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To my view, the concerns about "whether" the company will have a deal, as well as any residue of taint from the trial mix-up, are nonexistent. I am reading all of them, because I know I have a lot to learn, but I am doubtful that any of this is remotely a part of the present. The fact that retail shareholders are scared off is immaterial, and transitory, as well as irrelevant given that a BP deal concludes once and for all any chance of any dilution, ever, except for future management option awards.
Instead,I'm coming to see that PPHM itself is an organization that is too slow, and that trial management is a core competency that PPHM is less good at than the major firms.
It seems clear that PPHM expects, and likely, will, manage their own bavi phase III's (multiple,) because the phase II's are all well underway and/or completed.
The problem that the company has, to my view, is not it's IP, but how to move geometrically faster in trial management and the approval processes. Fortunately, this is precisely where BP's have core skill sets. It will be interesting to see how PPHM both maintains it's role or even control over the trial process, but it incorporates the superior management and skill competencies in this area of the large firms.
I wonder if the pharm companies that have big resources, such as Merck and BMY, are defacto skipping phase III for their PD approaches, and the pacing of the trial process is evolving, and changing, for breakthrough ideas. This point likely has been made by others, and I apologize that I'm just understanding this.
For example, BMY had 1000 patients in their Phase I study, and Merck had 600 for their phase II Melanoma.
In general, it seems that the pacing of PPHM's trial approach may be anachronistic, bred of few resources and an era where the FDA didn't know how to react to a new category.
Thanks, lorekarf for the clarification -- EOM
chenzo, I don't understand this -- can you clarify? Thanks.
I think the IP may be a key issue why there hasn't been a BP deal so far. Or, at least, it's an evolving thought, as I learn more.
As others on the Board know better than I, BP's mostly get credit from the market for likely revenue in the medium and short term. Owning the IP for a potential family of future biological ideas is something that a BP would have a hard time valuing.
Also, a reason why management may have soft-pedaled the IP ownership of a concept, and not merely a specific compound, to it's own shareholders is that retail investors just want to hear when the company will stop losing money -- they aren't in the mood to hear about long-term IP value, ten years out. In addition, management may have wanted to say less about the issue for the reason that you raise, biopharm, which is that less said is better, for competitive reasons.
We know that Bavi is worth "X;" whatever X is. The concept IP, separate from Bavi could be worth nothing or it could be worth 10X. If management is willing to go to bat to protect this future value of the underlying IP, then the "only" deal we'll see is for bavi, and not for shares in the company, or the sale of the company.
A lot of times when people say that management should represent shareholders, what they sometimes mean is "get me a profit on my shares now!" But, another way that management could interpret their mandate is to deliver the highest value to the long term shareholders, and this would mean sacrificing some shorter-term upside and to only make the deal structured on bavi. I would hope it's the latter, and it depends on the management, as to whether they want quicker wealth or ultimate greatest wealth.
I haven't read as much on the board as I would have thought as to what breadth of bavi the BP acquires rights to, assuming the BP deal is limited to Bavi only and no other PPHM asset. As others have recorded remarkably well on this board, bavi may turn out to be useful in a wide array of oncologies and stages of these oncologies. What if BMY is more interested in only one or two types of cancer, and isn't willing to pay up for right to the rest as well as to fund trials and development for these?
The more I understand of PPHM's IP, it's unique to the industry, and it goes far beyond what I can yet comprehend. I know some on the board just want the deal to get done. My concern is not at all on a deal being reached soon, but as to whether the management has the stomach and patience to keep the deal limited and focused only on what the first BP values properly.
There are a lot of deals that get done that seem great at first, but, later, you realize you settled for peanuts. I think that the company's IP may be of this nature, and I hope that management can ignore all of us in the stadium yelling at them to "just make a deal!"
With Bavi funded with a BP for one or a few scenarios, the company will have the capital and credibility to develop bavi for an array of situations and to fund basic R&D to see what else can be done with the underlying concept IP.
biopharm, when you say " it almost hints of a negative type of statement' of my post, you are right! I personally think the patent office give out patents on things it shouldn't...
