Avid Bioservices Inc (CDMO)

[golfho]

Hi All

I posted my first post last night and apparently had my 15 minutes of fame. The post was deleted because the preamble was deemed to contain a personal attack. I’ve removed the preamble and now believe that this should fly.
During the brief time that the post was on line I received several responses, some of which were subsequently deleted as well. Of those that were left is jackdogmans #34937

“I believe your statistical analysis is incorrect given we have already passed phase I and one could argue we are looking good for phase II. If bavi were starting out today, the analysis would apply”

The analysis was a first time swing at bat and I agree that it can be refined. The primary purpose was to establish a proper handicap for the proposition I made to eric. I would like him to back up his years of droning with ANY rational and then to have some skin in this. The point is if he believes that there is no hope for the current shareholders then any odds would be acceptable i.e. 1:1000, 1:10000 etc. If he believes there is some hope then what is it? Is it my semi-scientific 1:160? Another number? Higher? Lower?

So eric please read and respond…

The expurgated version follows…

Assessing the risk/reward ratio for this investment:

Most drug candidates fail to make it through the FDA approval process.
I believe that the number is one out of 800. Implied is that; the success of any drug compound is roughly 1 in 800. Bavi is currently in three small phase II studies as a combo and is in one Phase I as a mono. From the attached hyperlink we can draw some statistics:

http://www.dana.org/news/cerebrum/detail.aspx?id=5486

“Success in Phase I is not guaranteed; overall, 35 percent of candidate drugs fail here for one reason or another.”

“And only about a third of the new molecules entering Phase II can progress to Phase III.”

“Just under two-thirds of the molecules entering Phase III will be developed further.”

So...
1:3 (Failures in Phase I)
1:3 (Failures in Phase II)
2:3 (Failures in Phase III)
Suggests a purely statistical success rate going forward of (3x3x2/3) = 1:12 that is one in twelve or ~ 8.33%. In other word statically Bavi has roughly a 1:12 chance of successfully completing a Phase III; from historical clinical trial data.

Now we must factor in some of the indeterminate factors, indeterminate in that assigning a success ratio is somewhat subjective and they include:
1- Funds on hand to complete the various studies.
2- Partnering- Will they be able to bring in a partner with deep pockets in time to help the current shareholders.
3- Competence of management and staff that would allow for a timely and successful conclusion.
4- The potential for a reverse split.
5- Are there forces aligned currently on the side of – Slowing down the progress and reducing the NAV of the company? For what ever purpose.

So let’s see what we have here...
1- Funds on hand to complete the various studies.
2- Potential partnering
From this article we get: http://www.businessweek.com/magazine/content/02_37/b3799028.htm

“The average cost of researching, developing, and testing drugs that receive FDA approval is astonishing: $800 million per drug.”
That seems a wee bit high and Bavi is in Phase I and II. I can’t say for sure but I think that PPHM can, with the influx from the loan money and the Wm Smith & Co. stock purchase complete the Phase II studies on their own. IF they chose to go it alone a Phase II/III study may cost 100-150 Million (If anyone would like to refine these numbers – Have at It...!) The point is that if PPHM tries to go it alone it would definitely destroy current shareholders. Though R&R may be licking their lips at that prospect. That now brings us to the partnering possibilities. Management has been telling us that they are in talks and of course eric has been telling us that they have been in talks for years. So what kind of factor can we assign to “A Partner Deal”? 1:1, 1:2, 1:3 as eric implied 1: infinity. I consider a one in four prospect a reasonable number; however please note it is only a SWAG.

Now I will address number three above:
3- Competence of management and staff that would allow for a timely and successful conclusion.
There has been a great deal of discussion on this board about the quality of the management of this company; Views that include “they really suck”, “Their interests are not aligned with the shareholder”, “They have no integrity”, and of course there’s eric’s “They have never achieved anything of significants other than lining their pockets“. etc. So I will arbitrarily assign to them school grades A to F. and select C as a grade. If you are trying this at home and feel adventurous you can select any value you think appropriate or use a different grading system all together.

So now let’s talk about the potential for a reverse split…
On the one hand we have the opinion (eric, CW and company) that this management team is totally incapable of completing any kind of meaningful deal and that the RS will be a continuation of the death spiral financing that will turn the current shareholders assets into dust. On the other hand we have management’s statement (Paraphrasing here) that under certain conditions the company would consider addressing the number of outstanding shares issued. I view this as follows…IF (Still a big IF) management successfully competes a significant licensing or partnership deal with a reasonable amount of upfront money and milestone payments then the market cap. of this company would increase from its current ~$86M. Under those circumstances a reverse split would have little or no effect on the market cap. I believe that a reverse split will occur for several reasons. However I have no idea or knowledge of the circumstance under which this might occur. I will arbitrarily assign a 50% - 50% effect on that occurrence. Meaning that; I think that it most likely will occur but that it may not necessarily be a bad thing.

