Provectus News

Medical Technology Stock Letter Recommends Provectus as a Buy
Thursday May 20, 2010
 

In the Medical Technology Stock Letter Special Update for Wednesday, May 19, 2010, Provectus is recommended as a buy based on the positive Phase II clinical data. The Special Update is reproduced below with the permission of Piedmont Venture Group and is not intended for redistribution. For a copy of the Special Update, or to subscribe to the Medical Technology Stock Letter, please visit http://www.bioinvest.com/.

This is a Medical Technology Stock Letter Special Update for Wednesday, May 19, 2010.

Abstracts for the year's biggest cancer conference, the American Society of Clinical Oncology (ASCO) will be posted online tomorrow, May 20 at 6 pm EST. The abstracts are brief descriptions of individual clinical trials that can include summary efficacy and safety data for the drug development candidates being tested. While we have to wait for ASCO to see the complete data sets, the abstracts have more than enough information to move stock prices in front of the meeting. The abstracts are the primary reason that certain cancer companies will see their stock prices rise before the conference and can also contribute to the post-ASCO sell-off. Biotech traders are known to "sell the news" meaning that many cancer stocks with important ASCO data will be sold leading up to or during ASCO. The titles for the abstracts have been available since April 12 and from these titles we have picked out some that could cause positive price movement. We have previously mentioned ARQL and their Phase 2 lung cancer data as a potential stock mover. We would also look to buy Provectus Pharmaceuticals (PVCT.OB), based on their Phase 2 melanoma data which we are recommending in this update. Positive Phase 2 data can be very important for cancer companies and has the potential to add significant value to individual stocks. We expect both ARQL and PVCT.OB to move significantly based on the upcoming data that will begin to be released in this year's ASCO abstracts. PVCT.OB is being recommended as a buy under $2.00 with an 18 month target of $4.00.

To participate in the potential upside of the ASCO abstracts we want to make some adjustments to the portfolios. We will sell the BIIB in both the portfolios to raise cash. In the Model Portfolio we will purchase 2,000 shares of ARQL and use the remainder to purchase PVCT.OB. In the Trader's Portfolio we will purchase 5,000 shares of PVCT.OB and purchase 1,000 shares of ARQL. The following is a description of our new recommendation PVCT.OB.

With Provectus Pharmaceuticals set to present at the upcoming ASCO conference, it is worth taking a look at the company's most promising drug, PV-10 for the treatment of malignant melanoma. Melanoma is not the most common form of skin cancer, but it is responsible for more than three-quarters of all skin cancer related deaths, due to the ease with which melanoma metastasizes. Melanoma claims approximately 50,000 lives each year and increasing incidence in younger populations suggests that many more people will be affected by the disease in years to come. Early detection and excision of melanoma tumors is the most effective treatment, and if the tumors are not found early treatment becomes more difficult and the cancer is much more likely to spread. Despite significant advances in most areas of oncology, no effective treatment for advanced melanoma exists and the best available drug was approved over 30 years ago.

The active ingredient in PV-10 is a small molecule, originally invented as a dye for fabrics, called Rose Bengal. Provectus has so far reported interim Phase II data for the first 40 melanoma patients. The headline is that 60% of patients experienced either a complete response (CR, 30%) or partial response (PR, 30%), which compares favorably to 15% response rate achieved by an existing front-line drug, DTIC. The Phase I trial demonstrated median survival of 29.7 months for the (CR + PR) group versus 13.5 months for the SD + PD group, and extended Phase I data is similarly promising. The new Phase II data presented at ASCO are expected to confirm the Phase I survival results. Some key facts about PV-10 and Provectus are important for understanding this new potential drug:

Rose Bengal is easily synthesized and chemically stable. It has been used in humans as a diagnostic tool for almost a century so it has a strong safety profile. Until the advent of MRI, Rose Bengal was given to patients as a way to diagnose liver diseases, including liver cancer, and the molecule is still used to stain diseased tissues, particularly in the eye. Adverse events in the Phase II trial reported so far have not been severe, consisting mostly of pain at the site of injection and itchiness. That secondary drugs may not be needed to manage severe side effects is a big potential advantage of this therapy.

