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Sometimes I shock myself…
With my own brilliance…
OK…
Going forward I promise not to, ever again, display such hubris…!!!
Much has changed over the last 19 months. So I will start with that posts’ final words.
“NOW…
For those of you who are not very keen on this stock or management, I will state very clearly…
There still is a statistical possibility of failure in this clinical trial of about 33% - 50% and I realize that this could go into the pooper if Bavituximab fails.
However on the potential up side…
With the potential share price of between $33.00 to $288.00 within 4-6 years and a current share price of $2.34 this implies a 14:1 to 123:1 potential gain.
My first few posts on the board involved assessing the risk, which I calculated at 20:1 at the end of 2009. I now calculate that risk factor at 10:1
Soooo…
If my $2.34 bet today can yield a $33.00 to $288.00 reward 4-6 years from now, a 14:1 to 123:1 reward…vs. a 10:1 risk factor, I see that as a very good bet.
A classic high risk high reward scenario…
This will be my last post for some time on this subject. I would appreciate any additional inputs, correction, comments.”
After that post I reassessed the risk factor again. My post # 73105
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70249933
In that post I set the risk factor at ~ 3:1. Newbies should read both posts. Think about it, you are given a one out of three chance of winning a bet, any bet. To put it another way; there is a roulette wheel, a roulette wheel with only three numbers. A one dollar bet on an even money bet would pay one dollar, that’s not a good bet, you have two chances to lose for every one chance to win. Now, if a dealer offered 2 dollars for a one dollar bet some people would say “wow I could double my money and make that bet”. If the dealer offered 3 dollars for your one dollar bet then that is a “true odds bet” for that 3 number roulette wheel. The odds are correct.
So, now let’s apply the simple logic to PPHM. If you purchased shares at $.40 a few months ago, when the shares arrived at $1.20, the proposition called “Investing in PPHM” satisfied the risk. Everything else is extra gravy. If you purchased shares at $1.00, when the share price arrived at $3.00,yep, you got it by now.
On Friday PPHM closed at $5.39. In order for the risk to be satisfied, the price has to be $16.17. That’s not to say that you can’t take the money and run at any price over $5.39. Taking money off the table is never a bad thing. The point I’ve been making is currently you should triple your money (Reward) in order to get paid correctly for the risk.
Let’s look at what has occurred recently and what management has said.
Management is looking to put together a deal that includes regional partnerships and co-promote the U.S. market. I don’t think that there could be more than 2 regional deals, The E.U. and Asia (and I would think that Asia would include all of the APEC nations), but you never know. The issue with that would be; how do you co-promote with 2 or more partners? 50-25-25 split? 33-33-33 split? 25-25-25-25 split? Will that be palatable for the partners? I could see how that would benefit PPHM, but will PPHM be able to convince 2 or more BPs that that is in everyone interest? Another possibility is that a single PB would take the world and co-promote in the U.S. Another possibility would be a partnership with the newly formed consortium…That would be interesting. What if a BP was greedy and wanted the BIG ENCHILADA© for itself?
When you must evaluate a proposition with too many tentacles the best thing to do is take a far away view first, big picture sort of thing.
In the low level scenario no partnership occurs, and PPHM is compelled to go it alone. I don’t see this as being very likely, management has cancelled the most important IB conference in its’ history. Either they had a collective stroke together, or something makes that conference unnecessary.
In the most likely scenario PPHM has a tentative agreement. Now here is were we need to simplify things and pick a few tentacles.
1- Let’s just assume that the first and only indication for Bavituximab is second line NSCLC. Management has indicated that that market might be worth 1B dollars annually. You can do your own research. When will that happen? Let’s just say in three to four years. (PIII + FDA review) So in 3 or 4 years the partnership could be looking at a revenue stream of ~$1B annually. At a 20% royalty PPHM could be receiving ~$200M in annual revenue. Even for a stodgy big Pharma with an EBTDA of 5 the enterprise value would be $1B, discount that at 20% per year to today yields a current value of…($1BX.8)X.8X.8X.8= $409M. The above does not include any up front money or milestone payments, nor does it include Avid revenue. That should be compared to today’s value of ~$561M. So, with only addressing the second line NSCLC and nothing else, PPHM is properly valued.
What is the reality of Bavituximab working in only one indication…?
IMO ZIP…!!!
It has already demonstrated efficacy in:
1. Ph.2 Bavi+Doce/BREAST/Refractory MOS=20.7mos
2. Ph.2 Bavi+PC/BREAST/Frontline MOS=23.2mos
3. Ph.2 Bavi+PC/NSCLC/Frontline MOS=12.4mos
It has completed and is awaiting results on the following:
1. Phase IIb Bavi+PC vs. Front-Line NSCLC
2. Phase II Bavi+GEM vs. Front-Line Adv. Pancreatic
There are 5 IST in process that will report over the coming few quarters:
1st IST Ph.I/II Trial (Bavi+Sorafenib vs. Liver Cancer/HCC, open-label)
2nd IST Trial (Bavi+Paclitaxel vs. Her2- Met. Breast Cancer, open-label Ph.1)
3rd IST Trial (Bavi+PemCarbo vs. Frontline NSCLC, open-label Ph.1B)
4th IST Trial (Bavi+Cabazitaxel vs. 2nd-Line PROSTATE(CRPC) Cancer, open-label Ph.1B/IIA)
5th IST Trial (Bavi+Capecitabine+RAD) vs. Rectal Cancer (Ph1, open-label)
OK now DD, AF, eric, et al, pay particular attention to the following:
Let’s pick a very large tentacle…
Bavituximab delivers…
It is what the hypothesis suggested…
Bavituximab targets PS and activates the immune system. Certain PS inducing components i.e. Chemo, Radiation, etc. enhance that effect. And…It is broad spectrum.
I shiver…
You should be shivering too…Maybe for different reasons…
In 6 to 8 years Bavituximab could be used in many…and I mean many…as in MOST cancers.
6 to 8 years is a long time…Many things can happen. One of those things is the reality that Bavituximab is real…
What is the total Oncology market today?
From this:
http://www.prnewswire.com/news-releases/the-cancer-market-outlook-to-2014-competitive-landscape-market-size-pipeline-analysis-and-growth-opportunities-now-available-on-reportsandreports-87326377.html
We get a number like $47.7B…
Let’s just say that we capture ~30% of the market (Assumes that Chemo, Radiation must be in the formula) = $15.9B
That’s annual sales…
Even for a stodgy big Pharma with an EBTDA of 5 the enterprise value would be 5 X $15.9B = ~$79.5B
Now we go through the same silly exercise of discounting 20% per year…from 6-8 years from now...blah…blah…blah…
We get ~$13.33B to ~20.84B in market cap…!!!
We now have ~104M shares outstanding…Throw in options (That’s for you Jakedude) and round it up to ~150 shares outstanding (I know…I’m being very generous). Throw in the $150M shelf…That’s about 28M shares. Let’s say all those shares go to our partner/partners and round that up to a total outstanding share count of 200M. So divide the potential market cap by the number of shares outstanding you get…
At a market cap of ~$13.33B we get a share price of ~$66.65
At a market cap of ~$20.84B we get a share price of ~$104.20
How does that compare to $16.17…?
The above does not include imaging, viral, R84, etc.
So, now that we have taken the little tentacle and the big tentacle out of the knot, what do we have? What are management and a potential partner/partners looking at? How do they structure a deal?
Sometimes the simplest solutions are not immediately obvious. Let’s state the problem in its’ simplest terms
You need to price a technology that is still unknown. It could yield a tremendous amount of money or be a bust. That is why a buy out at this point probably won’t work, too much risk for the BP. So, an incremental approach seems the most logical approach. PPHM receives up front money for second line NSCLC and milestone payments at various stages of progress. In addition PPHM receives seed money to advance other indications. PPHM receives milestone payments with every new indication that is advanced. At some point viral is revisited, imaging comes online.
At some point, the hypotheses that Bavituximab is truly a broad spectrum therapeutic that “Reactivates the innate and adaptive immune responses” will be validated.
Conclusion:
IMO anyone buying at these levels will be rewarded. My average buy price is well below Fridays’ closing price. Those of us who have been in this stock and averaged down through the bad times have a fair amount of casino money already. Soon the pps will rise above my highest buy price from 6/2006.
Good luck to all, and that includes DD, AF, eric, et al. If you short PPHM at this price I think you need to be very nimble.
Regards
Golfho
Thanks for your quick reply.
Do you, or anyone else know of any website where I can get data going further back in time?
Thanks in advance.
Golfho
cjgaddy...
A while back, someone added the market cap value to your share price list. Do you have that? Or, can you direct me to where I can get this information? I'm coming up blank.
Thanks
Golfho
With much regret...
I will be leaving for Florida on the 20th of October. Between closing down the summer cottage, packing 2 car and making other arrangements...I cannot see where I could find the time to attend; what may very well be, the most important ASM in this companies history...DRATS...
However...A steak dinner in NYC before the the 20th of October is very doable.
For those of you that would not be able to attend the NYC dinner and would like to set up a regional meeting, please post. I like traveling around the country and would like to meet as many I-Hubbers as possible.
I'm not a big fan of Aruba...But...After we breach the $20.00 mark I'll go anywhere for the big party...!!! Preferably somewhere near a Golf Course.
I'm thinking this Spring.
Regards
Golfho
That is an amazing turn around...
A few weeks ago he was leading the bear charge...
Now he's positioning himself as a neutral observer...
BTW...Where was it reveled that the MOS for the control group is 5.4 months?
Regards
Golfho
WOW…
What a presentation. This has got to be the best presentation that Mr. King has ever done. A few choice paraphrases below.
“We have not reached MOS yet”
“We may not reach MOS by the Chicago conference”
“We don’t really need to get to the final numbers before we partner with someone”
“We will be concluding a loan ($20M-$30M) against Avid revenue stream soon”
“We are so busy with Partnering DD that we have to do our daytime jobs at night”
I think that it’s time for me to really get serious about the prospects going forward.
The company’s stated goals:
1- Secure a loan sufficient “with favorable terms” to provide one year’s cash burn in order to not dilute any further.
2- The company would like to partner regionally and keep the U.S. market for as long as possible.
3- Secure sufficient financing from a partner/partners to advance bavituximab in many indications.
There’s more but let’s start with those three.
1- Secure a loan sufficient to provide one year’s cash burn in order to not dilute any further.
This is an area that I lack expertise in. I asked for help with this before; to data I have not received any feed back. In my view I don’t see a problem with securing a loan. I view the loan as a very important factor when it comes to negotiating the partnering/s deals. I’m sure we all understand the need. What I don’t understand is how to determine what “favorable terms” are. Help…!!!
2- The company would like to partner regionally and keep the U.S. market for as long as possible.
That also makes a lot of sense to me. A regional partnership is very much a classic divide and conquer strategy. What would be the markets? Obviously the E.U., Asia & the U.S. Are there big players in each area? You bet…!!!
What will it look like?
First, I can’t see any partner or PPHM accepting a deal for one indication only. I think that the division will be for all oncology in each region. Perhaps the same thing for viral down the road.
