An old email sent to me enjoy Morning guys,
My summary (pretty cryptic notes) and I reckon not much new here for you all, however, comments at the end wrt Moran you may find interesting. This is a far cry from my usual polish and distribution. In the strongest possible terms this is not for distribution, merely Vance, Tiviluk, Tupper, Mckenna and Barker.
Dave
Simon Best,
3.5 hrs with vance, tupper and llewellyn. Another 3 hrs with llewellyn and 14 IA’s (and Walter Siemens).
Anxiety meters running high, burning questions, plenty of bullets flying and impassioned discussion……Simon did a commendable job of answering credibly. Based on our pli history….fair to say the audience still hails from Missouri (albeit less so) and the sequence of events he described to unfold over the next 6 to 9 months should get us back on the rails and going from lower left to upper right.
In no particular order and jumping around a lot:
Thomvest……..they want to buy more but can’t by virtue of the current blackout (applies to all insiders), which could very well extend clear through the summer as term sheet back and forth plays out. Discussed getting TV to reschedule the loc…extend it by 2 years; increase it; convertiblize it ect and concurrently get TV to chime in with a well-crafted release reiterating their unconditional support. Worrisome nonetheless, to learn that pli has one more pull at another $10mm tranche and any further pulls thereafter – then the IP becomes collateral, but I don’t understand how much of it is at risk. Some angst in the room that white knight Thomvest could become black mamba marauder. Simon was taken aback by this perception because he said TV after 2 hr PL meeting last week with Peter and Clulow, that they are absolutely not predatory and do not want to own a bio/pharma….they want PLI to succeed.
4050……Miehm and Ridgeway say “all that matters is that they have to do a (credible) deal, full stop”. There are 3 pharma at the table…one tier 1 Japan for Japan only; one tier 1 for global (china was a must-have component) another tier 1 for US and Asia…..all of which have respective board approvals to negotiate. Five very interested tier 1’s at the next level down and a bunsen burner coming under their arses soon to giddy-up or piss off. Min half dozen more tier 1’s and tier 2’s on the third line of interest who are not so much interested in IPF as they are liver, kidney and heart. Alstrom reversal was a significant tipping point. Despite our weak negotiating position (balance sheet), Simon says that is not evident (at this juncture) in the negotiations. PLI to keep analogues for heart, liver and kidney which are apparently far superior to 4050 for those applications.
Pierre……he continues to have full board support but now (finally?) cognizant that he has to become more team focused. He simply cannot help himself in terms of over promising and under-delivering. Apparently he has accepted that and the challenge remains to change his role accordingly. Four guys at the top are each doing min 2 or more different roles. It is too much. Actively searching for a COO. Had George Skangos in their sights (ceo of biogen recently bot out – bill gates got him). Lots of lures in the water including guy who sold intermune to roche – discussions underway. Difficult fishing because the US market has been so buoyant in this space. Apparently Kory Sorenson an excellent board addition. New HR snr vp apparently a great addition also, Marcel LeClair.
Pdufa push out….they absolutely thought they had it….no issues with the plant; clinical specs were clean. FDA bumped mid feb review to mar 20 and then presented them with hurdles that were impossible to overcome in the remaining time. Need to modify quality control assays (add 4); run 32 more batches; fill/finish with cmo emergent; freeze dry; reconstitute and re-test. That is why it will take so long. Resubmit bla then fda has 6 months for pdufa….though fda intimates it may accelerate. Apparently the far bigger fda focus is the validation of a new and disruptive process (for which they have no familiarity) and consequently want to be absolutely certain the bar is as high as possible because they know it is only a matter of time before a lot of PG and follow-on proteins will be manufactured using this process. FDA also concurrently re-org’d and combined both plasma and biologics divisions (was supposed to be plasma only) and both inserted their most conservative requirements. PLi targeting (conservatively) an approval april 14/2019.
