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You are right - I do not have a position in CYDY and have stated I thought the drug was good but the company's finances were pretty bad. Thus, I wanted to buy after the forthcoming offering that might create a huge amount of dilution.
As things sit right now, it is hard to be sure that I will get that offering. If the data is good, the price might well rise and the offering will be done at higher prices. If the data is outright bad or even leaves room for some doubt, then the company either goes under or the offering they complete will be highly dilutive.
I believe the chance the data is good is high but it still a binary event that I am not willing to play. The previous test results that were released were not thorough so there is a chance they were worse than it seems. So, I am opting for safety at this point. If the results are unequivocally good, then I will miss the first run but there should still be a ton of future appreciation after that over the next couple of years.
I don't even think there is an issue with it but I can't figure out a great reason for doing a convertible rather than just stay with the stock, other than the reason already mentioned as this was the only way to keep the issuing price at $0.75. So, I can't help but noodle over what might be the reasons for doing the convert for a limited number of insiders.
I suppose if the drug stinks, the convert owners/insiders would just take their losses. But if the drug fails on some technicality, then they might let it go belly-up, and then take the still good drug and start over with new money from others and where they have a bigger stake in the new company.
Now, we have no reason to think the results of the phase III combo will be bad. So, the company should be able to raise additional capital. And the fact they cut off the additional fundraising could reflect their confidence the results will be good and/or it could just be related to inside information management now holds that would not allow for additional sales of securities until the news is public.
True, the few convert holders would also technically lose but would also be entitled to the assets of the company while shareholders would get nothing. There are only a few convert holders and they are basically insiders. They may know the value of those assets in the longer term better than we and they might be able to restart the company post a bankruptcy with new money and where they control a much larger stake in it.
But your explanation of trying to keep raising money at $0.75 is also a good one and it reflects well on the insiders that they would not be buying at better prices than everyone else. But, they did buy on better terms as the convertible is superior to common shares. If I had bought the common shares in May/June, I would not be happy that insiders were getting better terms than me.
Why was the latest round of fundraising cone using a debt security (convertible bond) versus stock? Why was it largely insiders who supplied the funds. The only reason I can come up with for this is a concern that they may not be able to raise the funds and those holding the convertible would then be entitled to the company's assets when it defaults. The insiders may know the assets are worth something and wanted to be prepared in case they are unable to raise the needed funds.
One could argue they stopped before raising the full $15 million to up their chances of getting the company assets in a bankruptcy.
While I don't believe that, I do wonder why they used a convertible and put themselves ahead of the rest of the shareholders in the case of a default. The offering also seemed to be to only selected individuals.
Does anyone have a good theory as to why they chose to use a convertible and sell only a little more than a third of it to insiders and apparently their friends?
I think one issue is that the FDA changed the rules between Oxycontin approval and Rexista. That us what the pADCOM was upset about - IPCI did not follow the protocols established for opioids by the FDA in 2015. So, they basically just ignored any data that was presented because those protocols were not followed. That is how 19 of them could vote against the drug being better at deterring IV abuse even though the facts were forcing them to vote in favor. They thought they had no reason to look at those facts since the protocol was not followed. Which seems petty and bizarre but there is no going back now.
Getting Rexista back on track will likely take some pretty fancy footwork by all the dancers involved (the FDA and IPCI primarily). I suspect it can be accomplished but it will not be simple as the political element, which I thought we had on our side, may now be against us. But if the category 3 trials are good, that should give the FDA cover to move forward.
Meanwhile, while we have been focused on this issue, as you would expect, the other generics have to be getting closer to approval. And one has to wonder if there might be something going on regarding Regbatin or PODRAS partnering. Or maybe even Rexista partnering. As I have said before, we know Rexista is superior, the FDA knows it and Purdue knows it too. While the ADCOM was a punch in the face, if we are right in saying the facts prove it to be superior, then there could even be progress on the partnering front with Rexista.
So, there are a lot of good things that could yet happen and the stock is barely reflecting the potential for the generics.
