-brainer for the IB to buy $15 million of the shelf registration at $1.00 per share, drive the price to $1.50 in the open market and keep it there until after the shorts have been forced to cover.”
Steve, I am 90% sure you will turn out to be as wrong about “later this year” as you have been about “objective response.”
I stick by my prediction Ph II AC will start in India by mid summer, just as SK said in the Dec 8, 2006 CC and as repeated in recent conversations.
Perhaps your problem comes from assuming PPHM uses PRs like other companies as an occasion to shine the best and most aggressive PR light on recent events. For whatever reason, this is simply not the case. More often than not, management’s approach to PRs is to say the bare minimum required by SEC disclosure rules. I’m not saying this is good, it’s just the way it is and has been for a long time. Hopefully things will change when an IB is on Board and institutional buyers have declared their hand.
Brandon, You are the sharpest knife on this board…
when it comes to understanding how IBs work, the value-added they bring, and the price they demand for escorting a pretty debutante onto the institutional radar screens.
As I see the world, EVERYTHING you said was 100% dead-on correct. I was too lazy to write such a thoughtful and complete analysis of all the trade-offs, costs and benefits facing the Company at this turning point. THANK YOU for laying it all out so clearly.
My only comment is to underscore one remark you made that deserves emphasis:
“If we can come up with the necessary clinical data, a legitimate IB will find the institutional investors, help us negotiate deals, and get the story out with its analysts. The IB’s opportunities for future fees will completely dwarf the short term change that could be made by cashing in the warrants.”
If I could re-write my post 14094, I would add these two sentences and then stop, without going on to speculate as to what the IB deal terms might look like.
My educated guess begins and ends with some dot connecting that leads me to guess an IB relationship will be announced in the coming week/month.
After that, everything is 100% pure speculation on my part. If I have correctly guessed the conditions that may attach to the warrants, or if I am right about the $1.00 price that may be put on an IB purchase of some of our shelf shares,… well then I should move to Las Vegas and make a living pulling slot handles.
In 6 months we’ll have proof of our assets.
Today all we have is the start of critical clinical trials and a cash shortfall of $10-15 million if we do regional funding deals in India, and a $30 million shortfall if we don’t do regional funding deals.
Unfortunately, we need to turn one more funding corner and wait six months before we’ll have the clinical proof needed to dictate our price in BP licensing negotiations.
You and I may agree we are sitting on several blockbuster drugs, but BP is going to need to see the next round of clinical data before they pay the $500-900 M upfront price you suggest.
A Warrant is…
a conditional right, not an absolute right, to purchase stock.
For example, the deal might be structured so the IB only has the right to exercise the warrants on condition the pps closes below $3.00 for 10 consecutive days starting July 1, 2008 or Jan 1, 2009. This would give the Company 12-18 months to generate clinical data that convinces the market we have one or more blockbuster drugs.
If the clinical data proves out and the pps stays north of $3.00, then the IB has made plenty of profit from the cheap shares it gets next week/next month for $1.00 from the shelf registration, and the warrants never become exercisable.
If clinical results can’t keep the pps north of $3.00, then the IB protects itself through warrants exercisable at a discount 20-30% below market.
The big difference between a PIPE and an IB deal is that the IB deal gives the Company (1) legitimacy/credibility, (2) analyst coverage/market visibility and (3) the gorilla on our side of the table who can force the shorts to cover.
Obviously you have to pay more to get the extras that an IB brings to the party. PPHM has, or is about to have, major league Ph II clinical assets and is ready to show off its stuff. IMO it’s well worth a few extra shares to have a professional escort do serious due diligence, take us down the red carpet, and launch us on to the institutional radar screens that count.
The Deb Ball: Time for an Investment Banker
Jake, my own speculation goes in the same direction as your post, except I would substitute an Investment Banker for your “friendly suitor.” IBs play this role all the time.
IMO, the timing is perfect now for bringing on an IB who can (1) buy in the open market as clinical news is released in the coming weeks, (2) drive the stock to the $1.50 level and, most importantly, (3) keep it there through market stabilization practices until the shorts realize they’ve been had by the IB gorilla now sitting on our side of the table and are forced to cover.
Of course the IB would be aided by analyst coverage from its own biotech person who tells the Peregrine story for the first time in a credible and comprehensive way that then leads to general media stories.
This is a classic role for IBs to play. As young debutante companies become eligible for wider market attention, it is most often an IB who escorts them to the coming-out ball. As all of us know, Peregrine is now ripe for such market attention.
I agree, Jake, that the IB could be picking up a few cheap shares in the market right now in anticipation of the coming-out party, but IMO a more likely scenario is that the Company uses shares from its shelf registration to pay for the IB’s escort services. Once the IB has done its diligence and confirmed the steady stream of clinical news the Company will have over the next six months (i.e. two or three Bavi Ph II cancer trials, HIV co-infection trial, HCV combo trial and Cotara Ph II GBM trial), it’s a no-brainer for the IB to buy $15 million of the shelf registration at $1.00 per share, drive the price to $1.50 in the open market and keep it there until after the shorts have been forced to cover.
I am hoping the Company won’t have to sell more than $15 million worth of cheap shares to the IB. I would like to believe $10-15 million is all the extra cash we will need after counting Avid’s growing revenues and the funds coming in from regional financing deals that pay for the cost of the Indian Cotara trial and the Indian Bavi PH II trials.
I am also hoping that any warrant coverage required by the IB will only kick in if the price of the stock one year from now is below $3. Hopefully the deal would be structured so the IB’s warrant coverage never kicks in because the $15 million of our shelf it buys next week at $1.00 has to be held for 12 months and the warrants disappear if the pps is north of $3 a year from now.