.....but as an investor, I sure want to own a part of them!
This will take time for a non-science guy like me to digest, but it's a core issue that I was tryng to undwind (and thanks again to the fantastic info published this morning.)
In the early phases of an emerging technology the patent office (and globally, patent officES,) may give patents for concept processes, without understanding the full ramifications of it.
Priceline was given a patent on the reverse auction on the internet, which is absurd. But, they got it.
As best I can understand, as of this moment, PPHM has a concept patent that goes ways beyond bavi. Bavi is merely one sub-use of the concept patent, and there may be other approaches beyond bavi that will get figured out, and PPHM has the IP for any and all of these.
Again, excuse my fuzzy use of terms, but if this is even broadly the case, then it also provides an insight into how difficult the BP negotiation is. For example, does the BP merely get the rights to bavi, and not the underlying concept patent? And, within bavi itself, which diseases, and at what stage of the treatment of the diseases (line,) and for what geographies?
If I'm even 100 yards of understanding this, then to those who want the negotiation to be over "soon," -- these are exceedingly arcane yet economically enormous issues that necessarily will take awhile to negotiate.
Again, I wanted to raise this in case it's a point of clarification that won't be clear once I understand the posts from this morning.
volgoat, I'm still digesting the posts, and so I won't comment on those, other than to say THANK YOU, but since we're on the topic, a follow-up to this comment:
Does PPHM have patents on the "conceptual approach?"
As biopharm says:
The deal process video: http://vimeo.com/62961652
An hour long, but interesting. Maybe basic for most on this board, but the framing of each of the steps of a deal are such that it seems improbable -- that a deal can be finalized, including going through the various divisions of a BP and legal teams from all sides, quickly.
I agree with CP, and his analysis is obviously more sophisticated than what I'm able to technically discuss. And, in general, I need and want to be as passive as possible in taking in the deep set of information, which is a long process.
But, on the issue of the timetable of the deal, I keep seeing it brought up, and I passionately disagree (not with CP, with whom I have learned to always agree.)
It's clear that the company is moving forward with phase III of nsclc, by their statements and their hiring. Each of us can interpret this as either being the company knows they have a deal, and just the terms and which of various partners get settled, or that the company might self-finance. For my view, I feel it's the former.
The company has been talking with bps for a long time. A year, three years -- a long time. They know who they have rapport with; who is interested; the general context of the way the deal might be structured.
But, the FDA approval was never a certainty. And, until the FDA approval was formalized, it was not possible to enter into an actual negotiation. The company might have been confident of an FDA approval, but it wasn't certain, and no BP would be willing to show their negotiating hand and invest in final due diligence without the FDA approval becoming final.
Given the complexity of these deals, and that they are likely ongoing with more than one interested party, I don't see how a deal could be finalized before the Fall. It seems nearly implausible for it to be earlier.
Whether there is a deal to be made -- as I feel certain is ocurring -- has no bearing on whether PPHM's managers are good deal makers. The BP's are brought to the table by the science, and nothing more. Whether it's a good deal or a mediocre deal is where manager's talents will emerge -- but not the fact of a deal.
This single deal is where your entire histories with the company will come to fruition, as is true of the managers. Every one of us should want managers to take every day they need, and to be as careful and effective negotiators as possible.
To my view, if we see a deal before the Fall, I will always wonder if managers did a rushed job of the deal process.
revmonster, re "Time to step up and do a deal.." I see this comment a lot so far, and I don't really agree.
To my view, I want them to take the time to talk to all possible bidders and go through due diligence and negotiate complex terms that involves myriad levels and teams at a global pharm company.
This takes time. Until the FDA approved stage III, the clock couldn't really start. The first-line data is not a factor, because this data is shared in due diligence before we see it (as others have commented.)
