FOLLOWING IS THE TEXT OF SEVERAL POSTS BY TICKTICKER FROM
RAGING BULL’S PPHM BOARD.
(MERIDIANSURVEYING.COM WILL NOT VOUCH FOR THE CREDIBILITY OF THE POSTER OR THE ACCURACY OF STATEMENTS MADE BY SAME OR THOSE ATTRIBUTED TO ED LEGERE)
06 Jun 2002, 10:43 PM EDT Msg. 87587 of 87727
You will not believe my good fortune today
I took a digital camera to Tustin to take as many photos as I can of the 2
buildings Peregrine occupies. I parked just inside the parking lot and walked
towards the 2 buildings, a few hundred feet inside the complex. I had visited
the offices last year and posted a description of the visit and summary of a
chat I had with one of the employees. But I did not think to take pictures
then. I was also late to a golf outing at a nearby course.
Well, this time...as I took pictures from every possible angle, an employee
approached me and asked my name and what I was doing. I gave him my name and
told him I am a shareholder taking pictures of the offices for reference. He
nodded and let me be.
When I was done, I got in my car and pulled out of my spot, then decided to
swing by and take one more picture of the corner at which the two buildings
form an "L" shape. I stopped my car to the left of Peregrine's office
and used up all the space I had left in the camera snapping away.
As I snapped the last one, I heard the voice of man walking towards me saying:
"Are you spying on us?" I said, "No, I'm a shareholder and I'm
taking pictures to share with friends..." He said: "I'm Ed Legere,
and since you're a shareholder, would you like a tour of the facility?"
Never being short for words I immediately said "Absolutely!" He said,
"Lets go!"
As we walked towards the Peregrine main entrance I said: "I wish I knew
this would happen, I could have saved some space on the camera for pictures
inside".
Ed then proceeded to guide me through Peregrine's offices then Avid's offices,
then Avid's manufacturing facility, ...every corner of the place. A full
detailed report will follow on this incredibly enlightening tour.
Through out the visit, I posed questions to him and solicited comments on
various topics. He answered every question and addressed my concerns, at least
the ones I managed to think of ... as stunned as I was at this incredible
opportunity.
Discussion with EL
First of all, I want to say that Ed's pictures don't do him justice. He is a
forceful personality, vibrant and full of vitality. He seemed younger and
healthier than in the photos we've seen of him. We walked at a fast pace, and
his energy level was incredibly high as he ushered me through department after
department, section after section...opening doors, introducing staff members,
and explaining the intricacies of Peregrine's and Avid's operations.
I am very impressed with the conviction with which he talked about the
company's future, short and long term. No uncertainty about what he wants to
accomplish, no limit to his enthusiasm for our prospects. He treated me as if I
represented all of PPHM's shareholders, and he offered information about the
production aspect, the clinical side, and business goals of the company...as if
I am a prospective client, a reporter, a rep for an investment fund, or a
candidate for a top position in the company. He went all out for me! And I am
very thankful for that.
He knew I'm familiar with most of the issues that PPHM investors are concerned
about, and he answered me as if he expects me to carry his answers back to you.
Which I'm doing. As a matter of fact, the last thing he said to me was "I
did not tell you anything that is a secret, so please tell all about what you
saw here". I was so taken by that that I mumbled that I will.
PHASE III
---------------
I asked him about the delay in announcing the start of enrollment for phase III
for brain cancer, and he said it's in the hands of the FDA. He said that people
forget that the approval was for the study design. Now comes the part where the
FDA has to approve of every procedure, every method, every item we use in the
trials. The trials have to be consistent and uniform across all the sites they
will be conducted at, here and in Europe.
When he mentioned Europe I uttered the term "multinational" (in
reference to the PR where it was mentioned) and he said "yes,
multinational" and proceeded to add that running the trials at 70 centers
is no easy task and requires a lot of preparation. The trials will be run at 35
sites in the U.S. and 35 in Europe...including Russia and Germany.
What remains to be resolved are a few minor details and he expects no problems
in meeting FDA requirements and in gaining a "go ahead" from them
soon, but until then, we wait.
The Expansion
-----------------------
As he showed me the 30-liter reactor through a window (the only room/lab we did
not enter because it is a clean room environment), he explained that to the
left of it is the 300-liter reactor and that a 100-liter reactor is also there.
He said the expansion he's working on will be done before the end of the year
"as promised" involves adding yet another 300 liter reactor and yet
another 100 liter reactor. We are also capable of adding 2 more 100 liter
reactors if needed. That's it. There is no construction going on, no extra
space added, everything is in place. Only reactors are being added.
I asked him about the $4 million expansion and he said that is something
totally different and is NOT underway right now. When that happens, it will
simply involve adding from one to three 1500-liter reactors and extending pipes
from the water tank (more on that later) to those new reactors. Some other
modifications also, but everything takes place in this building (which is the
second building that is adjacent to Peregrines offices). He was emphatic in
stating that that expansion will not take place until there are contracts in
hand.