There may be a communications problem with the FDA but I am of the opinion the problem may be more with the FDA than with Odidi. I suspect the company was hung out to dry by the FDA at the ADCOM where the FDA failed to properly anticipate the panel's reaction and also failed to prepare the panel properly for how they were thinking about Rexista (and perhaps how it was similar to Oxycontin approval process). I sure if we knew everything that happened behind the scenes we would be a bit more sympathetic to management.
Now, I also agree that communications from the company to the market, or just about anyone else for that matter, are bad. The company should have more analysts following it but analysts are loathe to cover a company where the info flow is so bad.
As for Odidi not saying much and more acting as the head coach, that was likely a conscious decision driven by consultants who knew his heavy accent might prove to be a disadvantage. You can be sure there was a lot of strategizing that went into the ADCOM prep by the company management. As I said earlier, the one doctor speaking for the company was often halting and hesitant was a problem and I imagine that was because he was coached not to say anything about certain topics and then he was asked directly about those topics.
In the end, I think if we knew everything about what went on, we would lay a lot of blame at the feet of the FDA. Hopefully, I am right and the FDA knows they are at largely at fault. If so they might feel a bit obligated to make things right.
That is extremely interesting and relevant. Do you have a link to something that would confirm it?
This is the only change I have found in the amended 10-K issued today - it appears CYDY may have had their hand slapped for misstating the facts:
First description of competition from Ibalizumab in the original 10-k (bolded section removed in the updated 10-k:
The only other monoclonal antibody in clinical development for HIV, that we are aware of, is TMB-335 referred to as ibalizumab being developed by TiaMed Biologics. Ibalizumab targets the CD4 receptor on T-cells which is one of the two co-receptors required for HIV entry into T-cells. However, CD4 is the T-cell receptor for recognizing targets of the immune response and critical for immunologic responses. We believe that targeting CD4 will interfere with immune function to an undesirable extent and if developed further will vastly limit the potential of ibalizumab as an effective anti-HIV therapy.
The restated description in the revised 10-k:
The only other monoclonal antibody in clinical development for HIV, that we are aware of, is TMB-335 referred to as ibalizumab
being developed by TiaMed Biologics. Ibalizumab targets the CD4 receptor on T-cells which is one of the two co-receptors required for
HIV entry into T-cells. However, CD4 is the T-cell receptor for recognizing targets of the immune response and critical for immunologic
responses.
Very curious. Did anyone see any other changes?
I wish I could give you a definitive answer on how long those tests might take. My guess is the category 2 tests take a long time but the category 3 tests can be accomplished much faster and at low cost. That just makes sense - it should not take too long to find people to use as guinea pigs to test the abuse deterrent properties of Rexista. And therefore it should not cost a lot of money. Which makes you wonder why they just did not do those tests already. I suspect the tenor of the meeting would have been completely different if those tests had been completed. They could have explained away the lack of category 2 tests due to bioequivalence and if they had category 3 tests in hand, that might have been easier for the committee to swallow.
Based on that info, the lawsuits might just have some merit in this case! Both the FDA's acceptance of the NDA in contradiction to their protocols and these statements by IPCI left investors with a very false impression of what had already been tested.
My understanding now is that all of their studies were category 1 studies all of which are done in the lab, not in humans.
Here is a description of the there categories of studies from the AMckie report this morning:
Laboratory-based in vitro manipulation and extraction studies (Category 1) to evaluate the ease with which the potentially
abuse-deterrent properties of a formulation can be defeated or compromised.
Pharmacokinetic studies (Category 2) to understand the in vivo properties of the formulation by comparing the pharmacokinetic
profiles of the manipulated formulation with the intact formulation and with manipulated and intact formulations of the
comparator drugs through one or more routes of administration.
Clinical abuse potential studies (Category 3) to assess the impact of potentially abuse-deterrent properties of the formulation.
Selling partnership rights for less is the same as dilution from an equity offering. Either way, shareholders get less.
