PROVECTUS BIOPHARMACEUTICALS INC. ANALYST BRIEF A NEW FRONT AGAINST CANCER

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1 Summary Provectus Biopharmaceuticals, Inc. (NYSE: PVCT) is a biopharmaceutical company whose planned principal operations is focusing on developing minimally invasive products for the treatment of psoriasis and other topical diseases, and certain forms of cancer including melanoma, breast cancer, and cancers of the liver. It conducts business under Healthcare sector and is part of Drug Manufacturers - Major industry. The company specializes in developing oncology and dermatology therapies through its two predominant drug candidates, PV-10 and PH-10. PV-10, PVCT s novel investigational drug for cancer, is designed for injection into solid tumors (intralesional administration), thereby reducing potential for systemic side effects. Its oncology focus is on melanoma, breast cancer and cancers of the liver. The Company has received orphan drug designations from the FDA for its melanoma and hepatocellular carcinoma indications. PH-10, the company s topical investigational drug for dermatology, is undergoing clinical testing for psoriasis and atopic dermatitis. Provectus has recently completed Phase 2 trials of PH-10 as a topical treatment for atopic dermatitis and psoriasis. Aside from the company s leading drug candidates, PVCT also holds patents and other intellectual property that may be used in over-the-counter (OTC) products. Some of these OTC products include GloveAid, Pureific, Pure-Stick, and Pure N Clear. Provectus has M outstanding shares of which 86 K shares are at this time shorted by private and institutional investors with about 3.6 trading days to cover. Key Indicators Performance Current Valuation M Shares Outstanding M Number of Shares Shorted 86 K Revenue 0 Gross Profit 0 Net Loss (basic/diluted) M Cash and Equivalents M Total Debt Obligations 881 K Recent News On December 23, 2014, PVCT announced that the protocol for its phase 2 study of the mechanism of action of PH-10 in psoriasis is available on ClinicalTrials.gov, a registry and results database of publicly and privately supported clinical studies of human participants. The protocol states that the multicenter study is PAGE 1

2 designed to assess treated psoriatic plaque when treated with PH-10 and to correlate observed changes in the skin with clinical response to treatment. On November 14, 2014, Provectus announced the extension of existing Memorandum of Understanding (MOU) with Sinopharm-China State Institute of Pharmaceutical Industry ("Sinopharm-CSIPI"), the leader among all pharmaceutical research institutes in China, and Sinopharm A-THINK Pharmaceutical Co., Ltd. ("Sinopharm A-THINK"), the only injectable anti-tumor drug research and development, manufacture and distribution integrated platform within Sinopharm Group to May 16,. According to the terms of this MOU, Sinopharm will do more research on the recent filed PV-10 Phase 3 trial protocol and this will help both parties to move forward in the Chinese market. Pros Provectus has transferred all of its intellectual properties and non-core technologies to its subsidiaries in an effort to focus solely on developing PV-10 and PH-10. Their strategy to focus primarily on their leading drug candidates PV-10 and PH-10 should also be viewed as a positive for shareholders. The company has three different development programs for its product candidates. It conducted Phase 1 and Phase 2 studies of PV-10 for the treatment of recurrent and metastatic melanoma, Phase 1 studies of PV-10 for the treatment of liver and breast cancers, Phase 2 studies of PH-10 for the treatment of Psoriasis and Atopic Dermatitis. Phase 2 trial of PV-10 showed a 51% objective response rate among all 80 intent-to-treat melanoma patients of their injected study tumors. This 51% was broken down by complete response (26%) and partial response (25%) which indicates shrinkage by at least 30%. These, and other data released, showed that if a tumor is accessible to PV-10 injection, the drug is likely to destroy that tumor. PV-10 is unlikely to be found to have significant adverse side effects. Also, given the data collected to date, it seems unlikely that PV-10 will fail to outperform other current drugs. On the contrary, for a portion of the population every evidence suggests that PV-10 will provide a much better treatment plan than other available options. Moreover, PV-10 seems primed to be combined with other immunotherapy drugs - which would greatly expand its market. The mechanism that PV-10 uses to engage the human immune system is novel and might possibly extend into a much larger portion of cancer patients. Cancer is obviously big money, but especially so if you consider the market sizes of melanoma, liver cancer, and breast cancer. For example, primary liver cancer (HCC) is the fifth leading cause of death related to cancer in the world in men and seventh in women, with the world market for liver cancer drugs projected to exceed $2 billion by. GlobalData estimates the melanoma therapeutics market will grow to $1.4 billion by 2017 (a CAGR of almost 17% each year), while the global market for breast cancer drugs should reach over $11 billion by PV-10, should be able to capture at least some of those markets. Considering the fact that nearly 55% of worldwide cases of liver cancer occur in China each year, it is why PVCT entered into an advisory agreement with Tririver Capital, an investment banking firm in China dedicated to the biotech and healthcare sectors. Moreover, extending the MOU with Sinopharm was its second move in an effort to expand PVCT s reach through partnership in China. PAGE 2

