investor
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Vanessapu,
Finally, a very intelligent question.
I have worked really hard in this area while I have attacked PPHM on dilutive financing. In gross and over simplified terms I would guesstimate that the Avid operation can fund 40- 50% of operating needs in one year and 60-75% of operational needs in two years.
This assumes approx the same burn rate of 12mm-13mm per quarter we currently face. The burn off of Sunrise which is expensive PH III into less expensive PH I and PH II trials should be about neutral to cash flow. Burn rate should decrease quarter by quarter as Avid builds out business.
I think my assumption that Avid II will produce additional 40mm in outside revenue is fairly conservative since it is designed to do three shifts 24/7 if necessary and has more efficient reactor technology with removable and replaceable linings that make for much more efficient cycle turnarounds. Were Avid II stressed to full capacity IMO it is capable of doing up to 80mm in additional revenue.
In addition, IMO Avid is hard at work lining up business to justify Avid III and Avid IV. IMO sites for "leasing" proximate but not abutting current Avid sites are available. IMO leasing terms are favorable in southern California industrial real estate.
Most important to me is financing of new sites. I would not advocate spending "expensive" biotech equity (defined as low priced common stock)
to finance more mundane manufacturing capability. However, IMO (well considered) Avid receivables are considered bankable and further facilities could be built for debt vs these receivables (which are growing as is the backlog). This debt IMO would be against just the Avid facility and its receivables and not against PPHM mother corporation or IP.
Imagine for a minute if you can build a facility (cookie cutter, state of the art) for 15 mm and finance it at 5-10% interest or approx 1.5mm per year while at the same time that facility can bring in 40mm in revenue at 50% gross profit or approx 20mm while it pays down principal.
This is not such a bad proposition. IMO this option is known to mgmt and was disguised in SK cc comments in response to questioning re "looking at options for the lowest cost of capital".
Reasonably expert and analytic "eyes" that have viewed the new Avid II state of the art facility are massively impressed with it. It is not therefore so surprising that Avid is experiencing client interest. Getting pure biotech material, with on time delivery, sterile, properly packaged and shipped , from an FDA cGMP facility is a life and death issue for many small to medium size biotech companies. Just read the disclaimer section in the Halozyme 10K.
Hopefully, during this two year time frame PPHM will complete enough clinical data for strategic, milestone partnering including sufficient up front cash to make this question less relevant.
In the mean time, I continue to advocate PPHM use preferred financing instead of common as my "second" choice.
Best Regards,
All of the above certainly just IMO
RRdog
It's a nice day in Manhattan and amazingly all the snow from the 2nd largest storm in history is gone. Jogging is back on the agenda.
These are difficult times for PPHM investors re a bear market in biotech
accompanied by a political attack on drug company pricing, and the extremely low market valuation for the stock. IMO it is not merely an undervaluation but (as I've said before) a complete misvaluation. Hopefully, either clinical/ FDA news or partnering will at some point change the mindset.
For now, I'd like to comment on a couple of areas where I think I have good historical perspective.
1. Avid is currently at a near 40mm run rate on outside business with an approx 50% gross profit and growing. With Avid II coming on line it is likely that in 12-18 months Avid will be at 70-80mm run rate and worth 2x-3x the current market cap of PPHM. The demographics of this manufacturing business suggest a long growth ramp over many years. One could envision Avid eventually growing into a business doing a couple of hundred million dollars a year in rev. IMO PPHM already looking into sites for Avid III and Avid IV .
In addition, Avid seems to be going into the consulting business on client FDA certification for manufactured product and intl certification. Also, going into the business of consulting for clients on FDA clinical trial process. This business should be high gross profit as there is no manufacturing cost nor raw materials only expertise.
In some cases, where PPHM is particularly enamored with a product, PPHM appears willing to barter some of these consulting and manufacturing services for partial product ownership. This may be very attractive to small biotechs that are cost constrained. It implies some hidden product upside.
Avid alone IMO suggests PPHM is misvalued.
2. I notice a lot of discussion on Steves' demeanor and presentation at Noble Financial on 1/18/16.
I have attended at least 10 presentations by SK and the "delivery" is always the same---very dead pan. His manner and dress are that of a lab clinician that just took off his apron and threw on a jacket and came to lecture in a very clinical manner. The content changes with different slides as events and clinical data progress but the demeanor remains the same.
If you are of the Marshall McCluhan school that "the medium is the message", then the presentation is very dry and unimpressive. Steve is no PT Barnum and so far the market is expressing that judgement in valuation (along with doubts from the reconfiguration of PH II data).
If you are interested in the "underlying message itself", then the presentations are power packed with corporate value creation. There is value to a very cold, clinical , unemotional way of proceding. You don't kid yourself, and you are data driven. (The more knowledge you bring to the presentation the more you get out of it.)
It harks back to the Buffett adage that "In the short run, markets are a popularity contest. But, in the long run, markets are a weighing machine." Buffett has become one of the richest investors in the world by buying what he feels is "weighty" when it is "unpopular".
One last word on Steves' presentation. For years he has been advised to speak not only about the science but also to investors about the potential value of the company----i.e. comps, discounted current value, size of target market, risk reward ratio, collaborations, Avid valuations, etc.. I note that in this presentation one of his slides deals with the target market size which runs into the many billions of dollars. This is one "small step for a man" in the right direction. One wonders why that has been so difficult to do in the past and why whole sections of his presentation are not devoted to the business side of PPHM.
3. CJ Gaddy has done us all a service with a masterful compilation on Steves' slides that have to do with PS as the central "ligand" versus all the other "receptors" that interact with this ligand. This coincides with my thoughts on the"weighted value" of the PPHM patent position. CJGs' presentation indirectly speaks to the value of those patents as well as to MOA.
a. PPHM has a decade long patenting advantage due to the early on genius of Phil Thorpe.
b. PPHM has over 150 patents covering PS/Bavi about half of which lay out the technical innovation and half of which are defensive in nature.
c. PPHM now has later generations of patents covering such things as Beta Bodies.
4. The Bavi/PS/ Immuno Stimulation patent combine looks very strong to me.
a. PS is ubiquitous--it is a "constant" or "cornerstone" molecule if you prefer.
b. PS is the immuno checkpoint furthest upstream, with the fewest side effects
c. PS is the most "efficient" and "comprehensive" ligand and IMO the most cost beneficial.
d. Bavi is the only "late Phase Mab" I can find accessing both PS and the Immuno system
e. PPHM patents re PS/Bavi are both of "design" and "substance" which makes them very difficult to circumvent.
5. On a different topic altogether::
My guess is that R. Birge will want to publish his results in a reputable journal or magazine and want to do so before he goes on speaking tour. IMO that means in the first half of Feb.. In this kind of a scientific paper Ray will lay out his complete thinking as to why PS is a "Global Immuno Checkpoint". The data IMO is massive so we will have to hope it is not edited down. If there is too much editing we lose the train of scientific logic.
I expect this paper to be written in very precise scientific language down to the molecular level. We will have to hope that PPHM has learned how to PR such a scientific work and explain the conclusions in plain investor English. If PPHM does PR such a paper, it will be an interesting communication test for the new PR people.
Most importantly we will have to hope that Dr. B begins to draw the connection from PS-- to Bavi --to PPHM --to PPHM late stage clinicals in this paper. In all the research I read on PS, I never see the connection to PPHM which is the company with the leading patent position and clinical program in this area. Hopefully, that starts to change. LACK OF UNDERSTANDING OF THIS CORPORATE CONNECTION TO ALL THE WORK BEING DONE ON PS. is another reason why PPHM is completely misvalued.
The bearish case is largely based on the argument that PPHM is not to be believed in what they say about the science. I find this case to be more and more worthless as more and more outside confirmation comes forward i.e. R Birge, AZN, NCCN, MSK/ Wolchok, etc..
6. As has been noted in Steves' recent presentation, PPHM can unblind the Sunrise Trial at 80% eventing.
This makes it high probability that first look-in will occur 1st qtr as suggested by PPHM since the look-in will be based on 1/3 of 80% eventing rather than a larger percentage. Assuming that there is no malfeasance and no futility the trial will continue. Some bears make the argument that this is a non event. IMO there is more of interest here. Once the first look-in has occurred investors can time line the second look-in fairly accurately and invest or speculate accordingly. The second look-in which includes efficacy is of course more important so being able to time it is important.
IMO stay focused on underlying value creation.
Best Regards in these difficult market times re valuation and volatility.
All of the above just IMO
RRdog
--------------------------------------------------------------------------------
Invest for retirement at E*TRADE.
To all,
I am including the link to THLD webcast describing failure of their trials. Even though the call sounds like a wake , you can learn a lot from failure.
I would be interested in CP opinion (or anyone else for that matter) on any differences between PPHM PH III and that of THLD.
http://investor.thresholdpharm.com/events.cfm
Regards,
RRdog
PS I think Barry Selnick was genuinely shocked.
27th Annual Piper Jaffray Healthcare Conference Dec 1-2,2015
Conference was held at the Palace Hotel (3p.m.) on Madison Ave., NYC
There were a total of approx 350 presenting companies (the universe of companies Piper Jaffray is interested in is expanding annually.)
The "forum" that PPHM presented in was hosted by Charles Duncan and titled "Undiscovered OncoInnovators" (sic)
The "screen" for this forum was companies in PH III and valued under 300mm market cap. Moderated by Charles Duncan. (I liked this "screen" because it was so extreme in highlighting the value disconnect)
FYI the 5 companies represented under this screening process were:
Argos Therapeutics, inc. (ARGS) Ceo Jeff Abbey
Nanobiotix SA (NANO) Ceo Lauren Levy
Oncanova Therapeutics Inc., (ONTX) Ceo Ramesh Kumar
Threshold Pharmaceuticals, Inc. (THLD) Ceo Barry Zelnick
and of course-----
Peregrine Pharmaceuticals Inc. (PPHM) Ceo Steve King
Under this format all five companies gave an overview of what they do. IMO all five companies are interesting but most of what they said was lost on the room which accomodated 100 - 200 people.