That would be a cool $30 million profit for the IB over 12 months. That should be enough to cover the analyst’s work for a year and several coming-out media events this summer.
In the past, the cost of bringing on an IB was just too high compared to the benefit. Now, however, with so much important clinical news coming out over the next six months, the Company has the strength to pick it’s IB and negotiate a fair deal.
Never has a pretty debutante ever been so ready for her coming-out party.
All IMO.
NICE WORK SUNSTAR. TERRIFIC INFO.!!
I have heard the Company say they expect Bavi to perform much better in prolonged, multi-week trials. Your post gives the first solid scientific explanation I have heard for why this might be the case. Great find. Thank you.
IMO, the Company must have a darn good understanding of the MOA to go from a 2-week trial to an 8-week trial the first time up to bat against HIV. Few realize the mountains of pre-clinical Bavi data, much of it unpublished, that has preceded the current human studies. I’m sure it is their knowledge of the MOA gained through extensive animal studies that gives the Company the confidence to leap into an 8-week study in co-infected patients.
Also, I note the PR says “Patient cohorts will receive ascending dose levels of bavituximab weekly for UP TO 8 weeks.” I wonder if the “up to” means the Company wants to be able to stop dosing after five or six weeks when the second, more robust immune response kicks in, as shown in your slide. Once blood chemistry reveals that the “secondary immune response” has fired, continued Bavi dosing might overload the immune system in a way that invites problems. Once the innate immune system is firing on all cylinders, maybe it’s safer (and wastes less product) to stop Bavi dosing. Then you wait two months and if the virus comes back the patient starts another 5 or 6 week treatment regimen.
In the end, it will be the body's innate immune system, not Bavi, that finishes the job.
All IMO
Co-Infection Dosing Schedule
I would be interested to learn what others think about the medical / immuno-stimulatory implications of the new dosing regimen in the HCV/HIV co-infection study.
In the Ph Ib HCV multi-dosing study patients received 4 doses over 2 weeks. In the new co-infection study patients will receive 8 doses over 8 weeks.
As compared with the Ph Ib HCV study, it seems results in the co-infection study ought to be much better because therapy regimen is lasting four times longer (8 weeks rather than 2) and patients are receiving twice as much Bavi during this period (8 doses rather than 4).
Can anyone offer educated commentary on this point? From what we know so far about Bavi's MOA, are there not good grounds for expecting this new, 8-week treatment protocol to be much more effective than the 2-week treatment protocol?
Yearwax, That's how I see it too.
I believe some of the delay in starting the co-infection trial came from protocol changes requested by Dr. Letvin and Duke scientists. There will definitely be a data collaboration going both ways.
Here is what I hear:
Summary of this Post:
Those of you who need to hear that major news is coming out between now and May 31 to save our Russell listing will be disappointed. The Company is either ambiguous or tight-lipped on this account.
Those of you who understand that the rapid start of Ph II AC trials this summer is the key to pps growth will be very re-assured.
Phase II AC Combo Therapy Trials:
“Ph II AC trials are still on track to start this summer, and quite possibly in July.”
IMO, everything else reported in this post pails by comparison with the above statement. The Company is confident analyst coverage and media coverage will start when Ph II trials start, with or without an investment banker on board. They are also confident biotech institutional players will start serious buying when the Ph II trials start. Remember, we’re talking about three Ph II AC combo trials, one for each of the three tumor types studied in the Bavi India I.B.
India clinical data is collected using the same criteria and procedures as in U.S. studies and will be accepted by the FDA as part of their official Bavi file. Of course U.S. Ph II data will also be required and this will take longer due to the backlog of AC trials in the U.S.
The Ph II AC combo therapy trials in both India and the US will continue until disease progression occurs. Probably first relapse patients will be treated but that may vary depending on which tumor type is being studied. Dosing will not stop at the end of eight weeks, so we will finally get an apples to apples comparison with Avastin (where treatment continues for a year, then stops, and the tumor grows back).
The Ph II combo studies will have scheduled interim reporting points built in to the time line. For example, every four months there may be a report on the number of patients who have disease progression vs. stabilization vs an objective response.
How can the Company be so sure the Indian Ph II trials will be such a big value driver for the Company? Anyone who follows clinical cancer studies recognizes that the Phase I.B had “blow your socks off” results considering that the patients had advanced metastatic disease and were only treated for 8 weeks. Then why hasn’t this been recognized by the market in the pps? Answer, because the patient population was too small to be statistically meaningful. Once the Ph I.B. results start being repeated in a larger study, our day in the sun has arrived.
I apologize, Katie, for saying in my post 13791 that SK projected mid-summer start of Ph II trials “in his last CC.” In fact it was in the Dec 8 CC where SK said “… probably by the middle of next year we should be in a position to have our clinical protocols for Ph II studies and in a position to submit and then initiate those studies.” I followed up on that remark. I learned in March and again this week that the Company is on track to start the Ph II AC combo studies this summer and “quite possibly in July.” No matter is getting more of the Company’s attention than the mid-summer start of the Ph II Indian trials.
Funding of Ph II AC Combo Studies:
Financing for the Ph II AC combo trials will be announced before they start. IMO, we will hear about Ph II financing in June.
How will Ph II trials be funded? The noises I hear are still about a regional project finance or license deal. “There are a dozen ways to structure such a deal.” It seems one way being considered would involve no upfront fees but funding of 100% of clinical costs in exchange for a negotiated split of the Bavi AC revenues generated in a particular territory (e.g. India) over a limited period of time until a multiple of the trial costs (e.g. 3X) had been recovered by the non-BP source funding the trial.