Why? Because controlling off label use after initial approval will be near impossible. Even with AA for second line NSCLC in the U.S. there will be a requirement to perform a confirmatory PIII trial for each region. By the time that that’s completed PPHM will have (or not) confirmed that the BROAD SPECTRUM reality of the anti-PS platform is real. Hang on to your panties, folks.
3- Secure sufficient financing from a partner or partners to advance Bavituximab in many indications.
What are some of the possibilities?
Scenario 1- Everyone plays nice in the sand box; they divide the world pie into three equal slices and work diligently toward the end goal. In this scenario the partners start PIII’s for second line NSCLC in their respective markets ASAP and start planning and executing PIIb trials for several other potential indications as well.
In this scenario PPHM stands to gain the most. In the U.S. the AA will allow PPHM to market Bavituximab while simultaneously performing a PIII trial. This will allow PPHM time to develop a distribution system or contract an agent to market and distribute Bavituximab. The initial upfront money from the two other partners will fund the PIII for second line NSCLC and possible the front line trial if warranted or pancreatic cancer or breast cancer or prostate cancer or…
Scenario 2- Not everyone plays well in the sand box. Someone is not happy with their slice of the pie. Perhaps several potential partners want the pie divided differently. This is where the logic tree’s exponential factor comes into play…you remember 1X2=2, 2X2=4, 4X4=16 etc. What would be the most likely big demand? Several of the bidders want the U.S. market. Someone wants the whole Enchilada.
Are there more branches in this logic tree? Sure there are. But I can come up with some valuation with the above.
In the first scenario we have:
Will the partnership be for only NSCLC? I don’t think that will work for the above stated reason.
If it’s not for one indication then it must be for all indications (Oncology)
What is the value of all cancer indications? Well this website states that in 2010 it was $54B and will be about $76B in 2015. Let’s start with a conservative estimate; that Bavituximab can capture just 10% of the market. That $7.6B annual sales.
http://onc.globalacademycme.com/news/oncology-news/single-view/world-cancer-market-expected-to-top-76-billion-by-2015/a0811239503ebaba5bec772199b21315.html
What sounds plausible? Well a scenario that makes sense is one where a partner pays an upfront amount with future milestone payment to market approval and then a percentage (royalty) of the proceeds, and then another upfront or milestone payment for every other indication moved forward plus royalties on those new indications.
In today’s presentation there was a slide that indicated that the 2013 market for second line NSCLC in the US, EU & Japan is at $1.5B. That was divided into 61M for the US, 50M for the EU and 24M for Japan. So it looks like the company wants to divide the world into three areas, with Japan taking the balance of Asia. In my very quick search I could not find any China data or other areas for that matter. I’ll spend more time on that over the weekend. For now I’ll arbitrarily assign Asia 50M cases annually. So, a very quick extrapolation gives me a market value for the other two regions of: EU ~ $483M and Asia ~$483M
So, what would a reasonable deal look like for these two regions?
SWAG: $50M - $100M each in up front money and a 20%-25% royalty.
I need to attend to some thing so I’ll terminate this post here and will continue that stream of thought over the weekend.
Regards
golfho
I think you're absolutely right...EOM
I agree with you...
Selling Avid would be a mistake. And that is not management's plan.
I remember PL stating that they would like to secure a loan against Avid's revenue stream. Selling Avid was rejected in 2008 when R & R floated that balloon.
Regards
golfho
The last time I posted…
I was pulling out my hair, scratching & ripping my flesh, bleeding from my eyes…(you get the picture) I decided to take a hiatus from monitoring this board, & PPHM, in general. I was on full tilt…My assessment of PPHM was falling apart. What I thought was a well thought out assessment of the risk/reward ratio came into question. What the hell was I missing…??? What didn’t I see…??? In addition, I committed the Cardinal Sin of investing…When the share price started to tank, I went deeper and deeper into my cash reserves…Investing far more money than I ever planned to invest in this high risk high reward biotech. And it kept on tanking…I’m 65 years old…Not enough runway left…Good Grief…!!!
Nothing, absolutely nothing, was going right with this investment. No Cotara advancement. No financing progress…Only more dilution…No trial updates…No partnering deal. The risk portion of the equation was increasing exponentially. Management appeared inept. Financing was a disaster. And, the science started to look less impressive. This is THE time to walk away from the poker table. And I did. Metaphorically only, of course…!!!
My last post (77585) was to drumstick57, on 3-25-12. After that post I needed a break. I spent some time on the eastern Mediterranean Sea, exploring some very interesting vacation spots and calming my frazzled nerves. When I returned I focused on my golf game and only occasionally checked the share price. I went to Atlantic City a few times and played some poker.
I came back to this board and found several thousand posts that I left unread. I skimmed through them. I’m sure that I missed many important posts, and read some gems.
Here are my thoughts as of today:
THE RISK:
The last risk assessment I posted on 3-25-12 was:
“I suggest that you re-read that section in my 73105 post. I concluded that the company’s chance of success was approx. 33% and therefore an investor’s chance of success was about the same…Well not so. In reality, it’s the price you bought it at that determines success or failure. I have my core holdings and I bought, for me, a very large trading position over the last six months. I bought that trading position in anticipation of good financial news by now. My expectations were that NOW we would be trading in the $5.00 to $10.00 range. (NOT AT $0.57). My emotions are clouding my thoughts. This is not a good thing in investing or poker. My risk assessment for me has gone up significantly. I’ve downgraded Management skills, partnering prospects and financial capability. My risks have gone up significantly. I will not average down any longer. My last purchase was at $0.59. I am done buying.”
The components of my risk assessment remain the same:
(Statistical PIII trial success number (66%))* (number assigned to partnering prospects)* (weighted management skills)* (Financing (Dilution impact, etc.))
The first value is the historical success rate for drugs entering PIII trials. In as much as the current PII second line NSCLC trial was designed as a mini-PIII that only lacks a greater number of patients to become statistically significant I will arbitrarily split the difference. (66% + 16% = 82%)
Number assigned to partnering prospects (Was 25%) must now be much greater than 25%. I’ll go with 75%
Weighted Management Skills: Management has taken a beating over the years. However, their plan appears to be working and as I noted before; they have brought onboard top quality personnel. Was 60%; I’ll assign 85%
Financing: (Dilution impact, etc.) was set at 50%. Management has now stated that they are planning to borrow money against Avid’s income. In addition they reported that they received non-refundable deposits for future work to the tune of $7M. This has got to be a plus. Was 50%...Make it 75%...???
New (8-11-12) odds:
(0.82)*(0.75)*(0.85)*(0.75) = 0.392
That’s a better than 1 in 3 chances of success. OMG…!!!
My view of matters as they stand today:
Cotara – Almost a year ago my thoughts were that we would be getting FDA approval for a PIII trial very soon. In my view, that was to lead us into our first partnership. I even tried to calculate what I thought a deal might look like. I’ll repost that calculation and opinion:
“I wrote in post # 73105 the following:
“MILESTONES THAT I WILL USE TO JUDGE THE COMPANY AND MY INVESTMENT IN IT
1- The Cotara meeting with the FDA is very important…But what I expect to occur is a meeting with potential partner/partners soon after. Final negotiation will conclude with these possible outcomes:
a- Management walks away with no deal.
b- Some kind of agreement occurs where PPHM and a partner split the major remaining markets
c- Management seals a deal with a partner that includes upfront money, milestone payment and royalties.
If “a” occurs I will be pissed. If “b” occurs I could be anywhere between annoyed and happy. If “c” occurs I will judge it with the following criteria.
1- If the up front money is around $35M with a 20% royalty I would consider that some what of a capitulation. Why? Because that was the number that was floated by R&R in 2008. What ameliorates that to some degree is the fact that the Stason deal was inked for ~$16M in the interim.
2- My estimate last year of what I think a deal would be worth was between $79M to $137M in up front money, or up front & milestone payments with a 20% royalty. So, if management inks a deal greater than $35M or closer to $79M to $137M I would be somewhere between OK and delirious.”
That was then…
Cotara is now a small side show. It will happen when it happens. All eyes are firmly focused on the main event.
Bavituximab (Oncology) – THE BIG ENCHILADA©. It’s becoming very difficult to ignore the 800lb gorilla in the room. MOS for second line NSCLC is approaching or already surpassed a doubling of the SOC and “May not be reached for some time”. First line MOS not achieved yet. In the next few months (now until Dec.) preliminary data on pancreatic cancer trial will be released. Additional data from the ISTs in Prostate, HER-2 Breast, Liver and NSCLC (Bavi + PemCarbo) trials will be released.
Let’s stop there for on second…At this point it would appear that AA for second line NSCLC is a possibility. PIII for second line NSCLC is almost assured. AND…by the beginning of next year, with a fair amount of certainty, the concept that Dr. Thorpe put out over ten years ago, primarily, that anti-PS is a safe and BROAD-SPECTRUM anti-cancer Mab. is a reality…!!!
I’m beginning to swoon again…!!!
THE REWARD:
If Bavituximab proves to be the broad spectrum anti-cancer Mab that we hope it will be, and that reality sets into the minds of the investment community, and BP, OMG…!!!
Genetech was valued at $65B more or less, with drugs that have serious side effects and provide little improvement in overall survival…what if one Mab can beat the crap out of those statistics and in more indications…???
When will that happen…???
Well, it could take years (Call it 3-5 years from now to arrive at a ~90% certainty) to confirm.
Does BP want to wait for total confirmation before they make a play? NO, HELL NO!
Do I believe management when they say that there is a heightened interest in negotiations? YEP…
SO WHAT WILL A DEAL LOOK LIKE…???
I have no F**king idea.
But I find speculating irresistible…What are some of the options?
1- A buy out.
2- Partnering regionally 2 or 3 separate deals with different BPs.
3- Partnering regionally and keeping the U.S. market for our self.
4- Partnering with one BP with an eventual buy out.
1- A buy out. – This would be great for me as I would get my payoff sooner than later. At what price? Over $65B now…??? Not likely…Value at $65B in five years discounted back to today at 20% per year…??? That’s $21B…Hmmmmm….
2-4 – Any kind of partnering will require up front money, milestone payments and if marketed, royalties. In addition, there will most likely be stock issued to a partner or partners. The permeations and combinations are staggering. I don’t want to go there.
There are currently over 100M shares outstanding. At $21B, that’s nearly $210.00 per share. Likely…??? Maybe not, but why not…??? The $12B buy out price for a company with an HCV drug in PII…??? That’s nearly $120.00 per share. Likely…??? Maybe.
Much less than that, considering all the time I spent, would be very disappointing. (On a sliding scale…!!!)
Maybe old FROOT-LOOPS from the raging bull board was right…!!!
$153.00 a share…
Only 10 years too early…!!!
IN THE INTERIM…
What will keep the light on and progress going…???
The loan that PL talked about in the last CC, a loan against Avid’s revenue stream.
The important thing for me is determining whether the terms are favorable or not. In this area I have no expertise.
I thought that the $10M loan of a few years ago had very egregious terms.
So, again I turn to RRdog or anyone else with knowledge in this area, for information.
What terms would be good for PPHM?
What terms would make PPHM appear desperate?
What if the IB wants the IP as collateral?
What are the upside and downside of any terms?
Will the repayment terms of the loan create negotiation pressure on management?
Concluding a loan agreement will certainly remove pressure in the short term.