Also, you refer to the test as a phase III test when what the ADCOM wanted was category 2 and category 3 tests. Category 2 is pharmacokinetic tests which I am sure the FDA and IPCI did not believe were necessary since the drug was bioequivalent to Oxycontin. Category 3 tests are clinical abuse deterrent studies which test whether the proposed deterrents are effective. You will notice the company did not say it would do any Category 2 tests in its PR today, so the FDA must have signalled them this is unnecessary.
One thing I certainly agree with you on is that every aspect of the ADCOM was sloppy. No one really did a great job in the end and the panelists were running around like a dog that had just slipped its leash, paying no attention to what they were supposed to be doing. I am not sure they were ever informed that Rexista had not even had any phase III tests because it was bioequivalent to Oxycontin and since we have this raging opioid problem which has raised the need for drugs like Rexista to get to market quickly. They were all concerned about stigma and insensitivity of the blue dye but there decision yesterday likely cost some lives that would have otherwise have been spared. If it was even only 1 life that was saved it would have been worth approving the drug as there would be no other harm than some blue faces that Rexista would cause. Apparently, hurting an abuser's feelings counted more than saving their life!
If we really believe that the ADCOM was a joke and that Rexista is the best ADF Opioid available, then there is a good chance the FDA believes that and potential partners believe it as well. Common sense says we are right so the implication is that the company and the FDA will come up with some way to "address" some of the concerns of the ADCOM (leaving aside the truly wacky ones) and that a potential partner will also still be willing to pay a very nice amount.
On the other hand, if we are wrong in that assumption, the FDA is not going to approve and thus there will be no partner. There will be no partners willing to step in at half price, so to speak.
I think it is all or nothing. Well, maybe not all as the ADCOM had to take a piece of the economics away from IPCI. But if the drug is good, it will find its way to the market. Considering the delay the Purdue lawsuit would likely have caused anyway, the timing of when it gets to the market may not be much different from what it would have been anyway.
This is standard stuff for any stock that has a big decline. The law firms have no idea what is going on yet but race to file and figure out the details later. I think such lawsuits have impacted at least 25% of the stocks I have owned and they are all settled in such a way where the law firm makes a little money and the shareholders make essentially nothing, if they are settled at all. It has always been a non-issue in the case of the other companies I have owned who were subjected to this.
That is not going to happen. Until the Rexista mess is straightened out, the company is not worth that much and the Odidi's are your poison pill. There is no company without them.
That was never addressed well and I had to think that even if you got it into the syringe during the 30 seconds (and I believe this window only occurred under a specific means of abuse that not every addict may be aware of), it would continue the gelling process and would be very hard to get out of the syringe. So, what exactly happens in this rare situation? Is it possible to get the drug into and out of the syringe (and into your vein) in less than 30 seconds? If it gets into your vein, does the gelling process stop or reverse?
While I think the FDA deserves a lot of blame for what happened yesterday, the company deserves a fair amount as well as they did little to explain themselves well and seemed unprepared for many questions. I have to assume they never thought such questions would be asked as the whole session veered in a different direction than it was supposed to. Even so, they were not very fast on their feet and their experts did not always inspire much confidence. The one guy was so halting and hesitant at times that it was clear to me that he had been coached on not saying certain things but found himself in positions where he then had little or nothing to say.
Basically, they could not discuss it as the committee members already made up their mind once they had no studies to support ADF for nasal and oral. It was case closed, unfortunately. And, since the FDA accepted the NDA with the knowledge those required studies were not included, it has to take some of the blame. They really hung us investors out to dry as we had every reason to believe everything the committee would need to give an affirmative answer to the questions was in the NDA. .
Also, I have to assume the company only mentioned carrying out Category 3 studies because Category 2 studies are pharmokinetic studies and they don't think these are required due to bioequivalence with Oxycontin. As such they would be repetitive. I assume this is what the FDA believes as well.