So, to think that the company can do all this within weeks of the FDA's phase III approval is absurd, to my view. I would be amazed if there is a deal before later fall, but the company clearly has a near certainty that there is a deal brewing, and they are moving forward.
It seems mistaken to me for a company to take all the time they need to get the science right, but then short change the time it takes to shop the business opportunity to all the interested parties, and to go through negotiation issues that are among the most complex set faced between commercial parties.
regarding board compensation: I readily admit that when I looked at the BOD of the company, I was astonished. It's basically a bunch of guys who get along and control their little public company, without anyone asking intrusive questions.
I haven't looked at the specifics of their compensation as carefully as I will, but the amount of options floating out there didn't strike me as grotesque. In a VC-backed company, board members who represent the various venture capital firms invested do not get compensated, because it's assumed that their payout comes from the returns that flow back to the invested venture firms . But, if an individual is on the board of an early-stage company, they need to get incentivized.
Basically what these guys have is a bunch of options, and most of them way under water. If they can make deals to create a multi-billion dollar company, then all these guys get rich. If the company fails, then they have little to show for all their years and effort.
It reminds me a bit of what you should do if you're selling an expensive house and you can ask the agent to reduce their 6% commission -- because the agent is getting so much money anyway from a big-ticket sale. It's not an easy decision to make, because you have to ask whether the agent will work harder to get you the extra 5% or 10% if they stand to make 6% vs 5%, and remember too that the money gets split with the buyer's agent, and you want "that" agent to want to close the deal.
That's a long example for the point that these guys are exceedingly motivated to get rich from this particular company. Is it fair, all that's gone on in the past? I truly don't know the answer because I haven't prioritized that aspect in my research so far (though I'll get around to it.) What's key, to my view, though, is that I concluded that these guys really, truly, madly want to make some deals that get this company to multi-billion market cap status and, more likely, to a total sale.
Whether PPHM gets 14% of global revenues from bavi or 23%, or however the variables in the deal structure, is just the sort of arcane details that these board guys are likely obsessed on. We would be less likely to get this petty-money-view from a more-biotech-PHD board. These guys want to get rich -- from PPHM -- and to anyone buying shares now, I can be pretty confident that they are going to get the top price for us.
It's true that the board lacks some of the clear expertise that comes from being industry insiders. I just think that, at this point, the BOD issue is less of a concerning factor than maybe it was at an earlier stage. With BP's on board, the Board will get worked out between our present team of guys and the BP's deal makers.
jakedogman, re your comment "Still 3 person incestuous BOD with zero biotech experience that adds zero value.... "
I have a slightly different view. For a biotech company, clearly it's a paper thin board. From my entry-investor view, I'm bothered only a bit.
The reason is that this is basically a deal-making group. They've been together from the early days, and they're all lawyers looking to structure smart arrangements with global pharm companies.
Remember that the only way these guys monetize their almost full-generation investment is the same way that I get my money -- by the share price going up, and this means not only the cash in from a deal, but also the long term payout.
We can be sure that there's little political infighting or dissension among this group. and they've left their negotiating leverage at full in the makeup of the board with their future partners.
Often, in a VC-backed company, the board is comprised just of people who have a financial interest in the company. That's what we have now. In some ways, a biotech smart board would be good, but there are some advantages to this type of board which I'm sensitive to. It's not as if these are family members or second tier biotech guys -- these are just deal makers.
You gotta admit, Avid was a out-of-the-ballpark concept: the idea sure didn't occur at other "biotech" heavy microcap boards!
Thanks, hella. Behind the stock, there's the story of PPHM hopefully prolonging and saving people's lives. The street cred of Cotara must be substanial, because I don't think that oncologists who treat brain cancer patients would even be a part of the completed phase II, or the upcoming phase III trials unless they had confidence in the science. Hopefully, people diagnosed with brain cancer will be able to get Cotara starting this year, if they can get involved in the trial, and not long after.
