Editorial and a couple of questions.
Disclaimer: I've been involved in TCLN/PPHM for over 20 years. Met all the guys - Stone, Bymaster, Bonfiglio, Legere and the current crop. I've had many beefs over the years and I've voiced them to management. And, I hate a business model that jumps from "hope to better hope to ...." (I say this for a reason that I'll explain later). Bottom line, I'm an optimist and I'm a supporter of PPHM for two distinct reasons. Number one, I'd like to make money and I have a substantial bet on the upside. Number two, and more importantly, and not unlike many others on here, I'd like to see serious progress made towards the treatment, and dare I say, "management" of cancer. It's an insidious disease and it's infected far too many dear to my heart.
So, during AACR week with new data emerging, it's probably not the proper time to make some comments, ask some questions. But, even with the usual lack of clear and follow-up information from the company, I'm "extremely hopeful" and I don't see others sharing my optimism. So, I'm a bit confused. So, I'd like to lay out the way I see things and ask for some help with "reasoned thought". What am I missing? I know some of the risks against my optimism. But, please chime in - good and bad. I like to learn.
So, here goes. The way I see it, PPHM has three main things currently going for it. They are as follows in increasing order of importance (to me):
1. Avid
2. Anti-PS treatment of immune checkpoint inhibition
3. Exosome test for cancer diagnostics.
So, let's start with number 1 (least important), Avid. I won't go into all the details because it's been fought over extensively here. Let me just say that I have extensive experience buying and selling companies. And, the value of Avid (my opinion) is more that the current market cap of PPHM. No, I don't have the broken out numbers. And no, I don't think PPHM knows how to value Avid and/or sell it. Lytle's mention that "people have told us a business like this should sell for 2 to 3 times sales" was stupid. This is a business with extremely high "barriers to entrance" on the technology front. It's growing rapidly in a market that is undoubtedly poised for rapid growth. Margins are very healthy, blah, blah, blah. Only negative is the shroud of uncertainty perpetuated by the accounting cloud of secrecy. And, some other issues that many of the "triple N's" as well as PPHM supporters have discussed non-stop. So, I don't feel compelled to do it again. Let's just say that Avid, broken off and marketed professionally is already worth more than market cap - my opinion. So, I love this asset. But it's not the home run. That follows. Btw, is everyone aware that "backlog" of business isn't actually extended to the true length of the contract? Hmmmm. But's let's not digress here.
That lead me to the number two "hope" - anti-PS treatment to improve the tumor microenvironment - improving the number of responders for immuno-oncology "cocktails". I believe we can soon start talking about "hot" and "cold" tumors and how we can change the cold tumors to hot for treatment. Again, I digress.
Now here's the deal for me in this area. With all of the mounting evidence - pre-clinical and clinical, if I had a cancer that was a potential for treatment with one of the approved immuno-therapy drugs, knowing what I now know, I'd do everything I could to have Bavi added to my treatment. Heck why not? We know it's safe. And, lots of data says it works. Lots. With more coming out every day. Now, I know. Sunrise was an unmitigated disaster, blah, blah, blah - blah, blah.
See here's my problem with all the failure crap. And yes, I did take a couple of statistics courses. And I did stay at a Holiday Inn Express in Gunnison recently. So here's the issue I have. With the way, current cancer trials are structured, it's very difficult to have success if you're one of the small guys ala PPHM. You see, the "degrees of freedom", or variables are just too numerous to really get a clean answer - I don't care what the experts say about "stat sig", HR, etc. Think about it, you're doing a trial on a certain cancer. But, every patient has relapsed several rounds of treatments. So, the cancers have been subjected to treatment and are in various stages of "morphing" or "mutating". Each patient is also very different. Each patient has a unique health profile. They live in different environments. They eat different diets. They ......, you name it. The variable are endless. Then of course, with Sunrise, there was the added issue of newly approved treatments available. But, again I digress. And, do any of you guys remember Entdoc repeatedly saying PPHM shouldn't be treating bulky solid tumors as it's chief target? Anyway, the bottom line for me is that with the current testing program mandated for FDA approval, I'm not surprised Sunrise failed. And, I understand that post blinding "data-mining" can't lead to direct FDA approval. But, the data-mining information shouldn't be ignored. At least I won't ignore it if my life is on the line.