Charles Duncan (god bless him) asked exactly the question I was thinking about as I watched these five Ceo discuss their companies.
"WHAT DON'T INVESTORS GET"???????
Lauren Levy at Nano suggested these companies suffered from new approaches for which there was no comparitor data and that therefore more data was necessary in this type of company including PH III data.
In the same vein, Barry Zelnick at THLD talked about fear of PH III results (in Thld case 2 PH III). He tried to make the case that in THLD case he would be shocked by poor data because of all the previous clinical work leading to PH III. (Reminded me of PPHM in this respect.) He also talked about lack of comparitor data and therefore lots of skepticism.
Several examples were given of similar undervalued situations that became big winners over time as data proved out and other validations both scientific and corporate (partners) panned out.
Steve King at PPHM introduced a new phrase by suggesting that they all suffered from "Novel Therapeutic Syndrome". Steve felt that data overcomes this syndrome though obviously later stage data. Steve talked a bit more about PS as a novel "key regulator". Steve felt it was difficult enough to explain to investors one action of a mab which might be blocking the immuno suppressive effect of PS but it was even more difficult to explain to skeptical investors a mab that had a double action i.e. not only a blocking effect but also an immune stimulating effect through the Fc arm of the antibody.
Steve also agreed with some of the other speakers that more validation was required from outside sources and said that PPHM had begun moving down that path with their collaborations at AZN, MSK, and UTSW.
Now these answers were okay to a point but IMO the answers were thin, left many areas unaddressed and to a certain degree illogical.
Charles Duncan then asked the audience if they had any questions and (in that first quiet moment) I was the only one with my hand up and he recognized me. I had the advantage of being able to ask my question of the panel as a whole and of Charles Duncan (so PPHM was camouflaged and not singled out.)
I asked it this way---"Essentially what you are saying is that the undervaluation is caused by the novelty of your approach. Are you suggesting that many companies in only PH I or PH II (such as the CarT companies and other examples) that are trading for multiple billions of dollars of market value are not doing anything novel???"
IMO there was considerable "fumfering" around after this question. Charles Duncan said he felt this group of companies on the panel presented much better value than those overvalued companies whose drugs had a greater chance of failure since they were earlier stage. (IMO this was true but it sidestepped the question as to how the higher valued companies had achieved their valuation and the advantage it gave them in less dilutive financing---not to mention the liquidity advantage it provided their shareholders.)
I said, "I agree with you. I think this group of companies is better "current" value but,-- I don't think it's because they are doing something novel and other companies are not." Charles of course got the point and tacitly agreed when he further answered "Well I have been doing this for a long time and sometimes the market is irrational and can be irrational for a long time."
IMO there is some truth to "Novel Therapeutic Syndrome" and "irrational markets" and more "data" and more "validation". I'd say this makes up about 20-30-40% at most. The other 60-70% has to do with financing and financial "structure", top venture investors, top management that investors trust to deploy capital wisely within their own shop or to acquire additional assets wisely, top banking, top corporate and scientific connections---in short how well connected and put together within the system is a corporation and "whose back is being scratched". If mgmt and shareholders aren't part of "the club" and can't bring in top institutional buy side talent, they tend to stay undervalued.
In addition, undervaluation tends to feed on itself. As a real time example, prior to the meeting I sat with a major institutional investor and we had some coffee and doughnuts. We got to talking and it turned out he really liked the risk / reward values in PPHM, felt very comfortable with the manufacturing protecting the downside, but, couldn't buy the company until it is over 500mm market cap.
The good news in all this is that in spite of PPHM mgmt short comings, IMO ultimately the science is strong enough that it will lead to more outside validation and market value.
Hope that gives some flavor re the conference and is helpful.
RRdog
Good Afternoon to All,
As long as it's a quiet Sunday I'd like to begin by thanking the board for all the good feedback on blogs I have written. I know that everyone may not agree with all the positions taken but, am glad that this board gave those arguments a fair hearing and hope that those same arguments were helpful. I am a great believer in "civility". I can tell you with certainty that lack of civility has cost this board some extremely valuable posters. I know because I still correspond with them.
Stoneroad---
In your response to questions about my remarks---(post 336)
you continue IMO to become increasingly sophisticated in your posting. Dr. Wolchok is "the man". He is responsible for a lot of the testing and proof on the existing FDA approved immuno therapy drugs. My sources at MSK say the good doctor speaks with the authority of a godlike figure and my sources are good.
MH----
There is an analogy hanging around this board that the PS/bavi platform is similar to the "Manhattan Project" that developed the atomic bomb. I think this analogy was first posited by MH. IMO there is real merit to this analogy only I would take it further and be more specific. The Manhattan Project and the building of Oak Ridge and the Nevada test sites was a monumental undertaking requiring huge resources that were "war scarce". The Roosevelt admin would not commit to the project until "the man"-- Albert Einstein-- sent a letter endorsing the feasibility of the project which was based on his work. (when you see that mushroom cloud you know that indeed E=mc 2)
In the immuno oncology world Dr. Wolchok is "The Man".
Were Dr.Wolchok ever to publicly acknowledge the PS pathway as primary in the immuno cascade and then link that pathway to Bavi and PPHM as the only patented mab in late stage human clinicals accessing that pathway, then I think PPHM would quickly be 5-8 dollars a share. The reasoning would be that "investors" could instantly see PPHM as a target for combos with existing drugs and as a target for multiple big pharma bidding. In addition, investors know Dr. Wolchok has the "advisory power" to move BP strategic thinking and the attention of the "analytic" community. That is IMO only, but, my opinion is fairly well educated in this area. (BTW $5-8/ share only takes you to fair comp value)
Of course, that is a big "if". I have no idea whether Dr. Wolchok would ever make such a statement or in what forum or in what time frame. However, it's a lot like one of my favorite jokes-- "Even a blind pig finds a truffle now and then, but, it helps to know that truffles grow in the deepest , darkest part of the forest".
When PPHM (the blind pig in this analogy) is playing with Dr. Wolchok and his lab---THEY ARE IN THE DEEPEST, DARKEST PART OF THE FOREST---and therefore have a chance to get lucky.
Heads up on something additional. My understanding is that the NYAS has secured Dr. Wolchok as a keynote speaker in a 1st quarter meeting. It will afford fellow scientists a chance not only to listen to him but also to question him. It is my hope that members of this board will be able to learn a lot from this session.
IMO there are a number of scientists working on publications about this PS pathway. Again IMOO, it is only logical that sooner or later someone is going to link PS to Bavi and then to PPHM and--- eventually--- to the "massive patent advantage" PPHM has in this area.. Im sure you have all noticed how nobody ever makes this link----as of yet. It is uncertain which group will conclude first. If I had my druthers, of course, I'd always choose Dr. Wolchok but, who knows with these guys and who knows how long it takes for peer review. (Thank goodness for the huge lead provided by Dr. Thorpe and his apostle in the patent area Shelley Fussey)
Position--
By nature I could never be a "basher". I would simply put my energies elsewhere if PPHM were not of interest. In addition, being a short or short trader seems to me simply to be against the laws of mathematics/ risk/reward. However, neither can I afford to be a starry eyed booster of PPHM with a "my mgmt right or wrong" type of attitude. I have to fit into that third category of long term investor with a "substantial" position that looks at that position every day with zero based logic. I can not afford to delude myself about PPHM mgmt. As long as I feel this is the best use for a percentage of aggressive funds, the best risk/reward I can get for the money---then I stay long. I am much more concerned with increase in underlying value than I am with price. I don't worry too much about a nickle or dime up or a nickle or dime down. IMO sooner or later price will catch up with value on a catalytic event.
Recent Funding--
I grade PPHM mgmt a (d-) on the recent funding--barely passing. They pass because they raised some needed funding to move forward on their clinicals, they put it in strong hands where the stock is not likely to come back on the open market, and it was a "clean" funding without fees. The reason I give it a barely passing grade is that anyone on this board could have sold plain vanilla common stock at $1.08 Ask yourself why we are paying this mgmt team millions of dollars for something any of us could do??????????????????????
Some people say debt is not doable. I know they are wrong. PPHM mgmt themselves would tell you they are open to debt if they can get the covenants right ie, no encumbrance of IP and no overly restrictive covenants. Debt is the cheapest it has ever been in our lifetime so, not to use a modest amount of debt when you have increasing positive cash flow to service the interest is a mistake. That is why you pay mgmt millions of dollars---to get those covenants right. (As an example our collaborative partner AZN just this week chose to issue 6 Billion (with a capital B) of debt rather that dilute what they feel is a promising future price on their equity.)
Or--PPHM could have sold Dart Preferred Stock for one third the dilution. Heck, Dart is already buying Preferred stock. If they had to give him a sweetener then so be it. I mean what the heck did they authorize all those new cap shares for if not to back modest amounts of preferred. Mgmt could have done this 20mm raise through sale of common without additional cap.
Instead, PPHM chose to sell approx 9% of your company on an after deal basis for $20mm. Imagine that. They just sold 9% of your company for 20mm. The worst part of that sale is that they still do not know how to promote their stock after all these years with what is arguably the best story in all biotech. When PPHM lacked expertise in regulatory matters they went out an got the best regulatory authority in the world to work with them. Any management smart enough to do that should be smart enough to go out and get the best promotional people in the world especially if they intend to sell equity. For that reason, I give this financing a D minus.