One of the people involved in the founding of Genetech made the comment in a private lecture that Roche paid at a market cap rate of 100B for the final portion of Genentech it didn't already own. You get a lot of credit for patience, and I can see that there are a lot of exceedingly smart people on the board who agree with you.
golfho, I'm so grateful -- thanks. I have my homework now studying your post, and the added info from others. I'm so appreciative.
hella, I have a question about Cotara that's been bothering me. The person who told me about PPHM also, as true for you, became interested in PPHM because of Cotara and a personal connection to brain cancer.
If Cotara can result in some people who know that they will die quickly to live even just a few months longer, as so far it appears Cotara can, why has the company taken so long to get where it is? Why five years for the phase II, in particular?
I don't have a problem with the delays pre- stage II, because early R&D takes the time it takes, and I don't have a problem with the company waiting from December 2012 in order to raise cash from a bavi or a direct Cotara partner, but those five years seem interminable to me. What happened that caused Cotara to take so painfully long in their phase II?
Carboat, your -- and some others' -- focus on why reporters wrote about things other than bavi at ASCO seems a bit like the many anti-investment-PPHM articles that talk about all the scary things regarding the stock, but not the odds of bavi getting to approval.
At the stage that bavi and PPHM are at now, the only issue that matters, as relates to the investment thesis, is whether bavi has 15% or greater odds of eventual FDA approval ...for anything at all. If BP's think it does, PPHM will get a partner, and the stock price will go up a lot.
For the FDA to allow a stage III trial involving 600 human beings facing imminent death -- and blind, at that, which is even more flagrant with these people's lives in my view -- the FDA had to be exceedingly convinced that the phase II results were material.
I know a whole lot less than you do, carboat, but even I can tell that bavi is a big story. I still don't understand why a reporter milling around vast ASCO, bombarded with data and posters and ideas and food and lack of sleep is a better indicator of whether bavi showed meaningful results in phase II than the FDA, whose decision about 600 people's lives weighed more heavily than whether an article would get written.
I am looking to buy shares in an undervalued company and make a lot of money. I read every negative article about PPHM that I could find, and I had to read each of them many times because they were hard for me to understand at first. Every negative article that likely scared away competing investors, but which had no actual scary content, made PPHM more exciting as an investment.
On the one side we have people writing about the lack of press coverage or the troubled history of the company's stock price fluctuations. On the other side, we have a company that has Avid, and a number of other non-bavi IP assets, in addition to a now-FDA green lighted phase III for a compound that, if eventually approved, is worth many billions.
When I read you say that you aren't going to buy shares because journalists didn't write articles at ASCO or that AH doesn't think the company is investable because there were confusions in September that the FDA eventually put aside, it convinces me all the more that I've got one heck of an entry price. I really mean this -- I can't believe my eyes that I've stumbled into a trove of assets like PPHM selling for barely more than a 200M market cap.
The "no articles at ASCO" issue has no bearing on whether a BP funds the stage III trials. So, to me, you signal an agenda other than making an effort to being fully informative. If a regular person got scared that there weren't articles, I could understand that. But you are clearly very smart and informed, and so you know, in ways that a non-biotech outsider wouldn't, that what journalists chose to cover is a data point that is immaterial to a BP, whose only concern are the odds of bavi approval for any stage and any oncology use...any use at all, and the market value of bavi is way more the cost to a BP of funding a stage III.
I watched a lot of the media reports on the "PD's" and the journalists were truly excited; they weren't pretending. BM, Roche, and Merck put their collective weight behind an extraordinary new direction in cancer approach. I know that you, and others here, having been following the PD-revolution, but for the media, ASCO is when this all became real for the media. And it is really, exciting!
I am probably being dumb in saying this, but I took the lack of any media reports as a signal to put my bet now, before the first line trial data. When there's big news, it can shadow other news, and the PD-debut at ASCO was huge for the medical profession, and for the general media. To understand and report and bavi, you have to put aside all the amazing news of what the majors are doing that's radical and new, and you have to get behind a compound that has a sketchy 9-month history -- who needs to get involved in all that?