Enough for now…I have to check my tomatoes.
Regards
Golfho
“Golfo awhile back you posted #73105
how do you feel looking back on that assessment now?”
On March 4th I posted, post # 76077…As a starter I suggest you read that first…To summarize…I’m pissed…
And…
Very anxious…
Why…???
Let’s start with Cotara…
Cotara is not the blessed child. But…At this point it should have gotten FDA approval.
Why not?
I wrote in post # 73105 the following:
“MILESTONES THAT I WILL USE TO JUDGE THE COMPANY AND MY INVESTMENT IN IT
1- The Cotara meeting with the FDA is very important…But what I expect to occur is a meeting with potential partner/partners soon after. Final negotiation will conclude with these possible outcomes:
a- Management walks away with no deal.
b- Some kind of agreement occurs where PPHM and a partner split the major remaining markets
c- Management seals a deal with a partner that includes upfront money, milestone payment and royalties.
If “a” occurs I will be pissed. If “b” occurs I could be anywhere between annoyed and happy. If “c” occurs I will judge it with the following criteria.
1- If the up front money is around $35M with a 20% royalty I would consider that some what of a capitulation. Why? Because that was the number that was floated by R&R in 2008. What ameliorates that to some degree is the fact that the Stason deal was inked for ~$16M in the interim.
2- My estimate last year of what I think a deal would be worth was between $79M to $137M in up front or, up front & milestone payments with a 20% royalty. So, if management inks a deal greater than $35M or closer to $79M to $137M I would be somewhere between OK and delirious.”
In my post # 76077 I wrote:
“I expected PPHM to have concluded the meetings with the FDA and have an agreed upon and approved Cotara PIII trial designed by NOW. That means today…Not tomorrow, next week, next month or the famous “Next few months”
This is my current assessment:
Cotara PIII clinical trial and partnering:
The original Cotara PIII clinical trial was approved by the FDA in 2001.
From the 12-13-01 PR
“The Phase III study will have an open-label, randomized design comparing Cotara (131I-chTNT-1/B MAb) and temozolomide in patients with recurrent GBM. Approximately 400 patients will be treated in the study upon first recurrence of GBM after receiving primary treatment for their disease. Peregrine plans to conduct the study in the United States, Canada and Europe.
The objective of the study is to compare patients with recurrent GBM treated with 131I-chTNT-1/B monoclonal antibody to those treated with temozolomide. Patients in the Cotara arm of the study will receive up to two doses of the drug administered via interstitial catheters over a 25-hour period.
The dose will be calculated by measuring the size of the tumor using standard gadolinium enhancing tumor volume (GETV). Patients who receive temozolomide will receive the drug in accordance with the package insert. The company expects enrollment to occur over 24 months.”
I can only conclude that PPHM went to the FDA in 2011with a very similar package. I can reasonably assume that the personnel, philosophy and a whole host of other issues including SOC to go against, have changed since 2001.
So what can be the issues?
1- In my opinion getting an SPA is paramount and management is trying their best to get it.
2- Does the SOC now include Avastin?
3- Will the trial require going against other treatments that are currently being used such as surgery and radiation?
Who knows what the issues are?
What ever form the final agreement takes the obvious result is delay in approval.
The above micro issues are not important; for the investor it’s the macro issue of when will a money deal be struck. Every day that goes by without a deal being made, bleeds us a little more.
If we all know that, then, so does any potential partner. It is not in their best interest to speed things up or quickly conclude negotiations after FDA approval.
The pressure is on management, not on any potential partner.”
Over the last few weeks my mind has been swirling with speculation...All of that speculation has been driven by emotion. Emotions are not what an investor should make a decision on.
Greed and Fear…Drives most retail investors’ decisions. Try as I might, I cannot find a quiet place in my mind to rationally think.
WHY THE COTARA DELAY…???
We had an approved PIII in 2001…We are now 9 months behind in approval and still not complete…WTF…???
Now the fear factor…That part of my brain that I normally control, where all of the Machiavellian thoughts stir, suddenly take over.
Is Dr. Garnick really a Trojan Horse? Was he sent by Roche to keep an eye on Bavituximab and slow down Cotara? Head of regulatory affairs, Guiding light in getting 17 other drugs through the FDA approval process…Yet can’t get Cotara with a previously approved PIII trial through the FDA after 9 months. Again…WTF.
In my December post (73105) I stated my OPINION that I though Cotara would be the first good partnering news. Imaging and viral would be further off…At that time I felt that these might be partnered in the later part of 2012. At this point I don’t know WTF to think.
The following is a restatement of parts of my December (Post 73105) with my current view:
“2- Bavituximab anti viral; some time in the January, February time frame we will get the results of the HCV trial. If at the minimum, they duplicate the efficacy of the Peg-I leg of the trial then Game On. Why? Because of the safety/tolerability factor. If the trail demonstrates better efficacy…All the better.
What I would hope to see is PPHM partnering the entire viral field. That’s a massive field and with the proof of concept provided by third parties (Gov’t & Duke). I am fairly confident that whoever partners with PPHM on the viral side will do quite well…Hell…Throw in the parasites as well.
What’s that worth? I have no idea. But currently the Peg-I market alone is worth ~$1.5B to $2.0B…”
As we all know by now the results were mediocre. Neither meat or milk. Does the fact that the viral indication was not a blockbuster kill Bavituximab viral? No…But it takes some of the glow away. Perhaps those people that are interested in Bavituximab may be interested in acquiring all of it and not just specific indications. In that case they will wait for the Bavituximab oncology results to mature…You got it…2013…!!!
“3- PGN635 for Imaging. It seems that management is starting to move this forward. I would like to thank RRdog for bringing up this issue on this board last summer. Because I have very little knowledge on the subject I have no milestones. So I will say simply that; I would like to see this partnered/licensed/sold in 2012.”
NO change in opinion.
“4- Biosimilars; There may still be legal issues with biosimilars that the FDA must sort through. I do not expect much from this effort yet.”
NO change in opinion.
“BAVITUXIMAB ONCOLOGY
What should happen in 2012…???
1- We will have the Front line NSCLC data
2- We will have the Second line NSCLC data unblinded in the first half of the year. Note that the all important MOS data may not be mature until after the end of the year…The later the better.
3- We should have some of the interim data from the IST’s during the year.
Conclusion:
We (PPHM) will know with a 90% certainty whether Bavituximab will be effective for NSCLC. We will have some indication as to whether Bavituximab demonstrates activity on some of the most difficult to treat cancers. When that becomes apparent; towards the end of 2012…I leave that to your imagination.”
1- Well we got the Front line NSCLC data for ORR and PFS. NOT blockbuster; but with the control arm outlier and difference in opinion on results…We got smacked. My note on MOS still stands.
Nothing new to comment on for points 2 & 3.
The liver cancer indication appears to be moving forward more quickly.
Conclusion remains the same. I would like to add to the science side assessment the following. I would like to thank the science guys for all of the informative posts over the last few months. I still take comfort in that fact that, on the science side Bavituximab has a statistical success rate approaching 66%. We will get a clearer picture very soon at AACR.
Now for the nightmare called “The Financing of this Enterprise”
In my March post I wrote:
“Finances:
This is where my hair and some flesh start flying…!!!
I agree with those people who have expressed the opinion that the outstanding share count will be in excess of 100M when announced this Friday.
I’ve revised my outlook accordingly. I also regret buying some trading shares over the last few months. It appears that there will be better buying opportunities shortly…!!!
More hair and flesh are flying at this moment.
The point I am trying to make here is that IMO a deal…any deal…for anything…will not occur for another six month to a year.
And to RRdogs’ point. Without a non-ATM source of money; at these current levels we will be near…”
It behooves every investor to write to IR on Monday and demand an explanation as to why Paul Lytle cannot find better ways to finance the company and what is his rationale for selling nearly 25% of the company at or near all time lows over the last 6 months?
Risk assessment:
I suggest that you re-read that section in my 73105 post. I concluded then, that the company’s chance of suggest was approx. 33% and therefore an investors chance of success was about the same…Well not so; in reality it’s at what price you bought at that determines success or failure. I have my core holdings and I bought, for me a very large trading position over the last six months. I bought that trading position in anticipation of good financial news by now. My expectations were that NOW we would be trading in the $5.00 to $10.00 range. NOT AT $0.57. My emotions are clouding my thought. Not a good thing in investing or poker. My risk assessment for me has gone up significantly. I’ve downgraded Management skills, Partnering prospects and financial capability. My risks have gone up significantly. I will not average down any longer. My last purchase was at $0.59. I am done buying.
My last suggestion to every long on this board is; if the science is successful but we long time investors get screwed, we hire one of those lawyers someone posted about last year and start a class actions lawsuit. I for one will spend the rest of my life making sure that they get no pleasure from their ill gotten gains.
Loof…I need more of your stuff…To wash down the Valiums…
Regards
Golfho
Hi drubstick57
I'm in the middle of re-assessing everything. I'll need a few days...I have other thing on my plate.
Golfho
Hi CP;
And thanks for your reply and concern about my current appearance.
As Cheynew already pointed out at the last CC the outstanding share count was at 87M
From the 10-Q “As of October 31, 2011, there were 82,638,201 shares of our common stock outstanding” and “Subsequent to October 31, 2011 and through December 9, 2011, we issued an aggregate of 4,150,616 shares of common stock” That brings us to $86.78M. I assume a $9M average quarterly burn rate which brings us to…more or less…$96M. I also consider the possibility that management may want to increase the cash reserve based on the delayed FDA approval.
My assessment and milestones for PPHM in 2012 set the FDA PIII approval and partnering deal to be concluded by NOW…It could be delay for another 3 to 6 months, no one really knows. In truth it could be tomorrow or next year. In my December projections for PPHM I assumed a partnership for Cotara would have been completed. I assume that that partnership would have provided enough up front money to turn off the ATM for the remainder of the year. If a viral or imaging partnership occurred in the first half of this year that would be added gravy. But I don’t see anything like that occurring in the next 3 or 4 months…We will see.
If your BK is bankruptcy I agree with you 100% I do not see that in the future. I did not mean to imply that in my post. It is the share price erosion that I am concerned with in the short to mid term.
I am not concerned with PPHM’s ability to raise money. It’s at what cost. They have enough on the shelf to carry us until the end of next fiscal year (3-31-13)
From the last CC “As of December 9, 2011, additional shares of our common stock for aggregate gross proceeds of up to $50,868,000 remained available under two effective shelf registration statements.”
The question is…How many shares do we need to sell in order to raise that amount of money? Right now ~50M…
As far as the delisting issue goes…I’m not concerned. My concern is centered on the next 3 to 6 months. Without a Cotara, viral or imaging contract the only source of revenue is the ATM. The next 3 to 9 months could be very painful to watch…
It reference to Avid revenue. I remember someone in management stating that Avids’ margin was improving to ~30%. PPHM’s burn rate is ~ $36M. In order to support PPHM Avid would have to generate ~$120M of revenue annually to cover that burn rate. Please note that Avids’ best two revenue years were 2009 & 2010 at ~ $13M annually…That implies a tenfold increase in revenue…
A few years ago management stated that running all out; the current facility could be capable of generating ~$50M in revenue. Anything more would require building out into the adjacent space. That will take time and money. In my view nothing dramatic will occur in the next 3 to 9 months.