The only ray of light I see in this is that sources tell me that the new PR people (Stephanie Diaz and Vida Strategic Partners) are good promotional people. We will have to see over time which institutions they can effectively introduce to PPHM. I measure this in very hard numbers. Just watch the percentage of institutional ownership incl of Eastern Capital. If that number were to move north of 50% I would view it very positively.
MD1225 (Chris)
You have to like Chris. However, purely as an investor I would give his last piece a (C minus/ A). I give him a C minus because it was largely a cut and paste piece that didn't tell us anything we didn't already know. His reference to a "slowing rate of dilution" is a paraphrase of something I wrote earlier. It was true when I wrote it but less so now after the recent financing.
I give him an "A" for aggressiveness, for dealing with the editorial board of SA, for writing in clear English, for promoting to a broader audience including numerous institutions, and for stepping into the promotional void left by PPHM mgmt. I now understand that this is just an interim article and Chris is still waiting for a full enrollment PR to fire off his main article. In the article that is forthcoming I hope to learn a lot of new things.
Biopharm, Hutschi, CP
You guys are really tireless researchers and speculative thinkers. I really appreciate your efforts and can cull out what I think is useful from the huge mass of material you guys present.
CP presents a perfect example for "culling" through "mass" of data to find some good ideas. The way I do this is really simple. The first thing I do is throw out anything he writes related to dilution. This is just not his forte IMO and I already have a serious understanding of this subject. HOWEVER, IF YOU REALLY WANT TO UNDERSTAND WHY PPHM HAS A HUGE PERCENTAGE ADVANTAGE (98%+ in his opinion) IN THE PHASE III SUNRISE TRIAL, go back and reread everything he has written on this subject and on the PH II results leading to this trial. This is very fine work.
On Timing
I expect PPHM to be late on everything. They always are. It is much more important to me that they get to their goal than that they do it in precisely the time frame they lay out. They are not good at close timing. As exhibit A they are late on opening Avid II. Avid II is such a complex undertaking, requiring FDA certification, nobody could get the timing precisely right. However, when it does eventually open it will triple the size of our manufacturing facilities and much more than triple the capacity to manufacture. IMO there should be a continual upward trend in revenue projections and positive cash flow for years to come and that is what is important to me.
Ditto on Sunrise enrollment. If Sunrise enrollment completes give or take a few weeks on either side of year end it matters much less to me than that it is "properly" enrolled. The end result is what is important not the close timing.
In the words of Warren Buffett--"I'd rather be generally right than precisely wrong".
On Ray Birge
Dr. Birge is a first rate clinical researcher running a lab at Rutgers and before that coming out of Rockefeller University in Manhattan. Quietly, in a zero promoted scientific talk, Dr. Birge says his work indicates that PS is a Global Immuno Checkpoint. This is exactly what was said by SK a couple of months back. To date it was the proverbial tree that "falls in the forest with nobody to hear it". Dr. Birge pretty much stuck to just PS without any further linkage. IMO this was as it should be under his MTA and NDA. Nevertheless, the implications of this statement are profound. I look forward to further work by Dr. Birge where he is less constrained.
Have a good evening and be of good spirit. The weight of the scientific argument is moving in PPHMs' favor.
Condolences to our French allies and the people of Paris and to all freedom loving people. Again, "close timing" is impossible to predict, but, it is more important to know that the day of reckoning will come.
Best Regards,
RRdog
To all,
I think CP has a point that reports from SITC were scratchy. In all the discussion about SITC how could you have missed this salient piece of information sent to me by an analyst friend:
"BTW, saw PPHM folks at SITC in Maryland last week. They were entertaining the folks from Dr. Wolchok’s lab (MSKCC). If he starts talking about Bavi it will be big news."
Regards,
RRdog
Sun 10/25/15
Good afternoon to all.
"EPILOGUE TO A VOTE"
I am not surprised that PPHM mgmt won the vote to increase cap authorization for common stock. "THEY STOLE THE VOTE FAIR AND SQUARE" with the very sophisticated legal maneuver to make this a "routine" vote as opposed to a "non routine" vote.
If PPHM can be this sophisticated "legally", and in their "patenting", and in their "clinical development", and in their "regulatory work with the FDA"---then--- I expect them to be equally sophisticated in their "financing" and "promotion of value". The salient point has not changed . IT IS MORE IMPORTANT WHAT PRICE YOU GET FOR THE SHARES THAN THE NUMBER OF SHARES.
It is a prima facie case that mgmts' need to steal this vote reflects on the weakness of some of their business policies. I am hopeful that mgmt and BOD will reflect on this and change their approach. The mgmt team can be "congenitally stubborn" about some things but eventually can change when forced by circumstance. Examples of such change were the long advised move to preferred financing after the loan prepayment and sabotage debacle. A second example was-- again after long advisement-- the removal of CK as head of IR a position for which IMO he was singularly unsuited by temperament and ability.
Enough negativism---that is all you will get from me. I prefer to focus on the massive positives of PPHM position. One of the redeeming points of this "authorization" is that PPHM has enough authorized shares to backstop substantial "interim" financing by preferred stock. If nothing else, it should occur to mgmt that financing at 3x is better than financing at 1x and they should be encouraged by all shareholders to go this route in the interim period before FDA action or partnering. The increase in interest expense will be easily offset by more substantial growth at Avid.
During this "interim" period increased price promotion and less dilution are extremely important to investors. I sense on this IHUB board there is still some misunderstanding about dilution, market cap, and pricing. THE ONLY THING THAT PAYS IS PRICE. If PPHM was to increase 500% to a billion dollar market cap but was so inefficient in their promotion , time to partnering, and financing as to get to that cap with one billion issued shares then the price would still be $1/sh. If PPHM were to increase 1000% to a 2 billion dollar cap but needed 2 billion shares of ATM to get there the price would still be $1/share. The point I am making is that as investors our goal is not simply "increased market cap" but "increased price".
I am not denigrating such things as benefit to humanity, benefit to scientific advancement in general, benefit to patients at any value. However, as investors---focus on "price" not just on "market cap".
A FEW MISCELLANEOUS REMARKS:
I notice that MD1225 has some extremely bullish thoughts about his upcoming article. Previously, I note he has linked the release to 500mm market cap which is largely unpredictable in "timing" This is analogous to PPHM trying to link the second tier of their bank loans to an FDA action (which subsequently did not occur before they returned the loan). I would advise timing the article to only the PR re "full enrollment". That seems to be a "kickoff" or starter event for investment by some of the funds MD1225 corresponds with and is a finite event likely to be reached in the short future, and again not subject to market timing. The PR may achieve a doubling or tripling in market cap but, that may not necessarily happen immediately.
Re AZN---
I am extremely impressed with the expansion of the AZN collaboration, the jump directly to a PH II global study in NSCLC. PPHM mgmt is really to be congratulated on this. IMO they achieved the key objectives of this negotiation which are:
1. Much closer working relationship with AZN---a real "flare in the night" to other BP
2. Kept non exclusivity for now----why give up non-exclusivity for small potatoes--much bigger dollar amounts are possible in forseeable future.
3. Global and timely access to the expensive part of this trial which is Durvalumab for no cost
4. Continued control of clinical trials and build out of PPHM network of hospital sites. Efficient leveraging of PPHM existing clinical site network.
I also am intrigued by the proposed AZN combo PH I with Bavi vs MULTIPLE TUMOR TYPES. This is a fast tango toward proving the breadth of bavi platform.
SOME BACKGROUND ON RB AND THE JHU PRESENTATION THIS WEEK:
First of all, I will not be able to attend Rays' presentation in Baltimore though I would have liked to and I hope it will be signifigant and picked up on by investors not just scientists. We already know that PPHM and its KOLs can talk to scientists. It is extremely important that PPHM learns how to talk to investor types writ large or to translate and promote the scientific info into clear investable english. (Why this point is so difficult for mgmt to pick up on is beyond me)
My colleague from ML and I first met Ray a number of years ago at the NYAS presentation by Phil Thorpe. I was physically present in sidebar conversations with Dr. Thorpe one of which was with RB. RB is a top researcher at Rutgers with world class credentials going back to Rockefeller University. Was able to check him out because I also attend seminars at RU and have donated money to that org. IMO his key area of expertise is in Tam receptors.
My colleague at ML and myself were helpful to RB in obtaining an MTA (material transfer agreement) with PPHM writing several letters on his behalf. It was a long and tortuous procedure and I can only hope (and I believe) that PPHM is becoming more efficient in processing the forward progress of their IP.
With Thorpe and RB at NYAS the discussion had much to do with whether the primary mover in immuno oncology was with the Tam receptors or with the PS pathway. I believe both had key points but always believed that Dr. Thorpe made the better case. (Never bet against Phil). Judging from the title of RB presentation I think that is the way the research is proving out:
Oct29 2015: “John Hopkins MMI/ID Research Seminar”, Baltimore
MMI = Molecular Microbiology & Immunology
12-1:00pm: "Phosphatidylserine is a Global Immune Checkpoint In Cancer"
I'm sure investors will be able to pick up the gist of this presentation and I would focus on the way bavi/ps is able to combine with Tam receptors to further enable immune system action vs tumors.
AVID
IMO the hints about further Avid expansion at the ASM are further advanced than we know at this time. The key is in the "cookie cutter" remarks. This biotech high tech manufacturing niche is growing rapidly. It reminds me of the "micro brewing" area. PPHM is way too conservative in their projections for current fiscal year revenue at Avid in the 30-35mm outside business. PPHM already running at about a 38mm rate through first quarter and increasing backlog with only Avid I in the projection. A number of shareholders have advised PPHM to raise projections as soon as Avid II officially opens.