Maybe an investor, like me, but why should the media get into the thick of all this, when they know that the BM science teams will figure out what's real and what's not, when it comes to bavi.
Anyway, that's how I read it. I want to buy cheaply -- even if I need to figure something out before the media reporters get around to the story.
Carboat, I interpreted this differently than you, when you say"
"Funny how there were scores of PD-1/PDL-1 articles from all of the major outlets post-Asco and not a one about Bavi."
I saw that too, and it helped me to make a decision that now was the time to accumulate.
The PD-set is a revolution, and the media was right to try to grapple with what these compounds, and the concept of treatment approach, the underlie these compounds.
I read the media focus entirely differently from you. At big conferences, it's always the large companies that make it easy for the media to digest information. The big companies have great food; cute models; lots of PR people to answer questions; and there's no journalistic risk of hyping a small cap stock or getting lulled into a dead-end dream by reporting on compound directions that the biggest pharmaceutical firms in the world believe is the future of oncology care.
This has nothing to do, though, with the inside baseball process of micro cap biotech company compounds that are in development. Maybe there's a Hall of Fame pitcher at the Yankee's AA team in a rural town, but as a fan and even the professional journalists don't mind waiting until the Yankees feel the pitcher is ready for the big leagues.
I think you are confusing the role of the journalist in an era of depleted media budgets with the role of the R&D pipeline team at the major firms.
Is this really accurate, carboat, when you say:
"It is not Avastin that Bavi is being measured against - It is PD-1/PD-L1 from Merck etc."
You likely understand more than I do, but it seems that bavi and the "PD's" are similar on concept, and they are competitive in the sense that one would be used and not the other. But, you seem to be dismissing the role of the medical community, as if the oncologists who care about each of their patients and their reputations will have no opinion as to the relative efficacy.
In the end, don't you think the FDA and the reimbursement agencies will have to leave the actual composite of compounds to each patient's oncologist, and particularly so in an era of personalized medicine, where they are spiraling new sub categories within each cancer type, and even with sub categories there are micro-categories by DNA profile.
You don't think that the medical specialist will have any say at all?
Re "That is a crime of an outrageous proportion, IMO."
It really a crime that goes beyond economic. I'm not a physician, although my brother is, and I look at what I am learning through the eyes of a civilian. The FDA has to decide what it will put it's reputation to, but, as a trial patient, I can make my own opinion as to what risks to take. To my uninformed view, the odds of bavi depreciating the effectiveness of the two standard compounds seems limited, while the odds of bavi helping seems higher than 0%, which as a patient, is all I would care about.
ImaPseudonym, thanks for the link, as well, and I appreciate that an FDA approval needs near-perfect data. No need to dwell on this more, I've just been struggling with this concept.
There seem to be a lot of trials going on for lung cancer, and getting stuck in a blind trial would be a concern. But, that the world we -- and the people who are fighting for their lives -- are in. I just wanted to confirm this.
Yes, I understand they get standard of care. I've been learning a lot about cancer the past couple of weeks, as relates to this investment. If I was a cancer patient, I know I would do even more research, and I've come to the view that the odds of living longer adding bavi to the other two first line compounds would give me a chance to live longer. I guess I'm just adjusting to the cruel world of the double blind trial, where people who face death have no choice. Again, I'm not making a political statement, I'm just grappling with understanding this. It's a system that has a taint of cruelty to it, but I appreciate that without it being blind the FDA couldn't trust the results in the same way.
What if a patient in phase III -- who faces imminent death -- doesn't want the placebo, they want bavi? Is it ethical to force half the trial population to have no choice? I'm just trying to understand this, not making a political statement. Personally, if I were in the trial, there's no question I would want bavi, and I would feel that my life is being trivialized by being forced to have a 50% chance of being in the control group.
Re: "The phase III clinical trial will be a randomized, double-blind, placebo-controlled trial"
CP, from the perspective of someone catching up, this is a fantastic post.