Indian Ph II Cotara Brain Trial:
The Company is frustrated by the difference in how fast Bavi AC approvals happen in India compared with how long it is taking to get the final radio-labeling approval from the Indian government for the Cotara trial. Each time one question is answered, another is asked. I am told a large light is now visible at the end of the Q&A tunnel, but all the Company is saying is that this trial will start “soon.” The Company sees the delay as a bureaucratic process related to a new government-sponsored radio-labeling facility, and has no worries that some BP is conspiring to work against them.
Once this trial starts, the Company is sure that it will progress rapidly and be a huge value driver. In the near term the Company sees the Indian Cotara trial as being just as big a pps driver as the Ph II Bavi trials.
This trial may also be paid for through a collaboration to share GBM revenues generated by Cotara in a particular territory.
U.S. Cotara Brain Trial
NABTT is experiencing internal money problems. The Company is taking over direct funding of certain key sites.
HIV/HCV Co-Infection Trial
This Ph I trial is definitely going to start in the very near term. Delay is because the docs designing the trial want to be sure the protocol is collecting data on every possible biomarker that could reveal something about how Bavi is working to stimulate the immune system. Every time the doctors identify new data to collect they have to go back and revise the amount and frequency of blood collection, etc.
This is purely a guess, but IMO the most likely mega news the Company could spring last week of May to save the Russell (in addition, of course, to a PR on top line Indian I.B. results which many of us are expecting this month) would be the start of the HIV/HCV coinfection trial. Sounds to me like the start of this trial is imminent.
AACR:
The AACR reports generated huge attention from both BP and well-known scientists in different fields. The most attention came from the vaccine-like glioma study. Given that IT ONLY TAKES 10 TUMOR CELLS to fuel new tumor growth, Bavi must have knocked out 99.99% of the subsequent lethal dose in the surviving 57% of the animals. This outcome turned the heads of some opinion leaders in the viral world!!!
Duke Studies:
I can confirm that Dr Thorpe is indeed working with Dr Norm Letvin on primate studies to protect against acute SIV infection. The only reason the website was taken down was to protect the good doctors from attracting unwanted attention from animal rights groups.
AVID
There is no reason to worry about the cost of polished stainless steel. Yes, under the old batch method technology, AVID would now need an additional 10,000 litre bioreactor. But AVID is now a leader in the “Perfusion Method” of cell culture where production is extracted on a daily basis. Using Perfusion, the Company’s 300 litre reactor can run continuously for 30 days and produce a full 300 litre production run each day, or the equivalent of 9,000 liters in one month.
CTL Lawsuit:
Management’s confidence in winning has increased through recent discovery. In particular, note the naming of Dr. Epstein and Medipharm as new defendants in the Amended Complaint. Apparently the big issue is that Epstein never got Medipharm to sign a license or joint venture agreement or any other document providing for the payment of royalties for Medipharm’s use of PPHM’s antibodies, or at least Epstein has been unable to produce such a document in discovery when it would take a lot of pressure off him to do so. It seems maybe Epstein was thinking he could get paid on the side by Medipharm and PPHM would never be owed anything if no sublicense agreement was ever signed by Medipharm. Clive Taylor, who was on the PPHM Board at the time, may have been misled by Epstein and genuinely thought there was a written royalty agreement in place with Medipharm and that’s why he told the Board such an agreement was in place.
________________________________
Bottom Line: I got very solid confirmation that ALL of the clinical trials are moving forward without a problem. The Ph II Bavi Indian AC trials seem to be moving as fast as hoped, and the Ph II Cotara India trial is moving slower than hoped. The HIV/HCV co-infection trial seems to be imminent.
IMO, and this is a guess not a report, Ph II trials will be funded in June through BP or non-BP sources that pay 100% of the trial expense in exchange for a share of Bavi’s AC revenues in a limited territory for a limited time until trial costs have been repaid several times over. PPHM will also have to guarantee repayment of the trial costs plus interest if Bavi is not approved in the territory, but with all the “shots on goal” the Company now has, such a guarantee is good commercial paper.
Regarding funding of PPHM’s remaining, non-Ph II operations, I really have no new input but my guess from prior conversations is that this will be funded by an investment banking relationship that involves a amall piece of the shelf registration and comes with analyst coverage.
Hope this helps. BOT
Totally agree that the Clinical Review Board adds huge value. I should not have been so glib is dismissing their contribution.
My point is that all these different layers of review add months to the time line. Given that Phase 1b data from India was only fully available in late April, it’s quite impressive if the Company can get Phase II trials started by mid summer as projected in the last CC.
Russell Re-Balance
Jake, this is just personal speculation, but here is why I am not too worried about the May 31 date:
Hopefully major news (including Ph 1b results) comes out before May 31 and we make the cut.
If we don’t make the cut, I am confident there is plenty of high-quality clinical and financial news coming in June and July so that the Russell sellers who don’t follow biotech will be more than offset by the institutional buyers who do. I don’t believe the Company is working in concert to help anyone pick up cheap stock. It’s just how the Ph II timing works out. By mid summer serious biotech institutions will have gobbled Russell selling (if it happens) like a tiny appetizer course.
MM,
I am also frustrated, but more by the delay than the share price, which will be irrelevant when Ph IIs start. I expect to have some conversations quite soon. In the meantime, here is what I know (or think I know) from other good sources:
1. The $30 million needed to fund Phase II trials and ongoing operations WILL NOT come from a PIPE or other deal that results in near-term dumping of shares on the market.