That's it for now…I must run out and get some soothing ointment
Regards
golfho
Good grief...
More hair and flesh are flying...!!!
Anything can happen...But that process will take at least six months
Lets hope it doesn't come to that
Regards
golfho
No...
We still have approx. 200M authorized shares left to play with...
I'm concerned with the relentless downward pressure the ATM is providing.
Regards
Golfho
My neighbor has a dog…It’s very sweet…unfortunately…It has anxiety issues.
When it has an episode…It starts to chew its hair off…
It now looks like a dog with mange…
You know…
Bald spots and bloody scabs…
I’m starting to look like my neighbors dog…!!!
OK…
Time for some rational thinking…And reassessment…!!!
My involvement with PPHM has taught me…If nothing else…To NOT have high expectations of any rapid success.
I expected PPHM to have concluded the meetings with the FDA and have an agreed upon and approved Cotara PIII trial designed by NOW. That means today…Not tomorrow, next week, next month or the famous “Next few months”
This is my current assessment:
Cotara PIII clinical trial and partnering:
The original Cotara PIII clinical trial was approved by the FDA in 2001.
From the 12-13-01 PR
“The Phase III study will have an open-label, randomized design comparing Cotara (131I-chTNT-1/B MAb) and temozolomide in patients with recurrent GBM. Approximately 400 patients will be treated in the study upon first recurrence of GBM after receiving primary treatment for their disease. Peregrine plans to conduct the study in the United States, Canada and Europe.
The objective of the study is to compare patients with recurrent GBM treated with 131I-chTNT-1/B monoclonal antibody to those treated with temozolomide. Patients in the Cotara arm of the study will receive up to two doses of the drug administered via interstitial catheters over a 25-hour period.
The dose will be calculated by measuring the size of the tumor using standard gadolinium enhancing tumor volume (GETV). Patients who receive temozolomide will receive the drug in accordance with the package insert. The company expects enrollment to occur over 24 months.”
I can only conclude that PPHM went to the FDA in 2011with a very similar package. I can reasonably assume that the personal, philosophy and a whole host of other issues including SOC to go against, has changed since 2001.
So what can be the issues?
1- In my opinion getting an SPA is paramount and management is trying their best to get it.
2- Does the SOC now include Avastin?
3- Will the trial require going against other treatments that are currently being used such as surgery and radiation?
Who knows what the issues are?
What ever form the final agreement takes the obvious result is delay in approval.
The above micro issues are not important; for the investor it’s the macro issue of when will a money deal be struck. Every day that goes by without a deal being made, bleeds us a little more.
If we all know that then so does any potential partner. It is not in their best interest to speed things up or quickly conclude negotiations after FDA approval.
The pressure is on management, not on any potential partner.
Other potential partnering opportunities:
Viral:
After the not so impressive preliminary HCV trial results; any potential partner or “outsourcer” will probably be thinking that…Well it’s interesting stuff, it’s safer than interferon and the data implied that bavi was working better towards the end of the trial…But there so many unanswered questions…Lets revisit this next year…Besides…They may be more desperate then.
Imaging:
Dr. Thorpe and management have just started to really talk this up. Before the recent presentations it was on the backburner. In any case I don’t see anything happening in this area in the next 6 months to a year.
Bavituximab oncology:
Very important data will be dribbling out throughout this year. IMO BP will want to see the complete and final data on all indications before seriously considering making an offer. That data will not be complete until the end of 2012 to mid 2013
Finances:
This is where my hair and some flesh start flying…!!!
I agree with those people who have expressed the opinion that the outstanding share count will be in excess of 100M when announced this Friday.
I’ve revised my outlook accordingly. I also regret buying some trading shares over the last few months. It appears that there will be better buying opportunities shortly…!!!
More hair and flesh are flying at this moment.
The point I am trying to make here is that IMO a deal…any deal…for anything…will not occur for another six month to a year.
And to RRdogs’ point. Without a non-ATM source of money; at these current levels we will be near…
Regards
Golfho
BRAVO...
Regards
Golfo
Sniff…Sniff…
I’m beginning to smell it…
Hmmmmmmm…..
Damn…
I can almost taste it…!!!
What…???
The BIG ENCHILADA…!!!
OK…I’ll get a little more serious.
I decided to revisit my odds calculation because it hasn’t been reviewed in over a year.
I purchased my first shares of PPHM when Cotara appeared to be heading towards a PIII or accelerated approval. That had a set back but when the new management brought in Bavituximab, I thought that the promise of a “One drug, many bugs” concept was worth a gamble. That decision was somewhat of a snap decision. After a while I decided that; 1- I really needed to seriously evaluate this proposition and; 2- Make a decision to hang in or bail out.
That led me to make two assessments; a risk assessment and a reward assessment. The risk represents the odds of success and the reward represents the amount of money that can be gained.
I’ve posted these assessments on this board over the last few years. Partly because I needed a reality check for myself and I needed feed back. Did I miss something really huge or err in some profound way?
End of the day…I don’t think I’m too far off.
Now for an update:
My last risk assessment (Late 2009 – Early 2010) concluded that PPHM had a 1 in 20 chance of success. The factors I considered at that time were:
1- The historical statistical success rate for all drugs that completed a PII clinical trial and successfully completed a PIII trial. (A 33% failure rate)
2- An arbitrary percentage assigned to partnering prospects.
3- An arbitrary percentage assigned to management skills.
4- An arbitrary percentage assigned to the financial impact to the reverse split.
And the formula looked like this:
66% (New Statistical number)* 25% (number assigned to partnering prospects)* 60% (weighted management skills)* 50% (Reverse split impact) yielding a potential success ratio of:
(0.66)*(0.25)*(0.60)*(0.50) = 0.0495
A nearly 1 in 20 chance of success.
I also suggested in my post that anyone could substitute or add factors as they chose to arrive at their own risk factor.
Drum roll please…
NEW RISK ASSESSMENT FOR 2012:
The Factors:
1- Statistical success rate. My last assessment addressed the statistical success rate for a single clinical trial. We now have Cotara at a stage where accelerated approval (It can be marketed) while the PIII trial is being conducted is a possibility. We will know soon. More on that later. In addition we have completed a randomized HCV clinical trial and NSCLC trial; results will be out soon. Finally management has brought forward Bavituximab’s enhanced imaging capability to the front burner. From information posted on this board it appears that FDA approval for imagine is an easier path than drug approval. Dr Thorpe recently presented some pretty compelling pictures of mice tumors.
Conclusions for “statistical success rate” is that it remains at ~66%
Rationale: Cotara is at 66%. The HCV & NSCLC trials are a non factor until data is released. They will either go to 66% if successful or remain a non factor. Imaging is a little different. PS targeting antibodies work well in mice. It should work in all mammals. The issue in human trails will be safety and tolerability. That implies that imaging will be either 100% or a non factor.
2- Partnering prospects. My last assessment was somewhat pessimistic at 25% probability. Management has stated several times that their goal is to partner certain indication after successful completion of their PII trails.
Conclusions: This is an arbitrarily selected number; I feel that the partnering prospects have improved significantly…60%...???
3- Management skills. The addition of Dr. Garnick & other top level (A team) personnel has, in my opinion added quality to management.
Conclusion: This is another arbitrarily selected number. It was 60% (Marginally passing or failing) I now move that up to A-team status…90%.
4- Financial impact of the reverse split…or…more properly put in today’s context…Financial capability. Does the company have the financial capability to successfully complete clinical trials to the point that they can conclude a partnering contract that will satisfy management?
Conclusion: With around 220 millions authorized shares still in the bank I see NO financial issue that can prevent the company from arriving at a partnering point. I now consider this a near certainty…90%.
Warning to investors that bought early…Hold on to your panties…Average down.
The formula now looks like this:
66% (Statistical number)* 60% (number assigned to partnering prospects)* 90% (weighted management skills)* 90% (Financial capability) yielding a potential success ratio of:
(0.66)*(0.60)*(0.90)*(0.90) = 0.32076
A nearly 1 in 3 chance of success.
Let me say that again…
A NEARLY 1 IN 3 CHANCE OF SUCCESS
So, from ~2004 to late 2009 we’ve gone from a 1 in 100 to a 1 in 20 chance of success. And from late 2009 to today we’ve gone from a 1 in 20 to a 1 in 3 chance success.
For most of the time between 2004 and late 2009 the market cap of the company was in the range of $140M to $270M. Today it’s ~$80M…THAT’S A TOTAL DISCONNECT…!!! The company is worth less with less risk than it was when there was more risk.
RRdog made the equivalent statement a while back. Conclusion…”Buying opportunity”
A simple observation on the financial markets…As they exist today.
Axiom#1- Nobody makes money when the price of something remains the same.
Axiom#2- Money managers/market makers will make the price go up and down independent of technical or fundamental realities.
Reality check#1- The current share price in no way reflects the value of this enterprise at this stage. Past dilution and future dilution alone, cannot account for the depressed share price. What can?...Axiom#1 & 2…!!!
Reality check#2- The 3 signal seeking PII trial demonstrated continued safety and better efficacy than SOC; and soon the 4 randomize PII trials may confirm that to a near 90% certainty.
Reality check#3- This whole enterprise can go to crap in a hand basket.
All of this will become crystal clear by the end of 2012.
In my previous assessment I calculated the potential reward this proposition could provide. You can re-read it if you chose. The conclusion was arrived at using only Cotara & NSCLC as the drivers. We all pondered the possibility that Bavituximab could be a player in many solid tumor types. When I asked for input from other poster RRdog responded with (Paraphrased here) We have not performed a detail analysis; it may be to early…But it’s something between zero and a whole bunch of money.
So I’ll go with that as well; suffice to say the potential enterprise value could be in the BILLIONS…Far less brain work and to the point.
MILESTONES THAT I WILL USE TO JUDGE THE COMPANY AND MY INVESTMENT IN IT
1- The Cotara meeting with the FDA is very important…But what I expect to occur is a meeting with potential partner/partners soon after. Final negotiation will conclude with these possible outcomes:
a- Management walks away with no deal.
b- Some kind of agreement occurs where PPHM and a partner split the major remaining markets
c- Management seals a deal with a partner that includes upfront money, milestone payment and royalties.
If “a” occurs I will be pissed. If “b” occurs I could be anywhere between annoyed and happy. If “c” occurs I will judge it with the following criteria.
1- If the up front money is around $35M with a 20% royalty I would consider that some what of a capitulation. Why? Because that was the number that was floated by R&R in 2008. What ameliorates that to some degree is the fact that the Stason deal was inked for ~$16M in the interim.
2- My estimate last year of what I think a deal would be worth was between $79M to $137M in up front or, up front & milestone payments with a 20% royalty. So, if management inks a deal greater than $35M or closer to $79M to $137M I would be somewhere between OK and delirious.
Before I go on I will say this one last time:
Everything that I have put forward has been working under the assumption that there is a very good possibility that this enterprise can be an utter failure, a 33% chance of success or a 2 out of 3 chance of failure. Going forward I will only address the success path. If any poster chooses to point out the obvious “Yea but this could also fail”…I will hunt you down and deliver a very crisp Greek “Fappa” to the back of your head.
