Well…
Here we are, three months after the close of the fiscal year and slightly passed the middle of the calendar year. It’s time for a look back and a look forward.
THE SCIENCE:
The Bavituximab Juggernaut is moving along; Dr Thorpe’s presentation in Barcelona has stated to the world, what many on this board have hoped for, for many years. Bavituximab has the potential to be the drug discovery of the century. As someone stated earlier…It’s like the old BASF commercial…We don’t make the things you use…We make the things you use better.
Over the last eight years Bavituximab has gone from and interesting pre-clinical Mab to a Mab that is now being clinically tested for multiple indication in oncology and viral. I was disappointed that there was be no Bavituximab updated data at ASCO this year.
Cotara in my view, is currently in the spiffing-up stage…Spot light on…A little dab of make-up…In…Three…Two…One…Action…(Action takes place in the beginning of next year)
FINANCE:
I tried to post charts from Excel. These charts were from Yahoo Finance and were the monthly summary of shares sold, volume, high, low and closing price…After the forth attempt I gave up. Perhaps someone with more knowledge will take the time to enlighten me. If you choose to you can verify the numbers on Yahoo.
The ATM….
If the charts were available the following would be a bit clearer…My apologies.
Some simple math…
If the company sold ~1M shares in February with ~7.2M shares traded that month…Some simple extrapolation produces…
For March:
The potential low and high, number of shares sold, are…ZERO to ~2.2M shares.
For April:
The potential low and high, number of shares sold, are…ZERO to ~4.8M shares.
I added the data for May so that I could compare volume and price.
For May:
With only 6.9M shares sold at an average price of $2.23 and total aggregate cost of ~ $15.5 M…I assume no shares were sold from the ATM in May.
There is no way to determine the cash needs on a monthly basis…I doubt that even management could be certain beyond a few months.
The things that can impact the amount of shares sold through the ATM are real revenue sources such as royalties, milestone payments & Avis revenue; on the other side, additional payments may become due to vendors, collaborators, etc. In that regard I think that PPHM has received from Affitech the $1M milestone payment. Though I don’t think it arrived until after FYE. On the other side when the TMTI contract was not continued PPHM was required to put aside ~$3M for the loan repayment. This reserve is reduced every month as payments are made but I assume it reduced available operating capital by that same amount.
It was posted on this board a while back that the analyst consensus on revenue was $12.4M. That surprised me at the time. My recollection was that Steve Kings’ guidance during the third quarter CC was in the range of ~$8M to $10M. The issue was a manufacturing/processing problem at Avid (Hic-cup #2) to the tune of ~$2M. I’m very interested in where the $2M difference is; is it the lost revenue from Avid that was salvaged prior to 4-30-11? Is it additional sources? Or is it a case of “Who’s On First” with Abbott & Costello being replaced by management & the analysts?
Last quarters operating costs were approaching ~$8M. With all of the irons that PPHM has in the fire, I cannot see that going down. As a matter of fact I see the potential for the burn rate to go up.
Now for my SWAG’s (Scientific Wild Ass Guess’s) I cannot; under the penalty of death reveal this process…However I can state that it involves some rattling of bones and waving of chicken claws…(Please note: NO CHICKENS WERE ACTUALLY HARMED DURING THIS PROCESS)
With a burn rate in the $8-9M range for the last quarter I assume that that money was raised in March and April. With an average share price of $2.27 for March and $2.51 for April they could have sold between 3.5M – 4.0M shares. That would leave ~$24M as a cash reserve at the start of this new fiscal year and outstanding shares of about 71.4M to 71.9M.
With an annual burn rate in the range of ~$32M to ~$36M and my projected cash reserve of ~$24M at the start of the year I suspect that the “Going concern” clause will be with us again. What could change that? There could be signed contracts with projected timetables and payment schedules that could impact the clause in a positive way.
LOOKING FORWARD…
I would like to first, respond to a post (#62696) from RRdog.
“Seeking an opinion from FF, CJ, WH (three board contributors who seem particularly tuned in to the science).
Having studied the latest round of science carefully I come to the following conclusions:
1. Cotara seems to be somewhere between equal to and about 50% better than short term efficacy in existing SOC.
2. Cotara seems to be considerably better than SOC re longer term efficacy.
3. Cotara seems to be accompanied by fewer AEs and side effects than SOC.
4. Cotara seems to present a good alternative MOA to SOC .
5. As currently posited Cotara single dose appears to offer some benefits as to method of treatment, time, and cost compared to SOC.