Avid II is also represented way too conservatively as a "doubling" of capacity when IMO it is closer to a tripling of capacity. Avid II is also designed to operate 24/7 if necessary which potentially makes its capacity way more than a triple of current capacity. Not only can it operate longer hours but the new replaceable reactor liners make it a much more efficient operation with much less down time between batches.
I would keep an eye out for Avid III based on hard contracts with prepayments. There is no reason manufacturing can not become a 100-200 million dollar business over the next couple of years. Also too conservatively stated was PL valuation of Avid at 2-4 times sales. A growing specialty manufacturing business like Avid with high gross profitability and sales backlog visibility is worth at least 5 times sales. I would value Avid currently at 150 - 200mm and rising. If all else were to fail, Avid should give investors a profitable exit if, again,---dilution is kept down.
GLTA investors and patients
RRdog
CP,
Can't help notice your long, long piece on the potential uses of Bavi platform. It is well done as far as it goes.
Unfortunately, most of it is in the distant future of label expansion. Currently Bavi is in PH III for one indication in 2nd line NSCLC. Equally unfortunately, we live and die in the short term. The future can be rosy but if you get hit by a truck today -- not so good.
The two ton truck in the room is "dilution". What do we do about dilution while PPHM proves out the value of the platform??? Just looking at the math, the following alternatives look better than giving mgmt carte blanche on 175mm new share cap authorization:
1. "Defer" the authorization until a very defined use of proceeds with a "no" vote. A "no" vote is a deferral while a "yes" vote is irrevocable.
We all should understand by this time that a "no" vote can be changed for de minimus cost should good reason arise. This gives voters huge flexibility.
1a. "Defer" Prop #3 with a "no" vote until mgmt shows the ability to get value for the equity. The "price" PPHM gets for the equity is more important than the amount of shares available for sale. Selling shares for 10 cents on the dollar vs "lesser comp values" is a bad deal.
Selling shares for fractional value vs "discounted future value adjusted for risk" in a PH III broad platform biotechnology (as described by CP) is a very bad deal.
2. Raise non dilutive capital through a milestone "regional" deal. (A very good option and talked about by PPHM mgmt for years)
3. Leverage Avid for 50-100mm. Debt is much cheaper than equity in the current environment. According to my sources, IP need not be encumbered. Avid is a growing and valuable asset on its own with a high gross profit margin. (IMO there is no prohibition in the preferred prospectus regarding debt)
4. Do a sale/leaseback of Avid (200mm) with a long term lease and the right to rebuy the asset at a TBD premium should a large cash deal be accomplished. Again, IP need not be encumbered. If the leaseback is for 20mm/ year or less it is better than Preferred interest and is a lease payment not debt. The 20mm per year becomes easier to bear as Avid expands. Such a sale/leaseback would buy PPHM years of non dilutive capital to pursue the commercialization of the platform.
5. Sell preferred when possible as PPHM gets more value for equity. (If necessary have K and L Gates paper up a series F preferred without the worst case 29:1 anti-dilutive clause that devours cap space)
6. "Defer" prop #3 until Mgmt submits a smaller cap authorization. A smaller cap authorization would cover all mgmt needs to back options for new hires and to retain existing personnel.
7. Bring in an overall partner for "milestone" deal.
Almost any solution is better than selling large percentages of PPHM for $1+ or giving mgmt 175mm shares worth of room to proceed unchecked. That is truly a horrendous deal.
The really "insidious" part of this whole vote is the change from "non routine" to "routine" vote. Forgetting the arcane legalities for a moment---this is anything but a routine vote. This legal change by mgmt was a clear indication IMO that they had no confidence in winning a vote for a continuation of current fiscal policy under normal circumstances and based on their poor record for creating fair comp value.
Lastly, I would be remiss if I did not thank the board for the pleasant comments on my last article. I don't post often on the board because it is easy to be misinterpreted, but whichever way you vote, I appreciate that so many of you gave my remarks a fair hearing.
PPHM $1.10
Best Regards,
RRdog
Good Evening to all,
I have viewed with great interest the debate on the board regarding the authorization of additional share cap. For me the decision is obvious. I will vote all three of my accounts a resounding "NO". I put no credence in all the wild theories about this vote and prefer to address it on the merits. I will try to keep my reasoning as straight forward as possible in the hope that I can convert all shareholders to this point of view.
1. This is your moment as shareholders. Through arcane Delaware law PPHM has blocked shareholders from voting opinions on almost all other issues including composition of the board. Once, every couple of years, shareholders are dealt a "strong hand" and it has to do with the share cap authorization. Shareholders should realize this is a multi-handed poker game. BP has a hand, mgmt and BOD have a hand and in this one instance shareholders have a hand. MGMT IS NOW TRYING TO TAKE AWAY THE ONE CHANCE SHAREHOLDERS HAVE TO ASSERT AN OPINION BY CHANGING THE VOTE TO 'ROUTINE'. Remember, shareholders are more than deserving of a strong voice in corporate affairs since by and large they are financing the whole operation..
2. Shareholders really need to think specifically and independently on this vote. It can't be "vote with the board right or wrong because I am a loyal shareholder". This is not a loyalty test. This is a vote about reasonable business decisions. Mgmt has done some very good things that I doubt any shareholder could have done much better. Among these are the hiring of Dr. Garnick, a terrific patenting job, a good clinical program over all, MSK and AZN collaborations, and a miraculous revamping of PH II debacle into a PH III FDA approved test with "fast track". I am not a shareholder because I am anti mgmt. But, we can not be simplistic or "broad brush" about this. MGMT HAS DONE A MISERABLE JOB AT GETTING ANY 'TRANSLATIONAL' VALUE FOR THEIR WHOLE PROGRAM IN TERMS OF MARKET CAP.
3. In reference to above point #2--PPHM is selling for approx one sixth to one eighth of dozens of early stage biotech comps that have lesser IP, smaller target markets, earlier phase trials, and zero manufacturing. Imagine--mgmt is actually selling stock for a small fraction of comp value while at the same time maintaining that PPHM has a paradigm shifting technology, that we are late stage PH III and we have a burgeoning manufacturing component with a huge gross profit.
4. The vote to increase share cap is really misdirected. IT IS NOT THE AUTHORIZED SHARES THAT ARE SO IMPORTANT AS THE PRICE PPHM GETS FOR THOSE SHARES. This is not just an opinion. This is simple arithmetic. If you get comp value for the shares (6-8X) you need far fewer shares for financing the corporate program. If you inflate the cap authorization (similar to a Weimar Republic paper inflation) and you get less than a dollar per share then, of course, PPHM will need a lot more shares to finance the program. If, as an extreme example, PPHM gets 10 cents per share for 175mm new shares that is only 17.5mm--hardly enough for a biotech experiment. Once again, IT IS NOT THE AMOUNT OF SHARES AUTHORIZED THAT IS AS IMPORTANT AS THE PRICE PPHM GETS FOR THE SHARES THEY SELL.
5. If shareholders authorize this increase it is "final". If shareholders vote "no" it is only a DEFERRAL and can be voted on again at any time for de minimus cost if there is a specific good reason to increase. A " yes" vote now takes away all shareholder voice, leverage, flexibility. Why would a shareholder do that to themselves. This is negotiation 101--it is really obvious.
6. Mgmt has been advised for years now by many shareholders (inlc myself) as to a number of simple measures that might help the cap value (price) they get for financing. They continue to be tone deaf in this area. In all fairness, Mgmt has improved financing with the pref (also a shareholder suggestion) and shareholders should encourage mgmt to do more in this direction.
7. Mathematically it does not make sense to keep trying for a better and better deal while selling large percentages of PPHM for dollar range prices. Other biotech companies are demonstrating they can make PH I multi-billion dollar milestone deals. Milestone deals are how companies bridge the gap between bid and ask. PPHM has shown some knowledge of milestone negotiation in the 2012 discussion with ABBV as detailed in the legal documents. PPHM NEEDS TO REVISIT THIS TECHNIQUE as an alternative to giving away large percentages of the company for fractional comp values.
8. A "no" vote now (which can be altered later if for good cause) sends a powerful anti dilutive message to Wall Street which (along with some good PR in the pipeline) may actually cause the price to rise. Imagine, shareholders have a real chance to positively affect the price and get higher prices for already registered shares and pref shares. Isn't that a better alternative than constantly complaining on this board about every penny down??!!!!!
8a. A "no" vote now also "gently" informs management and BOD that shareholders are interested in controlling expenses and being a "tad" more aggressive about raising capital through some form of regional deal, milestone deal, paid for collaboration, or partnership.
9. If a shareholder has possession of their shares they can vote no by simple abstention. If an institution holds your shares you must inform that institution of your no vote by proxy. This is not difficult.
Best Regards,
IMO but, also supported by the simple arithmetic.
GLTA
RRDOG
Biopharm,
How could you fail to note my question at approx 37:40 on this webinar about bavi and PS??? First Dr. Wolchok has to correct the moderators' mispronunciation of bavituximab and then answers that they have "deep interest".
Please review:
Not a slap in the face at all. Just suggesting you do a little research before commenting. It is too late in the game for a lot of nonsense.
Not only is there no option activity in May, June or July series but relative to PPHM market cap shares there is practically no open interest in any of the option series.
RRdog
You don't have to be an options expert to read the data fairly and objectively before commenting.
There is zero option volume for either the puts or calls in May, June, or July series.
Have a good weekend.
RRdog
Believe it or not I think it is still too early in the game to really get a meaningful signal from the percentage of institutional interest.