2. THE CLINICAL TRIAL PROGRAM IS NOT IN TROUBLE. There will be multiple Ph II trials starting soon -- hopefully/probably this summer. It just takes a long time for the Company and its advisors to agree on the best possible dosing schedule and protocol, and then the big egos on the hospital review boards want to re-visit everything and put their own stamp on it.
Dear Microbe Man,
I have not stopped posting. It’s simply that conversations have been deferred for exactly the reason you put forward, namely, to avoid disclosure of “material” market information during the sensitive period before such an event is announced. But that should change very soon!
I try to limit my reporting of conversations to only factual information that by itself would not affect an investor’s decision to buy or sell the stock, i.e., the SEC’s definition of “material” information. I feel strongly that the people with whom I speak would not pass on the information I hear unless the Company believed it was “non-material” information.
I try to distinguish between information that answers specific technical questions raised on this board and, on the other hand, my own personal speculation as to the “when and what” of future material events. Your post reminds me of the need for vigilance in this regard.
Thank you. BOT
Thanks Drragmop
You hit the nail on the head. Given that safety in humans has been established, the data this week is hugely cumulative in determining the value BP would put on a strategic alliance with the Company.
Another theory on PPHM’s low PR image.
IMHO, a key reason why Mgmt remains understated about Bavi’s blockbuster potential relates to the high profile of the world-class scientists -- e.g. Dr. Haynes, Nabel, Letvin etc. – who are doing free supporting research for us.
Imagine if you were an obsure psychotherapist named “Dr Phil” and Oprah started working with you off stage with the prospect of endorsing you on stage if she liked what she saw after working with you for a year.
Would you run around beating your own drums and shouting you were one of Americas leading therapists, or would you just quietly wait for Oprah’s endorsement?
Read Jazz’s post again. Think about who these scientists are that have taken such an interest in Bavi. Isn’t it worth a few more months of waiting quietly on the sidelines so THEY can be the ones to explain how HIV and cancer hide from our immune system and how an anti-PS antibody can break the chain of immuno-suppressive signals that allow this hiding.
“Dr Phil” got where he is because he let a national opinion leader discover him, not by beating his own drum -- and it’s about to happen again.
Jazz -- Another great post!!!!
Awesome job connecting the dots.
THANK YOU. bot
Explaining the Company’s rapid time line for commercializing Cotara GBM is done to explain how the Company will turn its funding corner this summer and pay for Bavi Ph II trials.
As the “glimpse” we saw this week suggests, Bavi is likely to be 50 times bigger than Cotara.
Your pretense not to understand what’s going on is transparent.
GBM Revisited.
I have no firm information on this point, but my personal opinion is that only BPs who have signed confidentiality agreements would see the early scan data. For the first few months MRI scans will show only small tumor remissions compared to what the public is used to seeing for tumors in other places. It takes a qualified brain tumor oncologist to interpret the MRI data, i.e. someone who understands that brain tumors in first relapse GBM patients grow so fast that stabilization after one month, or 10% shrinkage after 2 months, is an amazing outcome.
For the public, my guess is that we will hear results six months after the 40th patients is dosed, which brings you close to the year-end date you have heard. Six months is enough time to get meaningful data on MTP: Median Time to Progression. It’s also enough time to compare survival profiles. Under SOC with Temozolimide, a first relapse GBM patient is extremely sick and bed-ridden by week 24. If Cotara is working as we expect from earlier trials, by week 24 we will have 40 patients leading normal lives in New Delhi just like Phil is doing at U. of Penn.
I understand that any first relapse GBM patient who is still alive and leading a fairly normal life six months after treatment means Cotara has achieved the Gold Standard of success.
Forget Bavi AC. Forget Bavi HCV. Forget Bavi HIV. Forget TNT for lung cancer. If Cotara goes as well in these 40 first relapse patients as it did in the previous 3rd and 4th relapse patients, we will know by October 2007 that the Company owns all rights to a blockbuster drug (except perhaps for a small regional license outside North America). In 2005, Temozolimide sales exceeded $700 million, and that's for a highly toxic therapy that achieves very limited results.
In a conversation today I learned:
12 PATIENT INDIA DATA:
The chemo used with Bavi during 8 week trial was selected by the managing oncologist. In some cases it was the same as the chemo on which patients had “failed prior therapy,” and in other patients the chemo used with Bavi was a different chemo. The decision as to which chemo to use was made by the treating physician based on whether the patient failed therapy because of resistance to the prior chemo drug or failed therapy because of toxicities or side effects seen with the prior drug.
The biggest point is that oncologists generally don’t see any meaningful response in patients with metastatic disease NO MATTER WHAT CHEMO IS USED, NEW OR OLD.
Another big point to take home is that the treatment was for only 8 weeks. Oncologists who have seen today’s results are very impressed that this new Bavi combination protocol achieved in 8 weeks in death row patients what other biologic targeted drug therapies are only able to achieve in much healthier patients after 16-24 weeks of treatment.
One of the emerging understandings about all biologic targeted drug therapies (at least until Bavi arrived) is that they work best over a sustained course of treatment lasting many months. According to several oncologists the most remarkable thing about the efficacy “glimpse” we saw today is that it was achieved in only 8 weeks.
Here’s another way of making the same point. Avastin only works on 35% of the first line patients who receive it during a course of treatment lasting many months. Bavi’s 50% rate of stabilization or objective response was achieved in death row patients in just two months.