From my perspective, I got past the trial mix-up issue literally in the first half day of my research. I'm not saying that if I were shareholder in September I wouldn't have pulled all my hair out, but for a new person, right now, it's beyond a non-issue.
There was an article in the NYT's about Snowden only having worked at Booz Allen for three months, and now that one hiring error on the part of Booz may turn out to have significant consequences for the firm, and that share price.
Consultants make mistakes. Sometimes they are severe, such as giving away massive security data on the US government. Or, they almost bury a company like PPHM that's trying to do good in the world. But, as an investor new in June, I promise this was patently and obviously 100% a non issue.
Still, I copied and saved your post because it's explains things I've wanted to understand.
Right, CP, I know that charts can only tell part of the story, and the MM's who write the options themselves take the risk that news could cause them to lose a lot of money. The "max pain" chart may be the most helpful I've seen, though for deciding this week's entry point, and I had not heard of it before.
In another very micro cap stock that I own, there is one poster at Yahoo who reports whenever the "shares to borrow to short" at InteractiveBrokers drops quickly, and it seems to indicate a coming, short, bear event. This has been proven to be a remarkable moment to buy. For whatever it's worth, IBrokers only lists 20K shares to short for PPHM, which is crazy small....I don't know what it indicates, but I'm going to check IBrokers in the future to see how that number fluctuates for PPHM.
I don't think that javier likes your bringing the max pain point to the board's attention, which further indicates that buy
CP, that's quite helpful. For a long term investor, it's a great time to buy if the shares are being pinned at a lower point. I'm using your insight to make sure that any shares I would buy the following week, I move into this week.
Thanks for this reply, and the others earlier as well. It's the key issue, and I want to re-read the posts and understand them better.
So, I appreciate the comments, and particularly because I know they had to be dumbed down.
Perhaps I'm naive, but I have limited concern as to the company's ability to fund itself either through a substantive loan or a deal. One of the surprises to me was that the company was able to ever arrange a loan in mid-2012, but I've come to realize that the company has a remarkably clean balance sheet. Given the asset of it's Avid subsidiary and the IP, there seems to be a capacity to acquire at least a first round of debt, sufficient to finance an additional 12 months, through 2015.
I also think that anything above a 20% chance of eventual approval will be certain to be financed with a BP. I could see that at many BP's there might be in-house political issues in the BP making a big investment in bavi, when it competes with an in-house project. But, all this means is reduced negotiating leverage, not an absence of a deal. There are just so many possible deal partners, and way more than there are conflicted BP's.
The only place -- literally the only place -- where the actual data of the studies are discussed is this board. AH, and the other third-party sources have never, as far as I've been able to see, discussed the data, and, if the company can either or both self-finance and get a deal, the rest of all of the AH and SA, etc. comments are 100% nonmaterial. The fact that stage II had a lot of censored participants, for example, is irrelevant now.
The lack of institutional ownership does seem curious to me. But, I've seen this elsewhere, in companies in parallel circumstances, and it may to do more with volume, market cap, and perceived risk of bankruptcy, which to an individual investor is an allowable risk, but to an institution is embarrassing. Because the actual risk of bankruptcy seems remote, a retail buyer can buy before institutional accumulation, and that's yet another value piece.
The trend to factor how a patient "feels" as being a meaningful ingredient, seems evident even to a new and non- medical person. I've been watching recent presentations, such as this from MGH, and, in this, and others, it seems that how a patient tolerates, and simply feels in their attitude, is a material ingredient.
Thanks, exwannabe. "A clinically meaningfully benefit" seems to a standard that bavi clearly reached in stage II, and if stage III merely equals the results of stage II, I don't understand why approval would be in much doubt, and particularly if the benefits don't diminish, as it does, apparently, with other approved treatments. The results of stage II, on their face, are clearly equal or better than any alternative....as far as I can understand, at least.
Overall survival standard: Having made the investment leap based on my business analysis, of which I'm more confident, I'm gradually working through the science. I'm limiting what I ask, because I imagine it's irritating to have the community discussion to be at a remarkably sophisticated level, and then have a newbie be around. Hopefully there are others accumulating, and my curiosity can serve them as well.