3 Provectus could benefit greatly from PH-10 as the dermatology market is also very large in size, especially with regards to psoriasis. National Psoriasis Foundation reports that approximately 125 million people worldwide have psoriasis, while Global Business Intelligence (GBI) research estimated that the global psoriasis market will grow from about $5 billion in 2013 to $10.4 billion in Additionally, GlobalData estimates the global eczema therapeutics market will double in size from over $2 billion in 2010 to almost $4 billion in 2018, representing a CAGR of over 8%. The company s large cash position of $17.77 million at the end of September 2014 should certainly be viewed as a positive for shareholders. Although they entered into an agreement with Cantor Fitzgerald under which they may issue and sell additional shares of common stock (up to $50 million worth), the company has specifically stated the cash they have will be sufficient to meet their current and planned operating needs (Phase 3 trial for both PV-10 and Ph-10) until well into. This should help alleviate some concerns of further dilution of shares at least for the near term. Cons A significant problem facing PVCT though involves the fact that competition within both the cancer and dermatology markets is intense, and there are currently many large and small companies developing drugs designed to treat melanoma, liver cancer, breast cancer, psoriasis, and eczema. Although the market can absorb more than one drug for the treatment of these indications, there are likely to be several drugs that are better than other drugs for the treatment of the same indication. Therefore, not only is PVCT at risk for not receiving FDA approval for its two drugs (PV-10 and PH-10), but they may not be as effective as other drugs in development and/or currently on the market. PVCT it is literally a small company as there are only four full-time employees at the firm, plus four fulltime consultants, including a lab technician, a contract research associate, an analytical chemist, and an information technology consultant. Although not completely unexpected in the biotech industry, there is a considerable amount of risk in having such a small number of people working at a firm. Nonetheless, the company s management does seem capable, and appears to have shareholder interests aligned with their own as they own about 5% of the company s shares outstanding. The company had no revenue during the three and nine months ended September 30, 2014, although the amount of cash and cash equivalents on hand at September 30, 2014 seems to be sufficient to meet the current and planned operating needs into 2016 without consideration being given to additional cash inflows Verdict Provectus is on the doorstep of enrolling for Phase 3 trials for PV-10. Although the amount of cash on hand would cover the half of financial needed for Phase 3, with the build of partnership, PVCT would bring the influx of cash that will allow the trial to be completed. Even if dilution is required to obtain the cash required to complete Phase 3, the risk/reward on PVCT is still very good. Altogether, $3.50 would be a solid price for this stock targeting one year and long position could be rewarding. PAGE 3

4 Sources: 1. PVCT Form 10-Q, 06 November Disclosure: I, Houman Farahani, CFA have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article. The information contained herein is not intended to be investment advice and does not constitute any form of invitation or inducement by Houman Farahani, CFA to engage in investment activity. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities, financial instruments, strategies, or commentary mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor s particular investment objectives, financial situations or needs. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only current as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fluctuate, and an investor may, upon selling an investment lose a portion of, or the entire principal amount invested. Past performance is no guarantee of future results. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. FORWARD-LOOKING STATEMENT This report may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward- looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of mentioned company to be materially different from the statements made. COMPLIANCE PROCEDURE Content is researched, written and reviewed on a best-effort basis. This document, article or report is written and authored by an outsourced research services provider, which provided Small Cap IR this article or report. However, we are only human and are prone to make mistakes. If you notice any errors or omissions, please notify us. Small Cap IR is not entitled to veto, interfere or alter the articles, documents or report once created and reviewed by the outsourced research provider. All parties responsible for the creation and dissemination of this report do not engage in high frequency trading. NO WARRANTY OR LIABILITY ASSUMED Small Cap IR is not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. Small Cap IR has not been compensated by PVCT or any other entity for this report and does not have any positions or plan to attain any positions in PSID in the PAGE 4

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