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Thank you JR.
As for Geo -- I just think he is lobbying for the wrong thing. Every day he comes in looking for PL to give him buy side comfort.
Have you ever talked to PL. He could buy every day for the next ten years and I would never get any comfort from him. The only comfort you could get from PL would be for him to resign and have PPhm put in a well qualified and well connected CFO.
PL doesn't have the chops to stand up to BOD re alternate methods of finance to the dilutive ATM, he doesn't even run the ATM properly and IMO he doesn't have the chops to deal with potential partners.
You don't want PL to buy --you just don't want him to sell!!!!
If you must redundantly lobby then lobby for PL not to sell ATM into good news and let the stock run. This would be perceived
as very bullish. If PL still needs interim funding then let him and that other bright light CK sell ATM privately to institutions that want a longer term investment. Never, never show an ATM offer in the open market.
Lobby for that.
Best Regards,
RRdog
It is interesting to note today a few "billion dollars" up valuation in VRTX on a 5-10% increase in lung function vs cystic fybrosis in testing.
Makes you wonder what a 50-100% improvement vs 2nd line NSCLC SOC in ORR and PFS (initially) might be worth??? In MOS (ultimately)??
I'm not predicting results--repeat I'm not predicting results-- of clinical trials but the scientists think improvement is possible based on earlier outstanding results in MBC. Both MBC and NSCLC tests are bavi + Doxy vs a Doxy control arm. In NSCLC doxy also happens to be the SOC. Though the organelle is different that may be trumped by the biochemistry which is the same. PPHM has a "broad spectrum" approach with Bavi because "often" the biochemistry is the same. (In case you have forgotten that is what you are investing in --a novel, broad spectrum approach to cancer treatment.)
There was another question asked of Thorpe that has thus far not been noted but might be germain. When asked whether he thought bavi worked better on earlier stage patients or sicker patients, Thorpe was non-committal. To him "they are all pretty sick".
However, for purposes of our "stockholder interests" IMO this answer may be trumped by Garnicks' answer/decision to attack on 2nd line (sicker) patients in NSCLC. Not from a "biochemical" viewpoint but from a "statistical/regulatory" viewpoint:
1. There is a lower statistical hurdle with sicker patients
2. Sicker patients were much easier to enroll for testing
3. There is much less room for the outlier control arm stats
to move around in 2nd line numbers because they are all
patients who have failed other methods of treatment.
IMO this is the synergistic value of having not only great theoretical scientists but also having great regulatory talent at PPHM.
Again, the up valuation in vrtx on a 5-10% improvement in lung capacity in a phase II study certainly is something to think about when compared to the PPHM valuations (prior to data) and while we are worrying about whether PPHM can "break out" technically for a couple of pennies or how they will run their financing or how much stock Paul Lytle buys.
Guess we'll have to wait for data and keep our fingers crossed.
Best Regards,
RRdog
Geo,
Glad to see your sense of humor returning.
For a while there I thought you were going to have to be institutionalized for some form of obsessive/repetitive syndrome.
We need you to be sharp now --from here going forward.
Best Regards,
RRdog
FTM,
I agree that the rotating image of the mouse tumors was particularly impressive and gave credence to the three dimensional aspect of PPHM technique. It lends weight to Dr. Thorpes's contention that this may be the finest imaging system for hard tumors he has seen to date.
My own research indicates the FDA will not be quick on this diagnostic and like everything else will proceed on "bureaucratic time". However, it is not expensive for PPHM to proceed and it is certainly quicker than an MOS cancer proof.
Further research leads me to believe imaging is eminently partnerable at an early stage. Since the imaging market is "enormous" PPHM should be encouraged to partner at the earliest moment on this one, and take milestones all the way out. There is nothing in this that would prohibit PPHM from using imaging to their own advantage. I am sure mgmt is aware of this possibility. Whether they are capable of executing is an open question. (Imaging market as a whole estimated to grow to 15 billion by 2015. Even a small slice of that would be nice.)
IT IS MUCH BETTER TO PARTNER IMAGING AT LESS THAN TOP DOLLAR THEN TO SELL PERCENTAGES OF THE ENTIRE COMPANY AT PRICES WAY BELOW FUTURE DISCOUNTED VALUE.
