Biotech Values

[DewDiligence]

David Sobek’s take on Bavituximab (via email):

PPHM announced its agreement with the FDA on a phase III trial design and this was enough to rocket the PPS higher. Do not confuse the price action today with the underlying fundamentals of PPHM.

First, they do not have enough money to run this trial. Second, they are highly unlikely to get a partnership for the drug to defray some of the costs. Third, even if they somehow dilute shareholders enough to run the trial, it has almost no chance of succeeding.

Bavituximab is slightly more potent than saline. One could write a thesis on the issues. First, notice how few side effects bavituximab has when added to an active compound. That is not normal for an active drug. Active drugs make changes and these all lead to various side effects. So if bavituximab is destroying the blood vessels to the tumors, why are there not additional bleeding AEs? It is a fairly good rule of thumb that drugs that do not increases AE events are likely not very active, especially in cancer.

The second major issue is that they are targeting solid tumors by cutting off blood flow but solid tumors can often survive (if not thrive) in hypoxic environments. So it is not even clear if the mechanism of action is reasonable for their targets.

Third, it is likely not the developed tumor with the PS exposed that causes progression but distant metastases, where PS is likely not exposed yet. So even if we assume it targets the main tumor, it is not clear if that would actually matter in terms of metastases. Of course this is to not even mention the issues with the data.

Long story short is that the fundamentals have not changed on PPHM and this is a company that will continue to have spurts of pumping followed by inevitable dumping and ultimate drug trial failures.