Has anyone wondered why the FDA accepted the Rexista NDA if it failed to live up to the protocols established by the FDA? We investors had no idea they accepted the NDA even though it was technically not complete. That is why we were all blindsided yesterday. The committee could not get past the idea that the category 2 and 3 tests were not completed and, as a result, just disregarded all other evidence that supported the fact that Rexista would have been the best product on the market. Also, they basically said who cares if it was the best product as all the opioid ADF products are ineffective since abuses just move on to other drugs and they see no reason in approving the best option since none of them solve the problem.
What a mess of an ADCOM - they complete lost perspective and there was no one to shout at them and point that out. They just effectively shot down the best option. If Rexista helped prevent 1 death, it was worth approving. While there were no studies supporting the ADF claims, there was a lot of common sense supporting them. But, the committee members were more concerned about the stigma of the blue dye or the possibility it might be a badge of honor to teens or that the kid's parents might get upset with their kid for abusing drugs - all of which was total speculation on their part as well.
I have to believe the FDA understands the benefits of Rexista and that approving it is the most sensible thing to do. But they will need some political cover so the company has to perform some of the tests. The question is how long will it take and how much will it cost. Related to the cost question is how will the company get the required cash and how much will that dilution hurt current shareholders. We know the company is pursuing the tests but we were not informed about timing or cost.
I bet Rexista gets approved and commercialized on a time frame that ends up not being all that different than if the ADCOM had been a success since we would have had to wait for a settlement with Purdue anyway. The FDA has to find a way to get it to approval since it is the best drug available. They also probably feel a bit guilty for putting IPCI in a bad spot by accepting the NDA without the normally required tests.
We were done in by the fact that IPCI did not abide by FDA guidance on the testing and we had no way of knowing that.
It is not looking good right now.
That is correct but it usually does follow the committee's recommendations. However, in this case, I suspect there is a greater chance they would not ollow a negative committee recommendation due to the lack of studies perhaps influencing the committee members to heavily, the general messiness of this particular ADCOM and the proprietary aspects that did not allow for a clear presentation and answer to some questions.
As the company is now answering questions again, it seems to be going a bit better. But it is definitely a hairier than normal ADCOM based on my experience.
Another confusing aspect of this is the discussion of the opioid market overall. That seems to have muddied the waters in some respects and pulled the focus away from Rexista's strengths. Basically, the FDA seems frustrated with every aspect of the opioid market and that frustration seems to be polluting the proceedings a bit. We are passed that now but it was an issue earlier.
Correct. It is not over until it is over. The company presented some very good data and the balance of risks and return is what matters in the end. I expect a No on 3 now as the FDA is clearly guiding in that direction due to the lack of studies as to what the ingredients, primarily the blue dye, might do to the body. IPCI said the only impact was local and not to organs but I don't think they had convincing data on that. So, my guess is it gets approved but without the blue dye. The FDA has also said that since the drug is not aiming for nasal and oral approval at this point, there is no reason for the blue dye and they don't allow materials in the drug that serve no purpose. Now, the blue dye actually does serve a purpose but since it is not seeking approval for those purposes right now, the FDA sees no reason to allow it in the drug. That may be practically silly, but it is how the FDA operates.
The current FDA presentation is highlighting how messy these things are. While it has been a bit of a rough go so far, the fact remains that Rexista is the best looking product available, The main question is will the lack of studies the FDA likes to see hinder an approval. I don't think it will as that is focused on nasal and oral abuse, not IV.
There is concern that IV use could lead to safety issues but the FDA has pointed out they approve based on the drug being used properly, not improperly.
The FDA person just hammered the gatorade blue dye comparison.
While the Q&A was, overall, pretty rough, I don't think this would have been different for any other ADF opioid brought before an ADCOM. There is just not a lot of data out there about these issues (it is not easy to test these abuse matters) and that seems to be a frustration. But I believe it is likely there is enough data to support approval - if the other drugs got approved it is hard to see how Rexista would not be approved as the same data was likely missing in most cases for those as well. There are some specific studies, however, that IPCI likely could have run that would have helped them answer the questions that they did not do and that may reflect the lack of money the company has been dealing with for so long. Even so, based on what I have heard so far I would vote for approval because the data that is available indicates a superior product to what is already on the market. One would have to conclude the lack of studies is enough to not believe the data presented.