Best Regards,
RRdog
Thurly,
I think CK is suspect on much of his opinions and advice to PPHM until proven otherwise.
IMO the webinar will be reduced to an "e briefing" with edited language versus the slides. It is unclear how much of the cross questioning (which was key) will be included and it will probably take about eight weeks.
Best Regards,
RRdog
Cheynew,
Most of what you post I am not in agreement with. However, I give you props for at least listening to the conference. You had a very good pickup on a "sly" question that was inserted during Thorpes' talk as to the relative value of the chimeric version of Bavi versus the human version. So much incorrect information has been written on this board about that particular subject it was interesting to hear Thorpes' rather matter of fact response slightly in favor of the chimeric.
I will write later on other thoughts re the conference when I have time.
Best Regards,
RRdog
Geo,
I take it you were not in attendance at the NY Academy Conference.
So why are you blathering about it????
RRdog
JamesGMS,
You ask interesting but unanswerable questions until the data is in and the bidding is over and the FDA has ruled. I will give you some thoughts and you can make of them what you like:
1. IMO Abe's comments are not germain. The governing factors on Cotara value will not be PPHM's market cap but the strength of the FDA protocols/SPA and the number of bidders. This is analogous to selling a house. If the house is in good condition and there is more than one bidder, the price will not be determined by the buyers need to sell. If there is not more than one bidder, then PPHM can seek a "financial partner" for this product and self- develop it or use the financial partner to bid against a biotech partner.
2. The overall market in developed western countries for Glio is generally thought of as around $470mm/yr. This is an interesting market size since "nothing works". If there was a product that really extended life, had the occasional long term survivor (CR) and improved the "quality of life" during "extension" the market size might be triple what is reported.
3. Since PPHMs Cotara has "orphan drug status" it might obtain a longer life cycle than 18 years. Multiply 18 -25 x 470mm + and take whatever percentage of that you think you can market to and you get some idea of what stakes you are playing for. If the market is really larger (3x) for a workable product and you include other parts of the world the stakes get bigger. There is little competition for Cotara in this indication .
4. IMO Dr Garnick is not given to working on "waste of time" projects nor given to much hyperbole nor does he have much to prove. According to his remarks on the CC, he feels he can reach a suitable accomodation with the FDA. IMO only, I interpret this to mean he knows what the "worst case" is and he can live with that and he is trying for ever stronger protocols with smaller patient populations and doable in under two years. Obviously, the stronger the protocol, the economics and timing of the clinicals, the better PPHM negotiating position.
5. IMO Dr. Garnick is intimately aware of the FDA position and also of PPHMs financial needs and also potential partnering needs.
That's why PPHM hired him, why he gets paid the big bucks, and why he is the foremost "regulatory tactician" in the world.
I agree with you to the extent that there is commercial value to PPHM IP plus Avid that the market cap seems absurd. So far it has proved to be a "value trap". Until PPHM can break out of the trap either with a commercial deal, FDA agreement, partner, or outstanding data that is good enough to cause "price speculation" re "partnering" the value remains trapped.
Having made the point about a "value trap", IMO it should not be unremarked that the overall "value" appears to be growing by serious size. I am very pleased by PPHM submission of IND in imaging as it is the first product (with the hugely projected overall market size of 15 billion by 2015) that does not require an MOS proof at the FDA. This means that it is quicker and easier to approval (as a process or device) and partnering and much cheaper to process.
All of the above is just IMO.
Best Regards,
RRdog
Very funny RCJ but not informational or helpful in any way.
Im trying to give you something to look at. Without potent activity of the bavi agent the chances of there being another 2 CRs in the next 8 patients in this study are very very small.
RRdog
Not likely to be too many CRs in the control arm. There were zero CRs in the Avastin control of over 200 patients.
What you might want to watch is the next 8 patients to be reported in this study since it is slated for 14 patients total.
If we see another 2 CRs in the next 8 patients I would pay close attention to that.
This study by the way is not anything to do with PPHM cred. It is IST UA and NIH. The measurement is independent and it is pretty objective when you get to CR the same way MOS is pretty objective. The IST was run by a high profile doctor with outstanding credentials.