If you are going to do this calculation, why don't you do it in a way that would have more meaning to investors on this board. Your 30mm + number would imply about a 15% institutional interest in PPHM
If you were to add Dart 9mm+ you come to about 20-21%.
I think that still gives a wrong impression. The real increase in institutional ownership is in the preferred which was approx 100% owned by institutions on the offering according to MLV. You have to make the assumption that at some point that preferred becomes common at $3/ share.
So I would take the total amount of preferred sold and multiply by 8. Then add that number to both the total cap and the numerator which would be approx 39mm plus the preferred converted amount. That would give you a clearer more meaningful picture. I believe it brings you up around 30%. Still a low number but more clear.
I think the real institutional interest will show up if and when there are major fundamental events that take the common price over $5/ share. Until then it is a less relevant number. The real increase in the last couple of years is hidden in the preferred.
Just IMO
RRdog
WWTMM,
People can put any spin on this they want but it is what it is. In my universe 2 + 2 still equals 4.
BTW When a tree falls in the forest and nobody hears it---it still falls.
LOL RRDOG
MGaddy,
I've told you before on this board in response to a Cheynew post that the 3/17/15 388,840 was a raise for PPHM as confirmed by MLV for net of close to 8.7mm
This converts at $3 which means for the cost of the interest you are selling a security that converts at a value of $564mm market cap.
This is a way that institutions can acquire interest in PPHM without buying a low priced stock and get yield on their money.
Also, as an aside, a retail buyer could package 8 shares of common with 1 share of pref and have a security with a very decent yield. ( 8x 1.35= 10.8 + 22 = 32.8. Then 2.62 divided by 32.8 gives you a yield on the package of .0798 or just shy of 8%)
This last calculation tells me the valuation for the common stock is very low (not to mention the speculative value of the IP)
Last point. Since the Preferred is almost all held by institutions (it was placed that way) , if you do the math on a hypothetical conversion into common of all the preferred the institutional ownership of PPHM is much greater than "commonly" thought.
Come on guys. This is just math . Nothing to argue about.
Regards,
RRdog
Cheynew,
You can sleep peacefully. It is my well informed opinion (according to MLV) that the PPHMP raise was a cap raise for PPHM by MLV at the same conv of $3/ share or roughly a 560mm market cap.
Regards,
RRdog
MD,
This is an excellent discussion on the subject of patent infringement.
In answer to the swipe by "eyebuy"--- for the record PPHM holds numerous patents on "phosphatidylserine decarboxylase".
You have no idea how deep and valuable the patent position really runs.
RRdog
Good Afternoon to All,
Since everybody seems to be in a good humor today, I submit the following:
Have been away for a long vacation on the planet Mongo. Mongo is the planet furthest from the Earth in the known universe. I am happy to report that on Mongo their favorite game is "Six Degrees of Separation from the Company PPHM on the Planet Earth". The Mongoloids are fantastic players of this game.
Mongo has two suns in its solar system so their beach resorts are fabulous. Unfortunately, it is a favorite resort now for all the white mice that have been treated by PPHM. You can't get a lounge chair at the pool or on the beach because they are taken by the white mice that are no longer afraid of Melanoma. On this last vacation I noticed that not only are the mice laying out in the sun but they are also smoking. I take it something has happened on Earth that makes them no longer afraid of NSCLC.
What the Mongoloids enjoy even more than "Six Degrees" are "facts" that no one else has previously talked about. Since they knew I was returning to my day job on Earth, they whispered what they thought was an interesting new fact in my ear. They hope I will trade it for other new facts that the earthlings can dig up. They already have enough innuendo, speculation, but, they are still craving new facts.
BTW-- Every thing is free on Mongo.
Mongoloids understand "value" but they have no conception of "price" and so they can't conceive of "day trading". They never discuss it. Though IMO there is nothing wrong with a discussion of price or with day trading, my observation is that this flaw in Mongoloid thinking makes them very clear headed and efficient. (LOL)
The Mongoloids whisper the following new fact. :
This recent paper at AACR that used SBRT and Bavi vs NSCLC in mice and for all practical purposes eradicated the disease after 184 days was done on "nude" mice or "athymic" mice. That is to say the mice had fully developed immune systems EXCEPT for the fact that they have no TCells. Since TCells are the killer elite of the immune system this is a "particularly interesting result". Just think about this. To repeat, PPHM achieved this result without TCells.
IMO this is black and white prima facie evidence of the difference in MOA of bavi upstream vs all downstream checkpoints. This IMO makes the argument stronger that bavi is the perfect combo drug since it would be uncompetitive to offer any downstream treatment alone.
Some Downstream checkpoint drugs target PD1/PDL-1 and CTLA-4 . They are designed to counter TCell suppression and release existing TCells to do their work. As you already know Bavi enhances the chain of immuno response that produces more active TCells. So when TCells are added back into the equation this story just gets better.
IMO one step closer to "collaboration".
If you really want to "Wook something up" just imagine--- an immuno therapy that gets 100% response in white mice (NSCLC) without a single TCell---wow.
Best Regards,
RRdog
CP,
Re your post 498
IMO believe "Green Shoe" will be fully subscribed. Therefore , I believe proceeds to PPHM will be approx. 20mm from the preferred E offering (not 17mm). IMO also think that preferred series will therefore have over 200 shareholders and qualify for trading under a symbol in not distant future.
Regards,
RRdog
What is wrong with you guys this morning. Yervoy equals IPilimumab. Number 16 on clinical trials . gov Wake up
RRdog
PPHMTOOLONG,
I like this quote in your last post:
"My crystal ball is no better than everyone else's here. In other words our predictions based on sketchy to no information and the "he used to work with him ten years ago" kind of connections are entertainment more than anything else IMO."
If you put me on the furthest known star in the universe, with six degrees of separation I could make a connection to PPHM. It is well to remember that the universe does not revolve around PPHM but rather PPHM is just one small asteroid moving through the universe.
PPHM is flexible and fluid as conditions change and their corporate culture seems to be one of a constantly "moving target". It is easier to assess whether you think it is generally overvalued or undervalued that it is to assess what the particular course of action will be chosen.
So, back here on Earth and because it is closer in time, I am sticking with my idea that the conversion point on this preferred offering will be between $3-4/ share. This seems to be a fair mathematical trade off for the yield versus the risk.
Having seen the ATM sale in the last quarter and the additional cash on the balance sheet, I think the preferred offering E series will be much smaller than fully authorized. This is also in accord with PPHM corporate culture which is one of "titration" and funding to meet need. (I am not a big supporter of PPHM corporate culture--just commenting)
There is nothing in the preferred that stops PPHM from using additional ATM and nothing that stops PPHM from issuing "series F" preferred for example (after the passage of time and news) at a "higher conversion price". There is nothing, for that matter, to stop them from issuing straight debt. If I am correct that this will be a much smaller preferred than authorized, I would expect with high probability that further series preferred may be used when PPHM can do well with them. (They can be issued under essentially the same set of docs and authorization.)
A conversion price on this preferred between $3-4/ share would expose the undervaluation of the common stock. I am not sure how quickly this may be perceived. A second preferred at a higher conversion would be a different matter as that would show a clear trend.
Just in my opinion.
Best Regards,
RRdog
Good Evening to All,
I am mildly pleased with this financing. For one thing PPHM has stopped selling common at ridiculously low prices relative to other small biotech companies with lesser IP. They are about two years late in this but at least they got there.
The following occurs to me:
1. I think Geocappy and Firefox are largely on the right track.
2. A 10.5% Cumulative, convertible, preferred stock is "priced to sell"-- and in some ways has the properties of a junk bond.
3. Most preferred stock sales are pretty well spoken for in the underwriters' "minds eye" before they are offered.
4. This deal is infinitely more sophisticated as structured by Mike Hedge at K and L Gates than the last fiasco debt structured by Lytle versus "uncontrollable" events at the FDA.
5. The Preferred takes debt off the table i.e. not necessary. However, unless I missed something in the fine print, debt is still an additional option against an asset such as Avid.
6. I suspect the buyers will be pretty well assured from the "road show" that they will get their interest and principal returned (or converted at favorable terms). Therefore, the buyers will have to feel that the IP is valid and dealable, that the interest can be paid in the interim, that Avid is a valid and growing cash generator (which I have been saying for a long time).
7. There is absolutely no way that PPHM will pay 10.5% yield in a "no yield world" without getting a substantial premium on conversion to current price of common. That is absolutely the point of the preferred. Otherwise , just keep selling common and don't pay any interest. (PS don't pay attention to posters who have been bashers for years--what are you crazy.)
8. My best guesstimate is that MLV et al will be able to sell this offering with a conversion price between $3-4 per share. Of course this is not as high as I would like but it is a step in the right direction. Most importantly, if I am correct, this price is ANTI- DILUTIVE TO THE COMMON STOCK and in fact LEVERAGES THE COMMON STOCK.
This offering therefore-again if I am correct-SHOULD BE HIGHLY POSITIVE FOR THE COMMON STOCK HOLDERS AND LEAVE PPHM IN A HIGHLY FLEXIBLE FINANCIAL POSITION.
9. At the Piper Jaffray conference I suggested to mgmt. that my scientific advisors thought that PPHM could be running at least three dozen clinicals currently if they were financed properly.
Mgmts' flippant answer was that they could probably be running a hundred clinicals. There is some truth in their humor. My guess is this financing will allow PPHM to run many more clinicals than just PH III NSCLC.
10. The overall flexibility that will accrue to PPHM from this financing raises the stakes in this poker game a great deal.
11. IMO I would guess that over time the price of the common should move toward the price of the conversion on the preferred.