As I'll explain later, that second building is fully equipped already!! Amazing
setup. Fully operational, and in his words "we're making money as we
speak". And he "showed me the money"...in the form of a just
completed harvest from the 30 liter, and another harvest that was broken down
into smaller portions and being stored in bags in a refrigerator (he was
guessing those bags were either LYM-1 or Cotara).
Medipharm's data and the FDA
------------------------------------------------
I asked this question with Katie in mind, but that topic seemed to start before
I even asked. In regards to that he said the FDA has not seen Medipharm's
"package" and neither has he. He said he doubts the FDA will readily
accept it but that he'll take it if it does. He commented on how great the data
was, and I told him that that data is the source of great joy for us.
This was not the first instance I wished I had TerryGD with me, but it was the
moment his presence would have been most appreciated. Ed knew I was
scientifically challenged yet he explained everything in layman's terms as he
would to a banker or fund manager or any other similarly challenged visitor. I
appreciated that he went to the fullest extent possible to explain.
Conference Call
-------------------------
Coming up. No date given. We changed the subject quickly.
By the way, as I thanked him before I left, I expressed my gratitude for him
taking the time to show me around. He said he offered in conference calls in
the past to give tours to interested investors but no one stepped forward. So I
asked: " if I can gather a bunch of us long time investors, would you give
us a tour?" He enthusiastically said SURE.
Whoever is interested in joining a group to visit the facility, please contact me
at [email protected] and we'll get this thing going ASAP. Please tell me
dates that would work for you. It will take me a couple of days to respond but
I will.
I cannot tell you how this visit lifted my spirit. You will not believe what an
incredibly complex and how superbly setup and professionally run operation...
Avid is.
THE TOUR
Peregrine and Avid occupy two 2-story buildings: 14272 and 14282 Franklin St.
in Tustin. I will refer to the first as Building "A", and the second
as building "B".
Building A: Peregrine occupies the left end of the building and half of the top
floor. A company by the name of Phage occupies the middle portion of the first
floor. Avid occupies the right end of the building and half of the top floor.
Building B: Avid occupies the left and right ends of the building, with a
company by the name of Erogo(?) occupying the middle portion (both floors).
Erogo is on the way out, and soon Avid will occupy the building in its
entirety.
Not only that, but Ed pointed to a 3rd building and said that if they need to
they can take over that as well. I asked if they had a lease back on that 3rd
building, he said no, only the two. But they know the owner and can work
something out when needed.
--------------------------
Building A:
Ed guides me through the main entrance to Peregrine's offices in Building A,
and through a door in the small lobby to an area that I honestly don't remember
what is used for. I was still stunned then that I was being given a tour of the
place.
But I quickly regain my focus, and we head up the stairs to the corporate
office area. Ed introduces a few employees to me and says that Peregrine now
has only 8 to 9 employees as other employees now work at Avid. Here were
offices and work areas where Ed et al run Peregrine and manage the trials.
We then head to the middle of the top floor where a door separates Peregrine
from Avid. Ed explained that clients are given a tour of Avid without stepping
into Peregrine, which enforces the notion that they are two separate companies.
This part of Avid includes labs where clones brought in by clients are examined
and scaled up to determine yield. He referred to the mixtures as
"soups", and that is (as I understood it) the first step in producing
antibodies from the clones brought in by the client and for PPHM's own use. The
master clones are here, but I didn't see them. A wide array of equipment and
accessories. From here, the soups are taken to the other building to produce
antibodies in mass quantities in the bioreactors.
In addition to the labs, the floor also includes some offices including that of
Rich Richieri.
We climb down the stairs to the main entrance to Avid and the shipping &
receiving area. Here Ed showed me a cage where all received materials are impounded
until examined and certified for use in production. Strict control is exercised
here to ensure adherence to FDA regulations.
Building B:
This building is where the bulk of the work is done. The left end of the
building - first floor - is where the IT department is located. Thirteen
servers managed by Nick F. help both the scientist and office personnel in
carrying out their duties. I'm an IT guy, but I resisted asking any questions
about the setup even though I was as curious as heck to know about a few
things.
We go outside and to the back of the building and enter through a door to a
security post. I immediately seize the opportunity to ask about security, a
concern I expressed in posts past. Ed shows me the setup (I will not discuss it
here), and adds that they are in the process of hiring guards. Without going
into detail, I will just say that Ed is security conscious and they're adding
to what they have in place.
We exit that area move past the middle section occupied by Erogo to one of the
many back doors with the Avid Name and logo stenciled on. Ed tries his security
card to open a door and it doesn't open. He says, "I'm the CEO and there
are certain areas I cannot enter. I need someone to get us in here".
Someone does come by and lets us in.
Now, this room, if you can call that, houses a huge tank of water (8000
liters?) and a couple of other smaller ones. Ed remarked with a smile that Avid
is in the business of "making and selling water!!" I did not fully
understand what that meant until later. But at that moment I was trying to
understand what purpose all those tanks served.