Best Regards,
RRdog
Ubuy2w,
That is a very intelligent question because it leads you to another valuation metric. I am not suggesting that an acquisition is in the offing however:
Assuming gross carry forward losses of better part of 300mm, if PPHM were acquired by a profitable US pharma and assuming a 35% corporate rate, the pharma could save about 105mm in taxes. That alone is worth about twice the market cap of PPHM. I'm sure an accountant could better fine tune this and comment on the amount of time over which the savings would be distributed but the general idea is about right.
Regards,
RRdog
Mojo,
This is a remarkably good pick up. I tended to discount our 40% complete response because of the small sample (6) but considering Avastin used hundreds of patients with no complete response (0) PPHM number looks a lot more impressive.
Do you make any foreshadowing correlation between this result and ORR, PFS, MOS in 2nd line NSCLC??? or do you see this data as unrelated.
Thanks
RRdog
Thanks FTM,
I look forward to a more researched answer. I agree with you that on the surface the proof should center around safety and workability and that it shouldn't take as long as proving MOS.
RRdog
General Comments on recent PRs and filings:
I am extremely pleased by PPHM moving "imaging" front and center with the new "Non-Therapeutic" filing of its IND with the FDA. I apologize for being overly critical about the time it took to move this area forward and acknowlege the huge amount of clinical work it took to shape and underpin this filing.
The PR was again clear and well written. However, I subtract points from C Keenan score for failure to understand what is critically important to shareholders. Shareholders want to understand the different milestones and timelines at the FDA for a diagnostic filing as opposed to a new drug filing. The PR did not talk about the market size for this product which would seem very appropriate in this case. No PR is issued in a vacuum as if there were no question of expense in a corporate time of continued ATM dilution -- therefore failure to discuss cost is a disservice to shareholders.
It should not be lost in the stir about the IND for Imaging that there was another excellent PR re Avid. Again this was clear and well written and since Avid contributes to cash flow this PR is set against a different background. The gist of this PR, which quotes J Gingrich (mgr of business development at Avid) is that Avid is developing proprietary technology and manufacturing techniques. This should augur well IMO for "future increases" in revenue and expanded profit margin.
Regards,
RRdog
Geo,
If you don't believe anything else S.K. says why would you believe any "inferral" you get from his CC? Tough to have it both ways.
IMO this imaging field is so large and so diverse that there is room to both partner and hold on to certain parts of the technology. Also, it would depend on the nature of the offer.
"You can't tell who the rats really are until you throw a big piece of cheese on the floor."
Let's just wait a second and see if we can get a cogent opinion from FTM. He seems to be adept at "gridding" prior trials of a similar nature.
Regards,
RRdog
Page 1 - Line 32 to Page 2 - Line 39
[An exploratory IND study on a potential diagnostic radiopharmaceutical would not appear to
necessitate the following traditional dose escalation, safety, and tolerance studies due to minimal risk
from the drug substance to human subjects. FDA should waive requirement for those subsequent
studies given the clinical benefit and low risk of the drug product to humans.]
FTM,
Could you hazard a guesstimate on "time" and "hurdles" to an FDA decision on a "non therapeutic" IND re "imaging" based on similar IND non-therapeutic filings???
Could you also hazard a guesstimate on time to negotiable data points for large companies to consider partnering?? I note that some of the largest companies in the world are involved heavily in "imaging" among them GE, JNJ, ABT.
When I have talked about the size of the "imaging" market I have used a conservative figure of several billion dollars. It is interesting to note that on the PPHM web page they are raising the ante by citing studies indicating that market will be more diverse and approach 15 billion by 2015.
Lastly, could you comment on any thoughts you might have about new imaging methodology enhancing the PPHM proof of bavi activity versus cancer targets.
Thank you in advance.
RRdog
Page 1 - Line 32 to Page 2 - Line 39
[An exploratory IND study on a potential diagnostic radiopharmaceutical would not appear to
necessitate the following traditional dose escalation, safety, and tolerance studies due to minimal risk
from the drug substance to human subjects. FDA should waive requirement for those subsequent
studies given the clinical benefit and low risk of the drug product to humans.]