6. Cotara might appear additionally attractive to BP (and perhaps the FDA as well) in combos and in future testing against non relapsed patient population.
Do you agree in general with this assessment and do you think the science is strong enough for the FDA to move forward with Cotara into a phase III as an alternate mode of treatment for this deadly disease? More specifically, do you think the science is strong enough for the FDA to move to any kind of SPA, AA, or simultaneous phase III plus commercial usage??
IMHO…I think that your assessment of the science and my assessment are very similar; and yes, I think that the science is strong enough for the FDA to move forward into PIII. SPA or AA…I give it a 50 – 50 chance.
”How committed are you to your answer? Leaving Bavi aside and focusing on Cotara alone, if you were able to, would you double or triple your position in PPHM into this slow time period before Cotara meets with the FDA?”
I never give stock advice…PPHM cured me of that…!!! However I will tell you what I have been doing. I’ve been buying small lots over the past few weeks and will sell half in the next run-up on any doubling of the buy price. There’s nothing like accumulating free shares.
”Further conclusions:
1. Though I don't think PPHM would take the FDA for granted or assume anything, I do believe they are in close and fairly constant contact with the FDA and have developed the Cotara MOA to conform to FDA ideas for alternative treatment to SOC in brain cancer (Glio).
2. PPHM itself seems to be extremely confident in their approach to the FDA.
3. PPHM with their personnel beef up in this area seems to be sending BP a message (and unintentionally sending a message to their shareholders) that they do not intend to sell this product cheaply and are prepared to go it alone if they can not get their price.
4. Furthermore PPHM may be sending BP a message that they intend to keep the manufacturing of Cotara for themselves.
Do you agree in general with this set of conclusions??”
EVERYONE ON THE BOARD SHOULD READ OUT LOUD #3…OVER AND OVER AGAIN…!!!
I made a very similar statement in one of my earlier assessments. The analogy is: Management is compelled to play poker with an open hand. They cannot bluff pocket aces…everyone at the table knows the hand they have…And they have the following hand…With the ATM in place and all of those shares on the shelf, they have the financing. After the meeting with the FDA this winter they will have the roadmap and a good idea of cost. Remember…They need to sell this to a few hundred surgeons NOT a few thousand oncologists. I will stick to the conclusions I made in January…Management would prefer to partner Cotara with a EU and a US partner, and if not…They’ll go it alone.
”Do you think the science is strong enough yet for PPHM to reach a satisfactory deal for Cotara prior to an FDA phase III ruling??”
NO…That is; no deal prior to the FDA roadmap.
“ What probability 0-100% would you give PPHM of reaching a global or regional partnership prior to an actual FDA phase III ruling?”
Less than 10%
‘ Would such a deal carry enough front money to negate ATM usage and or the going concern letter? Ditto on the same set of questions "after" a positive FDA phase III ruling?”
My January analysis (SWAG) was ~$79M to $137M in upfront money and a 20% royalty on future sales. Anything in the $35M range for upfront money would be a management capitulation.
”What percent chance do you think there is of PPHM moving up the date on FDA Cotara meeting?”
Less than 5%
Now RRdog I would like to ask you for a big favor.
You wrote in post 62822
“Close your eyes and imagine PPHM brought a first class investment banker on the board from a firm that had real buy side clout, a strong trading/market making desk, and a strong biotech analyst. Further imagine that PPHM allowed that bank to buy a modest amount of stock from the ATM for their private equity account. Keep your eyes closed and further imagine we give this bank modest amounts of five year wts all the way up to $7.50/ share against a subset of modest milestones. (read that as research reports, market making, etc. ) Further imagine we give this bank a balloon load of wts above $7.50 if they get off a secondary for the company between $7.50-$10/ share for $150mm. Let all those wts carry a "right of registration" if said secondary is enacted and of course they get paid for the secondary. Now all the incentives are in the right place. Remember wts are only exercised if the price is above their strike and represent additional capital placed directly on PPHM balance sheet.”
Now RRdog…Close your eyes and imagine that you are speaking to your 10 year old son. He’s a bright kid with a lot of promise. He has a natural curiosity for all things. He saw you reading the Wall Street Journal. He picked up a discarded page and started to read the words above and asked…How does this banking thing work? Who gets how much and for what? What’s a modest amount of stock? What’s a private equity account? What’s a secondary?
Regards
Golfgo
AI