Some of his hesitation seems to be associated with concern about revealing info he is not supposed to reveal in a public forum. There was a private session with the panel earlier today to cover that info. But, still, he may be giving decent answers but the body language is less than ideal.
Because if it is in gatorade, it is very common and no issues have ever come up about it. I think that was the point.
Question about PEO in Rexista - not sure what that is about.
Question about excipient safety data - blue dye issue. IPCI expert says long term data says it is not an issue - limited absorption via gastrointestinal method. With IV administration there is only toxicity at the injection site. No organ issues with either single or repeated IV. Dye eliminated through both urine and feces but there is limited data. The IPCI expert did not inspire a ton of confidence with the way he answered.
Questions about toxicity - they seemed to answer the questions well but I am not an expert.
Question about "liking studies" - but no liking studies were performed - It seems like this could be a negative.
Question about data regarding blue dye impact on kids or smaller body mass people - no data but referred to the fact that it is used in gatorade which kids drink.
Question about why only males in one study - good answer to that.
Question about body mass and weight standardization in the studies and apparently there was not any standardization. Implication is the results might be biased by these factors.
Question about crushed versus whole Oxy - no studies done on this.
Question about switching drugs - most switched to illicit drugs with heroin being the most prominent drug to switch to
Question about syringability after taking off the coating was testing done, if not, why not - outer coating is easily removeable but the inside coating is harder to remove.
10 minute break now. The biggest complaint is likely to be the lack of studies that panel would like to have seen (not all of that is IPCI's fault).
4 presentations by experts went well but now it is time for questions.
Dr. Odidi did a good job in my opinion. It is clear Rexista is the best drug out there but these sessions are always focused on some narrow medical issues. It seemed to me Dr. Odidi did a good job defending Rexista but I am not a medical expert.
FDA's initial presentation seemed pretty harsh, not so much to IPCI, but to Purdue and just a lot of complaining about how hard it is to draw any conclusions.
I think you may be getting things a bit mixed up. The abusers of the drug get it into their system by an IV approach and that is what is being discussed in the briefing document.
In past ADCOM's I have been involved with, the stock was halted the entire day of the ADCOM. So, yes, I expect the stock to be halted tomorrow. But I have not seen any official announcement of that.
It is what my experience has been and I assume it will be the case tomorrow. I thought that was the normal way of doing things but perhaps there are exceptions.
Unfortunately, those who took positions recently may be looking to sell on the news of the vote on Thursday (for those who are new to this ADCOM thing, the stock will not trade tomorrow), thereby limiting the gains. You need long term investors to be buying from them in greater quantity than they are selling to get the pop the company will likely deserve on Thursday.
Also, the situation with the partner for Rexista, at least regarding timing, is hard to figure out but this is the really big news that we should all really be focused on. Odidi certainly has played a good game of poker with both waiting to sign a partner to the last minute and with financing the company's operations with share issues until the last minute. It reflects his high confidence that he has played his hand this way and he had better be right. I feel pretty confident he is. But, he may drag out the partnership agreement even further if he thinks it will take longer to bring Purdue to the partnership table. Purdue needs Rexista more than anyone else both politically and economically. If Odidi gets them to do a partnership, it likely will be the most attractive terms he can get since Purdue is very wealthy and in great need of a drug like Rexista. But I just can't really tell how long that might take. It could be August or it could be much later than that. Or it may not happen at all and IPCI will need to partner with someone else. If anyone has good insight into the partnership situation, I am all ears.