Much too much obsession with Price and too little with Value: "Why" the price is where it is may be more important than price itself.
Price is screaming at PPHM mgmt and BOD two things:
1. Sell product cheaply before you are ready (I advocate
only very selectively) or partner up.
2. Find alternate financing to dilutive ATM
To date PPHM has been unwilling to take either of these suggestions. I have long advocated selling non core assets or regional assets. I have also long suggested at least six alternatives to ATM financing. PPHM usually runs about one to two years behind my suggestions so they should be right in the zone. My third suggestion of bridging by adding prudent amount of debt vs Avid without encumbering IP or issuing convertible preferred is starting to age as well.
On the more positive side, earlier I noted a possible "peaking of burn rate". The "quiet improvement" here is also cited in Charles Duncans' most recent comments at JMP. Charles notes the "third" quarterly increase in projected revenue at Avid again by 2mm and he further notes the "first" quarterly decline in expenses also by 2mm. This is a good first step. If Avid revenues can again be raised by 2mm (IMO this is coming) and expenses cut another 2mm then we may be getting somewhere. Cutting another 2mm in expense is very doable IMO. One way to kill dilution that is very rarely talked about is to "kill the burn rate".
Surprisingly (especially to myself), I give points to Chris Keenan. In the PR re "NASD warning" Chris was able to prove that PPHM is capable of writing a very clear and concise and informatory PR. This PR completely defused the NASD warning and I have heard little about it since. That is how it should be. The real issues should be well resolved before the next 360 days IMO.
I was not expecting any particularly interesting data from the 7 AACR papers as much of this presentation was telegraphed. Again, I was pleasantly surprised by a second clearly presented PR this morning. Chris clearly articulated the up regulating potential of a doxy combo with Bavi, and clearly talked about the potential of new "imaging" techniques (Imaging is one of my favorite areas and IMO can be an enormous product market and non-core asset sale/deal area for PPHM).
Chris gets more points for "lucidly linking" the imaging results of doxy for upregulating PS on cell surface with the ongoing 2nd line NSCLC testing. This was more than I could have expected based on PPHM's prior PR history. (refer to FTM work and projections for opinion on coming results, plus FF work -very well
written on testing results, plus my own comments on "return to mean". FF should be paid to write for PPHM as his discussion of early surrogate indications was much clearer than PPHM on the CC.)
Additionally, Chris went further and got his final points for continuing with a suggestion I have made for years, i.e, to stop speaking as if to scientists and start aiming more at investors. He clearly and simply layed out the size and deadliness of the NSCLC market in the US annually. IMO PPHM should continue to talk about the target markets in all their various product info PRs.
Unfortunately, this type of research will not really move the needle on market cap at this stage. Harder data is needed. You can define that as data strong enough and far enough along (mos) to cause partnering speculation and eventually the actual partnership. Ditto for a "hard" announcement on FDA accomodation for Cotara that would lead to partnering.
Best Regards,
RRdog
Geo,
If the strategy is correct, there will be less dilution, more money and more opportunity to go after less sick or earlier stage patients.
Regards,
RRdog
Geo,
I'd like to take the other side of that argument and side with Garnick who may know a thing or two more than PPHM critics. Though the patients are much sicker, the bar or hurdle at the FDA is much, much lower (see the really fine work by FTM in this area) . In these patients PPHM is looking for a statistically signifigant increase in MOS which is usually defined as ten percent. What the FDA is looking for besides life extension is improved quality of life (QOL) which has to do with AE's. Nobody is looking for a cure. This is a "camels' nose under the tent" type of FDA strategy which has proved effective for Garnick before. It can lead to partnering and eventually expansion of label.
Best Regards in this tough time,
RRdog
Jake,
I think both. BP is much more more sophisticated in their understanding of data and measurement than any of us so I am sure they can spot anomalies. At the same time I am sure they await further data that points to efficacy.
Earlier, a question was asked about patent life on Sorafenib expiring. My sources tell me that a new combo of Bavi/Sorafenib would have a new patent life and is in effect a method of patent extension even though the original Sorafenib comes off patent. (new and improved product)
"In theory only", this should make an efficable combo of Bavi/ Sorafenib very attractive to Sanofi Aventis and make them an excellent candidate as a foreign partner. We will have to see how this plays out over time, what the results of the combo clinicals look like.