Here's one confusion: It seems, from looking at all other NSCLC treatments, the standard for approval is length of survival primarily, and side effects secondarily. Has the FDA standard for bavi's third stage trial being "survival" raised the bar, or am I misreading this standard, so that merely equaling avastin and other emerging approaches, but with equal or less side effects, is the standard? It sure sounds as though the scope of the trial has a higher standard, or is this boilerplate language and bavi's approval is more likely to be judged only in comparison to the real choices that oncologists face between bavi and what else is available?
dia76ca, you read my mind -- thanks from all "newbies" for the explanation.
BioBS2012 and wook, thanks for both of your answer/comments yeterday. Very helpful. As well, of course, following the remarkable discourse that flows every day.
Thanks biobs2012. I've taken the investment leap, and with a position size that's rather meaningful to me. PPHM is a stock owned by an investor whom I deeply respect, and hence my initially wanting to look into it.
The fact that the FDA approved a large study that presumably has a tighter focus on a slightly healthier patient population, but is otherwise identical to the stage II, seems to telegraph almost an FDA tilt towards bavi approval. If bavi works best with earlier-diagnosed patients, and if the concoction is all identical at 3mm, then statistical odds of positive results would seem to be high.
In this context, it's confounding that there are skeptics in the investor community. I have been struggling to understand what is the basis for skepticism, and I simply can't find it. For example, my own general business view of the evolving R & D and pricing nature of big pharma gives me a high confidence in at least a bare bones BP deal and, therefore, that there are low odds of any further dilution prior to the stage III results, i.e at least a forward 18-24 months.
What's been left for me is to understand where the scientific doubt comes from. The statistical odds of a stage III trial equaling or exceeding the results of the stage II that is designed identically except skewed healthier, seems pretty good. Clearly that would be clear to AH and others. It's noteworthy that none of the negative articles ever take on the actual results of the stage II trial and say that these results aren't good; rather the AH's only take on the veracity of the results. The implication is that if I, as an investor, believe the phase II results are legitimate (as clearly does the FDA,) then I ought to be optimistic about Bavi's approval odds.
As a businessperson, and with the added clarity of reading this board, I can easily dismiss the business case issues of past dilution, test results mix-up, and dilution and cash flow concerns. So, I'm hoping I can find the market's skeptical view somewhere in the science itself, and I don't see it yet; i.e. it's hard for me to see that the FDA would deny approval to an approach that extends some people's lives with no side effect.
Maybe that's the issue? That, unless bavi actually literally cures cancer that it won't be approved....but then the FDA would have to take many of the proteins off the market. Confused, but in.
For new investors (like me,) expanding on this would be useful.
As has been vividly explained on this board, bavi works best on healthier patients. Also, bavi works in conjunction with other proteins likely in different ways for different people. So, the more the phase III trial allows for participation by patients earlier in diagnosis, and for a wider array of concoctions, the more likely it is that bavi's potential will be clarified.
I've struggled to read in multiple posts whether phase III allows this expansion of the trial agenda....or whether, as stoneroad says, Phase III is simply a mirror of phase II, but with a wider pool.
I know this topic has been discussed in multiple postings, but it's been hard to follow the resolution of the nature of the phase III pool.
javier, to give a serious reply, the high short position is a significant lure to an investor like me. I'm certain that you have no knowledge about the company which I don't have, and that you don't have any insight into the science deeper than what the FDA has on bavi. So, to my view, shorts are playing the losers game. With Avid, the patents, two phase III trials in two different proteins, and other assets, the worst that will happen is the share price falls to, let's say, 80c. But, if literally anything good happens -- an analyst upgrade/initiation from a major firm, big pharm investment, new positive trial results, or a positive article, the price will move quickly, higher.