12. IMO this financing takes a number of negatives off the table, adds balance sheet strength and credibility to the company. IMO therefore, the value of the IP should begin to gain better recognition and the value of future scientific announcements should carry more market cap weight.
All in my opinion,
RRdog
Wook,
My "guesstimate" would be closer to 150 sites. (600/ 150 = 4 patients average per site. Could fill up faster than you think.)
PS I was in attendance at the Piper Jaffray conference where the phase III was briefly discussed so I feel modestly informed on this issue.
IMO would be wise to disregard most of what was written about that conference by negative posters who don't have the faintest idea of what they are talking about. Ditto on negative posters re enrollment. Look for a "hockey stick" enrollment and "fast start" aimed at getting to interim looks faster. Interim looks are event driven by number. Not necessary to have full enrollment to get to interim looks.
It is clear as crystal that the value of the IP is increasing at a more rapid pace and an ever broadening outlook. PPHM as a research organization is doing well. Forget all the bashing and watch the "feet" moving toward this small unknown company inclusive of top Bus. Develop personnel and four KOL types on the S.A.B..
It is also clear PPHM still not doing well as a stock. In my opinion both areas should come together in a positive direction.
Directional change in PPHM as a "stock" might be aided by the following IMO:
Increase at Avid is good for cash flow and lessens ATM need. Lytle still lowballing IMO Avid projections at 18-22mm for fy. IMO could be more like 22-30mm for fy.
Lytle again mentions debt as a less dilutive option. There is no reason PPHM should not be able to put in place an interim loan vs a stronger and growing Avid free cash flow. IMO Avid easily sustains 30-40mm in long term, clean debt that in no way encumbers IP.
Expanding KOL publication re MOA should expand partnering ops. Worsley is a licensing and partnering expert with a proven track record on Mabs. Naturally, some interim deals, other than sale of entire company, would be positive for stock IMO.
Regards,
RRdog
I read very few posters on IHUB and respond infrequently. One of the posters I like is CP because occassionally he has something very interesting to suggest. Conversely, when I think he says something I consider silly, I tend to come down hard on him because I am "expecting" more and "expecting" him to be smarter. Usually, the issue in debate has to do with "dilution".
Another poster I consider very clear eyed, specific and generally knowlegable in his responses is "Bungler". However, I think Bungler has caught the "inanity" IMO re "dilution" from CP. What's worse, several additional posters are actually praising his analysis. Obviously, they don't know any better but, it is important to understand this issue as it is key and it will be carefully questioned at the ASM---so listen for it.
Let's take one more crack at the "essence" of this issue rather than the dictionary definition. "Value", at the end of the day, is what PPHM is going to get for its IP in the form of buy out or partnering with milestones. "Dilution", in terms of ATM shares and mgmt options has to do with the cost and efficiency and time in getting to the final value.
Let's say, for example, that at the end of the day, PPHM gets in one form or another 2 billion dollars of value for its IP. That number may be high or it may be billions of dollars low but, it is convenient for example.
Based on todays capitalization of aprox 156mm shares, that means a shareholder would get (2 B / 156mm) or roughly $12.82/ share (actually a bit less when you figure all these options in but we will leave that out for example).
Under this scenario, most shareholders would do pretty well if this 2 B deal were cut today. However, if it takes a long time to get there and PPHM has to go the very expensive route of PH3 on their own, then shareholders may not do as well. If , for clarity of example, it takes another 3-4 years and PPHM continues with the self defeating ATM and gets to the 2B valuation but now has 312 mm shares, then each shareholder would only get $6.41 cents for each of their shares and that is not nearly so good.
Well, what if during that period PPHM creates a lot more value--that would be good. However, PPHM might not create more value and BP may have moved on to a completely different solution to the same problem and PPHM IP might be worth less. The universe is dynamic and expanding and conditions change.
So "time" is very important. That's why the expression "a good deal today may be worth a lot more than a great deal tomorrow".
Also, "how you finance" the creation of value is important. Some ways are much more "efficient" than others. If the only thing you know is ATM because you have been addicted to it for over a decade, things can get plenty expensive. This is especially true when the market "KNOWS THE DILUTION IS COMING" and is going to suppress the price and make PPHM pay through the nose regarding the number of shares it must sell to reach their goal if ever.
All PPHM shareholders are intimately acquainted with price suppression.
If PPHM chooses a more efficient method of financing (something other than artificially low price issuance of ATM) then there will be fewer shares and the price shareholders will get for the IP value will be higher. "Efficiency" in getting to a corporate goal is key.
Among the many methods that might lead to greater "efficiency of finance" are the following:
1. Professional PR that really gets the story across to the market place so that the market affords PPHM a fairer present discount value for its efforts. If the share price is $4.50/ share then, even if PL can't figure anything else out but ATM, your dilution rate is cut by two thirds. PPHM PR/IR has been a disaster for over a decade. They have the biggest biotech story to tell in the hottest biotech area (IT) and nobody understands them. I submit there are many IHUB board members that could tell this story better.
2. PPHM might hire a top IB to professionalize their "book" and broaden their partnering search, improve the market making, improve the research, and improve the structure of financing. I submit that such an IB might also add a few points of "credibility" to the price and cut dilution by two thirds.
3. PPHM could consider "well structured" debt vs their Avid asset which is growing both in revenue and free cash flow. A reasonable amount of debt is more efficient financing than selling ATM at one twentieth or less of future discounted value.
4. PPHM could consider a sale leaseback of Avid, maintaining control of the asset and the right to re-acquire.
5. PPHM could do a smaller deal, or regional deal for a non-core piece of IP. This would allow funding for the core platform with more efficiency and no ATM. Such a deal might be for Cotara or for liver cancer in Asia (as has been suggested).
Cotara is a particularly egregious example. PPHM has a paid in capital deficit or cumulative loss of nearly 400mm. Best estimates are that Cotara accounts for 25-37% of this overall deficit that has been funded by ATM primarily. In additiion, PPHM has spent over 10 years of man hours developing this technology. During Dr. Garnicks' tenure PPHM spent many millions more completing the technology and then Dr. Garnick spent most of a year getting "everything he wanted" from the FDA protocols.
Not to be able to capitalize on this asset in some way that is more efficient than ATM is a staggering Mgmt failure.
These are just some examples of ways to become more financially efficient and less dilutive but, the actual list is much more extensive.
Supposing PPHM succeeds over a long number of years in creating 10 billion of value but by then it has 2.5 billion shares. (Don't think that's impossible. Some of these drugs are hugely expensive to create in ultimate form and when the market "KNOWS THE MASSIVE DILUTION IS COMING" they make it even more expensive.) In this example of fabulous value creation the shareholder only gets $4/ share for their holdings. I don't expect this to happen but I use it as an extreme example to demonstrate how insidious dilution can be.
Let's use a more "real world" example since long term and long suffering shareholders in PPHM are in this for the big hit. Supposing the ultimate value for PPHM is 5 billion dollars. A year ago at 100mm shares in the cap you would have gotten $50 a share for your holdings. Today, at 156mm share cap, you would get approx $32/ share for that same IP. Quite a difference. At 200mm sh cap you get $25/ share for your smashing success and at 300 mm share cap you get $16.66/share. That is some whopping difference on the back end and the "back end" is what most knowlegable shareholders are here for.
So the next time some poster like Bungler tells you something really stupid like:
"I submit that unless you are concerned about loss of voting power, do not fret over dilution through ATM sales, because it has no effect on the price per share."
You will know that he has taken short term leave of his normally very sensible nature and you will disregard such statements and press mgmt to become "ever more financially efficient".
Best Regards,
RRdog
My guess is you are making some brilliant assumptions on the amended complaint. IMO the meat of the complaint is in two parts:
1. PPHM was untimely in releasing the news re coding error . This is very difficult to prove and already rejected.
2. That PPHM failed to release the initial results as "preliminary". "Preliminary" in this sense means not "final". I do note that PPHM used the word "interim" in their initial release. "Interim" also denotes not final so I think this case is weak and will be thrown out again.
My legal friends tell me that by allowing time for an amendment there can be no cause for a "procedural" overturn. The second time this is dismissed it will be final and irrevocable. Expect PPHM to answer the amendment shortly and somewhat thereafter for this lawsuit to be terminated. In any case, it is not important to outside negotiations as any potential partners with PPHM would be "held harmless" from this kind of suit and secondly, expect termination date to be prior to collaboration.
IMO you are making a good guess in that somewhere in the complaint the plantiff is referencing a potential partner and partnering discussion for PPHM as a reason for not releasing the results properly??? This is a weak argument but it may be one PPHM might believe interferes with current discussion. At least that is possible.
Lest you think I am completely in agreement with you on all things, I still can not understand how someone who can be so smart about so many things is so colossally stupid IMO on the subject of dilution. You have written many, many times on the subject of dilution and IMO you are wrong every time not only from a classic accounting point of view but also from the practical point of view that the ATM itself is self defeating and depresses the stock making future ATM sales even more dilutive.
What's worse is you are not even approaching the subject from the right direction. Instead of trying to justify managements' decade long persistant use of the ATM to the point of addiction, you should use some of your brilliance to investigate alternate means of finance of which there are many. Write half as many times on alternate means of financing and I will start to take you quite a bit more seriously instead of as just a mgmt apologist. Their way is not the only way.
Best Regards,
RRdog IMOO
Alvaroc,
This is an excellent post. If you drill two layers down on this you will find that Glaxo is paying Immunocore of Oxford over 200mm for pre clinical data (repeat--PRE CLINICAL DATA) re ImmTAC sites.
This appears to me to be a direct attempt to compete with PD-LI technologies.