This answer should be double checked.
The same question and answer may apply to a number of products.
IMO only
Best Regards,
RRdog
Recently physicists at Cern had an anomalous result that showed neutrinos moving faster than the speed of light. This result was not predicted by any theory, nor was it accompanied by other effects that would have been present had the result been correct, and lastly of course it flew in the face of Einsteins' theory which had been confirmed over thousands of experiments, and worked flawlessly in hundreds of products which run our modern world.
On trying to repeat the experiment and failing, physicists called the initial result an "artifact of measurement". This is a polite way of saying that the way the experiment was measured (incorrectly) affected the results.
This "artifact of measurement" as a concept seems relevant to the radiographic scans that measured the control arm on recent PPHM clinicals in NSCLC. These results also flew in the face of hundreds of prior results and had no theoretical basis for the result. I still expect results to return to the norm over time and improved measurement modes and in clinicals that are less subject to interpretation such as those that measure MOS.
Best Regards,
RRdog
Geo,
I'm not saying the decrease in burn rate is the end all and be all. If you've been following the libretto I have been advocating some debt versus free cash flow at Avid for some time and or a convertible preferred similar to what Eastern Capital did with ASTM.
I'm trying not to be too negative or really vent spleen at this mgmt and BOD. Obviously, there are lots of things they can do until a commercial event. We will just have to see where the matter ends.
It should be noted that there appear to be IMO many individual and institutional PPHM shareholders that would like to double or triple their position in the science if they could ever get a stable denominator in the capitalization. Hopefully, mgmt and bod will understand this even if they are asleep.
RRdog
Geo,
As you know, I agree with you completely re concern over dilution.
The only positive IMO so far is my previously stated theory that the burn rate appears to have peaked. This was confirmed in Charles Duncans' most recent comments at JMP where he noted that revenue at Avid was increased by 2mm and that expenses were 2mm less in recent quarter due to a decline in R and D (less expense in existing clinicals and no new clinicals). I hope that this trend in revenue continues upward -- it seems to be more linear-- and I can think of at least six different ways to lower expenses further off the top of my head.
I await further non-dilutive commercial events as do we all.
Best Regards,
RRdog
FTM,
Once again, thanks for the grid presentations of data. They are clear and lucid.
I would like to add a business thought after talking to many professional investors that have interest in biotech. In the investment world investors "shoot first" and ask questions later. They do not have much clinical sophistication and you are correct in the assertion that understanding the clinicals is key to persevering to a profit in PPHM.
A large part of the herd instinct in "shoot first" is "semantic". When clinicians or PPHM use the word "primary" goal they mean "first" goal or "initial" goal. When investors hear "primary" they think it means "main" data milestone. Investors do not always understand that the real main goal is the "ultimate" or "tertiary" target which is MOS.
In PPHM, stockholders should be wary of taking the "primary" or "initial" prices set by marginal buyers and sellers and shoot instead for the "ultimate" valuations driven by revenue, FDA action, partnering, and sale (partial or whole).
IMO, shareholders should also be wary of false and shallow prophets or internet "gurus". IMO it would be better to stick with Thorpe and his laboratory and Garnick. Between the two of them they are two PHD's, one of the three top cancer research centers in the world, 17 FDA new drug approvals , hundreds of published scientific papers, and about 15-20 billion dollars in revenue per year ahead of all the critics. That's billion per year with a "B".
It is interesting to note that if you took all of PPHM's critics on the IP and rolled them into a ball, I don't think they account for 1 dollar of biotech revenue per year or one scientific paper published in a prestigious medical journal and reviewed by their peers.
Best Regards,
RRdog
Thurly,
Thank you for that refresh on data from the previous AACR conference. I will review it carefully. Sorafenib, however, particularly interests me as it may hold the key to ex-US partnering in Asia. I have particular interest in anything that can lead to a commercial agreement and non-dilutive financing.
Best Regards,
RRdog
Thank you FTM,
I agree with you in general and that is the way I have bet and continue to bet.