So, I truly think there will eventually be a place at the table for PPHM's anti-PS. And, I think it's going to be a very large table based on the many applications that I think will eventually prove out. Again, just IMO, but I think we'll get there. And it will be big. So now, with the information that's available, it's time to make a deal. Note to management - it's time to get your asses in gear.
Which leads me to the area I'm most excited about and in which we know the least - exosomes. I hesitate to bring this up (and this is what I was alluding to in the first paragraph) because I hate the constant changing of company goals. Oncolym to TNT/Cotara to VTA to anti-PS. Heck, look what IDEC did with their NHL drug. There always seems to be a new hope. And, I'm always suspect when I see the ever-changing goals. But, in this case, I'm going to suggest the change.
Why? Well, I'm truly excited about the ongoing and exploding work to come up with "liquid biopsy" technologies. The main reason I'm so gung-ho on this area is that as great as it is to come up with effective treatments for various cancers, the real holy grail for cancer treatment/management is to "catch cancer in the earliest stage". I have information, but here's where I'm going to ask for some googling help. Look it up, how much does your prognosis for surviving cancer go up if you "catch it early"? I think you'll find that the literature is quite profound. Catch cancer early - you have a very good chance of recovery. Discover it late (as is almost always the case now) and we're mainly talking about extension of life, not recovery. And that is precisely why I'm so gung ho on the whole bevy of work going on in this area. If scientists can develop a test, or stable of tests, that are easy to perform, non-invasive, relatively cheap, etc. that can allow the early detection of disease, the improvements to our health care situation will be profound. It's really quite mind-boggling. Would you pay for a yearly or semi-annual test for cancer if it improved your life expectancy significantly? I would.
Now here's what I don't understand. If you understand the statistics related to early detection as it relates to survival, why isn't everyone all a gaggle about PPHM's announcement on exosomes and the information it provided on Ovarian cancer detection? Quite frankly, I found it to be unbelievably compelling. Now understand, as is usual, PPHM didn't go overboard with their disclosure. And, the field of competition is hopefully very robust in this area. I say hopefully it's very robust because I want to see results in the area of cancer treatment as I stated above. So, I want someone to succeed. But, if you recall, I also would like to make money. So, I'm also hopeful that the eventual diagnostic winner is PPHM. So, I've been researching this area a bit. Different folks are heading down different paths. But, so far, I've not come across an approach that seems to make as much sense or quite possibly should have as large universe of application than the UTSW/PPHM method. The fact that they were able to get the results they got and that they PR'd have me drooling?
Another factor that I love about this application is that we are not talking about trying to develop and test a treatment that will require years of human trials and testing. The PPHM exosome test relies on doing an analysis on a blood sample taken from a patient. Blood can be drawn in 2 minutes. The UTSW/PPHM method concentrates exosomes via titration, not expensive centrifugation. So, one might conclude that this test is very simple and should be relatively inexpensive. And, here's the best part. Patients should be lining up to get tested in the examination phase. Why not? The difficulty is limited to a blood test. You don't take a drug. You don't cram and instrument up some body cavity. You don't get scanned. You don't ..... Then, if you have a suspected positive, you're off to biopsy testing. Something I'd certainly want to do.
So what am I missing guys? Are we on the verge (as an industry) of having fantastic new diagnostic tools that will do more to advance cancer survivability than any new super drug that's come along - or will come along. And, if we are, is PPHM the guy's holding the hole cards? And, if PPHM does have the "goodies", have they done more than look at Ovarian cancer? Given the simplicity of testing, I'm betting they have.
So summing up. I think owning a fast growing high-tech toll processing business is very exciting. In a valuation event I'd expect to get a very high EBITDA multiple on this type of business. Additionally, I truly believe Bavi will find a substantial "niche" in the arena of turning cold tumors into hot tumors. There should be substantial profits that arise from this technology that should dwarf the toll-processing business. Finally, if the exosome test proves to be as attractive as the first data point (Ovarian) suggested, this could prove to be the most significant advancement in the cancer arena to-date! Think about it. Early diagnosis leads to effective management - not life prolongment. And, the test also should effectively reduce substantially the time required to evaluate and test new treatments.
Ok, time to stop. Sorry for the promotion, triple N's. I know I'm over-simplifying. But help me out here. Who looks better in the liquid biopsy space? Who's got the lead horse? I'd really like to know. And yes, I'm open to spreading my investment dollars around.
Back to AACR week. Three biomarkers so far? Neat stuff.
Regards,
WH
AI