Now for the last item on the list:
5- Are there forces aligned currently on the side of – Slowing down the progress and reducing the NAV of the company?
I have no way of determining this with any kind of certitude. However in my mind there is sufficient anecdotal evidence that suggest that some entity is working hard to create disinterest and doubt. So I will not assign any factor to this now.

So what we have here is a semi-scientific assessment of the investment known as PPHM.
12(Statistical number from #1 above)*4(number assigned to partnering prospects)*5/3(weighted management skills)*2(Reverse split impact) yielding a potential success ratio of:
A 1 in 160 chance of success.

So…Now back to you eric…

Any fool can plainly see that taking the “It’s a loser” position has a very good (159 in 160 chances) chance of winning a bet. That in fact is true about most biotech companies. Picking losers is easy picking winners is far more difficult. So please…Don’t think that you’re so smart…Anyone can throw a dart at a poster containing all of the names of biotech companies in existence today and; hit a loser. It’s picking the few winners that is difficult.

I’m feeling magnanimous today…

I will give you an opportunity to make some of your money back that YOU lost on this loser stock.

I purchased this stock at the following times and prices:

Date Symbol Description Commission/Fees Interest Amount
3/3/2009 PPHM BOUGHT 5000 SHARES OF PPHM AT $0.31 ($14.75) $0.00 ($1,564.75)

2/19/2009 PPHM BOUGHT 10000 SHARES OF PPHM AT $0.415 ($27.75) $0.00 ($4,177.75)

1/16/2009 PPHM BOUGHT 5000 SHARES OF PPHM AT $0.3899 ($16.75) $0.00 ($1,966.25)

12/24/2008 PPHM BOUGHT 200 SHARES OF PPHM AT $0.2899 ($0.29) $0.00 ($58.27)

12/24/2008 PPHM BOUGHT 100 SHARES OF PPHM AT $0.2899 ($0.14) $0.00 ($29.13)

12/24/2008 PPHM BOUGHT 100 SHARES OF PPHM AT $0.2898 ($7.14) $0.00 ($36.12)

12/24/2008 PPHM BOUGHT 100 SHARES OF PPHM AT $0.2899 ($0.15) $0.00 ($29.14)

12/24/2008 PPHM BOUGHT 100 SHARES OF PPHM AT $0.2899 ($0.15) $0.00 ($29.14)

12/24/2008 PPHM BOUGHT 6900 SHARES OF PPHM AT $0.292 ($10.07) $0.00 ($2,024.87)

12/24/2008 PPHM BOUGHT 300 SHARES OF PPHM AT $0.292 ($0.44) $0.00 ($88.04)

12/24/2008 PPHM BOUGHT 2200 SHARES OF PPHM AT $0.292 ($3.21) $0.00 ($645.61)

11/26/2008 PPHM BOUGHT 10000 SHARES OF PPHM AT $0.29 ($21.50) $0.00 ($2,921.50)

12/26/2007 PPHM BOUGHT 10000 SHARES OF PPHM AT $0.38 ($26.00) $0.00 ($3,826.00)

7/31/2007 PPHM BOUGHT 4000 SHARES OF PPHM AT $0.74 ($21.80) $0.00 ($2,981.80)

6/29/2007 PPHM BOUGHT 4000 SHARES OF PPHM AT $0.7499 ($22.00) $0.00 ($3,021.60




I FULLY EXPECT TO BE IN THE MONEY BY 12/31/09.

I will make you the following proposition:
I will wager you up to $200.00 at the above calculated risk assessment ratio that I will be in the money on ALL of my purchases by the end of the year 12/31/09.
That means…In the likelihood that you might be math challenged…
My $1.00 against your $160.00
My $10.00 against your $1600.00
My $100.00 against your $16,000.00
My $200.00 against your $32,000.00

Now $200.00 may not make up for all of your loses but according what you have posted over that last few years this is a no-brainer…You can’t pass up…Easy money.

However I must say…Not that I doubt you integrity…Or anything like that…But…If you choose a wager greater than My $10.00 I would require a certified check deposited in escrow (I would accept a certified check sent to your brother and I would most likely hand him my money personally. I live only 20 minutes from the city and someday I would like to meet him. This would be as good a reason as any.)

I will now don my Karnack Turban and gaze into the stars…And predict the future…

eric will respond with some disconnected gibberish and then I will put eric on ignore…

P.S. to the moderators…Why do you allow him to continue to post? Do you really think he provides the “Opposing View”? A sense of balance to the board? Please do all of us a favor…Ban him…I will assume the heavy burden of playing the devil’s advocate.

On a different subject…JGAL555 said:
“Many people have suggested share prices which they would like to see, but I haven't seen much discussion re realistic and attainable market caps. We have our thoughts, but I thought it might be interesting to get a little discussion going on this issue.”

There was not a large response to that…I think because you did not provide any info on your thoughts…Soooooo…

If you show me yours…

I’ll show you mine…

Wink…Wink…

Ok…I’m done…

I thank everyone on this board for their contributions over the years and I thank anyone that is still reading this for your abundant patience…KT…I think I beat you with the longest post posted…

I’m going to soak my throbbing index fingers in ice water…

Golfho