Very best regards,
RRdog
FTM,
Thanks again for you terrific scientific data posts and grids and it is interesting to see you go on the line with a very optimistic forecast for results in 2nd line NSCLC.
Do you want to hazard a guess as well on ORR, PFS, and MOS for the HCC IST data which is being presented at AACR and might "foreshadow" the results in NSCLC? I realize that HCC is so deadly that it is measured in OS not MOS but the IST might include some figures on the latter which would come earlier in time.
TIA
RRdog
NP1986/ 70030
No one is talking about variation in OS. The only discussion revolves around ORR or PFS. Get your facts straight before explaining to us.
Regards,
RRdog
Geo,
They can finance on outside contracted revenue, which does not have to do with PPHM usage and they can set up a rolling facility as they pay down the loan. Whether they want to or not is a different story.
Got any reasons why they can't do a convertible preferred/ convertible at higher prices and redeemable?
What they shouldn't do is ATM dilution at these prices. Use the ATM when conditions are better. Bridge finance now.
Regards,
RRdog
Robert,
You're thinking too much like management. If an institution issues a loan vs Avid revenue and assets that is all that is encumbered. Avid income hasn't dried up in ten years. Currently, it is advancing steadily with PPHM raising their projections for the last 3 qtrs.
If you borrowed as much as 50mm at 10% PPHM could pay pack the annual interest of 5mm and pay down principal at the rate of 11mm per year. I'm not saying PPHM could or would borrow that much but it is a good example in round numbers.
Your point about the ATM becoming more effective at 2-5/ share is correct. Just for the record though, sale of ATM is not "revenue" it is a capital raise.
Regards,
RRdog
Robert,
Wake up. A loan against Avid revenue and assets does not encumber IP--for the 100th time. It is also repayable vs any commercial transaction for IP and as such is a form of Bridge financing.
A Dart type Preferred offering is also redeemable and as such is a form of bridge.
This is not "brain surgery".
Regards
RRdog
Johnny,
Shan and King appear to be wrong because they never figured on 3 test subjects being dropped due to misnomering on type III and IV disease. It was an overstatement on their part and unnecessary. 86 subjects divided by two arms of study equals 43. 3/43 accounts almost precisely for the 7% overstatement.
The decision to use an additional radiographic scan technique that was not used for Avastin, for SOC C/P in 1st line NSCLC, nor in Doxy for SOC in 2nd line NSCLC appears to be a grievous self inflicted wound with very little upside. If MOS is what you need for movement at the FDA and in partnering why would we spend "company money" for a double trenche in testing on ORR and PFS???
The wound appears localized in the market cap number and will be healed and corrected over time IMO. Move on if you can. This kind of "stuff" happens. It is not central to the case.
Make yourself feel better by sending mgmt a copy of the Dart convertible funding for 40mm by ASTM.
Regards
RRdog
Geo,
Avid is now kicking off close to 16 mm in outside contract revenue/ year. If PPHM pledged all contract revenue and future contract revenue for Avid against a loan or rolling credit facility they could raise substantial funding without encumbering IP. I have been advocating some debt for a while until blue in the face.
A Dart type transaction with a redeemable preferred convertible at higher prices and with a five year term also works. If the issue hasn't been decided in five years it wont ever matter.
The worst alternative is massive dilution by ATM at current levels. The best alternative is a non dilutive deal for IP such as Cotara. If Garnick gets through the FDA in good order, Should be able to make a front money deal in Cotara with milestones and with partner picking up Phase III expense.
My suggestion is that everyone on this board long the stock send a copy of the Dart transaction to mgmt. Maybe that will get their heads out of the sand and start them thinking about alternatives to ATM of which there are many.
Regards,
RRdog
General comments on a weekend:
Tremendous thanks to FTM for his excellent posts on ORR, PFS, MOS numbers and Avastin comparison and history 76695 and 76738. These posts were informative and helpful.
Tremendous thanks to Purpledawg for his excellent summary number 76697. Couldn't have done a better job.
The full transcript of the CC less the Q and A is posted by Cheynew on 76701. Interesting and worth a careful read.