Sram……they were in breach. They played for time and kept pulling PLI strings for delays and revision of terms. Delay also veiled in terms of bureaucratic china $ flow control issues. PLI played along for a bit but as it became apparent that better dance partners were emerging (one global pharma potential ipf partner saying they must have china) with far better economics…then they decided to terminate. Simple, though understandably optics and timing say otherwise.
Nasdaq….the plan was Pg approval April 14 + voucher; Nasdaq in May and 4050 IPF deal mid-summer. Syndicate was lined up as were analysts. Pdufa push out fooked it all up. Apparently 75% of all pdufa’s are delayed? Jan 2018 a US IB was engaged by the PLI “defense committee” to render an independent assessment of the value in the event of hostility. Pretty thorough looking report. Concludes current value $8 with Pg, IPF and Alstrom only…..and ramping to $18 with layering in of additional drivers further down the pipe. Was some discussion about working on strategies to showcase this more broadly. Apparently above referenced potential partners are using considerably higher probabilities of success than this IB assessment. Nasdaq postponed to roughly soon before or soon after PG approval. Tbd
Managing head count and burn……forthcoming discussion at agm. Apparantly to become a focus though I think it will be minimal change. Exec comp was tabled and it too will be diminished for 2018; salaries lower; bonus’s more skewed to performance and more correlation to share price than simply executing on science goals. We’ll see.
Forthcoming Triple whammy….. a possible pipe; a 4050 deal and possible follow-on engagement by the Caisse (with whom they are finally in meaningful discussions). I must stress none of the foregoing are assured….merely anticipated scenario’s and certainly subject to change.
Financial Times…….Clive Cookson is doing a feature on Fibrosis. Already had a 1 hr interview with Pierre and doing same with fibrogen and Galapagos. Ought to be in print relatively soon
Dr John Moran……..I spoke with him at length the day after our visit with Simon.. I asked him “ how definitive is the latest alstrom data, confirmed via fibroscan, mri and now insulin clamp, in terms of show casing reversal of fibrosis?” He said “incontrovertible”. He was at a loss to describe how this is not resonating. Further said it is a major pivot point for negotiations…not only for ipf but equally for heart and liver. Said 100% this demonstrates significant reversal and all the more meaningful in a disease that starts from congenital and therefore advancing over many years if not decades. Further said….the longer on the drug, the more efficacious it becomes. In addition to 30+ animal studies including the gold standard Vanderbilt model where the mice were severely handicapped out of the gate and the phase 2 data that translated but was decried for small cohort, open label, non-randomized………the 52 week alstrom results are now unequivocal. The cardiologist in charge, Dr Steeds is apparently keen to publish. Should be relatively soon. I hope to speak with this doctor within the week. John regards 4050 to be a “miracle drug” and further describes that it was “irresistible” to him when first introduced. It is what attracted him in 2008 when he was engaged by a US IB to do some dd on pli. Subsequently became a pli director in 2012 and left a very good paying job at Davita (overseeing thousands of home modalities for dialysis) to become CMO of PLI in 2014. Says the hallelujah event will be roughly Q1 or Q2 2020 when we get phase 3 IPF read-out. If not before…. from 26 week interim data. He wants to be there when 4050 is validated and will stay to see these results. (Spoke with Doug Loe yesterday and he confirms successful phase 3 will warrant at a minimum mrkt cap of $8.3bn for this indication alone). Moran absolutely convinced 4050 will be a revolutionary game changer in the fibrosis arena. In all seriousness – he likens it to “penicillin”. He is stepping down from the board because Nasdaq regulations only allow one snr exec on the board and that has to be Pierre (further evidence Nasdaq was on deck). Further, he and the board recognizes that the board needs more capital market savvy members. His focus remains the science. He reminded me that he has never sold a share, not even when exercising options (which he has on deck once again 200,000 at $.34 on May 21/2018). Laurin, Sartore and Pritchard also have collectively 550,000 options at $.40 on deck for April 8/2018. Which are extended due to blackout for 3 weeks beyond lifting of the blackout.
We twist for 2-3 more months