First Mover Advantage
Personal Comment (based in part on conversations):
Here is my take on why our little company has hid its light under a bushel basket for so long. As shareholders we are all frustrated by the lack of flag waving and drum beating. After all, if we own the best platform since antibiotics were invented, why don’t we look and act more like a major league player in our industry?
The answer to this question could lie in the fallacy of assuming our patent position means our early control of the anti-PS medical revolution will go unchallenged. If you have experience in big business, you know that patents are like moats around a castle -- they are helpful in warding off some challengers, but they do not prevent attack from the really big players who are determined to have some of what you’ve got.
So most businesses with a great new idea rely instead, or in addition to patents, on what’s called the First Mover Advantage. They keep the core elements and proof of their market success hidden under a basket for as long as they can. Then they burst on the market with a fury and acquire such a large brand recognition and market share that it’s hard for anyone to catch up with them. Remember the Beanie Baby craze -- a household name overnight achieved by years of pre-launch secrecy. At business school they call this the First Mover Advantage.
In biotech, I understand the First Mover Advantage from inventing a new platform is about 2 years because it will take that long for BP to develop and conduct preclinical and clinical tests on new antibodies that also target PS or related lipids. The sooner PPHM announces to BP and the investment world real proof they are sitting on a blockbuster new platform, the sooner the clock starts ticking on our 2 year head start.
As frustrated as I am by the long wait, I am glad now that the non-human primate data and other evidence that Bavi works has been guarded so tightly. Over the next 2-6 months the basket covering the proof of our story will be lifted and a bonfire, not a small candle, will be revealed. Duke and Tulane will release the long-awaited results of their Bavi primate studies. Ph 1b HCV efficacy results will be announced. NIH alliances to go after respiratory disease will be announced (hopefully). HIV collaborations will be announced. High-speed cancer clinical trial programs in India and possibly Eastern Europe will be announced. And an alliance with a major investment banking firm to fuel this bonfire will also be announced. The race with BP to acquire market share will be on!
As data is revealed over the next six months confirming Bavi’s potential, Gendel will place some articles and the price will go up. Then in 2007 the Company will raise $50-$100 million to launch more clinical trials in the U.S., Europe and India than you can shake a stick at. This is why you can be sure UU’s days are over. The entire size of their fund is around $70 million. Once the basket is lifted and the race with BP is on, our investment bank partners will be raising $100 million for new trials every year. Don’t worry about the pps. If the Company has the clinical data, Wall Street will get the story told.
Thanks to all the PR secrecy we’ve suffered, BP is hopefully still in a “watch and learn” mode about Bavi rather than a “turn on the engines; we can do that better” mode. Once critical primate and human data is disclosed this fall, if the Company can move quickly to launch multiple trials for multiple indications around the globe, we should be able to force BP to negotiate with us rather than crush us.
Bottom Line: By disclosing the absolute bare minimum required by SEC rules, the PPHM Management has demonstrated the business savvy and know-how needed to capitalize on our First Mover Advantage. Having held back so much information for so long, the Company may get lucky and be able to capture for itself a large market share of the medical revolution Thorpe stumbled upon.
