NEW YORK (TheStreet) -- Trading in Provectus Biopharmaceuticals (PVCT) remains halted early Tuesday morning following Friday's decision by the FDA to reject the company's request to grant Breakthrough Therapy Designation to the experimental melanoma drug PV-10.
At some point today, Provectus shares will start trading again, likely with a hefty dose of volatility. Some things to consider:
1. Provectus and its executives should be the target of an investigation and censure by the FDA.
Provectus Chief Operating Officer Peter Culpepper made several unsubstantiated claims about the efficacy and safety of PV-10 in melanoma patients on a conference call Friday evening. In my opinion, Culpepper's statements were a clear violation of FDA law, which generally forbids companies or its executives from promoting the use of experimental (unapproved) drugs without demonstrably proven clinical evidence or regulatory oversight.
Around the 25:50 mark of Friday night's conference call, Culpepper, in response to a question, says:
"The reason we will be successful is because we do have a drug [PV-10] that works. It works very well..."
PV-10 does not "work" for the simple reason that Provectus has never submitted a new drug application to the FDA. Only drugs that are reviewed and approved by FDA can be deemed to "work" in patients.
Later in the same call, Culpepper digs a deeper hole for himself. At around the 27:15 mark during the Q&A, an investor named Albert says, "We're saving lives here. We're saving lives." Culpepper replies, "Exactly."
Provectus has no data demonstrating PV-10 prolongs survival in melanoma patients. Provectus cannot say PV-10 is "saving lives" because no such clinical data exists.
At 27:45 of the call, Culpepper says the following about PV-10's efficacy:
"We know it's [PV-10] saving lives. We know that the patients we have treated successfully have no evidence of disease years after, so yes, this is absolutely critical we proceed and we have no questions in our minds that we will continued and be successful simply because the drug works."
Again, at the 1 hour and 3 minute mark of the call, Culpepper adds:
"There are forces out there obviously that are not in favor for whatever reason but that's not going to trump at the end of the day something that clearly works on patients and helping literally saves lives and treat disease when to our knowledge, as we know from the data, we are dealing with refractory patients who have failed other therapies and are being treated successfully with PV-10."
I can't decide if Culpepper is mendacious, stupid or a bit of both. Regardless, his reckless, unsubstantiated claims about PV-10 will only serve to anger the FDA and should result in a warning letter and additional mistrust between the company and regulators.
2. Provectus' deliberate decision to delay disclosure of the PV-10 Breakthrough Therapy Designation (BTD) rejection notice deserves greater scrutiny from the SEC and the New York Stock Exchange.
The letter from the FDA rejecting PV-10 for BTD is dated May 16, 2014.
Responding to a question on Friday's conference call, Provectus Chief Technology Officer Eric Wachter claims the company knew nothing about the FDA's PV-10 BTD decision until Weds. May 21, when he called his FDA contact person and was informed of the rejection. Wachter explains away the five-day notification delay by claiming his FDA contact person "forgot" to call him about the rejection decision. The call on Weds. May 21 between Wachter and the FDA was followed up up on the same afternoon by an email from the agency to the company with formal notification of the BTD rejection.
Even if you believe Provectus, the FDA's decision to reject the PV-10 BTD request was known on the afternoon of Weds. May 21.
This is significant and still troubling. On Weds. May 21 at 2:08 pm ET, Provectus issued a press release refuting details of an article published earlier the same day by Seeking Alpha. The Provectus press release states, in part, "The FDA has not reported back to the Company with respect to the Company's application for Breakthrough Therapy Designation."
Provectus admits knowing about the FDA decision on the "afternoon" of Weds. May 21, so was that before or after the company issued the denial at 2:08 pm ET? The SEC should ask for proof.
On Thursday, May 22, Provectus rang the opening bell on the New York Stock Exchange. The company celebrated its new NYSE MKT listing with the full knowledge FDA had rejected the BTD request for PV-10. Provectus hid this material information until Friday afternoon at 1:53 PM ET.
Let's not also forget Provectus removed a description of PV-10 as a "breakthrough cancer drug" from its web site on Tues. May 20.