Power of The Dream Ventures (PWRV) Inactive
Filed: 20 Oct 14, 12:00am
October17, 2014
Mr.TerenceO’Brien
Securities andExchangeCommission, DivisionofCorporationFinance
100 F Street,N.E., Washington,D.C.20549-3561
Re:Powerof theDream Ventures,Inc.
Form10-K for FiscalYear EndedDecember31,2013FiledApril14,2014
FileNo.0-52289
DearMrO’Brian:
AsPoweroftheDreamVentures,Inc.,aDelawarecorporation(the“Company”),wetransmitherewith forfilingwiththeSecuritiesandExchangeCommission(the”Commission”),ourresponsestothe commentssetforthin theStaff’s letter totheCompany, dated October2,2014(the“Staff’sLetter”).
Inordertofacilitateyourreviewofthissubmission,wehaverestatedandrespondedtoeachofthe commentssetforthin the Staff’sLetter,on apoint-by-pointbasis. Thenumberedparagraphssetforthbelowcorrespond to thenumberedparagraphs in the Staff’s Letter. Pagenumbersreferto the marked copyoftheenclosed submission.
FinancialStatements,page F-1
Note1-General Information,pageF-13
3. Wehavereadyourresponsetoprior comment3.Pleaseprovideuswithacopyofthe valuation reportorother documentationofthe valuationmethods andcalculationforGeneticImmunity, Inc.at theacquisitiondate thatresultedinthefairvalueofapproximately $25million,includinga discussionof thebasisforsignificantassumptions,inEnglish.
OnOctober2,2012thePDVacquiredGeneticImmunity,Inc.GeneticImmunityisanimmunotherapeuticvaccinecompanywhoseleadproductcandidateDermaVirhaspassedPhaseIIclinical trials. Throughtheacquisition Genetic Immunity became 100%wholly owned subsidiary. The acquisitionwascompleted for 1,000,000 sharesof Series B Preferred stock,convertibleinto40million sharesofcommonstockbeginningonJanuary1,2014.
PoweroftheDreamVentures,Inc(OTCBB:PWRV)1095Budapest,Soroksariut 94-96,Hungary
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ThePreferredstockwasissuedupontheacquisition,nopriorissuetothisserieswasbefore.Astheacquisitionwasacashlessexercisebyissuingthe1,000,000preferredshares,theCompany shouldhavevaluedthefairvalueoftheacquiredcompany.Ourconclusionwas,thatthemajor valueinGeneticImmunityistheintangibleassetcoming from itsvaccinewhichwasnotcapitalisedinitsbooks,resultinginaverylownet assetlevel.Asthe acquisitionofGenetic Immunity,Inc. has been accounted for as a businesscombinationwherebythepurchase pricewas allocatedto intangible assets basedontheirfair valuesofthe acquisition date.The fair value oftheintangiblewas evaluatedbya certifiedpublicaccountantinHungary.
Thefairvalueoftheshares(andthefairvalueoftheintangibleasset)equalsthefairvalueof GeneticImmunity,Inc.attheacquisitiondate.Thefairvalueofthecompanywasestimatedbyanindependentvaluationcompanyand thevaluationwascarriedouton adiscounted cashflow basis(attached).TheCompanyissued1,000,000sharesofSeriesBPreferredstockwhichisnot tradedpubliclyandnomarketpricecouldbeestimated.As aresultofthis,thefairvalueofthe shares wasevaluatedby avaluationcompany.The valueoftheshares is $25.07362pershare.
TheevaluationoftheGI’sassets atthetimeoftheacquisitionwastostartthebusinessscenario intheEU.InEurope,theEuropeanMedicineAgency(EMA)handlesallapprovalissuesaboutHIVdrugscentrallyforallEUmembercountries.TheirfastlaneprogramistheConditionalMarketing Authorisation(CMA),whilstthecompanyisallowedtosellthedrugtopatientsandhastocollect allrelevantdata forayear,what more orless lookslikea trial itself.If the data showsefficacy (andthatisprovenin aPhaseII humantrial)thanproblems,theproductcan getfinalapproval.
This evaluation isbasedontheEUmarketfigures,theEUpatients population,assumingonly 1,6up to7%marketsharein2015.Takingintoconsideration allpotentialincomes andcoststheDCF valuation(interestrate:28%) forthreeyears showed24,803,024 USDmarket value.
Tothisevaluationpleasefindattachedfile: gidcfbase2012.htm
Note 5–IntangiblesandFixedAssets,pageF-25
4. Wehavereadyourresponsetopriorcomment 4.Pleaseprovideuswiththeindependent valuationreportofyourintangibleassetsintheamountof$30millionasofthe mostrecent dateperformed,includingadiscussionofthebasisforsignificantassumptions,inEnglish.
