Avid Bioservices Inc (CDMO)

[Protector]

PPHM, Dart, Ronin and us retail shareholders

Corrected version for IHub TOS compliance plus extensions

Yesterday I was out of posts and so today I am going to address the complete Ronin letter, PPHM's response and some remarks I saw on the board.

sources:
#1:The Ronin letter to share holders

#2:Peregrine Pharmaceutical's Response to the Ronin letter

#3:PPHM Sec listing incl. letter to PPHM employees

PRELIMINARY REMARK
I do NOT advice anyone to do anything, nor do I accuse anyone of anything in this post. What you read is my opinion and I provide the reasoning and the underlying links where available to make my case, which might be wrong. I will use common knowledge without links, so if I write that PPHM does clinical trials with NCCN I am not going to provide a link to that again. Reacting to a LONG letter as the one of Ronin results in a LONG answer BUT all quotes of Ronin's letter to PPHM shareholders can be skipped if you read and remember the letter. That cut's 2/3 away of this post.

POSITION
I will argue a position that reflects my opinion that Ronin is not a good thing for PPHM shareholders except for the fact that they put things in motion and that the CURRENT BoD must indeed, at least partially, CHANGE TOO. Furthermore, by reading the letter again I will point out the points in which I think Ronin has a point (unless I didn't understand or they misrepresented it).

But more importantly I will try to put in evidence that Ronin IMO has fabricated versions of facts to reach and, in a populist way, tries to win over shareholders that otherwise then claimed are NOT AT ALL ALIGNED with them, on the contrary Ronin is probably the party with which we are THE LEAST aligned.

Ronin's INTRODUCTION

CHICAGO, July 13, 2017 /PRNewswire/ -- Ronin Trading, LLC and SW Investment Management LLC (together with the other participants in their solicitation, "Ronin"), collectively the second largest stockholder of Peregrine Pharmaceuticals, Inc. ("Peregrine" or the "Company") (NASDAQ: PPHM), with aggregate beneficial ownership of approximately 8.8% of the Company's outstanding shares of common stock, today issued a letter to Peregrine's stockholders. In the letter, Ronin announced that it has formally nominated three independent, highly-qualified candidates, Gregory P. Sargen, Brian W. Scanlan and Saiid Zarrabian, for election to the Company's Board of Directors (the "Board") at the Company's upcoming 2017 annual meeting of stockholders. As explained in the letter, Ronin believes that there are opportunities to increase stockholder value; however, Ronin is concerned that stockholders will continue to suffer unless the Board is reconstituted with directors who will represent stockholders' best interests. The full text of the letter follows:

All of us know that there are opportunities to increase PPHM shareholders value. If we look at Avid then that is not even a 'believe in opportunity' but it is an opportunity being REALIZED right NOW. PPHM has made Avid profitable and a funding vehicle of R&D and now announced that they enter sustained profitability as of MID 2018. That is NOT going away and Ronin knows that, so the party that can hi-jack the BoD in OCTOBER 2017 will be the party that will proudly announce that expected sustained profitability in MID 2018.

I think we all know that with or without a new BoD Avid will flourish and that ALL CREDITS go to that, claimed to be, incompetent BoD that is so bad for us according Ronin. But of THAT BoD/management team we know FOR SURE that they made and can continue to make it happen. They NEVER deviated one single dollar of Avid revenue away from us to other pockets. WIth ROnin that remains to see because their is minefield of related companies out there that can absorb parts of PPHM for breadcrumbs and let the profit flow into privately owned companies while WE sponsored it.

It is all in the timing and Ronin wants in now that they think it is going to happen. Kind of like the CA, they wanted a 5th BoD member when Bavituximab got approved. Explain that! The BoD is OK when Bavituximab does NOT get approved but if it does (which would then be the merits of the sitting BoD) that BoD must be extended because it is incompetent. Understand who can understand.