INDIA GBM TRIAL
Here is follow up to Steve’ Butabi’s questions in post 12360:
India Ph II GBM trial of 40 patients is NOT blinded. The only control is the well know results from SOC (i.e. resection followed by Temozolimide), which has a Median Survival Time of 24 weeks in first relapse patients.
Of course Cotara achieved over 50 weeks of Median Survival Time in 3rd and 4th relapse patients. In the current India trial all of the patients will be 1st relapse patients, so the comparison will be apples to apples and Cotara should do much better.
So here’s the big question: How soon will BP be able to get their hands on meaningful clinical results that they can use to make a cash offer for a regional license agreement?
The short answer is 2-3 months after dosing for strong confirmation of success. Dosing for most of the Indian patients (many of whom are already enrolled in the U.S. sense of being identified and screened) will complete in April and May.
Here’s the longer answer: The blood brain barrier does not allow radiated/dead brain tumors to reduce in size as fast as normal tumors with normal blood supply. Thus, if you do an MRI scan of a brain tumor one week after dosing with Cotara, it will show up as the same size as before treatment. Two or three months after treatment with Cotara the radiated brain tumor will start to shrink.
But you don’t actually have to wait this long to know what’s happening. The first post-treatment scan for Cotara patients is done just one (1) month after treatment because GBM TUMORS GROW SO FAST IN RELAPSED PATIENTS THAT YOU KNOW THE THERAPY HAS WORKED IF THE TUMOR IMAGE HAS NOT INCREASED IN 30 DAYS. After 2-3 months, if it still has not increased in size, but in fact has decrease 10%-30%, you can be sure you killed it.
All the Indian patients will be scanned on a frequent basis approximately once a month for about a year following treatment. By early summer, and certainly by mid summer, the BPs will be reviewing scans from the patients treated in April and will have excellent information about the likely outcome of the trial.
Remember, there are seven centers and the radio-labeling facility can easily handle 7 patients per week. If dosing starts the second week of April, all 40 patients could be dosed by end of May and be end of June or July BP could have all the data they need to confirm that Cotara is indeed a breakthrough GBM therapy.
Bottom Line. I am still predicting the Company will close a regional GBM license outside North America in June or July with upfront license fees that solve all our funding needs through the end of Bavi Ph II trials.
Speculation on India AC Results
I have no direct knowledge of the India combo results, but I infer the results are good because of the all the planning that is being done right now to aggressively prepare for Ph II trials with multiple arms.
If the results were mediocre, do you really think Mgmt. would be so focused on raising $30 million to finance several of their own Ph II trials of 100 patients each, starting in both India and the U.S. this summer?
Thanks very much C.J.
These transcripts are immensely helpful. BOT
Steve, Thanks for the good questions.
I will address your points in my next chat, which may be several weeks from now.
I understand that end of calendar ’07 is when the Company has officially projected data release for the India GBM trial. I also understand they have a sound basis for being hopeful trial will complete dosing within a few months after it starts, and it’s going to start very soon. I also understand the Company wants to release India data and drive GBM licensing values as aggressively as possible as soon as possible. I agree that completing a regional GBM license by mid July is a very aggressive time table.
No word on publication date,
but I've definitely heard such a paper is coming.
Jazz, Thanks for the reminder…
of your January hockey stick post #10771. The explosion in value that occurs with Phase II “proof of concept” is why India GBM trial is the most important value driver at the Company right now. In my conversations I hear a huge emphasis on the India GBM trial. That’s why I made this the first item in my post #12342.
It’s pretty clear to me that the first strategic licensing partnership will be for Cotara GBM in a region outside North America. As the Company keeps telling us, this 40 patient Phase II trial is set up to move very quickly. Looks like the trial will start this month and data from the 7 centers could be complete (six patients per center) and viewable by BPs end of May. We may not see top line data until June but I am betting serious BP regional licensing negotiations will start in May and close before the 10-K is filed in mid July.
The upfront fees from this regional GBM Cotara license will allow the Company to turn the 10-K funding corner and start it’s first Bavi Ph II cancer trial by mid summer with 100 patients.
My guess is that by late summer or fall the company will have data from the HCV / Ribavirin combo trial and from the HCV/HIV co-infected patient trial. By autumn the Company will have efficacy data from over 100 HCV patients and this data will be enough to establish early “proof of concept” in the clinic and begin the hockey stick valuation climb that justifies bringing on an HCV strategic partner.
As soon as it’s clear to the Company in late summer that it will be able to close an HCV licensing deal in the fall, final steps will be taken to launch a second and a third Ph II Bavi cancer trial involving 100 patients each.
Just my personal opinion on how it will roll out.
In recent conversations I learned:
Cotara GBM:
Cotara trial in India will go extremely fast. The 40 patients will be divided into 7 centers, or about one cohort per center. As mentioned in the cc, many of these patients are already enrolled. The radio labeling is done by a single government operated center that works closely with PPHM. The dosing has to be individualized according to the size of each patient’s tumor. The government facility can easily handle 7 patients per week, or one patient per week per trial center. On this schedule all 40 patients could theoretically be completed in six weeks and realistically completed in 3 months.
Management is optimistic that top line GBM data from India will be released this summer. It seems Management intends to use this data to drive value in closing a Cotara GBM license this summer for a non-North American region.
In addition, I learned there is a new way to sell drugs for profit in Europe and some South American countries BEFORE they have been approved IF they have strong efficacy and safety data compared with SOC and the doctor names the patient who will receive the drug. PPHM intends to participate in these “Named Patient Programs” following results from the 40 patient Ph II study. Google this term for more info.