I agree with Jakedogman1 comments in 76734 specific to his data analysis only. I agree with him on this analysis and (when I am not angry or emotional) tend to rely on the math. In this case IMO there is a large probability that there will be "reversion to the mean" which should be very favorable for PPHM and Bavi. Hundreds and hundreds of patients have been tested on the chemo and there is a very well defined "mean" response. SK will have to learn how to be upbeat yet still "curb his enthusiasm" when he talks about preliminary data being "potentially game changing". If a few pieces move around in a small sample there can be swings in the statistical analysis. FTM , again, does an excellent job in his comments on this. The FDA and, more importantly for PPHM shareholders, "partners" will move on the MOS data. I hope the MOS is good of course, and IMO the probabilities are still very favorable.
I share the pain (probably more than my share due to sizing) of all the disgruntled posting. I have been particularly critical of the one "D" thinking re bridge financing and all the attendant issues. I note for everyone who commented on my numbers re Avid free cash flow that even if I was somewhat ahead of myself the numbers are moving in my direction. Too much debt is fatal, too little debt is overly conservative. PPHM could easily pay the interest and principal of 40-50mm in debt from Avid free cash flow. That debt could be retired at the time of any larger commercial transaction and thus be viewed as a form of bridge financing. My math says this could buy PPHM a lot of valuable time. It would be preferable to diluting through the ATM by 50-80mm shares at current prices.
That having been said, I think IMO posters have to bear in mind that this is "brain surgery" and "cancer research" - not easy stuff, not stuff always on a preset timeline. The data and decision making, and partnering and financing are not bound by hard and fast "Newtonian Laws" like the predictable orbiting of planets around the sun. Rather, these issues are closer to "quantum physics" where things are either energy or mass but never both at the same time, where there are always multiple options.
A few words on financing -back to my favorite subject. The announcement of this additional shelf for 150mm in addition to approximately 40mm still extant - no matter how clumsily timed--is interesting and I note the following:
1. The fact that it is filed and available does not mean it will necessarily be used immediately. On the contrary, IMO PPHM will try to do the least financing in this price area possible and will continue to titrate stock into the market to stay around the 20mm cash on balance sheet area net after expenses and Avid income. The good news IMO is that I believe clinical expenses are tapering down and that Avid free cash flow is moving up so that the burn rate may regress to lower more historical rate.
2. The timing is interesting. Firstly, there may be a desire to put all the nasty stuff out there and get it behind us. In that case we are in the "washout" period that JR talks about.
Secondly, there may be a bit of "negotiating bluster" to this announcement. This is encouraging to me as it makes the partnering discussions seem more "present time."
Thirdly, getting back to the quantum and opportunistic nature of the biotech business, if something good should happen (--I know, I know, it never does--) but, if something good should happen PPHM may need this shelf for a couple of reasons. Two come to mind immediately -- as part of a sweetener for a partnering deal and self funding at much higher prices.
For the two reasons above it is interesting to note that the shelf is expressed in dollars and not enumerated in shares. If, for example, there were a Cotara breakthrough at the FDA and then with a partner , PPHM would need less funding (to the extent of upfront dollars) but might also get a chance to self fund at much higher prices and less dilution. Self funding at higher prices would put PPHM in a much stronger position for further clinicals and negotiations.
This example is not totally a figment of my imagination. I found Garnick's discussion re Cotara/FDA very interesting. It is clear this FDA process is deep into an "iterative negotiating process" which is both verbal and written and appears cooperative on both sides. Twice Garnick used the word "orphan" when describing Cotara. Orphan status is for drugs that are encouraged by the state to be developed due to an unmet need , get an easier approval pathway, and sometimes get other incentives for development such as longer periods of exclusivity.
IMO, based on Garnick's comments, I think PPHM and the FDA will come to a partnerable middle ground re Cotara in the not distant future and this may be one reason for the need to talk about a larger shelf now.
Best Regards in this dark moment,
RRdog
In general IMO costs at Avid are being misallocated so as to keep profit margins artificially low. By far the biggest costs at Avid are plant and equipment operation and personnel. The more business PPHM does the more efficient a drop to bottom line IMO. Other than raw materials the only variable would be more man hours.
I have been saying for a while that IMO Avid is approaching 8mm/ year in "free cash flow" from outside customers. PPHM in house business distorts things but does give PPHM obvious advantages.
