I read the letter to shareholders again, and I think I am even more impressed the second time around.
Besides the collaborations with the world leading infectious disease research test centers, universities and laboratories, all reporting great results, the discussion of history and management operating practice, as well as the timelines and costs impressed me even more than the first read.
About all I can fault NNVC for at the moment is being a little too optimistic with prediction of milestone dates. The overwhelming dominant plus is they have actually accomplished much of what they set out to do. I also agree that 2005 was not that long ago and the average burn rate to reach the significant milestones achieved to date is probably at par with the best in the industry.
I think they are still too optimistic for final tox report and phase I start. I am betting the fall of 2015. Some earlier offshore trials might be in there, but I would bet early 2015 for that at best.
Regarding costs, I fully appreciate the outsourcing matter. On many of the R&D projects I managed, I found it very difficult to work within a reasonable budget and go too far beyond your immediate in-house capabilities. Even working with all inside resources, the cost of doing anything these days is high. Once you went outside, you ran into IP protection concerns, added legal costs for confidentiality agreements, non-disclosure agreements, etc. You had to spend a lot to pay the outside source plus the cost of time documenting information transfers. Costs skyrocketed from internal project management time, trip costs, leading to more costly status reviews. If you have a manufacturing process, outsourcing that had similar problems. Both were often held hostage to schedule and timeline disruptions from the provider that could easily get complciated by your own. More time was spent trying to keep your finger-on-their-button than doing good value added work. Often, it was an absolute pain in the butt!
The letter describes what I feel is a realistic view of how things can evolve. It also illuminates the happenstance type navigations that occur when an opportunity presents itself. For example, I think, in hindsight, they could probably have FluCide in human trials right now, if they did not dilute their efforts by working on as many other viral types. Yet, this is not a net negative at all. Their resounding success in these tests yield excellent associated support and leave them prepared for a very quick expansion of the actual ‘to-market’ pipeline.
My biggest concerns are IP dominance and competition.
