I hate hiccups because they cause delay and imply further dilution. However, when Garnick saw enrollment difficulty he brought in Menander and PPHM retooled the protocols and sites were expanded (and perhaps scope of the label as well). I like his aggressive approach and response. Sometimes hiccups happen and the "response" is important. The response here was excellent with no structural damage. (Remember PPHM lived through a hiccup with the US Govt where at first they failed on the contract and later acquired 10's of millions of dollars in business). This stuff happens. Garnick is demonstrably better, more aggressive management IMO.
It has become obvious to me and others IMO that the "driving force" in mgmt and direction is Dr. Garnick. Of course , things funnel back through SK so he can channel back and forth with ES and the investigative scientific team headed by Dr. Thorpe, but the driving force is Garnick. Garnick comes to PPHM with the ability to sort through the science-- re its relevance at the FDA-- and the proven ability to "kill" a program he doesnt like. He likes what he sees and quickly the trials are tooled up aggressively on five fronts. Again, I like his aggressiveness. IMO, he will go for the SPA on Cotara if the FDA discussion gives him the slightest opening.
In case Dr. Garnick reads this board , I again suggest he become more aggressive in the area of "imaging" and other ancillary IP and (in the same mode as Menander) Garnick hire an ex DNA guy that is an expert in leveraging IP and that reports directly to him. It does not matter to me whether PPHM gets large dollars upfront, delayed milestone payments or even more modest dollars because there are clearly some major benefits to trying to commercialize IP i.e. imaging:
1. It shows that PPHM can commercialize "non crown jewel IP"
2. It shows that PPHM can partner with substantial ( imaging) companies.
3. Imaging is similar to "device" approval at the FDA which is a much less strenuous process than NDA. Real efficacy is proven in the marketplace.
4. The FDA and oncologists in general should welcome a technique that could advance by a large increment the diagnostics on hard tumors.
5. PPHM Avid unit could pick up large and lucrative manufacturing business from imaging.
6. PPHM could pick up copious amounts of ancillary safety data from use of Bavi in imaging.
7. Partnering here would mean "no costs" to PPHM to leverage this technology.
8. Partnering "imaging" could prove the template for licensing
other "non core" IP. IMO PPHM has scores of non core patents that could be sold.
9. PPHM becomes familiar with more companies in the biotech universe via this contact.
10. Best of all--IMAGING IS A HIGHLY LUCRATIVE BUSINESS--and could mean large royalties to PPHM not dependent on a drug.
Clearly all the short term traders were disappointed on their speculation prior to the CC that drove the price up. After no new blockbuster announcements the traders have spoken and the price is lower. However, under rule 201 shorts seem limited to only selling into upticks (strength) which is a very dangerous proposition in a small biotech. Therefore, once all the selling is over re the CC, I envision (IMO) both a "positioning" opportunity and a "trading" opportunity in PPHM. From here through Feb of 2012 --- a period of time which encompasses both a lot of news for PPHM and the seasonally strongest time for performance (January effect)--- IMO one could easily get an intermediate trade of between 100% from current price and 300% if the basis goes a little lower.
I am predicating my opinion on the belief that it is a high "probability" that Garnick can take PPHM to the FDA re cotara in the fourth calendar quarter and get a reasonable Phase III protocol. Therefore:
1. THE BIG NEGATIVE IN THE STOCK TECHNICALLY IMO IS THE ATM AND THAT IS DRAWING TO A CLOSE AS PPHM GETS CLOSER TO PARTNERING. If you view this as a "straight line rate of change" between now and the first quarter of 2012 this facility is running off. Every day is one day closer to the end of this ATM. IMO if this derivative changes the "stock price" should do much better.
2. Deals of regional or national nature are possible.
3. The total dilution through the first quarter of 2012 is manageable from here even if undesirable.
Up or down a point is "not really the point" however. Even a trade of 100-300% is not the point. I prefer to stay focused on my "first" long term objective which is 1-1.5 billion in market value or roughly $15 per share. That's why I am taking the big risk in PPHM and I assume that is why everyone else on this board is taking risk. As part of this first objective I include "partnering" that:
1. improves balance sheet
2. Improves ability to conduct large scale trials
3. improves manufacturing performance at Avid
4. kills the ATM and "going concern letter".
5. Completely changes the credibility and aura of the stock trading in PPHM
Too early to talk about secondary objectives without more trial results in Bavi.