Avid business is starting to look more linear and less major cyclical . That makes Avid more and more valuable relative to PPHM market Cap.
Need more time to really think about this call. Enjoy the weekend.
RRdog
OK
The subjective ORR readings in different flavors lowered the Bavi and Raised the SOC to the point where it might be comparable to Avastin and better to the extent of side effects.
This is round 1. Round 2,3,4,5,6 etc still to come. Hopefully, less subjective.
Regards,
RRdog
I didnt say that. Those are your words not mine.
RRdog
Agree with this Mojo and also agree with Thurly assessment. I would add the following:
First of all, down is down and anything that makes the stock go down is not good for investors and makes us wrong (even if only temporarily) in my assessment. No use ever kidding yourself.
It looks like the Bavi data was roughly consistant and on one measure of PFS actually a bit higher. Overall data measurement now on "several tracks" and in some cases the SOC meaurement is much higher narrowing the margin of improvement by Bavi. This is an unexpected change in the "measurement" of SOC???
It does however, look like the Bavi ORR was at least 7 pts lower than the preliminary release which means Mgmt was wrong to that extent. (or there was some subjective measurement change)
Imaging measurement techniques have little to do with "MOS" so that will be the determining factor. Does Bavi in combo upregulate the immune system and increase MOS as advertised or not??? Would like to have that data in 1st line tomorrow but, unfortunately sounds like a wait. The only good in that is the longer the wait the better it may be. According to Dr. Thorpe this upregulation should occur and I have placed a lot of faith in Dr. Thorpe.
Have not sold any shares on this decline but for the first time have ceased to average down until further data clarification. The lower price advantage is mitigated by a possible delist notification (which PPHM can string out for a year but-- nevertheless) and by potentially higher percentage dilution. Also, awaiting any further milestones on Cotara, viral, etc.. Also, awaiting 2nd line NSCLC data and any benefit to combo with doxy. This latter group of items might mitigate the situation in a more favorable direction.
The math on all previous data would indicate that Bavi in combo with Doxy should be much better than Doxy alone in 2nd line NSCLC.
Now we will have to see whether 2nd line measurements increase the ORR of doxy in the same way 1st line measurement improved SOC. My guess is that will be less the case since these patients already failed chemo. Again, the doxy vs 2nd line NSCLC study that led to SOC showed ORR 5.5%, PFS 2.5 months and MOS 7.5 months. Since Bavi MOA different than chemo IMO still expect signifigantly better results than above something like ORR 10-15%, PFS 3.4 months, and MOS 9 months. (This would be a very statistically signifigant difference for FDA in this indication.)
I am sure the analysts will do the job of questioning SK on the conference call so I am interested in hearing that discussion as well. SK is not just a clinician. He is also the CEO of a business and as such would do well to address alternate means of financing and cash conservation. And I repeat for the umpteenth time, there are a number of possibilities other than ATM.
Bavi is an immuno upregulation/ antiangiogenesis MOA so whatever good it does is always on the back end of the time line as the immune system takes longer to work than other types of MOA.
All IMO
Best regards on a real tough day,
RRdog
Thank you Thurly for your very interesting background research reports. I note you are starting to get very close to my numbers on ORR in 2nd line NSCLC. Hopefully, PPHM will get a good chunk of the increase that is implied by the math.
Thanks again also to FTM for his very good work on systematizing the available data to date. FTM also sounds like he is moving higher in his estimation of ORR in 2nd line NSCLC.
In general, the battlefield seems to be tilting in a way that is favorable to the Bavi platform as a whole. I don't feel the inflection point has been reached yet re the big picture stuff IMO. If that should ever happen it will be very profound. The double blind randomized placebo 2nd line test "may" not only be an inflection point for PPHM but also influence the "big picture" thinking. That would be pleasant.
Regarding some of the large valuation numbers that have been kicked around, anything is possible in the long run if the full Bavi story played out IMO. However, I tend to look at it one critical path step at a time. If the stock were to rise into the 3-5 area it would be tremendously positive for financing and reduced dilution percentage.
Just in my opinion.
Best Regards
RRdog