I think this introduction is the place to emphasise that Ronin is only a 4 months old shareholder that got into PPHM mainly in Q1/2017 (source: 3x 13D filings with detailed Buy/Sell info). The very first 13D filings already contained the text:

Item 4. Purpose of Transaction

Ronin Capital, LLC acquired the above reported shares ... based on its belief that the securities represent an attractive investment opportunity, and such purchases have been made in the ordinary course of business. John S. Stafford, III is the indirect beneficial owner of all of the securities of Peregrine Pharmaceuticals, Inc. held of record by Ronin Capital, LLC.

SW Investment Management LLC acquired the above reported shares ... based on its belief that the securities represent an attractive investment opportunity, and such purchases have been made in the ordinary course of business. Stephen White is the indirect beneficial owner of all of the securities of Peregrine Pharmaceuticals, Inc. held of record or beneficially owned by SW Investment Management LLC by virtue of his having sole voting and dispositive power over such shares.

SWIM Partners LP acquired the above reported shares ... based on its belief that the securities represent an attractive investment opportunity, and such purchases have been made in the ordinary course of business. SW Investment Management LLC is the indirect beneficial owner of all of the securities of Peregrine Pharmaceuticals, Inc. held of record by SWIM Partners LP by virtue of its having sole voting and dispositive power over such shares. Stephen White is the indirect beneficial owner of all of the securities of Peregrine Pharmaceuticals, Inc. held of record or beneficially owned by SW Investment Management LLC by virtue of his having sole voting and dispositive power over such shares.

Ronin Capital, LLC, SW Investment Management LLC and SWIM Partners LP each intend to continue to review their respective equity interests in the Issuer. In addition, depending on their respective evaluations of the factors described below, the Reporting Persons may from time to time purchase additional securities of the Issuer, dispose of all or a portion of the securities then held by it, or cease buying or selling such securities. Any such additional purchases or sales of securities of the Issuer may be in the open market, in privately negotiated transactions, or otherwise.

The Reporting Persons may also wish to engage in a dialogue with officers, directors, and other representatives of the Issuer, as well as the Issuer’s shareholders; topics of discussion may include, but are not limited to, the Issuer’s markets, operations, competitors, prospects, strategy, personnel, directors, ownership and capitalization. The Reporting Persons may also enter into confidentiality or similar agreements with the Issuer and, subject to such an agreement or otherwise, exchange information with the Issuer. The factors that the Reporting Persons may consider in evaluating their equity interest in the Issuer include the following: (i) the Issuer’s business and prospects; (ii) the performance of the Common Stock and the availability of the Common Stock for purchase at particular price levels; (iii) the availability and nature of opportunities to dispose of the Reporting Persons’ interests; (iv) general economic conditions; (v) stock market conditions; (vi) other business and investment opportunities available to the Reporting Persons; and (vii) other plans and requirements of the Reporting Persons.

Notice how Ronin at that time already says he'll communicate with share holders and notice how he provides a LIST of topics but does NOT INCLUDE the ONE specific topic that he is discussing with shareholders; namely that he wants to take over the PPHM BoD. That is in the "but not limited to" part anticipation.

So IMO Ronin has no reason for complaining here. He came in when it was WELL KNOWN PUBLICLY that existing shareholders voted for a 1-7 Reverse Split possibility. They knew what (who) BoD/management was in place BEFORE even buying their first share. But no, the party that wants to take over PPHM first buys in and then IN FULL INCOMPETENCE discovers that PPHM seems to have a bad/incompetent BoD (according to their letter) and starts hostilities, something that is NOT GOOD for ongoing negotiations of the Exosome partnering. So after all PPHM shareholders interest isn't that much on their minds. Those guys that apparently couldn't even take care of their own D&D upfront are going to run PPHM/Avid ? Or is Ronin an angel that bought 21Mil shares (pre-split) just to do good for us, existing shareholders? I think nobody would believe that, not in Wall Street and neither here on the PPHM board. Ronin sees an opportunity the rip PPHM from us by playing on our 'malcontentment' about BoD, communication and RS/PPS situation at a moment where they know it is about to change. PERFECT TIMING, I'll give them that. We are just not sufficiently stupid to fall for it this time.