I am confident the news will be good tomorrow but I am less confident in the stock prices reaction. It should be a huge reaction but I suspect there just are not that many eyes on this story. So, while not exactly the proverbial tree that fell in the wood that nobody heard fall, the stock's reaction may prove more muted that we believe it should be. On the other hand, I am just guessing about that low level of interest and some traders no doubt specialize in trading ADCOM meetings, so the reaction may actually be larger than I think. But the stock has almost no analyst coverage and that it has is very weak. As a result, when good or bad news hits the stock, there are not salesforces of institutional brokers hearing about the news and acting on it with their big money clients.
Even while muted, however, it should be big enough for all to enjoy.
Here is how I would vote on the four issues
1.) Has the Applicant demonstrated that oxycodone extended-release tablets have properties that can be expected to deter abuse by the IV route of administration?
Yes
2.) Are there sufficient data to support inclusion of language regarding abuse-deterrent properties in the product label for the IV route of administration?
Yes
3.) Does the committee have concerns regarding of the safety of exposure to the excipients in this product if administered by the IV route for the purpose of abuse.
No
4.) Should oxycodone extended-release tablets be approved?
Yes
So, I am expecting them to walk out of the meeting rather triumphantly and I am not sure it is even close. WHile there might be discussion around certain issues that will sound unsettling during the course of the ADCOM, only the answers to the four questions matter. It is the nature of these meetings for the FDA to bring forward the most contentious issues and the only one in this case appears to be the abuse liability test for which the company already has a good answer I suspect most on the ADCOM will be happy to accept (given bioequivalence, those tests are duplicative and unnecessary). The press is always looking for the bad side of any story and they overemphasize it to the max - in virtually everything. At the ADCOM, you will see a very balanced presentation and you will also have the company making a stout and convincing defense of all of its choices and research. You are not seeing any of that today in the articles that have been written.
Since the FDA is only asking about the IV form of abuse labeling, it seems to me the other forms of abuse labeling are not going to happen. But, as has already been pointed out, Rexista would be the best product on the market if approved so it is pretty hard to see it not being approved given the backdrop of so many deaths and the need for the FDA to put some runs on the board to defend its handling of the situation. Politically, Rexista is the right product at the right time.
All this is following the pattern I noted last week. It is common for the press to produce fake news about all ADCOM meeting documents. The FDA raises the tough questions in these settings as they should. The press focuses on only the negative and ignores the positive. Skittish investors who don't really know what is going on panic and sell. It is all so stupid, but it happens often.
My quick read of the document indicates to me there is a very good chance the ADCOM will like the drug a lot and that this will be reflected in their comments and votes. The Opioid abuse problem is huge and Rexista certainly will help solve it. It is hard to see how there is anything in there which would cause an expert to freak out and vote against it.
Since you are a doctor you likely know this side effect was a result of a very sick patient getting better faster than their body could handle it. PRO 140 could face a similar issue since they will also be treating very sick patients in the combo trial. Notice, the description is "Immune Reconstitution" indicating Ibalizumab helped fix the patient's immune system - it just happened so quickly the patient's body was unable to adjust fast enough leading to inflammation. The situation can be handled pretty easily by halting treatment and perhaps adjusting dosages if treatment is restarted.
Actually, the point raised in the 10-K about Ibalizumab is a flat-out misrepresentation and I suspect the folks at PRO 140 know that. Ibalizumab targets domain 2 of CD4 while domain 1 is critical for the immune function. SO, the mechanism of action for Ibalizumab does not interfere with the immune function of the cell. People have been on Ibalizumab for as long as eight years and have had no issues whatsoever with the immune function. In fact, no Ibalizumab patient has ever had an immune function issue to the best of my knowledge. It is a very curious thing that CYDY even said anything about this as, like I said, they are smart enough to know it is a falsehood. Perhaps someone who speaks to management should ask them about what they were up to with this claim. And I am not even sure why they are talking about Ibalizumab as a competitor as it does not look to me like PRO 140 will be successfully marketed in the tiny part of the MDR market available to them and it seems unlikely that Ibalizumab will be used outside of the MDR market.