Again this is "downstream" from PPHM cell surface tech. It is only logical that sooner or later these guys will all move "upstream" for the combo hit vs cancer in immuno therapy.
I wonder what valuation PPHM can get for pre clinical data on beta bodies plus the package for the entire PS platform???
Best Regards,
RRdog
PS--A side note to CP--IMO You still have a gaping hole in your understanding of dilution, and non encumbered debt. You should rethink this much more deeply.
The Seeking Alpha article this morning is troublesome. I would like to take a closer look at this article and make the point that the real question for investors is "whether to invest in PPHM at this time and price"???.
Regarding the above simple question I would add that A CORRECT FACTUAL STATEMENT DOES NOT ALWAYS LEAD TO THE CORRECT ANSWER TO THE CENTRAL QUESTION.
Let's parse this article and see if I can better make the point:
1. " Peregrine holds or has an exclusive license to over 200 issued patents and published patent applications worldwide, which is important, but holds little value until the intellectual property is tested and in the clinic".
First of all, if nothing else PPHM is all over the clinic. IMO were the patents for sale they might have serious value. We have all seen recent patent sales from several companies that were in the billions.
2. " Peregrine's stock price, quoted on the NasdaqCM, has seen quite a flux in 2013, ranging from $1.21 to $2.43 in 2013".
This statement is factually true but no more so than most biotech stocks so hardly specific to PPHM. Also, this statement may be totally irrelevant to the central question.
3. "It should be noted that Peregrine was almost de-listed from the Nasdaq due to its share price being below $1.00 for a period greater than 30 days in Q4 2012".
This statement is mostly true, dated, and again irrelevant to the central question. I say mostly true because at no time did I really fear PPHM would be delisted for price since price could be adjusted by reverse split.
4. "it should be noted that with so many outstanding shares, one piece of bad news could easily sending it tumbling below $1.00."
The number of shares is not so important as the market valuation. Bad news could affect any biotech stock and this phenomenon is not specific to PPHM.
5. "Almost every analyst is bullish with their price targets on biotech stocks because they want the financing business that almost every biotech will require. An example of this is Roth's recent $7 price target, or a target that is over 420% the current price"
This statement is not necessarily true in general, certainly not true for PPHM, and Roth historically has not handled PPHM financing. MLV has handled some financing.
6. "Peregrine does still have $145.5 million worth of equity still to offer, which could potentially dilute the stock by 39%"
This statement may be accurate but again, not particularly specific to PPHM. Any biotech can issue more stock and it may be dilutive.
7. "If no additional capital is raised, Peregrine expects to be able to operate through January 31, 2014."
This statement is official. PPHM has operated as a going concern for most of a decade and has never properly addressed this question. It has funded through ATM, Govt grants and Avid revenue--not the most efficient method but nothing new in this . This may not be the most important fact going forward for a new investor that is looking for PPHM to partner.
8. "Ayer Capital Management, one of the largest institutional funds in the biotech sector recently has sold off the majority of their holdings in Peregrine."
This is factually true (and rather funny). Ayer has liquidated most if not all of their holdings in all of their stocks since the fund is going out of business. This fact is rather insidious in my opinion and not germain to PPHM.
9. "The biggest issue with success thus far is the management team at Peregrine. Inexperienced and overconfident management teams often are the difference between a successful start up and a failure. "
PPHM is not a start up. After nearly 14 years the PPHM team is neither inexperienced nor seems overconfident IMO. The original management team led by SK has been bolstered and contains a cadre of sophisticated players that came over from Genentech. These include top clinical experts, top execs at Avid, and of course Rob Garnick who is arguably the foremost authority in the world in FDA regulatory matters. If the article had said the BOD is thin I would have been more in agreement.
10. " it is clear that the company could have put itself in a better position for success in the past. This was seen in 2012 when they released misleading trial results about a second-line NSCLC bavituximab trial."
I'm not sure how PPHM could have "better positioned" this stuff. Again it is factually true in the narrowest sense that PPHM released misleading trial results. However, PPHM did not "knowingly" do so. When the error was found PPHM was quick to retract the results and to investigate. This was a gold standard double blind trial at an FDA sponsored CMO so PPHM was unable to manage the trial and "vial mis coding " may have been deliberate (to be determined legally).
What is more germain is that the FDA found PPHMs' corrective measures using the 3mg arm vs the combined placebo and 1mg arm sufficient in result to allow the phase III testing. The adjusted phase II trial appears historically to be the finest ever run vs 2nd line NSCLC in spite of the PPHM handicap of having to test against their own drug to some extent. IMO as an investor this is far more germain in trying to answer the central question of whether to invest in PPHM than trying to blame PPHM for something out of their control. This is a sophisticated argument and IMO largely lost on most investors to date.
11. "This is not the only time Peregrine has skewed results however. In March 2012, they also admitted that the unexpectedly high PFS in 1st line NSCLC patients taking bavituximab. This was attributed to "Principal Investigator" bias."
I'm not sure I even understand the grammar of the first sentence in this statement. In any case, IMO PPHM did not skew the data they just reported it and to that extent this statement is false. Again these arguments are sophisticated and largely ignored by a "shoot first ask questions later" investor culture.
12. "This clearly has had an effect around the ASCO news release to the extent that investors either see the results as nothing extraordinary, or are still skeptical about investment in PPHM."
I certainly have to agree with this statement.
13. "I believe the second line results show that bavituximab has its merits, and could be used in combination with other immunotherapies and chemotherapy drugs, but it is nowhere near as exciting as the PD-1 drugs being developed by Bristol-Myers Squibb (NYSE:BMY), Roche (PINK:RHHBY.OB), and Merck(NYSE: MRK). With a safety profile that to this point is in line with other approved products, if the phase II results are similar in Phase III, I would foresee approval in second-line NSCLC."
This is an interesting statement/speculation. IMO I disagree with the first sentence and agree with the second sentence. I believe I am better informed than the author of this article and my opinion could be substantiated with a long scientific argument. I believe that argument will be made by PPHM going forward over time and more importantly the argument will be made to potential partners. IMO the safety profile is better than other approved products and the statement quoted is false.
14. In conclusion (mercifully): "Ultimately, the question is, can Peregine get back on the track to success? I believe it is possible, but with the history of mistakes and lack of cash on hand, I am not too bullish. I do not believe that Peregrine is currently overvalued and a partnership deal could send the company easily to a $500 million market cap, but any source of bad news could send it to the OTC for good".
IMO I agree that PPHM is "not " overvalued. It is a generally true statement that bad news is bad and partnering for PPHM would be good. Who needs this author for that sort of deep thinking?
We could go on but I think the point has been made. Simple factual statements are not always germain and may not lead you to a correct answer for the central question.
Best Regards,
RRdog
Geo:
Thanks
Biopharm:
I am not critical of you. I am supportive of your effort. It's late in the game now and I want you to raise your game.
Best to all
RRdog
Geo,
Gild is being credited with a "strategic" buy of Vrus that gave it undisputed control of the whole HVC market (huge) and cover on the flanks. The market buys Gild management and strategy and cash and balance sheet and marketing for future.
I believe that is a good way to look at things from a business perspective. Looked at in that way, a lead candidate for partnering and eventual acquisition might be BMY. They could then control the entire spectrum of strategic patenting from upstream to downstream in cancer immunotherapy, ie from PS intra and extra cellular patents all the way to their T cell
and Ligand patenting.
But, again, that is a story for another day. All I am focusing on right now is the current value discounted for risk of 2nd line NSCLC to PPHM .
Best Regards,
RRdog
Biopharm,
Good luck with Vinmantoo numbers and other biotech boards. In general the "present" value "discounted for risk" to PPHM is not going to equal the global sales of current market size in 2nd line NSCLC.
There is lots of risk in this game. Either you get that or you don't.
EOM
Best
RRdog
Biopharm,
The following may help. My main point is you can not go straight from disease market size to valuation for PPHM. There is a "time" discounting and "risk" discounting before you "may" become SOC.
Description:
Globally, the Non-Small-Cell Lung Cancer (NSCLC) drug market will increase from USD 4.3 billion in 2009 to USD 6.9 billion in 2019 and the market is growing with a CAGR of 4.84% during 2009 to 2019. The major markets in these segments are the United States, France, Germany, Italy, Spain, United Kingdom and Japan. The global top five global brands in NSCLC with the largest market share are Avastin, Tarceva, Alimta, Gemzar and Taxotere. For growth in the future there are drugs in the pipeline and in clinical trials at the phase 3 process development in the non small cell lung cancer market.
In the year 2012 many pipeline agents are going to be launched - such as Stimuvax and Aflibercept. The drugs that are in clinical trials phase 3 processes are vargatef (BIBF 1120), BIBW 2992, Crizotinib, Erbitux, ARQ 197, and Ramucirumab. In the NSCLC drug market, clinical trials have been discontinued due to the failure to meet the primary endpoint of overall survival in phase III non small cell lung cancer such as Nexavar, Sutent, AMG-706, Zactima, Figitumumab, ASA-404,
The high growth forecast is primarily attributed to the strong pipeline landscape, population growth and release of new first-in-class drugs with better safety and efficacy profiles. The NSCLC drugs market will grow due to smoking, secondary lifestyle, and other agents such as asbestos and radon, and air pollution.
- small-cell-
Best Regards,
RRdog
Geo,
Read the narrative.
We are just talking about present value discounted for risk of 2nd line NSCLC. Analysis of other assets for another time.
Would love to see "strategic" overpayment such as Gild for Vrus but it is futile to compare apples to oranges. Never know , anything could happen.