The timing of all this is equally suspicious. We have a CA Settlement hearing on 27 Jul 2017. This CA dates from 2013, strangely enough just from when the current BoD achieved, IMO, the biggest and surprising rescue operation in history - they saved the PII 2nd ln NSCLC clinical trial and untied bankers grip, and that may not have pleased everyone out there that might have hoped to pick up PPHM from the garbage dump!

And the CA has TWO class dates of which one now says holding shares in MAY 2017 (recently change/updated) - by COINCIDENCE just when Ronin finished to build the BULK of their PPHM position. So in this context pointing at the PPS is sick because Ronin's action, including the timing of the letter, point to a machination IMO and that might well include keeping the LID on the PPHM PPS and then taking credit for lifting it, getting all shareholders on their hand. And that is the ONLY WAY to break through the poison pill. So, IMO we are looking at a clever version of an HOSTILE TAKE-OVER and THAT is NEVER GOOD for existing shareholders because it means the letter to shareholders is just there for us to help Ronin in and then...we become "Quantité Négligable". Mark my words.

So in the light of that I think the 13D green part is IMO MISLEADING because how can Ronin claim that PPHM is an attractive investment (and he does it multiple times, the last time about a month ago) and then wait for the announced RS and when current shareholders are emotionally touched and will probably think a little less clear address them in a letter claiming that the attractive investment is actually NOT ONE because the BoD/management isn't good and Bavituximab R&D is unaligned with 90% of the employees that work for the manufacturing part Avid. We are being played, but I admit, in a SMARTER way then it is usually done.

Dear Fellow Peregrine Stockholders

Ronin Trading, LLC and SW Investment Management LLC (together, "we") collectively beneficially own approximately 8.8% of the outstanding shares of Peregrine Pharmaceuticals, Inc. ("Peregrine" or the "Company"), making us the Company's second largest stockholder.

As we have discussed on several occasions with the Company's management, we are extremely concerned by Peregrine's current strategy, the continuous dilution of stockholders and the Company's exceptionally weak corporate governance. Both publicly and in our private conversations with management, we were shocked that neither Steven W. King nor Paul J. Lytle, Peregrine's Chief Executive Officer and Chief Financial Officer, respectively, could articulate any long-term strategy for addressing the capital needs of the Company, curing the outstanding going concern notice or rectifying the Company's corporate governance shortcomings, including the apparent interest misalignment of directors and other problems associated with Peregrine's Board of Directors (the "Board").

Now, well over a year after another clinical failure of bavituximab (the Company's immunotherapy drug candidate), instead of addressing the core problems of the Company, the Board relies on tangential, counter factual, and straw-man arguments to justify their positions, in desperate attempts to externalize the problems they have created. We believe immediate changes are necessary to stop Peregrine's reckless spending and equity dilution in order to put the Company on the path towards creating value for stockholders and stability for employees.

It is important you understand that, unlike the current Board, our interests are aligned with yours. Like you, we will only be able to achieve a return on our investment upon the appreciation in value of Peregrine's stock and we will lose our money if the Company continues to perform poorly. We have histories of successful investments in biotech and pharmaceutical contract development and manufacturing firms, and we believe it is obvious that the only path towards creating value for all stockholders begins with electing a new group of highly qualified independent directors and a sensible change of strategy. We would like to take this opportunity to explain the strategic changes that we believe are necessary to increase stockholder value and detail why we believe ALL stakeholders – stockholders, employees and customers – would benefit from the election of our independent, highly qualified director candidates at the upcoming 2017 Annual Meeting.

