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Provectus Biopharmaceuticals Inc (OTCMKTS:PVCT) Hits The OTC: Here's Our Take

Provectus Biopharmaceuticals Inc (OTCMKTS:PVCT) Hits The OTC: Here's Our Take
Written by
Chris Sandburg
Published on
October 20, 2016
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Provectus Biopharmaceuticals Inc (OTCMKTS:PVCT) just notified markets that the NYSE had moved to delist its stock from the exchange, and that as a result of this move, the NYSE had halted trading in the company. Provectus' market capitalization collapsed in response to the announcement, and is down more than 55% on last week's open.This action looks like a bit of a strange response to us, and we think there might be an opportunity not just to get in ahead of a short term bounce, but also to pick up a discounted longer term exposure.Here's why.First, a bit of background. The company is developing drugs on two primary, concurrent fronts – dermatology and oncology. Both fronts are working on immunotherapy approaches, with psoriasis the lead target in dermatology and melanoma (skin cancer) the lead in oncology. The oncology target is currently in a phase III trial, and the psoriasis target completed a phase IIc a few years back, which has since been in a sort of limbo while the company completes a phase II mechanism of action (MOA) study, designed to establish the change in the immunologic, structural and hyperproliferative state of the skin in the target plaque and evidence of cellular atypia following PH-10 application, when compared against various efficacy and safety endpoints. Basically, this latter trial is designed to establish exactly how the drug works, with (presumably) the goal being to take this information into a meeting with the FDA, and have it form the basis of a pivotal protocol.Data from trials to data suggest a degree of efficacy in both lead indications, and Provectus partnered with two of the industry's biggest names – Boehringer Ingelheim Corporation and Pfizer Inc. (NYSE:PFE). The company has presented at (or will present at) some of the biggest conference names on the circuit across the last couple of months (ESMO, R&R, SITC).Here's our issue.Markets have been aware for a month that the company is under threat of delisting, and there has been a pretty gradual (but not insignificant) selloff across this period in anticipation of the NYSE action. That the action finally coming should cause this degree of revaluation (and in turn, the assumption that the impact of this action wasn’t already priced into Provectus) seems unreasonable. This suggests an oversell – an overzealous reaction to the news of the halt – and this – in turn – suggests there's room for a near term bounce.That's opportunity one.The second opportunity is rooted in the fact that the company hasn’t actually been delisted yet, and while it's shares are halted and it's trading pink right now, there's every chance the shares will regain compliance and continue to trade up near term. Provectus management has already initiated proceedings towards a reverse split, and given the very imminent threat of delisting, we don’t expect shareholders to vote against it. An RS should just about boost the company above minimum bid for the required term, forcing NYSE to rescind the delisting and – by proxy – the halting of the shares trading on the exchange.Once this happens, and we expect it to happen in November (the special shareholders meeting at which the RS will likely get approved is November 14), we think markets will return to focus on the company's pipeline. The threat of delisting will be lifted, the impact of the RS absorbed, and – by way of a rights offering announced by way of an S-1 registration a few weeks ago, and the cash this offering injects into Provectus' balance sheet – the company can get moving on its development pipeline again. For all intents and purposes, it never stopped, but it’s the delisting that's impacting valuation right now, not the operational fundamentals.Bottom line: things are far from perfect, and the RS is a last ditch attempt to maintain a major listing that may fail. In all likelihood, however, it will be enough to help the company maintain its listing, and with a near term capital injection, we think the Provectus can moving in the right direction once more and start to lay the foundations for a marketing authorization application in melanoma first, and then psoriasis.Subscribe below and we will bring you our interpretation of the near term catalysts for PVCT as and when they hit press!Disclosure: We have no position in PVCT and have not been compensated for this article.

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