Biotech is in some large part a regulatory game. PPHM seems to have assembled the best regulatory team in the industry and one that believes in the various products.(BTW they now seem to be assembling one of the best manufacturing teams as well) That IMO is worth some speculation in size.
If we think about this clearly, this PPHM team has devoted their whole life to developing very high level skills and chosen to come to PPHM (????) when they have proven they could take that skill set almost anywhere in the biotech universe. They are definitely not coming for the BOD or the balance sheet. Therefore, they must "really" love the science in all its full ramifications. They are listening to Thorpe and USW Texas and these are very smart people as well.
This regulatory team has the wisdom to be FDA driven , FDA sensitive and communicative, as well as product driven. Again, IMO, this indicates a high degree of confidence that they will be able to present the product to the FDA in an "acceptable form".
(One does "yearn" for the day when some of these listening and communication skills will rub off on mgmt in regards to shareholders).
I continue to be disappointed in the quality of the BOD. They appear "arrogant". They are particularly arrogant in their attitude toward their own shareholders. When you are arrogant you better be dead right because it implies a rigid, inflexible, and limited way of thinking about a problem. If they are afraid of loss of control or are saving seats for partners they could AT LEAST ACQUIRE SOME "ADVISORS" TO THE BOD OTHER THAN SCIENTIFIC ADVISORS.
Clearly some BOD advisors with the following expertise would be helpful:
1. Expertise in gov't procurement. It is impossible to calculate what opportunities PPHM is missing in this area.
2. Advisors with prior biotech mgmt experience who are sophisticated enough in biotechnology to accurately question mgmt proposals and to suggest alternatives to mgmt.
3. Advisors with heavyweight connectivity to biotech financing or BP domestic or Intl partnering. There is no calculating what possibilities PPHM is missing due to this lack of expertise.
4. Advisors with PR expertise.
The PR and shareholder relations continues to be a disaster area. IMO if PPHM wanted to add two points to price and lessen dilution they could replace current IR with the old Gendel /Lindheim team.
On a more positive note:
I am very positively impressed by the patenting effort.
I am very positively impressed with the new hires.
I am beginning to come around to the viewpoint that Cotara has broader implications in hard tumors which make a deal more likely if we can start with brain.
Furthermore, IMO this message board is seriously underating the "approvability" of both Cotara and Bavi as we focus only on degrees of efficacy. The efficacy so far appears good not great, better than SOC in general and still improving. However, putting efficacy aside, both products have tremendous "peripheral" and "alternative" advantages that may make them very attractive to FDA and ultimately the marketplace. Among these are:
1. side affects
2. ease of deliverability
3. cost
4. new and different MOA
5. long term survivability
6. Treatment time
7. Ability to treat percentage segments of the market unhelped by SOC
Garnick seems to be a master in this peripheral realm.
IMO there is a big difference between "breakthrough" drug and "blockbuster" drug. Blockbuster refers to "sales revenue" and most blockbuster drugs (starting with our favorite Avastin) are incremental improvements. One side note: remember, to be a blockbuster drug for a small company like PPHM takes a lot less revenue than for a BP. What may augment, improve, or add to a BP line of product could really move the needle big time for PPHM.
Bavi looks better to me against viruses than the market place gives credit for as it does not look to compete with a whole host of drugs in this area but to augment. IMO there is little or no market value built into PPHM re virus area. This may change in shorter time frames than we think as virus testing moves much faster than trials in cancer.
I note a lot of argument on this message board re various types of financing, biotech stock comparisons, strength of BOD and stock purchase timing. It is clear to me that JR and JD have a point. In recent years PPHM has underperformed most biotech fair comparisons and PPHM is poorly financed and poorly staffed at BOD level. There really isn't much to argue about on these points. Let's just accept that or sell the stock. It is important to understand these negatives. It is because of these conditions we are afforded the "current" valuation and the "current" opportunity. IMO a better use of time and energy, rather than arguing the obvious among ourselves, is to continue ferreting out information, debunking the ridiculous, and suggesting better ideas. (see messages from random board visitors)
The "time frame" for comparisons about biotech stock performance is an interesting question. I choose the average price between now and Sept 30 of 2011 as my entry point. I always hope for higher prices because of my long bias but I am prepared to average lower. Let's compare the percentages going forward from that average point within that time frame. Then this game could be fun.
IMO the weight of the scientific achievements will eventually lead to partnering and this will "trump" and hopefully eradicate a lot of the negatives.
Regards,
RRdog