PPHM has confirmed the meetings and apparently Ronin never met the BoD but talked to CEO King and CFO Lytle. Don't you find it NORMAL that King & Lytle didn't provide Ronin with long term company strategy OTHER then the strategy that is publicly known to ALL shareholders. Ronin, even if the 2nd largest shareholder coming out of nothing 4 months ago, isn't entitled to ANY such additional PRIVI information that we retail shareholders don't get at THE SAME MOMENT! Ronin is just good and well on board with PPHM and they already try to gain an advantage on us shareholders and with their large position they would ALWAYS beat us at the punch. And now they want control of the BoD? Congratulations to King & Lytle for NOT having put the current shareholders at a disadvantage.

Then Ronin seems not to be able to distinguish between a clinical failure of a clinical trial and the clinical failure of a drug, bavituximab. All BPs have plenty of clinical trials that went wrong of drugs that are today cash cows. Furthermore, and we can understand that Ronin doesn't get it because they are only 4 months in PPHM, bavituximab ALWAYS PERFORMED AS EXPECTED. That proves the drug works EVEN if it did not get approved because the control arm (that does NOT contain bavituximab) had anomalies (dose switching & dramatically outperforming historical stats) making it impossible for the FDA to approve those specific clinical trial.

How are we going to let a party that doesn't understand those basic things about PPHM's business take over the company. No wonder Ronin includes selling PS-targeting IP and pipelines, the MAIN THING WE INVESTED IN, in his plans. Actually he used the MOMENTUM of Avid's booming to say we should throw away the baby with the bathing water just now that World Leading researchers and institutions such as Memorial Sloan Kettering, Rutger, NCCN, Moffit, Wistar, UTSW and even a BP, AstraZeneca, gets interested in PS-Targeting and Bavituximab and acknowledge it has a role to play.

And that is why the next part is mainly BoD/management bashing and trying to convince us that Ronin is MORE ALIGNED with us then anybody else. Well, ES and Dart are the most aligned with us because they are in long term, at high PPS prices (both are at a loss), consistently and repeatedly and in the case of ES at moments were NOBODY wanted to even invest or give PPHM a loan. Then when all BoD/Management and Employees options are out of the money, just as many shareholder's, they are NEXT best aligned because for their shares and options to turn a profit THE PPS MUST GO UP.

But for Ronin that is NOT a requirement. He already has a profit because he bought in the bulk of his position under 0.60$ (see 13D's) and with his well timed letter must now be at a 15/20+% profit after 5 months. So NO he is not aligned because he now has something that most/many shareholders on here, those that are here for a decade(+) believing in the PS-targeting science - and rightfully did as we know now - do NOT have! And that is TIME! Ronin took 10 years with Mr Stafford III in the BoD of his previous investment to turn it to the profit it became. PPHM/Avid on the other hand is PROFITABLE NEXT YEAR in a SUSTAINED WAY (meaning EVERY QUARTER, not just a singled out quarter). So perfect timing to steel the chickens eggs now that the chick is about to break our.

Suspend All Clinical Development Activities

All clinical development activities should be immediately halted and the Company's cost structure must be adjusted accordingly. In the last decade, we estimate that Peregrine has spent over $300 million cumulatively in research and development on clinical development activities, which are almost entirely related to bavituximab, a drug which has been unsuccessful in numerous clinical studies, most recently failing a Phase III SUNRISE trial in February 2016 for small cell lung cancer. It has shown similarly disappointing results for breast cancer, hepatitis C, and pancreatic cancer. Given bavituximab's poor performance in clinical trials, it is questionable whether any further spending on its development is warranted at all; however, given Peregrine's financial condition and the emergence of its contract development and manufacturing business, Avid Bioservices ("Avid"), squandering additional capital on further studies is objectively indefensible. The profligate spending on risky clinical development has caused Peregrine to continually resort to myopic and harmful financing solutions which have caused staggering stockholder dilution amounting to an astonishing 30% annually since fiscal year ("FY") 2010. In its most recent Form 8-K filing on July 7, 2017, the Company revealed that the number of outstanding shares had risen to 315 million (now split-adjusted to 45 million shares), bringing the total dilution in FY 2017 alone (plus the subsequent period from April 30, 2017 through July 7, 2017) to an outrageous 45.6%. That management publicly laments its stock price and claims a focus on creating value for all stockholders while simultaneously diluting stockholders at such an extraordinary (and accelerating) rate shows a profound misunderstanding of governance, management and stockholder value.