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HCV:
HCV Dosing Trial: HCV dosing trials will go very quickly. These trials are like to involve three cohorts of six patients each, with one cohort at weekly dosing, another cohort at bi-weekly dosing and a third cohort at monthly dosing. There’s no reason all three cohorts could not be run at same time. It’s quite possible to complete whole study from start to finish in 2-3 months.
HCV Combo Ribavirin Trial: Not able to get any update on when this will start or how long it will last. Perhaps this is a good sign.
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India Cancer Combo Study:
I learned the definitive MRI scan is taken at end of 8th week of therapy. There is no scan at end of 12th week. The last 4 weeks are just for a general evaluation follow-up period like in U.S. to make sure there are no adverse events after therapy completes.
The “glimpse” of India cancer data means same thing as “top line” results, i.e. summary data of scans done at end of 8th week for each different tumor type. It seems this “glimpse” may be released around mid-April when the 12th patient is “evaluable” by Indian standards. It seems the released data will be for only the 11 patients who were “evaluable” as of Feb 14 BIO CEO conference.
Unfortunately, it seems we may not be able to present India combo cancer data at ASCO because ASCO’s rule for late breaking abstracts is generally limited to Phase III data. But no final decision has yet been made on this point.
Fortunately, the very rapid pace of 12-patient India study means Company may be able to start Phase II Bavi cancer trials sooner than mid-summer. However, going in the other direction is the considerable time and attention required to design these Ph II trials (see next paragraph). For this reason, mid-summer is still a realistic date.
Genentech did about 22 Ph II studies in connection with Avastin, each study being around 100 patients. The Company believes it only needs to design and conduct two or three of these Ph II trials to position itself for maximum negotiating leverage with BP. Perhaps 2 of the 3 studies will be done in India. The design and relationship of what is studied first, second and third and what is studied in India vs the U.S. all needs to be worked out carefully over the next several months. The Company is extremely pleased that they went to India because it is the data now in hand from the 12 patient India study that allows them to start now in designing these critical Ph II studies.
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AC v. AV; Who Will Be First Strategic Partner:
My well-educated guess is that the Company’s first strategic partner will be an anti-viral BP, not a cancer partner. My speculation is that this AV partner will be revealed in early summer when the HCV dosing studies are complete.
Bavi’s greatest humanitarian value will come from viral applications, but multiple factors conspire to make AV a less attractive commercial market than cancer. The efficacy bell curve experienced in AV studies, but not in cancer, is one of these factors. Another is that the HCV virus turns over every 4 hours. This and many other factors make it more difficult to find the ideal protocol for treating each separate viral disease. Vertex spends 250 million per year to advance is viral products and address all these nuances of the viral market.
The meat and potatoes of Peregrine’s business will always be cancer. As between taking on a cancer partner vs taking on a viral partner, Company will try to retain its independence as long as possible in cancer arena because that’s where highest commercial value can be realized by waiting and generating more Ph II data.
PPHM will definitely pursue Bavi viral applications but it will do so through a partner who is willing to take on the higher cost curve for viral drug development. The Company believes Bavi can do miracles in the viral arena. The point is they will look to take on strategic partners in the viral arena to share the R&D costs at the end of Phase I while in cancer they intend to complete several Phase II studies on their own before taking on a partner.
Will we need to see results of HCV combo study with Ribavirin before an AV licensing deal matures? Ans: Not necessarily. I understand there are some hungry BPs out there who may be willing already to speculate Bavi is next Interferon. The HCV dosing studies (weekly, bi-weekly and monthly) will help lock down the ideal HCV regimen. Once it’s known how many doses are needed over what intervals, a BP can determine how much a regimen will cost, what price market can bear, how this price compares to Interferon, what profit margins will result, and finally what they should pay for a license from PPHM at this stage.
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AVID:
AVID revenues will be growing seriously and consistently now. The $1.9M figure is for shipments that occurred through date of cc. Additional shipments through April 30 will be added to the 10Q revenue figure. In addition, company requires its customers to make progress payments in cash as orders are completed and these are booked as deferred revenue. All we know for sure is that revenues for FY 2008 will exceed AVID’s highest prior revenues of $4.7M (thus making it a “record” year). I understand the $2M of shipments this 4th quarter is “sustainable.” IMO, from now on we can expect to see the $18M annual burn rate reduced by annual AVID sales of at least $8 million.
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Funding:
The $30 million raised by the Company this summer will pay for the Company’s $10 million FY 2008 annual burn rate (after $8M of AVID revenues) PLUS all the costs of 2 or 3 cancer Ph II studies involving 100 patients each.
How will the Company raise the next $30 million? In my opinion, it will come from a combination of (1) up-front fees from licensing Cotara for GBM in a non-North American regional market and/or (2) up-front fees from licensing Bavi for viral applications. Add to these revenues sales of Cotara from “Named Patient Programs” and you can get to $30 million fairly quickly. Remember, it’s not necessary to raise all of the $30M by June 30. The Company can easily persuade the auditors at 10-K time in early July that it has all needed working capital for the upcoming year by agreeing to drop one or two Ph II cancer studies if additional funds are not raised in the summer or fall from additional BP partnering deals.
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Short Interest:
Management is eager to see a few hedge funds get destroyed when the short interest reverses. They are greatly annoyed to have their many accomplishments this year clouded and denied by price manipulation. The Company has its own carefully-guarded plans for evening the score. IMO, the day of reckoning is near.
A conversation is pending.
I have been put on hold. Perhaps because news is close. IMO
John R-- Sounds a lot like what I have heard,
especially when you say:
"India has enrolled the 12th patient. PPHM will not wait for 12th evaluation to release data it will come earlier.Expect interim results there.