2- Bavituximab anti viral; some time in the January, February time frame we will get the results of the HCV trial. If at the minimum, they duplicate the efficacy of the Peg-I leg of the trial then Game On. Why? Because of the safety/tolerability factor. If the trail demonstrates better efficacy…All the better.
What I would hope to see is PPHM partnering the entire viral field. That’s a massive field and with the proof of concept provided by third parties (Gov’t & Duke). I am fairly confident that whoever partners with PPHM on the viral side will do quite well…Hell…Throw in the parasites as well.
What’s that worth? I have no idea. But currently the Peg-I market alone is worth ~$1.5B to $2.0B…
3- PGN635 for Imaging. It seems that management is starting to move this forward. I would like to thank RRdog for bringing up this issue on this board last summer. Because I have very little knowledge on the subject I have no milestones. So I will say simply that; I would like to see this partnered/licensed/sold in 2012.
4- Biosimilars; There may still be legal issues with biosimilars that the FDA must sort through. I do not expect much from this effort yet.
I’m beginning to shiver again…!!!
BAVITUXIMAB ONCOLOGY
What should happen in 2012…???
1- We will have the Front line NSCLC data
2- We will have the Second line NSCLC data unblinded in the first half of the year. Note that the all important MOS data may not be mature until after the end of the year…The later the better.
3- We should have some of the interim data from the IST’s during the year.
Conclusion:
We (PPHM) will know with a 90% certainty whether Bavituximab will be effective for NSCLC. We will have some indication as to whether Bavituximab demonstrates activity on some of the most difficult to treat cancers. When that becomes apparent; towards the end of 2012…I leave that to your imagination.
I wish everyone on this board a very happy and healthy Holiday Season. Even though this is an anonymous board; personalities shine through. Perhaps next year will be a great year and we can get together and put faces to all of the monikers
Regards
Golfho
Thanks jonnyrocket and the others who responded to my post.
1- Yes Billions not Millions…Between not enough coffee and to much wine lies a very narrow widow of clarity. Thanks dia76ca.
2- Thanks Karkonos for the lump sum definition.
3- From jonny’s post:
“Not too sure if PPHM gets a big lump sum for Cotara above $35M - I just don't see them negotiating from a level of strength, and based on their 2 prior deals with Stason and for R84”
My SWAG (Scientific Wild Ass Guess) was just that…A SWAG. My belief has been that PPHM rejected the R & R $30M plus $5M in 2007 thinking that they could command a greater price after the complete PII trial results and after the meeting with the FDA in the next month or two. I would like to note that the Stason deal for ~$16M in milestone payments and “lower double digit” royalty is half of the amount R & R floated for the smallest one third of the global pie. My estimate was for the simple partnership value that would sound something like this: We’ll give you (PPHM) X amount of dollars and X% of future sales; We get the USA & EU. If we get less than that, in anyone of 50 different ways to structure a deal I would not be surprised…But I would be disappointed…!!!
P.S. Mary Boyd has been pounded on the board for some time…And I must say…Some of the “Hit the road running” jokes were very funny. I suspect that she put the Stason deal together.
OK…
P.S.S. With reference to “not negotiating from a level of strength” (Please note that the following was said with tongue in cheek) I think that they are in a very strong negotiating position. Management has all the time in the world and all the money they need (Nearly 250M shares still on the shelf).
Regards
Golfho
I would like to briefly interrupt the constant bitching, moaning, ranting and raving, bleating and expressions of frustration, anger and other negative emotions that I have been reading on this board over the last few months to review the progress PPHM has made to date, the events I expect to see occur over the next six to nine months, a clearer picture of our financial landscape today and going forward.
Financing and the stock price:
Up until the end of the fiscal year my projections for the burn rate and ATM sales were very much on track. In July when they reported the results (See my mid-year assessment sniped below) things started to diverge. In spite of the fact that they reported ~$5M in revenue from Avid for the first quarter, the ATM continued at a blistering pace…??? Why? I first thought that the additional cost might be associated with the cost of so many additional trial sites. That still may have been a contributing factor. And then ~9% of the company was sold for ~$6.5M…WTF??? The recent discussion on this board about the possible Avid expansion strikes me as very plausible. Management has not spoken about Avid recently, other than upping the revenue projects to ~$10M to $12M. Regardless of the method i.e. increased CMO revenue, Biosimulars, partial sale of Avid; increased revenue/capital is in our future. My guess…6 – 9 months from now.
This is from my mid-year assessment.
“Last quarters operating costs (Burn rate) were approaching ~$8M. With all of the irons that PPHM has in the fire, I cannot see that going down. As a matter of fact I see the potential for the burn rate to go up.
With a burn rate in the $8-9M range for the last quarter I assume that that money was raised in March and April. With an average share price of $2.27 for March and $2.51 for April they could have sold between 3.5M – 4.0M shares. That would leave ~$24M as a cash reserve at the start of this new fiscal year and outstanding shares of about 71.4M to 71.9M.
With an annual burn rate in the range of ~$32M to ~$36M and my projected cash reserve of ~$24M at the start of the year I suspect that the “Going concern” clause will be with us again. What could change that? There could be signed contracts with projected timetables and payment schedules that could impact the clause in a positive way.”
Data from the 10K:
Burn rate for the fourth quarter was $8,961,000
As of 4-30-11 there were 69,837,142 shares outstanding. +1,951,331
In addition, the 10K states: “Number of shares of Common Stock outstanding as of July 8, 2011: 71,069,858”
Cotara:
There is NO doubt in my mind that management will do everything it can to close a deal for Cotara. I speculated on what I thought a deal would be worth in my beginning of the year analysis that I posted in January, sniped below:
My SWAG…Trial cost ($24M to $37M) + Prior development cost ($20M to $30M…???) + Lump sum ($35M to $70M…???) = $79M to $137M
The above was for both the E.U. & USA markets. There are several scenarios that can come into play; including PPHM keeps the USA market for itself and partners E.U. or Partners All…PPHM goes it alone…or nothing…!!!
BAVITUXIMAB (Viral):
In my earlier assessment I did not consider Bavituximab viral beyond the government contract; however I now believe that the viral indication could be licensed before the oncology indications. I think that the plan is to replace peg-interferon in the current HCV cocktail. In 2010 world wide sales for peg-interferon were ~$2.4M…Hmmmmm… ~$1.6M of that was Roche’s…More Hmmmmm…
BAVITUXIMAB (NSCLC):
According to management we should have data from the two trials by mid-year 2012. Will someone start nibbling before then…???
My personal financial plan…I will continue to buy on these dips and continue to sell half of my trading shares on the pops. That allows me to slowly increase my long position with shares at a zero cost basis.
I hate two things…The shorts that are driving this stock down and waiting…!!!
Regards
Golfho
Hi CP…
My January analysis addressed this. I intend to review and if necessary revise.
Albeit...
With apologies...
In my own sweet time…!!!
Regards
Golfho
Well…
Here we are, three months after the close of the fiscal year and slightly passed the middle of the calendar year. It’s time for a look back and a look forward.
THE SCIENCE:
The Bavituximab Juggernaut is moving along; Dr Thorpe’s presentation in Barcelona has stated to the world, what many on this board have hoped for, for many years. Bavituximab has the potential to be the drug discovery of the century. As someone stated earlier…It’s like the old BASF commercial…We don’t make the things you use…We make the things you use better.
Over the last eight years Bavituximab has gone from and interesting pre-clinical Mab to a Mab that is now being clinically tested for multiple indication in oncology and viral. I was disappointed that there was be no Bavituximab updated data at ASCO this year.
Cotara in my view, is currently in the spiffing-up stage…Spot light on…A little dab of make-up…In…Three…Two…One…Action…(Action takes place in the beginning of next year)
FINANCE:
I tried to post charts from Excel. These charts were from Yahoo Finance and were the monthly summary of shares sold, volume, high, low and closing price…After the forth attempt I gave up. Perhaps someone with more knowledge will take the time to enlighten me. If you choose to you can verify the numbers on Yahoo.
The ATM….
If the charts were available the following would be a bit clearer…My apologies.
Some simple math…
If the company sold ~1M shares in February with ~7.2M shares traded that month…Some simple extrapolation produces…
For March:
The potential low and high, number of shares sold, are…ZERO to ~2.2M shares.
For April:
The potential low and high, number of shares sold, are…ZERO to ~4.8M shares.
I added the data for May so that I could compare volume and price.
For May:
With only 6.9M shares sold at an average price of $2.23 and total aggregate cost of ~ $15.5 M…I assume no shares were sold from the ATM in May.
There is no way to determine the cash needs on a monthly basis…I doubt that even management could be certain beyond a few months.
The things that can impact the amount of shares sold through the ATM are real revenue sources such as royalties, milestone payments & Avis revenue; on the other side, additional payments may become due to vendors, collaborators, etc. In that regard I think that PPHM has received from Affitech the $1M milestone payment. Though I don’t think it arrived until after FYE. On the other side when the TMTI contract was not continued PPHM was required to put aside ~$3M for the loan repayment. This reserve is reduced every month as payments are made but I assume it reduced available operating capital by that same amount.
It was posted on this board a while back that the analyst consensus on revenue was $12.4M. That surprised me at the time. My recollection was that Steve Kings’ guidance during the third quarter CC was in the range of ~$8M to $10M. The issue was a manufacturing/processing problem at Avid (Hic-cup #2) to the tune of ~$2M. I’m very interested in where the $2M difference is; is it the lost revenue from Avid that was salvaged prior to 4-30-11? Is it additional sources? Or is it a case of “Who’s On First” with Abbott & Costello being replaced by management & the analysts?
Last quarters operating costs were approaching ~$8M. With all of the irons that PPHM has in the fire, I cannot see that going down. As a matter of fact I see the potential for the burn rate to go up.
Now for my SWAG’s (Scientific Wild Ass Guess’s) I cannot; under the penalty of death reveal this process…However I can state that it involves some rattling of bones and waving of chicken claws…(Please note: NO CHICKENS WERE ACTUALLY HARMED DURING THIS PROCESS)
With a burn rate in the $8-9M range for the last quarter I assume that that money was raised in March and April. With an average share price of $2.27 for March and $2.51 for April they could have sold between 3.5M – 4.0M shares. That would leave ~$24M as a cash reserve at the start of this new fiscal year and outstanding shares of about 71.4M to 71.9M.
With an annual burn rate in the range of ~$32M to ~$36M and my projected cash reserve of ~$24M at the start of the year I suspect that the “Going concern” clause will be with us again. What could change that? There could be signed contracts with projected timetables and payment schedules that could impact the clause in a positive way.
LOOKING FORWARD…
I would like to first, respond to a post (#62696) from RRdog.
“Seeking an opinion from FF, CJ, WH (three board contributors who seem particularly tuned in to the science).
Having studied the latest round of science carefully I come to the following conclusions:
1. Cotara seems to be somewhere between equal to and about 50% better than short term efficacy in existing SOC.
2. Cotara seems to be considerably better than SOC re longer term efficacy.
3. Cotara seems to be accompanied by fewer AEs and side effects than SOC.
4. Cotara seems to present a good alternative MOA to SOC .
5. As currently posited Cotara single dose appears to offer some benefits as to method of treatment, time, and cost compared to SOC.