This chart should make investors shake their heads in utter disbelief – THE DILUTION NEEDS TO STOP! Peregrine must immediately cease all clinical development activities, adjust its cost structure accordingly, and begin a process to monetize its intellectual property, either through an outright sale or a contingent value right to a larger pharmaceutical firm that has the financial ability to underwrite further studies. Peregrine's losses are entirely attributed to its roughly $30 million in annual clinical development activities. By stopping clinical development activities and monetizing the intellectual property, many of Peregrine's problems will automatically be solved, as it will no longer be deeply unprofitable or need to constantly dilute stockholders at such a rapid rate. Furthermore, this will enable Peregrine to focus on profitably growing Avid, which will no longer have to internally compete for capital with the extremely risky clinical development spending.

Besides proving that Ronin doesn't understand the PS-targeting clinical trials (others have mentioned the bavituximab results and we all know the context of the results) Ronin uses a SMART trick to show DILUTION since 2010 (of which he was NEVER AFFECTED because he is only here since 4 months) and provides NO CONTEXT.

No word about the usage of the authorised shares issued as contingency and the fact it saved PPHM/Avid in 2012 and sponsored Avid I, II, II+ and now III. Ronin presents it like we got NOTHING in return, yet ACKNOWLEDGES that the value of Avid does NOT REFLECT in the PPHM PPS shares, those same shares he uses to tell us about dilution, hoping we forget he said the PPS is not reflecting the real value. Of course we have been diluted at a certain level. The dose switching incident by our CRO (CSM in Fargo, ND) has certainly been such cost that has eaten up funding that shouldn't have been needed. SUNRISE costed 60Mil$ but, while bavituximab performed as expected but didn't get approved, it yielded all the biomarker data that will now allow PPHM to offer a shorter track to approval to its collaborators and potential partners FOR ALL SOLID CANCERS, not just NSCLC. But since that has not YET been realised the MOMENTUM is right to kick the company NOW before it happens, because AFTERWARDS nobody will believe it any more. But in all Ronin's letter the words biomarkers, Exosome all cancer blood test etc are mainly ABSENT.

Monetizing the PS-Targeting IP+pipelines! In Ronin's book that means OUTSIDE PPHM (hence the STOPING IMMEDIATELY), so sell or license it and take the risk of never seeing any SUBSTANTIAL licensing money because BP might not want the immuno-response of bavituximab and shelf it.

How can they claim that the PS platform, due to Bavituximab's performance is actually a lost 300Mil$ investment and then say they will MONETIZE THAT, hence expect another party to PAY for it at an extend that PPHM would "no longer be deeply unprofitable". So that means they need to make at least 500Mil$ of it to clear our losses per share. Because otherwise PPHM is NOT deeply unprofitable because they will today, probably, again announce losses that are FAR AWAY of the 12 cents per share they come from. Analysts expect 7 cent (1 cent pre-split to compare correctly)and SUSTAINED PROFITABILITY is announce for MID 2018 WITHOUT SELLING THE PS-TARGETING IP OT PIPELINE as Ronin want to do. So again, Ronin doesn't understand what is going on here OR they have another agenda. Below a post that might illustrate a possible hidden scenario, however, that ASCO information was NOT available when Ronin started to build its position, at least NOT PUBLICLY (I am going to write this one again for PPHM: AT LEAST NOT PUBLICLY).