"A major point he made is that these recent Ph Ib results show Toxicity as an issue is now out of the way.
"A combo trial of Bavi/Ribavirin is next.
"On Cotara 3rd and 4th relapse Glioma patients in that trial there is a cluster still alive after 80 weeks.
"He mentioned McCutcheon(check spelling) at Duke has Bavi and testing on Primates HIV and they are very excited how Bavi is able to bind to virus.Expect combo HCV/HIV trial.
"As for financing...no PIPE. BP yes..looking for BP take entire 30mm shares at higher price.
"Evidently they have some surprises for shorts which yes are still heavily active in these shares."
I hear HIV co-infection trial is in final planning stages,
but I don’t have any reliable info on starting date.
By contrast, India cancer combo trial, India GBM trial and HCV Ribavirin trial all have tangible spring timelines.
Just some thoughts.
We got confirmation today of what I said in my post 11385: “Our monthly burn rate is still only $1.5 million.” With $21.2 million of cash at year end, the Company can easily wait until 10K filing time in early July before closing the next financing.
Why is this so significant? Because it means the Company can continue to compare and play off different BP offers until May or June. Remember that BP sees the clinical data pursuant to Confidentiality Agreements months before we hear it.
So here’s the clinical data I believe BP will be reviewing in May when they have to make final offers for a strategic alliance with PPHM involving both an upfront license fee and the purchase of S-3 stock at a premium:
1. Fully completed cancer combo data on 12 Indian patients.
2. A substantial number of GBM patients treated in India. From conversations, I understand GBM is going to enroll in India even faster than cancer.
3. A substantial number of HCV patients treated in a combo trial with Ribavirin at 3 mg/kg. Even if the Ribavirin combo trial doesn’t start enrolling until late March, BP could still learn the initial viral load reduction in the first 10 or 15 patients by end of May. Combined with all the safety data already out there, 10-15 Ribavirin combo patients is all it will take for BP to see the writing on the wall.
The first BP to close a strategic alliance with the Company will get far better terms than all the subsequent licensees, and the BPs know this.
Any shorts who think this Company will do a PIPE before the BPs have seen all the clinical data coming out this spring are simply in denial about (a) how long the Company can wait before it has to do another financing and (b) how much more attractive the Company will be to BPs when they’ve seen the spring clinical data.
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P.S. I did listen again to the final clinical summary and PL’s words about current Indian combo trial were: “… in 12 patient population in which we already have 11 patients evaluable out of 12 patients completed.” This differs from his opening statement that 11 out of 12 patients have been enrolled. Hopefully someone will sort this out with PR. Thanks.
I never heard the figure $2.00/sh in any conversation. It’s purely a guess on my part to put some dimensions on the discussion.
I did learn in a conversation, however, that the S-3 was filed with a $30 million figure, rather than a number of shares figure, because the Company did not want to scare the markets by listing more shares than will actually be sold.
The Company is very serious about minimizing dilution. By mid summer the Company needs to raise $30 million to fund Ph II Bavi cancer trials. Given all the important PRs in the next few months, I’m sure they are hoping, when all the dust settles on all the transactions, that they will have sold far less than 15 million shares for an average price much higher than $2.00/sh, to reach the $30M result.
The fact that Mgmt filed the S-3 six months before it was needed is another indication of their confidence in the data coming out of India and Florida. I feel that in Mgmt's mind there's no more guessing about Bavi's blockbuster potential.
Apparently my post yesterday caused some confusion. I should be more careful about what I hear vs what I am guessing.
I hear that:
1. The combo data coming out of India is quite good.
2. After Avid revenues are counted, our monthly burn rate is still only $1.5 million and the Company does not see any need to do a financing before June. On the other hand, the S-3 was filed six months early in order to use the registered shares as part of a possible strategic transaction with BP or, alternatively, to be in a position to take advantage of a possible sp run up following significant PRs in the coming weeks and months.
3. Interim clinical results coming out of the India combo trial and the HCV repeat dose trial are shared pro-actively with BPs pursuant to Non-Disclosure / Confidentiality Agreements.
4. The ongoing dialogue with BPs is in an active phase right now.
From this information, I infer and offer the following guesses, all IMHO:
The sum of all the good clinical data flowing out of Florida, China and India is starting to be enough, or may already be enough, to (a) motivate BP to go after a deal with PPHM and (b) give Mgmt the negotiating leverage and confidence needed to cut a BP deal on favorable terms. As more HCV data, China TNT data and India combo data comes in over the coming months, our negotiating position gets even stronger. I could see our first BP deal this winter being only for equity at a small premium together with a grant of rights for the BP to see early data and make the first offer. I could also see Mgmt doing a different deal where equity is sold to BP at a substantial premium over current prices (e.g. $2.00/sh) together with a limited license for 2C3, TNT or even Bavi for viral applications.
The only thing I know to be “off the table” AT THIS EARLY STAGE is to give up licensing rights in the Crown Jewel, i.e. Bavi for cancer applications. Of course if BP is willing to pay the same price after seeing data from only 12 patients that they would pay normally after seeing data from 120 or 240 patients, then the Company is open today for Bavi AC business. Absent such irrational behavior on the part of BP, the plan is to fully demonstrate Bavi’s blockbuster potential through our own Phase II cancer trials this summer. By paying for these Ph II trials with a combination of cash and stock, I also hear that the current $30 million financing will be enough to take us through those trials. The plan is to start negotiating Bavi cancer licenses with BP after a significant volume of Phase II patients have been treated, which could be six months after Ph II trials start this summer in both India and the US (and China?).
