PPHM FINANCIAL YEAR END RESULTS 2015

Revenue increased 20.0%
Loss increased 36.4%
Cash at Hand US$68 million
Net Cash Reduction vs Previous Year: US$9.5 million (2014 Cash at Hand: US$77.5 million)
Current Ratio 2.16
Debt to Equity Ratio 0.63

The revenue growth is driven primarily by Avid Bioservices. In the 4th quarter its revenue grew an astounding 44%. In fact, the manufacturing backlog has now increased to US$40 million from a previous backlog of US$20 - US$30 million. Total revenue for 2016 is estimated at US$30 - US35 million. The amazing thing about this is all the backlogs are based on just the existing facility , discounting the new and expanded facility entirely. Although the new facility will be used mostly to commercialise Bavituximab (Bavi), the Management also mentioned that it will be used to manufacture third party drugs, which could generate additional source of revenue for the company.

The loss is expected as PPHM continues with it enrollment for the Sunrise Phase III Trial. The cash burn is also subdued with the increase in revenue generated by Avid Bioservices.

Sunrise Phase III Trial

Target to complete enrollment by year end 2015. Did the management accidently dropped a hint or two when they discussed about Sunrise?

CEO Steve King said, "Sunrise Phase III Trial is estimated to be unblinded in late 2016"

Joe Shan, VP Clinical and Regulatory Affairs, said, "Continue to receive positive feedback from investigators who are excited by both the safety profile and immunomodulating properties in Bavi." When pressed by a question, he reiterated he was referring to the recent ASCO and nothing to do with Sunrise.  

PPHM will initiate new clinical trials in the second half, including one combining Bavi with chemotherapy for breast cancer in a seamless Phase 2/3  trial This means that as soon as Phase 2 results are positive Phase 3 will be activated. Another, combining Bavi with Opdivo for the treatment of lung cancer. For the uninitiated, Opdivo is a drug owned by Bristol-Myers Squibb.

There has also been interests shown in combining Bavi with treatments for ovarian, pancreatic and other forms of cancers.

PPHM's direction is to partner for overseas market but retain 100% rights for the US market.

Perhaps, Steve King said it best, "We are more confident than ever in the Bavi's potential."

Now for some numbers crunching (Entirely my own opinion)

Total revenue from cancer treatment worldwide = US$150B

Assuming PPHM captures 10% of the market  = US$15B

Assume 30% Net Profit per year = US$4.5B

Adopting a PE Ratio of 10 = US$45B

Current Market Cap = US$255M

Share price potential = 176x current share price = $237.60 per share

Interesting isn't it? But of course it all hinges on Bavi securing the FDA approval. This, in my opinion is a high reward low cost stock but you should also have the nerve to wait and swallow any disappointment.

My disclosure: I am long PPHM.