The lipophilic nature of the Rose Bengal molecule gives it a strong affinity for cancerous cells, which undergo accelerated lipid biosynthesis as they rapidly divide. Once inside, it kills the cancerous cells in such a way that it also seems to elicit a so-called "bystander effect" meaning that the immune system becomes activated against other tumors. Provectus is a lean, flexible company with only four full-time employees and enough cash to complete a Phase III trial for PV-10 in melanoma. They have initiated clinical trials of PV-10 in breast cancer and liver metastasis and are looking at other indications, such as tumors of the head and neck. The core team at Provectus all have strong scientific credentials, having worked together as researchers at the Oak Ridge National Laboratory before leaving to form their own drug development company. Design of the Phase III trial is a key question. Interestingly, no suitable placebo exists because of the intense red color of the PV-10 formulation, so it is likely that an existing chemotherapy drug, probably DTIC, will be used in the study. The biggest question will be to see if the FDA allows Provectus to use non-survival endpoints such as tumor response and progression-free survival.

In February a team of clinical researchers, led by Dr. Matthew Foote of the Princess Alexandra Hospital at the University of Queensland in Australia, reported* provisional results from a study of three patients who were treated with but did not respond well to PV-10. In addition to the PV-10 treatment these patients were subsequently treated with radiation therapy and all three showed a complete response to the therapy. This publication moved Provectus stock significantly more than the positive Phase II data. The reason for investor confidence is likely due to two reasons: First, PV-10 or any other approved therapy for melanoma will likely be used in combination with other techniques such as surgery and radiation. Second, the data appears to confirm the existence of a bystander effect wherein PV-10 induces an immune response to remaining tumors. Although Rose Bengal is a photosensitizer – meaning it can help absorb and direct radiation towards a tumor – the researchers do not believe this is primarily what made the radiation effective. Indeed, by the time the radiation was administered likely only a small amount of the drug remained. Instead, they believe that the radiation may have worked together with the body's immune system, activated by the bystander effect, to shrink the tumors.

Of course, PV-10 is not the only new therapy under development for melanoma. The two most important trials to watch relative to PV-10 are also interlesional therapies: Vical’s Phase III trial of Allovectin-7 will be completed later this year, and BioVex's OncoVEX Phase III trial is also ongoing. The following table contains a summary of melanoma drugs currently under development.

Name	Sponsor	FDA Progress	Presenting at ASCO?
Allovectin-7	Vical	Phase III	No
Avastin (bevacizumab)	Genentech & Bristol-Myers Squibb	Phase II	Yes
AZD6244	AstraZeneca	Phase II	Yes
GSK2118426	GlaxoSmithKline	Phase I	Yes
Ipilimumab	Bristol-Myers Squibb & Medarex	Phase III	Yes
MKC1106-MT	Mannkind Corporation	Phase I	Yes
Oblimersen	Genta	Phase III	Yes
OncoVEX	BioVex	Phase III	Yes
PLX-4032	Hoffmann-La Roche	Phase III	No
PV-10	Provectus	Phase II	Yes

 

*Foote, M. C.; Burmeister, B. H.; Thomas, J.; Smithers, B. M.; Melanoma Research 2010, 20:48-51.

This has been a Medical Technology Stock Letter Special Update for Wednesday, May 19, 2010. Copyright 2010, Piedmont Venture Group. All rights reserved. Privilege and Confidentiality Notice: This electronic transmission (and/or the documents accompanying it) may contain confidential information belonging to the sender, and intended only for the use of the individual or entity to which it is addressed. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, electronic storing or the taking of any action in reliance on the contents of this information is strictly prohibited. If you have received this transmission in error, please immediately notify the sender by reply e-mail or telephone at 510-843-1857 and immediately delete this record from your computer system.