Obviously big pharma knows that the first BP to cut a small deal with us this winter (e.g. equity only, equity with right of first offer, equity plus small 2c3 license, equity plus viral license, etc, etc.) is going to have the best shot at the Crown Jewel in late ’07 or early ‘08.
Bottom line: IMHO, I guess the Company will (a) solve its summer financing needs,(b) establish credibility in the markets and (c) get rid of the shorts once and for all, through a single transaction this winter wherein it sells $30 million of equity to a strategic BP partner as the final India combo data rolls in. At $2.00/sh, a $30 million equity sale would mean giving up around 6% of the Company on a fully diluted basis. I could also see Mgmt giving up only 3% of the Company for $15 million with the rest of the cash coming from an up-front license payment.
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Separately, I also learned in conversations that at a recent conference a group of scientists working in the anti-angiogenesis field reported on a growing body of evidence that Avastin and other similar VEGF agents often have only a temporary affect in shutting down blood vessels and that capillaries are often able to grow back starting around 7-10 days after Avastin is no longer being administered !!!!!
So I am guessing, based on Avastin’s therapeutic limitations and the ability of microbubbles to quickly and cheaply identify in advance the 65% of cases where Avastin won’t work, that BPs can extrapolate on the good results seen in the first twelve patients out of India, and conclude that under any scenario buying PPHM equity at $2.00/sh this winter is stealing candy from babies.
The fact that Bavi also has a shot at replacing interferon in viral therapies makes $2.00/sh ridiculously low for a company like Roche or Schering Plough with so much at stake.
BP goes where good clinical data flows!
The list includes:
TNT rights for brain tumor applications
TNT rights for lung cancer applications outside China
2C3 rights
Rights to use Bavi as interferon's replacement in viral therapies
VEA
etc, etc
I can confirm Jazz' timeline.
Based on conversations, I also understand that "top line" India combo data will be made available in late March / April, well before details are presented at ASCO.
Also remember, as others have pointed out, the first cohorts from India combo trial have already completed the 8 week dosing regimen, MRI scans are done and turmor remission results are already known by PPHM and the BP colleagues who assisted PPHM in setting up the Indian trials.
The efficacy seen in these first Indian cohorts gives Mgmt all the info, leverage and confidence they need to cut excellent deal terms in the current negotiations.
IMHO, these negotiations may involve selling equity to BP at a premium over current share prices, with or without licensing rights for Bavi viral applications. Almost certainly these negotiations do NOT involve Bavi licensing rights for cancer applications.
The key phase in the litigation PR is “failure of CTL to A, B and C … DESPITE REPEATED ATTEMPTS by PPHM to X, Y and Z.”
Most license Agreements give the Licensor a right to terminate the license if licensee is in breach of its obligations AND fails to cure the breach after reasonable notice from Licensor.
In my personal opinion, and not based on any conversations, the take away message from the PR is that PPHM has terminated CTL’s license rights and went to China a few weeks ago to let them know the license was terminated and that the Chinese needed to cut a new deal directly with PPHM.
Of course with Bavi waiting in the wings as additional bait, I’m sure the Chinese were quick to see that PPHM did indeed give proper notice of CTL’s various breaches and that CTL failed to cure the breaches within the stated cure period and therefore the CTL license from PPHM is dead. I can easily see Epstein refusing to give the clinical data requested by PPHM and falling into this trap.
Indeed, all this would have to be done before Sunday’s PR launch to avoid the huge embarrassment that would follow if our Chinese friends announced they had a TNT license with a Company that had no right to sublicense.
We’ll find out soon. ALL IMHO.
I understand that:
Avid / Halozyme: The Company will not reveal which bioreactor has been dedicated to the 20 runs per year but confirms that revenue stream from these runs will be a “very significant factor in reducing our burn rate.” Note however that 20 runs per year represents Halozyme’s projected product demand for which they now have guaranteed capacity at Avid. Actual demand could be higher or lower. Note also that revenues are received at start, middle and end of each run but cannot be booked under current accounting rules until the product is actually shipped. So KT was right in post 10365 that it will be at least two quarterly reports before we see these new revenues even though first run will start in January.
12 Patient Cancer Combo Study in India: Top line results will be published as soon as they are available in March or April. The Company is making plans to present this data at ASCO in June. Prior publication of top line results will not prevent formal presentation of full data at ASCO. Same deal as the release of HCV Ph 1a top line results well before formal presentation at AASLD.
HCV Combo Study with Interferon and Ribaviron this winter will be done with SOC protocols for those drugs, not with a fusion protein. Additional animal studies need to be completed with Biotecnol’s Tribody technology before that product is ready for clinic. But Jazz is absolutely right when he described potential of Tribody conjugates in his post 9560 this way:
“The company that owned such a broad immunostimulatory mab, proven to be an effective chauffeur for bringing drugs to the right spot, wouldn't even necessarily have to sell the mab, or even partner it (as it is in itself). They could simply cut deals allowing pharmas the right to join their respective drugs at the hip to this special mab, develop it, etc. The mab co. need not sell/partner the key mab, ever, just cut seperate exclusive deals for new conjugates with whomever wants to tie their drug to this mab that goes to the right spot AND helps activate the immune system.”
Regarding Genmab / Glaxo transaction this week, PPHM is very aware and very pleased with how those deal terms give the Company considerably more leverage in current discussions!!!
Healthy Holidays to all.
I have no info on that
but I do hear a relevant Duke publication will be out "soon" and PPHM can say much more about the relationship at that time.