A medium sized tank takes water from a reverse osmosis system, and the water is
purified to 99%+ purity. Then it goes into a big steamer that in turn sends it
through a condenser and ultimately to the big tank where it's kept at 80°
Celsius. That holding tank is so tall I couldn't see the top of it. Ed
explained that the water in that tank is pumped to the bioreactors.
Now, the reactors we currently have do not "put a dent in this water
supply", but the foresight was there in the beginning to build a tank big
enough to supply 1500-liter reactors when they are acquired and put into
service. Those big reactors will also be housed in this building (B), and all that
needs to be done is have pipes extended from the big tank to them.
Why all this water? You’ll see.
Next Ed opened a door to a small room with a single computer, which he referred
to as a SCADA (?), and said that the PC keeps track of every scientific
activity at Avid. It registers everything from water temperatures, to start and
finish of tests and tasks, etc. Clients are very impressed by it because they
can get full reports on the process they paid for, and the data is in real time
if you need it on the spot.
Next, we go upstairs, and this (is) where it's all at. First, Ed showed me cold
storage areas where completed batches sat. One such batch was a harvest (full
run) from the 30-liter reactor. From the window in the door I saw wide rimmed
heavy-duty plastic cylindrical tub that contained a big plastic bag filled with
a liquid. The liquid in the bag came all the way to the rim of the tub. Ed said
"that liquid is antibodies". So that's what he meant by we sell
water.
He then took me to the next room (also cold storage-looked through a window)
where on shelves we saw clear plastic bags (the size of a large Ziploc bags)
containing smaller batches of MABs. He was guessing that they were either-LYM1
or Cotara. And then in the next room, there were more cold storage equipment.
One of them read -30°.
Another interesting tidbit is that when a finished product is shipped to
clients, sometimes not all of it is shipped at once. Some could be kept here.
And some could be sent to a storage facility in Virginia, which Avid also uses
to store some of its MABs as well. And all of this goings on are tracked.
Interesting logistics.
Here's where ED stopped to make two very important points:
1- He turned to me and said: people don't realize still how big this deal with
manufacturing phase III antibodies is. The client submitted to the FDA with
Avid MABS specified. When they get approval, THEIR SHAREHOLDERS WILL DEMAND
THAT THEY COME TO US AND BUY CAPACITY FOR THE NEXT 10 YEARS!!! People don't
realize how big this is.
2- I asked if SDA approval is granted tomorrow, could Avid start manufacturing
for them right away? He said Avid would have to make arrangements, but assuming
they get approval tomorrow...Medipharm could be in possession of the MABs by
the end of the year!
The next door is the entrance to the operations room where the reactors are.
The room is pressurized and you cannot open the two consecutive doors at once.
Also, past the second door is a gowning room where you don special clothing
before you enter the clean room environment. I could see employees handling the
30-liter unit.
From the window I could see the 30-liter reactor. Ed commented that that where
Avid makes money. I couldn't resist, I said "our cash cows" (in
reference to a post of mine from last week), he said, "yes, cash
cows". He then explained about the expansion and our misconceptions about
what's going on - as related tonight in the earlier post.
On the wall next to the door was an old picture of a reactor, I asked if that
was like one of ours...he said "no this a picture of an old reactor we
had. We got rid of that one". The processing unit (computer) part of the
reactor in the picture was almost as big as the reactor was. He laughed and
pointed to the one we have now and you cannot see the computer part of it. All
tank and pipes.
We then walk into a room where files and documentation are kept. He said when
the FDA comes to inspect, they camp in this room for days. He said, they have
documentation on everything....” how to pour a cup of water".
Next came a glass door that led to that Erogo company. Again he said, they'll
be gone soon.
Well, after that we went downstairs and out to the parking lot where we stood
and talked for a while. I have to mention that ED always looked me directly in
the eyes when he talked to me. He was assertive, and remarkably fluent in the
science and articulate in describing the ends that it serves for the investors.
You know, not once did either of us utter the word cancer, cure, or patient. We
are mindful of course that the whole purpose is help in the fight against the
disease. But today, all we talked about was the process of making MABs, from a
production point of view. Today Ed showed me how Avid makes money from MABs.
And more importantly how capable Avid is of quickly getting ready to make more
on relatively short notice.
What's more remarkable, is towards the end I thanked him and commented that had
no idea the operation is so complex, and that Avid is so well equipped for now
and what's to come. He said something to the effect that most people have no
idea. Then I said, I still look for the science to be what ultimately makes
Peregrine big. He agreed and said MABs make us money now, but he too is banking
on the science. Then he added THAT'S WHY I'M HERE! I have my own money in
this!! And I said: That's one of the reasons we're in it too.
It's still all mind boggling to me how this visit unfolded. The guy comes out
of his office, and offers me.... an investor he's never met before.... a tour
of the facility. For an hour or so he lets me in on his dream. In every word
and every expression I sense the love and pride he has for this project. What
can I say? I haven't seen this in any head of company I ever met before.
I think the most valuable gift I take away from this visit, is how he, in the
role of "entrepreneur"....not "CEO"... showed me how much
passion he has for what he does. That's all I needed to see.