6. Cotara might appear additionally attractive to BP (and perhaps the FDA as well) in combos and in future testing against non relapsed patient population.
Do you agree in general with this assessment and do you think the science is strong enough for the FDA to move forward with Cotara into a phase III as an alternate mode of treatment for this deadly disease? More specifically, do you think the science is strong enough for the FDA to move to any kind of SPA, AA, or simultaneous phase III plus commercial usage??
IMHO…I think that your assessment of the science and my assessment are very similar; and yes, I think that the science is strong enough for the FDA to move forward into PIII. SPA or AA…I give it a 50 – 50 chance.
”How committed are you to your answer? Leaving Bavi aside and focusing on Cotara alone, if you were able to, would you double or triple your position in PPHM into this slow time period before Cotara meets with the FDA?”
I never give stock advice…PPHM cured me of that…!!! However I will tell you what I have been doing. I’ve been buying small lots over the past few weeks and will sell half in the next run-up on any doubling of the buy price. There’s nothing like accumulating free shares.
”Further conclusions:
1. Though I don't think PPHM would take the FDA for granted or assume anything, I do believe they are in close and fairly constant contact with the FDA and have developed the Cotara MOA to conform to FDA ideas for alternative treatment to SOC in brain cancer (Glio).
2. PPHM itself seems to be extremely confident in their approach to the FDA.
3. PPHM with their personnel beef up in this area seems to be sending BP a message (and unintentionally sending a message to their shareholders) that they do not intend to sell this product cheaply and are prepared to go it alone if they can not get their price.
4. Furthermore PPHM may be sending BP a message that they intend to keep the manufacturing of Cotara for themselves.
Do you agree in general with this set of conclusions??”
EVERYONE ON THE BOARD SHOULD READ OUT LOUD #3…OVER AND OVER AGAIN…!!!
I made a very similar statement in one of my earlier assessments. The analogy is: Management is compelled to play poker with an open hand. They cannot bluff pocket aces…everyone at the table knows the hand they have…And they have the following hand…With the ATM in place and all of those shares on the shelf, they have the financing. After the meeting with the FDA this winter they will have the roadmap and a good idea of cost. Remember…They need to sell this to a few hundred surgeons NOT a few thousand oncologists. I will stick to the conclusions I made in January…Management would prefer to partner Cotara with a EU and a US partner, and if not…They’ll go it alone.
”Do you think the science is strong enough yet for PPHM to reach a satisfactory deal for Cotara prior to an FDA phase III ruling??”
NO…That is; no deal prior to the FDA roadmap.
“ What probability 0-100% would you give PPHM of reaching a global or regional partnership prior to an actual FDA phase III ruling?”
Less than 10%
‘ Would such a deal carry enough front money to negate ATM usage and or the going concern letter? Ditto on the same set of questions "after" a positive FDA phase III ruling?”
My January analysis (SWAG) was ~$79M to $137M in upfront money and a 20% royalty on future sales. Anything in the $35M range for upfront money would be a management capitulation.
”What percent chance do you think there is of PPHM moving up the date on FDA Cotara meeting?”
Less than 5%
Now RRdog I would like to ask you for a big favor.
You wrote in post 62822
“Close your eyes and imagine PPHM brought a first class investment banker on the board from a firm that had real buy side clout, a strong trading/market making desk, and a strong biotech analyst. Further imagine that PPHM allowed that bank to buy a modest amount of stock from the ATM for their private equity account. Keep your eyes closed and further imagine we give this bank modest amounts of five year wts all the way up to $7.50/ share against a subset of modest milestones. (read that as research reports, market making, etc. ) Further imagine we give this bank a balloon load of wts above $7.50 if they get off a secondary for the company between $7.50-$10/ share for $150mm. Let all those wts carry a "right of registration" if said secondary is enacted and of course they get paid for the secondary. Now all the incentives are in the right place. Remember wts are only exercised if the price is above their strike and represent additional capital placed directly on PPHM balance sheet.”
Now RRdog…Close your eyes and imagine that you are speaking to your 10 year old son. He’s a bright kid with a lot of promise. He has a natural curiosity for all things. He saw you reading the Wall Street Journal. He picked up a discarded page and started to read the words above and asked…How does this banking thing work? Who gets how much and for what? What’s a modest amount of stock? What’s a private equity account? What’s a secondary?
Regards
Golfgo
Some times...
When there is nothing to say...
Hi Mojo
I truly was not aware of many miscues. Can you annotate them? Thanks in advance.
Regards
Golfho
For the record…
In reference to the “Going Concern” clause:
The following is a compilation of FACTS.
1- Years that PPHM declared in their 10-K a “Going Concern”:
2001 - NO
2002 - NO
2003 - YES
2004 - NO
2005 - NO
2006 - NO
2007 - NO
2008 - YES
2009 - YES
2010 - YES
2- POINT:
a- Four out of the last ten years the auditors stated that the company did not have sufficient fund to operate for a year.
b- The company is still operating…!!!
c- NO time during that decade did the company have anything resembling “Revenue”
d- From 2001 to 2009 the institutional ownership remained around 3-4%
e- In the last year plus…Institutional ownership increased to ~20%...With a “Going Concern” clause in place.
f- After a full decade of on and off “Going Concern” clauses…How significant is that…???
RRdog…
You amaze me with your “Clarity of Thought & Precision of Thinking” (Phrase copyrighted…All Rights Relinquished)
One of your important points:
“IMO it's time to stop worrying so much about relatively unimportant issues and how annoying mgmt and BOD have been and instead----- start focusing on really making money between now and the end of calendar 2011.”
I think that you are spot on in reference to “unimportant issues”, and I agree…There will be several opportunities to “make money between now and the end of calendar 2011.”
In reference to:
“Based solely on Cotara obtaining a phase III green light with clearly delineated pathway/ SPA status/ and or "conditional marketing" status, then IMHO would value PPHM at 800mm with a market cap trading somewhere between 50-100% of that number (somewhat higher if PPHM gets SPA). In addition I would be looking for domestic or foreign partners and non share dilutive front funding. 400mm - 800mm market cap equates to roughly $6.15 - $12.30/ share IMO only by end of year.”
Your numbers seem to align well with the estimates from the three analysts ($10.00-$10.00-$5.00). My gut feeling is that these numbers are achievable. Your PPS appears to assume a “Number of shares outstanding” of ~65M. There’s no doubt that the ATM will be active until another source of capital is available. IMO management will be prudent in this respect and does not appear to be too concerned about the “Going Concern” clause. If there is a deal struck by late 2011 there would not be a need to raise money before 4-31-11 to eliminate the clause.
Jackdogman…
I am pleading with you…
Please…Please…Please…
Enough of this “Cheap options” drone
EVERYONE on this board understands your position.
EVERYONE understands your opinion of the BOD
Saying it every day provides no new insight into anything. WE GET IT…!!!
Your best posts over the years have been ones that provide information. Opinions are a vital part of our discussion of PPHM as well…It’s just not necessary to express it daily.
Moderators:
If this does not constitute “Repetitive Post” what does?
In reference to the discussion on clinical trial location; I would think that the issue will be discussed at length during the meetings with the FDA later this year. My gut says that there will be multiple sites; some in India and some in the USA.
Regards
Golfho
FWIW...
You are correct in that, there has been analyst coverage for over a year...But...
The article got the facts wrong...
Three analysts (Right) Average (Wrong) Should be (10+5+10)/3 = 8.33
...8-6-10: Bavituximab listed #8 in EP-Vantage’s ‘Biggest Unpartnered Pipeline Assets’ chart, with NPV=$1.022b: http://tinyurl.com/34lpt5j
...7-15-10 Roth Capital (Joe Pantginis) inititates PPHM as Buy, target=$10: http://tinyurl.com/3xmdgdv
......1-5-11 J.Pantginis reiterates PPHM Buy (“PPHM poised to rebound in 2011”), maintains target=$10: http://tinyurl.com/39gq4kh
...…3-14-11 J.Pantginis reiterates Buy/Tar=$10 on PPHM (EPS Est. FY11/-.53, FY12/-.48): http://tinyurl.com/6fdznbm
…4-14-10 LifeTech-Cap. (S.Dunn/W.Dawson) initiates: Strong-Spec-Buy, target=$8: http://tinyurl.com/y4cqjyg
......7-19-10 LifeTech reiterates Strong-Spec-Buy, lowers target $8=>$5 http://tinyurl.com/3kmb9an
……12-14-10 LifeTech reiterates Strong-Spec-Buy, maintains target=$5: http://tinyurl.com/2wey69r
......4-1-11 LifeTech reiterates Strong-Spec-Buy, maintains target=$5: http://tinyurl.com/3q8sjkq
......Lifetech Disclosures: All NO’s except: “Does the Firm expect to receive/intend to seek IB compensation in next 3mos?” => YES
…2-8-10 MLV (George B. Zavoico) initiates: BUY, target=$10: http://tinyurl.com/yech7gz
......6-22-10 Form 424B, New $15mm ATM Sales Agreement with IB’er MLV: http://tinyurl.com/37xhrjb
......10-18-10 Per AANI-Bull #57493, MLV reiterates Buy with Target=$10: http://tinyurl.com/2uo6nnd
…...12-29-10 New ATM Agreement (up to $75mm) with MLV, Form8K: http://tinyurl.com/2a6w76g
Regards
Golfho
Sorry Folks...
It seems that cj covered the MLV issue
Regards
Golfho
biopharm...
LifeTecCap initiated their coverage in April 2010 with a target price of $8.00. They then revised their target price to $5.00
in their July 2010 update. Their target time frame in April 2010 was 12 to 18 months...That would have brought us to April 2011 (NOW) to October 2011. They have not changed their time frame in any of their updates. They also missed the change in management.
FWIW I generally suspect everyone's motives...!!!
Perhaps...
Someone should tell them that "Marvin R. Garovoy, MD, Head of Clinical Science" Is no longer correct...!!!
Regards
Golfho
Hi All;
I arrived home on Thursday evening from Florida…I am now sitting at my computer with flu like symptoms…And thinking…I came back to soon…!!!
When I have little to do my mind starts to wander…
Hmmmm….
PPHM fiscal year ends in 27 days (20 business days). Right after that the auditors will do their magic and around mid-June we will get to see the 10-K. The question I have is…Will the “Going Concern” clause still be in the 10-K? What would it take to remove the clause?
Please bear in mind that the following was written with a somewhat fuzzy brain…!!!
What would it take to remove the clause?
I’m sure that there is more than one factor that the auditors look at; but having a year’s worth cash/financial resources to operate has been tossed about.
I’ll go with that for now (Would any accountant types like to step in?)
From the latest 10-Q we have for the first nine months a “Total cost and expenses” of $35,496,000. That implies an annual cost of ~$47.3M. That ~$47.3M is offset by any revenue that PPHM can generate. Management guidance for the FY ending this month was ~$8M to $10M. There is no way to predict what next years revenue will be…So I will arbitrarily go with the same amount ~$8M to $10M. That implies that PPHM will need ~$37M to $40M (I rounded up) of additional revenue (cash on hand).
