NanoViricides Inc. (NNVC)

[BonelessCat]

Line by Line Breakdown of Monday's PR

If one assumes that NNVC management has presented no falsehoods or misrepresentations and all that is contained is actually what has and is developing, here is what one may take from Monday's PR:

WEST HAVEN, Conn.--(BUSINESS WIRE)--NanoViricides, Inc. (OTC BB: NNVC.OB) (the "Company"), reported today that on-going negotiations with a large pharmaceutical company have now progressed to an advanced stage.

Negotiations have advanced to a final stage, and some form of agreement is forthcoming.

The pharmaceutical company initially plans to evaluate NanoViricides’s drug candidate for effectiveness against external ophthalmic diseases caused by two different virus types, namely herpes simplex virus (HSV) and adenovirus.

Adding to the idea that an agreement is forthcoming, a new wrinkle is added here. Where before announcements and interviews with management stated only EKC, the preliminary testing and interest from the pharma is now much broader. Testing will now include two major eye infections in addition to EKC. This is a significant expansion of a licensed potential market.

These evaluations will be performed by an independent research institute that specializes in diseases of the eye.

Prior to this announcement, information made public indicated testing would be done in-house by the pharma, that is in the pharma's own labs and by its own teams. This indicates a number of things: 1) Management may no longer trust the pharma to present a fair evaluation as the results would be part of the final stage of negotiating actual payments; 2) NNVC can now use any resulting data, whereas in-house testing would lock up the data; and, 3) The pharma is most probably still picking up the entire cost of the testing.

The Company will need to procure large quantities of the nanoviricides drug candidates for the upcoming studies.

Here management seems to be talking about all the studies, and not just those by the potentially licensed pharma. I count at least 4 Tox Packages in the coming year, with IND filings and clinical studies soon following. Those are large quantities, although the expanded viral eye inflammation studies alone will probably tax current production capability.

In order to support this production scale, TheraCour Pharma, Inc., the Company’s largest shareholder and licensor of the technology that the Company uses in its anti-viral drug development, has initiated a program to expand its laboratory facilities. TheraCour has entered into a Rule 10b5-1 trading plan to sell, over a one year period, up to 1.8 million shares of the Company’s common stock that it owns.

TheraCour and Diwan will be selling their holdings in order to finance expanded production facility; they are ponying up the funds to avoid dilution. The "one year period" indicates that the sales have not yet begun as the 8K filing of this statement followed the next day after the PR. Diwan and company seem to want significantly higher prices than 60 to 80 cents. The one year period indicates he will be waiting for other announcements that will boost share price and then he will trickle TheraCour shares into the float.

The proceeds are to be used to pay for the necessary improvements in laboratory facilities, the purchase of analytical equipment, and the costs of intellectual property (patent) protection.

This to me is one of the most significant statements in the entire PR. Whoever the pharma is, it won't be involved in drug development from the technology. It will only be involved in bringing to market drugs for carefully defined indications. NNVC and TheraCour will exclusively develop and test candidates and will be the exclusive holders of any and all Intellectual Property that comes from future development. This also indicates to me that during negotiations the pharma may have tried to insert weasel clauses to gain claims of ownership for any in-house drugs they develop on their own. This is also where one can assume that whatever contract comes out of advanced negotiations will clearly outline who is responsible for development of patentable property and who is responsible for clinical testing and marketing of that property with with benchmark payments and a big fat royalty attached to it.