AfterayearofworkingtogetherwiththepreviousGImanagementitbecameclearthatthecompanyneedsaparadigmshiftinthetargetedmarketfield. We stated,that
| - | Dermavirshowedrealbenefitsduringthreeclinicaltrials(includingPhaseI,PhaseI/IIand |
PhaseII)
| - | it issafe asplacebo |
| - | it reallybooststheimmune systemtofightagainsttheHIVinfectedcells |
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| - | itsregularusedropsthevirus loadcountintheblood |
| - | itcanbeadministeredeverythreemonths,comparedtothecurrentmedicinesthatshouldbe taken daily |
| - | during the clinicaltrialsallthemanufacturinganddosingissuesbecame clear. |
Takingallaboveinconsideration,wedecidedtotargettheUSmarket,becausetheFDAapproval pathlookedfasterandcheaperforourcompany.Since2013autumnwehaveagreatcollaborationwiththeFDA,we haveourIND (Investigationon NewDrug, filenumber: INDBB- 12590)andby August2014alltheseresultsandfindings,togetherwiththepre-clinicaldatahave beenissued totheFDAintheUS.
Accordingtothe2011InnovationAct,FDAhastherighttotake alookat allourdataandgiveusanofficialopiniononournextsteptowardstheMarketingApproval.Togetthiswehaveaskedasocalled“TypeC”meetingfortheperiod19-24January2015.FollowingthatmeetingFDAhastherightto declare DermaVir as “Breakthrough Therapy”andallcompanieswhorecievedthis titlecould getMarketing Approval in ashortperiodoftime. Asdescribedinthe calculations,wedonot planto buildup acompanyto distribute DermaVir,wewill find a partner forallthat. Accordingtothe market informationstheupfront payment takes hundredsofmillion USD,and thenayearlydouble-digit royaltyfromthesales.
Reviewingallthecompaniesandproducts,thathavegotBreakthrough Therapydesignation,westronglybelieve,thatDermaVirisasuccessfulcandidate.Aftergettingthisinspringnextyearwecan startwith afasttrackapprovalbytheFDA.
InEuropeourstrategyisthatoncewehaveBreakthroughTherapydesignationintheUS,westartwiththeCMAinordertosellDermaVironbothimportant markets.
OncewedecidedtogototheUSMarketfirst,wepreparedaDCFevaluationforthisproject,too.InthisDCFbasedevaluationprocessweplanveryconservative.Thecalculationitselfisattached. Ourcommentstothevarioussheetsarethefollowing:
| - | TheUSmarketsizefigurescanbefoundintheCentralforDiseaseControl(CDC)Healthreport. |
Itclearlyshowsthenumberoftheinfectedandthetreatedpeople.Intheaveragemarket situationwhenanewdrugappearsonthemarket,the1/3ofthetreatedpeopleswitchtothat,hopingitworksbetterforthem,oratleast haveless sideeffects.Inourcalculationwehavetakenonlythe5%ofthis population.
| - | Atthepricelevelwehavecountedwiththe60%oftheexistingdrugs(onayearlybasis). |
Howeverindustryexpert’ssuggestionisthattheMSRPshouldbethesameasthecompetition pricelevel.
| - | Costperdosecalculation:insomecaseswehaveleftplaceformarketchanges,mostlyfor |
inflation ofgoodsrequiredforthemanufacturing.Thekit contains threeparts:
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| - | theDNAisproducedbyATLHEAinthe US |
| - | thePEIm(thecover oftheDNA)is ourownproduct |
| - | thepatch(DermaPrepp)ismanufactured intheUSas well,basedon3Mtechnology | |
| - | Revenues:AccordingtotheabovewrittenweplantohaveincomefromthesalesONLYafter theMarketingApproval.In2015weplantosignadealwithoneofthebigpharmacompanies aboutthelicensingofthisvaccine. | |
| - | Thesefactsareallsummarisedinthe“budget2015-2017”sheet,whichshowstherough figuresoftheplanned budget,andtheyearlycashflowforthisthreeyears. | |
| - | Togetthefinalcompanyevaluationfigure,wehaveaddeda3,000,000USDinvestment,that accordingtoourcalculations issufficienttofinance ouroperationstogettotheFDAmeeting andtogettheBreakthroughTherapyDesingation. Thegood newsisthat morethanthehalf ofthismoneyalreadyhavelandedonour account inthelast12months,sowe statethatwecanmake it. |
Todiscountingwetook28%interestrate,whichcanbedescribedastoohigh.Wethink,thatthe abovestatedfactsclearlyshowwhatwearedoingandwhatisthebackgroundandthemarketsituation.Althoughwehaveaworkingvaccine,thatwillmakeourcompanyworldfamous,there mightbesomeissuesfromtheregulatory side,thatarehardtocalculateinthecashflow.This amountofriskwehighlightedinthehigherinterest rateatthe calculation.
Youhavealsonoted, that thevaluesintheDCFseemtobeundiscounted.Pleasetakeinto consideration, that if theyarenot, theirtotalmakes$52,620,096.Westated thevalue for $28,411,577what is discounted.
Tothis evaluationpleasefindattachedfile:dcfgi2014.htm
Your prompt attentiontothis filingwouldbegreatlyappreciated. Shouldyouhave any questions concerninganyof theforegoingpleasecontact mebytelephoneat+36-1-456-6061orviamy cellularphoneon+36-20-944-3748.
Sincerely:
/s/IldikoRozsaIldikoRozsa
Chief FinancialOfficer cc: ViktorRozsnyay
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