As of 1-31-11 PPHM had ~$24M in cash, in addition they raised an additional ~$2.36M in February we don’t know how much if any was raised in March. I will assume that the burn rate ( ~$11M in expenses less ~$2M in revenue) ~$9M will hold, implying that at the end of this FY PPHM will have ~$17.4M without raising more money.
In the “Management Discussion” section they state “Based on our current projections, which include projected revenues under signed contracts with existing customers of Avid, we believe we have sufficient cash on hand combined with amounts expected to be received from Avid customers to meet our obligations as they become due through at least the second quarter of our fiscal year 2012 ending October 31, 2011”
With ~$17.4M in cash and an expected revenue of ~$2M a quarter (~$17 + $4M = $21M). That Oct. assumption seems real.
I will assume that revenue will remain flat ~$2M quarterly. In order to get to the end of FY 2012 (4/30/12) we will need to raise an additional ~$18M to ~$20M
I have no idea whether the auditors can consider any events after 4-30-11 i.e. an additional signed contract or projected revenue with reference to the going concern clause; if not, PPHM must raise that sum by 4-30-11…Maybe we have another year of “Going Concern”
I’m going to take some aspirins now…!!!
Regards
Golfho
First, as always, I must apologize for the speed that I operate in. Slooooowwww….
Here is my response to two of your very well written posts:
I will respond to your third post after I return to NY on Thursday.
“. In addition, we find IHUB has some first rate contributors that are faster to the news than almost any other source and really dig deeply into various sources.”
I agree…This is the most informed and informative board I have found. I must say that your posts have raised the bar it the areas of assessment, logic and “corollaries” We appear to have similar views of management and the BOD. I made a similar "misunderestimation" when I invested in PPHM nearly 10 years ago, my first analysis was written to address that issue. I’ve also managed to do a little trading that allowed me to either take a little profit, average down or accumulate free shares; more on that later.
I hope everyone on this board read and then re-read your "thought experiment" I do not disagree with some posters on this board that feel that Eric Swartz has maintained tight control of this company and has surrounded himself with a BOD that are close friends. To me that is not the issue, the issue is, have they selected a management team that can bring home the bacon. I think at this stage the answer is yes. Opinion subject to change at any moment…With out advanced notice.
I would like to ask you a few questions and make a few comments:
From your first post:
“If mgmt cannot communicate the true underlying values in PPHM they should shift their strategic thinking about "earlier stage" partnering. There have been a number of early stage partnering deals that have been positive block busters Sure, PPHM may give up some front money but most of that can be made up in milestone payments. There are many ways to accomplish relatively non-dilutive financing without giving away the crown jewels. Two quick examples:
1. PPHM could make a "regional" sale for Japan or Europe in some part of the pipeline such as Cotara or one of the viral products.
Have they not done that with the APEC region Stason Cotara deal? Does the Affitech deal also apply?
Wouldn't a limited loss leader of this sort be better strategically than selling large percentages of the "whole" company at deep discounts. Again, the math is compelling so even the management thinking at PPHM may turn more flexible."
The answer would seem to be yes, in principle. It appears to me that that is the approach that management has taken. In my view the Affitech deal was a “Limited loss leader” and FWIW, IMHO…They had to sell it very cheep. The question is always…Is a dollar today better than 100 dollars next year. And, of course, it’s not that simple. If no one wants to pay more than pennies on the dollar for technology that is in early development. What would you suggest?
2. PPHM has huge untapped IP with literally hundreds of patents that were painstakingly applied for and the majority of which are not germain to PPHM core programs. If this IP were marketed intelligently to companies that do have special interest in the areas covered IMHO millions of dollars of value could be harvested. You think not?? Well consider the patents covering diagnostics. Dr. Thorpe believes that Bavi which adheres to the cell surface of tumors may lead to the finest three dimensional diagnostic imaging process ever developed. Diagnostic companies make a lot of money. This is an area that could be partnered and in our opinion worth tens of millions of dollars to PPHM, and, an excellent example of hidden value in this stock.
Have you discussed this with management? This is an area that I have not looked into. What would this diagnostic technology be worth today? To me your statement “Tens of millions” implies that some amount of analysis was performed. Can you elaborate on how you arrived at that? In addition would it be reasonable to assume that when Dr. Thorpe spoke about imaging during the last quarterly CC that in fact implies that the company is trying to move that forward?
"We can think of at least half a dozen other ways to obtain financing without large percentage dilution if mgmt cannot raise the price through better communication. Given the dirth of pipeline at big pharma this is almost a "no brainer" and we believe mgmt will wake up to reality.”
That would make us long time shareholders very happy. I am very interested in hearing about other ways of obtaining financing. Can you share that with the board?
“It is time for management to get much smarter about investment banking and financing, about board and management interconnectivity with the rest of the biotech world, about the quality of their communication, about early stage partnering or regional partnering where possible.”
This brings me back to a statement I made awhile back. The first attempt by management to engage an investment banker (Rodman & Renshaw ) was in 2007. In the 12-20-07 Initial Coverage Report by Rodman & Renshaw, Navdeep Jaikaria said that he expected Peregrine to receive an “upfront payment of $30mm for Cotara in 2010” as well as an “additional milestone payment of $5mm two years later.” In addition they recommended selling Avid. IMHO selling Avid would have been a big mistake. In 2007 Avid revenue was $3.4M. What would the enterprise value be for a company with an EBTIDA of $3.4M? $15M -$18M? What would that have provided? Less that a years burn rate? In 2010 Avid revenue was $13.2M, this year revenue is projected to be between $8M and $10M. What is the enterprise value for Avid now?
Now, back to Cotara. PPHM did ink a regional deal with Stason on 5-3-10. The PR did not state the financial details; it only stated “Peregrine will receive from Stason upfront fees, annual fees, and milestone payments over the term of the agreements, as well as double-digit royalty payments on net sales.” …I have no idea what that equates to in real dollars…Painfully, we will know, quarter by quarter. I have posted my estimate of what I think a Cotara partnering deal would be worth this year. ($79M to $137M upfront and milestone. Plus 20% of sales) ClockedProtector provided an estimate of ~$50M. I suspect that we will know this year whether the wait and the regional approach was the correct road to take.
You seem to be very well informed. Do you have any insight as to what transpired during the R&R meetings?
"IMHO this management is positively phobic about early stage partnering."
Please elaborate.
"In response to "golfho" question as to whether we have "modeled" a potential valuation for PPHM the answer in the specific is that we find that impossible to know. To paraphrase Buffett when he was acquiring a "paper" company and trying to evaluate their forest lands that had not cleared environmental hurdles-- "they were worth somewhere between zero and a whole lot."
I can understand that at some level…Not knowing the details, I would state the following…The value of that enterprise was, as bests as possible, determined by an intensive round of due diligence. That due diligence included much more than the value of the “forest lands that had not cleared environmental hurdles”. A paper company has assets that include mills, marketing, distribution centers and clients… perhaps more…The point I’m trying to make is…Buffet did not buy just “forest land”. He bought an enterprise that included an intangible…Called “forest lands that had not cleared environmental hurdles” the worth of all of the other assets were fairly well defined and I am sure the forest land was discounted based on its uncertain status.
"We prefer to focus more finitely. S King is on record saying NSCLC could easily be a billion dollar drug?? I can live with that. A capitalization of one times revenues divided by 100mm shares would be about $10/ share. Maybe it’s worth two times revenue?? Maybe it’s a two billion dollar drug and Steve is just being conservative?? Maybe if Bavi works in one indication the marketplace starts to add value for multiple indications??"
I call Bavituximab the “Big Enchilada” for a reason. I salute Eric Swartz and management for recognizing the potential of this Mab. It’s my opinion that this will bear fruit in 2 - 4 years. All of the current trials in so many indications leads me to believe that this Mab is potentially an unbelievable Blockbuster.
“Cotara is probably ahead of NSCLC in timing. Do we sell European rights and retain the US?? Who knows??? Since these examples are only a small part of the story, you can see why it is fruitless to model on. One note is that markets frequently misvalue equity”
There is little doubt in my mine that Cotara will go first…In reality, with the Stason deal…It has already. The U.S. and E.U. markets remain. As an individual investor I do not have the resources that a group or firm has. But…If I were a part of a group or firm…THE FIRST QUESTION I WOULD ASK IS…WHAT IS THE POTENTIAL VALUE…???
Fruitless??? NO…Difficult…Absolutely…!!!
I look forward to reading your response
Regards,
Golfho
A.K.A. Mr. Slow
ClockedProtector here are my “better late that never” responses
I've read your splendid report and am very interested in the part relating to Cotara for now because I like to focus on the more short term potential of Peregrine which probably lies in Cotara.
Thank you…
What I would like to contribute, in response to your request for input and comment, are the following things.
If you are looking for a research cost for Cotara I would simplify the model and take the current value per share (a negative value at this moment) which should represent the total cost of everything and apply a ratio. I think the revenues can be neglected, even considering the military revenue. We can and must assume that Cotara, Bavi and Avid will have to pay for the full monty and therefore, no matter whether there is some extra cost of the past, will each have to take a portion of that for their account. It will be an estimate and it will be some off but very probably not from the order to undermine your end results. If we look at the ration of trials in Bavi compared to those for Cotara then I think Bavi (you called it the big enchilada) should carry more cost. Would 30% for Cotara be a reasonable assumption?
I’m not quite sure I understand.
I find the assumption of a 50% market share quite optimistic. The reasons is the affordability of the treatment and the market penetration time. Many people in the US and at least 200 Mill in Europe do not have the Social Security coverage and must fall back on Health Insurance, own money, loans or 3rd party help or simply on nothing at all and die from the condition. I would therefore cut the potential market in 2 and say that 50% of the cases can afford the Cotara treatment. Peregrine will never, not even with extensive networking or with a partner tap into 50% of these at once. They have the orphan drug protection and a de facto monopoly but the machine has to start up. I think 10% the first year, 20% the next and 30% the 3rd year would be a good model giving them plenty of room to then work towards that 50%.
You make some very good points. The LTC report did in fact assume an “initial adoption rate of 25% with an assumed royalty rate of 20% from a marketing partner (or partners).” I also, am not familiar with the individual member nation’s health care policies within the E.U. The current attempt was to consider the broader question of “The potential market cap allocated to PPHM for a successful first line GBM treatment” I think that there will be time within this year to refine and correct any formulas. Last year I considered the possibility of creating an Excel spreadsheet with imbedded equations that would allow me to change any value (Assumption) or tweak any part of the formula and get an instant new result…Maybe this year…!!!
Then there is the $20000 price setting. From the LTC report I concluded that that was the price from the drug alone but after reading your report, and re-reading LTC, I kind of doubt and wonder if Peregrine is saying really that $20000 is an all in price (incl. hospital stay, surgeon fees, re-validation, after care, etc) or all in Cotara price (Production + special delivery for radio active product). If it's not that later case then Peregrine will only have a few thousand dollar per treatment, or the estimated/assumed 20% thereof with a partner. I also am under the impression that as well in the US as in Europe Brain Surgery, even if limited to a small skull opening and catheter insertion without cutting), followed by a 25 hour infuse of a radio active product with intensive monitoring is not a small operation. That plus multiple days hospital stay and the after care, plus Cotara manufacturing and distribution, would eat away a serious part of that 20000$, wouldn't it. Is there any better information about this around?