Best
RRdog
Biopharm,
"The right perspective is worth 80 IQ points"---Kaye (senior think tank consultant for Apple)
I've seen you state in a number of blogs that SOC in NSCLC is worth at least $4 Billion. I believe that is a figure you derive from 4.3 Billion in current global sales in the disease and then you divide by cap and come to some imputed share value. Since you are an avid bull in PPHM, I would like to see you get a better handle on this subject to enhance "credibility". Otherwise, you fall into a similar trap to that of CP , in spite of corporate statements, with the constant repetition that PPHM was going to get at least 100mm from the ABL contract. You say the same thing so often you come to believe it true. (In the case of the ABL contract 40mm is a good number so we are just talking about credibility--which is important for avid bulls.)
"Were" PPHMs' 2nd line NSCLC to "become" SOC at some date in the future, it would probably be worth a larger number than $4B as there may be some time passage and the disease "market size" is growing, and the drug could be used "off label" for "much larger" numbers, and the drug might be effective SOC for a generation of annual sales.
If you are going for a "current value" (which I think you are), the number is much lower. You need the "current time discounted value adjusted for risk". And there are lots of risks: quality of partnering, Phase III result risk, advancing competition, marketing risk. Until recently, there was risk that the FDA might not let PPHM advance to Phase III. Fortunately, we can cross that one off the list. At "best" I might value current worth at 1-1.5 B. Either way your numbers are off in my opinion.
Comments are made in a positive sense since I agree with much of what you write and same for CP. It's getting late in the game and IMO the board needs to tighten up as we prepare for forward progress.
Best Regards,
RRdog
I have long thought that immuno cancer therapy would be the next wave. This article may be of interest in that area.
Best regards,
RRdog
Immune system cancer drugs tipped to be a $35 billion market
LONDON | Wed May 22, 2013 5:48am EDT
LONDON (Reuters) - A new wave of medicines that tap the power of the immune system to fight cancer could become the biggest drug class in history, with potential sales of $35 billion a year.
That bullish sales forecast by analysts at U.S. bank Citigroup highlights the growing excitement surrounding so-called immunotherapy after positive results from clinical trials conducted by companies such as Bristol-Myers Squibb and Roche Holding.
"We believe this market will generate sales of up to $35 billion (a year) over the next 10 years and be used in some way in the management of up to 60 percent of all cancers," Citi analyst Andrew Baum said on Wednesday.
Citi's forecast is considerably higher than current market consensus, but if it proves correct, then cancer immunotherapy would exceed the peak market value of top blockbuster drug classes such as statins for high cholesterol.
After years of puzzling over how to get the body's immune system to respond more effectively against tumor cells, scientists are now finding a number of promising avenues.
The new drugs are designed to target areas that act as brakes on the immune system. By interfering with these brakes, the drugs free the immune system to attack and kill cancer cells.
Bristol-Myers Squibb's nivolumab and Roche's MPDL3280A are two leading contenders in the field. Both had an impressive effect against a variety of cancers, according to preliminary trial results released last week.
Further details of the studies will be presented at a meeting of the American Society of Clinical Oncology in Chicago early next month.
MANAGEABLE CANCER
Conventional chemotherapy and other cancer drugs often have a powerful effect in shrinking tumors, but the effect is typically short-lived. The effect of immunotherapy can last much longer because the immune system has effectively been reset to remember how to keep fighting cancer cells.
Citigroup said that immunotherapy has the potential to transform a significant percentage of cancers into something akin to a chronic disease, in a similar way to how HIV drugs have made the viral disease a manageable condition.
On the back of its upbeat prediction for the immunotherapy market, Citigroup has upgraded shares in Bristol-Myers Squibb and Roche to "buy" from "neutral".
Roche stock was trading 1.7 percent higher by 0914 GMT (5.14 a.m. EDT), outperforming a flat European drugs sector.
Other leading players with a range of drugs, vaccines and cell therapy treatments in the cancer immunotherapy field include GlaxoSmithKline, AstraZeneca, Novartis, Merck & Co and Amgen.
In addition to the progress being made in research, analysts believe that the immunotherapy field could also benefit from a new U.S. Food and Drug Administration initiative to speed approval of important and innovative drugs.
The U.S. watchdog recently started a scheme to allow quicker studies of life-saving therapies designated as a "breakthrough", provided that clinical data is compelling.
An excellent analysis Golfho.
I no longer imply that PPHM is "disconnected" from value or "undervalued".
IMO PPHM is completely "misvalued" as in a completely misunderstood company.
The delta between current valuation and a correctly understood and valued PPHM (starting with the basic valuation of Avid which any analyst could compute if they "wanted to make the effort"--- and adding IP discounted for risk to that) is very steep.
Piper Jaffray's Charles Duncan was the first new analyst to risk any reputational chips on this delta and he did his report in a very understated way with modest targeted goals. I expect additional analysts to start coming on board and IMO there will be price target upgrades as well.
Best Regards,
RRdog
PS--Thanks for not using any reference to the following word which is largely a waste of time and has been beaten to death in at least 400 posts: "Sabotage"
IMO it is late in the game now and the board is best served by focus on the value of the IP and Avid which you are doing.
That is correct. There was nothing specific in the question to PPHM. I thought it was odd at the time but I have a lot of respect for Zavoico.. and I gave it some thought because in some way I thought he was trying to get at the long term immunological value of bavi....and how that might be accurately measured.
Regards,
RRdog
RC Johnson,
Sorry Robert if I juxtaposed "locally" and "centrally" . I am glad you got my gist and agree.
Until 2000,
I will be happy to post more frequently if there is less jibberish to get through that wastes time. If we "raise the bar" on this board just a little, I think not only will it be the best such site but also, may be instrumental in making a great deal more money.
FTM,
I agree with your MOS estimation. PPHM has made our guesstimates much more difficult by changing the time frame they hold material facts until they can double and triple check every piece of data.
I suppose thay have become a bit paranoid since the "coding error" debacle. In addition, they do not release the date the control arm MOS events and that makes guesstimates harder. Ditto for information that would help us in ascertaining the date of average enrollment--leaving us to work only from the date of final enrollment. Thus I have become more conservative.
I am also working from the large "N" average of 9.9 months for SOC MOS. However, I note that that average is compiled from a range of previous trials of approx. 8.1 months all the way to a high end of range of 12.7 months. In my own analysis I am using 12 months as the SOC to be conservative.
FTM (or any other informed poster), I certainly agree that the most important concern for current shareholders is the ratio of MOS in the bavi arm to the control arm in 1st line NSCLC. Would like to add one other idea and get your thoughts:
Zavoico, in the Q and A of the qtrly cc raised the question of clinical trial patients living longer and taking additional treatment thus tainting the OS (overall survival) measurement. If a trial could be designed that would prevent patients from taking other treatment or at least measure subgroups that did not take additional treatment or limited treatment then we could get a clear look at extended response or "immunity" without the FDA feeling the result was adulterated by other drugs.
The idea is to validate any immunological response or MOA. This is a whole level up in the bavi story.
Best Regards,
RRdog
JD,
Whichever Bond floats your boat. Personally, I was a Connery fan but Moore made plenty of money for the "franchise".
If I am correct, which remains to be seen, and institutions start to buy into Duncans' thesis, we would see "sustainable, upward curving, accumulation over a long period of time."
We should also see a steady rise in the percentage of institutional holding which IR has been unable to thus far deliver.
Best Regards,
RRdog
RRDog, smart and good post.
However, be careful with:
Quote:
--------------------------------------------------------------------------------
The small molecule value may lie in its ability to also access PS targets inside the cell that have not migrated to the surface.
CP
I am merely moving along the lines indicated in Duncan report:
"In addition, we believe the size and fully-human
nature may support PGN650’s utility as a 2nd-gen “bavi’-better.” Phase I data for PGN650 is
expected this year, and this may result in the company becoming an acquisition candidate,
versus simply a partnering candidate, based on broad applicability but also long run-way
potential for the emerging PS-targeting franchise."
Remember, the bulk of the PS target is located just below a microscopically small cell surface which "is", in turn, exposed to blood supply. I would not put it beyond Thorpe Lab ability to engineer a technique that accesses sub surface PS still utilizing blood supply as the delivery channel.
However, this futuristic vision is not the main thrust of my comments. What I am really getting at is that Duncan is not only selling his institutions on the "horizontal" value of the bavi platform but, now he is selling them on the "franchisable" nature of that platform. That is to say he is multiplying the value. If institutions start to buy Duncans' thesis, it would mark much longer term, upward, and "sustainable" buying. Think of it using this analogy: The first James Bond movie was a broad appeal entertainment platform. Now we are in the 27th or 28th iteration of that platform which makes the Bond movies the most successful "franchise" in movie history with more gross box office than any other platform.
Regards,
RRdog
Something else comes up of great interest in the Piper Jaffray report and that is more talk of PPHM as an "acquisition". This gives PPHM two ways of being looked at --the first being of course a platform licensee.
The following quote supports this line:
"In addition, we believe the size and fully-human
nature may support PGN650’s utility as a 2nd-gen “bavi’-better.” Phase I data for PGN650 is
expected this year, and this may result in the company becoming an acquisition candidate,
versus simply a partnering candidate, based on broad applicability but also long run-way
potential for the emerging PS-targeting franchise."
This sounds like Duncan is starting to perceive the value of the "PS franchise" which makes him smarter than most analysts. The small molecule value may lie in its ability to also access PS targets inside the cell that have not migrated to the surface.
It is a possibility, still too early to really tell, that Piper Jaffray may have interest in a much larger future banking transaction with PPHM. Obviously, it would be difficult to engineer a sale from these prices. However, a stepped transaction would be possible starting with platform licensing and similar to some of the scenarios that have been described before.
Best Regards,
RRdog