So, part of my investing calculation is that I say to myself, "what would the real share price be if 10M shares had to bought?" This lets me know that I'm getting an artificially discounted price -- because the shorts are defacto selling me their shares at under-the-market pricing.
I truly don't want any of the serious members of this community to misinterpret.
Below is my activity this morning; My strategy is to build a base position, which I did since last Monday, and then at each dip I add.
Status Action Quantity
Symbol Type Price
Act. Price
Time-in-Force Reported
Filled Buy 1000 PPHM Limit 1.53 -- -- 09:36:14 06/13/13
Filled Buy 1000 PPHM Limit 1.5599 -- -- 09:33:00 06/13/13
north4000, I agree with everything you wrote.
My initial comments stemmed from the SA article, where I felt that the author was fighting PPHM not on the science, but on the business of the stock. So, while I'm still learning the science, I know enough about business to see that the author is clearly incorrect.
Now as a shareholder at a level that's meaninful to me, I will be thrilled if the company is acquired. And, if bopharm's scenario of a multi-hundred pre stage III trial happens, I'll be even happier.
But, even if the deal is bare bones, that scenario is not remotely built into the stock price. And, this is what lets me know that the market is doing a horrible pricing job.
I've read a number of backwards conference calls. To my view (still learning, please understand,) management sounds fine, and when they say they're doing something, I believe them. So, when I read SKing say, over multiple CC's and in press releases that the company is seeking a partner prior to the launch of phase III, I believe him.
BP's are lean machines nowadays. Even though they're big, they've become partly virtual research and approval systems, where much of their work occurs at development-stage biotech companies, and where BP provides just money and expertise. Later, when it comes to marketing, manufacturing, global approval, and pricing, the BP's have the scale and then take over. So, all I was saying, north, is that I worry less at this point as to management's trial expertise, because they'll have the "resources" of a global BP, but PPHM will still carry on their business, including trial execution, independently.
So, of your scenarios, the only one I don't believe that management is even considering is going alone. They don't need to -- I believe, and I've invested, in the idea that all of the key oncology global houses are talking with the company.
biopharm, you say "As for $50-100M upfront payment.. I'm sorry, but I don't see how anyone can see this as a proper valuation for a Bavi pipeline."
Clearly, you're right. With a traditional milestone payment structure, while the first payment might be 50M (and maybe much more,) there would be other staged payments such that the cash payments would be much higher, and also provide for a higher percentage revenue take on sales (the more cash upfront PPHM takes, the lower their percentage of revenue at marketing.)
My real point is that even a bare bones 50M first phase payment is not factored into the share price. Even it was, than the author of the SA wouldn't be focusing on the cash position of the company. It would be clear that PPHM will not need to dilute further and that it will have capital to conduct it's trials.
From the science perspective, I'm still learning, and without a science background, it's a slow go for me. This Board helps enormously, and particularly cjgaddy helps a lot here and his postings at IV (my nom there is "entrepreneur.")
My initial point in this thread is that the SA author talks about the science of bavi, but he battles PPHM mostly on the cash flow aspect, and, therefore, the author of the SA article believes that there is meaningful doubt that PPHM can get even the standard 50M + milestones deal. To my view, (and yours even more so,) that's absurd.
Also, the SA author is living in a dated pharm world, in my view, where he doesn't recognize that BP's are needing to build diverse portfolios of oncology solutions so that the BP can have all the key components of a cocktail. So, the negotiating position of PPHM is uniquely high for a drug that hasn't even begun phase III and where the results are promising and even persuasive, but not yet convincing.
investingdog, you say "I think that's all (50 to 100 millions upfront) they will get at this point without having BLA or some sort of accelerated approval path in the pocket."
That seems right to me, with additional payments at achievement points. Maybe they'll do better, but your view of what the company can get is not anywhere near factored into the share price, in my view.
I don't see why the company having a staff to manage expanded trials is inconsistent with a deal, though. It seems, rather, that it's signaling confidence in an upcoming deal.
Anyway, that's my view, and we'll all know the answer within a few months.