Again you make some very good points. Addressing your first point, the ~$20K price for Cotara. I re-read the section in the LTC report again and can understand the confusion. They used the term “treatment” if treatment included all of the items in your first interpretation then there would not be much value to be garnered. I made the assumption that the $20K was the price for, as you put it “Production + special delivery for radio active product”. In addition the price is in line with other mab’s such as Avastin, Erbitux, Herceptin, etc. I also backed into their (LTC) numbers by using the table on pg 33 and their assumptions and arrived at the same $20K per patient. I would like to add that pricing of anything that is being sold is based on a myriad of factors. I don’t think that management at this early stage has a clear picture. When/If Cotara is partnered the partner’s marketing team will try to find the sweet spot. In reference to better information…I wish I had it. Perhaps your questions will stimulate more research from some members of this outstanding board.
I also think, given the preliminary trial reports and the median survival times that you may assume that patients will have/need more then one treatment. The patients that can afford the first treatment and will have seen it at work will be very motivated for a second one and are already in the group that could afford the treatment, so low fall-off to be expected. Of course this second treatment would on average be 81 weeks after the first one and would only start to impact your calculations about 18 months after kick-off.
This is more a question for the medical people on this board. My background is in engineering. I would hope, for the patients involved, that one treatment would suffice.
About that kick-off. In your report you kind of calculated a regular Phase III trial cost and related execution time. I know for sure that the FDA does not work with percentage of the occurrence and that many trials seem to enlist 1000 to 3000 patients in a regular Phase III. I assume the quality of the safety design may come in line to pick the amount needed.
As I stated in my last analysis “My only experience in the area of statistical analysis is in reference to manufacturing and quality control. That experience consisted of using the reliability and quality control departments for their inputs when I needed to cost out a project. I’ll do my standard SWAG and say that a 1% sample size for clinical trails is reasonable. (Comments from the medical guys…???)” That’s why I asked for input from the medical guys. Do you have any knowledge on this subject? FWIW I agree that safety factors are one of, if not the most important factors in any trial. Perhaps your questions will stimulate further discussion on this subject.
Now, to be corrected by anyone on this board that went trough a Phase III+Fast Track or is knowledgeable about it, isn't it so that when a fast track is granted the applicant (and only the applicant) may start bringing the drug to the market (charging for it) and that reporting, complaints, etc are going to the FDA how monitors and can recall during a given period before entering definitive approval to enter Phase IV (the later field evaluation reporting).
I think that someone addressed that question already…I think that the answer is no. Any partner or entity that bought PPHM could market it…Good Grief…Golf is killing my memory cells…!!!
Two final notes:
1- Thank you for your participation in this discussion, perhaps it will inspire fellow members of this board to do some research in the areas that are lacking.
2- My apologies to RRdog for not commenting on your very lucid first post. We seem to have very similar views on the company and management. In my standard “Molasses Like Speed” I will respond/comment…I also have a request. If you/your firm have performed an analysis of the potential in PPHM could you please post it?
Regards
Golfho
Hi CP and welcome to the board.
Very interesting questions and thoughts. I just returned from a very nice mini-vacation...There was no internet. I have tons of stuff to attend too, but I will try to respond over the weekend.
Regards
Golfho
Sean;
You and I have similar timeframes and experiences. I’m a little older and retired a year and a half ago. I had similar expectations. I posted several assessments of my investment in PPHM over the last two years; I did that as sanity check. Please do not take what I write as advice to be followed; my response to you is only my SWAG.
(1) Am I correct in assuming that, based upon the "planned" second half of the year meeting with the FDA regarding Cotara, that the earliest possible commercialization of the product would not be until 2013/2014 at the earliest?
From my January post:
“In my opinion the company is positioning itself to possibly go it alone in the U.S. & E.U. markets…Why…??? The following is as always…IMHO…
In 2007 the company announced that R&R would be our IB…A rumor circulated that a deal for Cotara was imminent…I think that the final offer was NOT, in managements opinion, the offer they were looking for…Hence, a disastrous PIPE…At a $.75 a share price…Fast forward to 2011…The PII is finally over and PPHM will be going to the FDA soon to plan the PIII trail, with fast track status we could have FDA approval for a PIII trial by mid-year. (Now end of year) I think that management will make a final attempt to close a deal on their terms; if not they will go it alone.”
“The time to complete this trial
I’ll back into this one by using LTC’s analysis and company statements. The company stated that they hope to have meetings with the FDA and have a “Clear Pathway” to regulatory approval by mid year. (Now end of year) LTC forecasts a revenue stream by FY/E 2015. That implies that they think that the trial can be completed and FDA approval for use obtained by FY/E 2014. That would imply an approx. time duration for the PIII trial of 3-3.5 years. That is about the same timeframe as the PII trial.”
I also SWAGed the value of that deal…
“The terms of any partnership agreement.
If I am correct in my assumption that the company walked away from the R & R deal of ~ $35M, one would expect that any deal will be for a higher up front amount. The R & R deal did not state a royalty amount. I will go with LTC’s 20%. So, what is a reasonable up front amount? IMO, it should include the full cost of the PIII trial, in addition it should include a fair amount of the development costs. (Does anyone have any knowledge in this area?) In addition, it may include perhaps, a lump sum figure representing a portion of the annual market.
My SWAG…Trial cost ($24M to $37M) + Prior development cost ($20M to $30M…???) + Lump sum ($35M to $70M…???) = $79M to $137M”
(2) Given the status of where Bavituximab is at the moment, what would be a realistic projection for a product ready for commercialization?
My most recent assessment…Subject to change at any time…!!! Is that partnership will occur around the end of the current PII trials.
“The time required to complete a PIII trail and FDA approval for first line use of this combo
IMHO, the latest any BP can wait to partner with PPHM is the time when both NSCLC PII’s are complete, or possibly after the accelerated approval decision is made. That puts us at about early 2012 to end of 2012. It could be sooner. I can’t see it being much later. The only reason for this timeframe to be relevant would be if the company chooses to go it alone. IMO, not a likely scenario. However, it would provide a time frame for when royalties would be flowing in. I’ll simply SWAG that at 2-5 years starting at ~mid 2012 which brings us to 2014 – 2017”
(3) Is it your impression that PPHM is still seriously interested in biosimilars? Correct me if I'm wrong, but I don't remember hearing much about them lately in terms of PPHM's future plans. Was this just a throwaway line during a particular quarterly report?
Can’t say…I haven’t reviewed the transcript of the CC, but I think that I remember a brief mention of biosimilars when they were discussing Avid. My current feeling is that this is still in the far future. The FDA is still working out the details.
(4) King said at the end of the conference yesterday, “We are gearing up for what we expect to be a robust flow of clinical data reports throughout the rest of this year and into next year. This represents significant opportunities for potential value creation over the coming year...." Realistically, what is the meaning of the phrase, "significant opportunities for potential value creation"?
I don’t know what he was trying to say. It could imply that; as data comes in and that data is positive, the true value of bavituximab will be reflected in the stock price.
Hope this helps.
Good luck on your investments
Regards,
Golfho
Jake you wrote...
So you really think that PPHM's three closely related directors with their limited experience can provide the guidance needed at such a critical juncture?
In any worthwhile discussion involving a difference of opinion it is paramount to address each point that was raised by the other person. I addressed each point that you made. It would be very helpful if you did the same. Responses like; I disagree for the following reasons, I understand your point but disagree with…
In order to arrive at anything resembling reality one needs to follow this process…Otherwise what you are debating is not a debate, it is just an emotionally driven rant.
To answer your new question I will state the following:
1- Is it not this team of “closely related directors with their limited experience” the people that got us to this “critical juncture” Yes or No will probably suffice but any meaningful response would be appreciated.
2- The Board of Directors has limited responsibility with the day to day running of the company. That is the responsibility of the Management team. Steve King, Joseph Shan, Robert Garnick and Chris Eso are the people that got us where we are today. I think that they are a pretty good team. Agree or Disagree? If you disagree…Why?
Please respond to the issues I addressed:
In response to your last post to me…
They may be team players but the team they are playing on is their team, not the shareholder’s team. On that issue I would agree…I temper my view with the following observation. Wall Street, Corporate America is the epitome of greed. When I compare PPHM management with comparable management I find very little difference. Question number one. Would you agree or disagree? Please explain if you disagree. Mgmt seems to recognize the need to get experience in conducting trials, So…In your words…Management has recognized the need to get experience in conducting trials…Don’t you agree that they have in fact done that? but none of the mgmt team including SK has ever done a deal with BP True… To date… and they don't have ANY biotech experience to speak off. I beg to differ…They currently have nearly twelve years of experience...!!! Biotech is perhaps the most complex sectors out there and these guys are clueless. Clueless…??? Please explain.
Regards
Golfho
In response to your last post to me…
They may be team players but the team they are playing on is their team, not the shareholder’s team . On that issue I would agree…I temper my view with the following observation. Wall Street, Corporate America is the epitome of greed. When I compare PPHM management with comparable management I find very little difference. Question number one. Would you agree or disagree? Please explain if you disagree. Mgmt seems to recognize the need to get experience in conducting trials, So…In your words…Management has recognized the need to get experience in conducting trials…Don’t you agree that they have in fact done that? but none of the mgmt team including SK has ever done a deal with BP True… To date… and they don't have ANY biotech experience to speak off. I beg to differ…They currently have nearly twelve years of experience...!!! Biotech is perhaps the most complex sectors out there and these guys are clueless. Clueless…??? Please explain.
And the fact that they pay themselves 5 to 8 times their peer group and over twice as much as the top ten US companies by market cap is a joke. Are they paying themselves for performance? For now I chose to NOT get into the GRAND COMPENSATION DEBATE that is unfolding…
Regards
Golfho
Yet once again I have a tee time and must go...I'll respond later...
Regards
Golfho
I would like to take a step back and start with pre-Eric Swartz. As TLCN the company stumbled for nearly 15+ years. The company was lead by the likes of Larry Bymaster , John N. Bonfiglio , Lon H. Stone & Ed Legere. It produced no revenue of significants for all of those years and was teetering on financial disaster for most of them. All during that time and for the first few years that Eric Swartz was in charge, PIPEs, Preferred stock deals, questionable loans were the norm. I think that that is what nysemover is always ranting about. Since 2007 we have been financed with profit from the government contract, Avid revenue and ATM’s. He has been with PPHM from 11/1999. His team has, over the last decade move the company to a point where the finish line is in clear sight (2012-2015). It’s my opinion that he will continue to try and maintain control of the company until the big payday that we all are hoping for. In my view he has worked a long time for it. Carlton is a team member. IMHO Carlton and the other team members will be rewarded and replaced as part of any deal going forward. IMHO that deal could happen this year for Cotara and later this year or next for bavituximab.
Regards
Golfho
P.S. I’m glad to see that you have not lost your sense of humor…
I'm playing a round so I must go now...I would like to share my thoughts on the subject when I return...
Regards
Golfho
In my view...Very doable...!!!
Regards
Golfho
It's becoming clear to me as well...That is one of the reasons that brings me to the conclusion that management, over the last several years has established a clear path to success.
Regards
Golfho