I'm a little disturbed by Stafford's association with Xencor. Xencor is into CAR-T cells and, noting the recent Wolchok, et. al. poster:"Targeting phosphatidylserine in combination with adoptive T cell transfer eliminates advanced tumors without off-target toxicities in a melanoma preclinical model."

last line of 2017 poster conclusions ---
"PS targeting can be combined with CAR T cells to enhance anti-tumor potential."

Is this all a slight-of-hand to strip bavi from PPHM and slip it to Xencor?

Refocus on Contract Development and Manufacturing

Avid is an extremely attractive business in a secularly growing market. Because of the growing demand for biologic and biosimilar drugs, we are very optimistic about the outlook for biologics contract manufacturers, particularly smaller ones like Avid that have embraced single-use bioreactor technology. Avid's excellent regulatory track record and premier customer list are validation of the quality of the business and its prospects for long-term growth with high returns on capital. However, Avid has entirely different capital requirements, cash flow profiles, regulatory demands, scientific expertise and managerial needs than Peregrine's high-risk clinical development. It is illogical for Avid to be owned alongside Peregrine's high risk clinical development activities. No other public contract manufacturer has a large clinical development operation, let alone one that renders the whole company massively unprofitable.

Management has stated that only 10% of Peregrine's employees are directly related to its clinical development operations. Unfortunately for the other 90% of employees who work at Avid, the price of Peregrine's stock is almost entirely driven by clinical development activities and the massive losses and dilution it causes. We were shocked that management was totally unappreciative of how misaligned the Company is with 90% of its own employees.

We agree with management's public comments about Avid being an excellent business whose value is not accurately reflected in Peregrine's stock price, but how can any investor confidently value the price of the stock when the dilution is both severe and perpetual? No one knows what share count to use. This is such an obvious problem, but again, we were shocked that in private conversations with management, they could not comprehend how the endless dilution has contributed to Peregrine's poor stock performance under their watch. It is clear to us that Avid is a great business and it should be a standalone company with the right people and incentives in place in order to continue its growth for the long-run.

Now this is a MASTER STUPIDITY PLAY of Ronin IMO and it is where he looses all credit IMO because he show, probably unwanted, his cards. For starter lets emphasise that WITHOUT CEO King no EXTREMELY ATTRACTIVE AVID would even exist. So CEO King must have had strategic vision. Furthermore you CANNOT see this apart from the fact that over the years, if PPHM kept its PS-targeting IP and pipeline UNENCUBERED, it is thanks to the, at the time much smaller, AVID REVENUE that helped reducing ATM usage, a reduction that is the perfect measure against dilution but it takes time to build it up and put it in place!

But Ronin knows that this letter will be viewed by many people that will not in detailed have followed PPHM/Avid. Hence they do NOT KNOW that Avid's blooming is a end 2015, 2016 into 2017 story and that that is the period in which most employees for the lab where hired at a time were PPHM announce that they would reduce R&D cost. Hutchins left and it proved that cutting R&D by involving MSK in the pre-clinical and NCCN in the clinical includes cutting in R&D people too which helped to accentuate this even more. So this claim of 90% of the employees being at Avid is one that can only recently be made, yet it is presented to us, no...actually to the Avid leg employees inside PPHM to set them up against the R&D part of the company..., as if this has always been the case. With Avid III this is even going to increase because PPHM will have to hire even more people for Avid.

Furthermore letting us believe that manufacturing must be separated from R&D is a Ronin agenda point IMO because ALL BPs have both. The FDA requires guarantees on manufacturing quality and QUANTITY at the launch of a new drug. Stripping Avid from PPHM would be a serious handicap for the R&D as Avid can produce GRAMS in its new factories were OTHER can only produce MILLI-GRAMS (1/1000th of a gram). So calling Avid SMALL may be correct in current REVENUE but will very soon no longer be so if we start seeing the revenue from those new factories (which we haven't yet). So it is NOW or NEVER if you want to steel Avid away. And saying that it is that bad, vision and strategy less, incompetent current BoD/Management that made all that happen.

Poor Corporate Governance Is to Blame – Changes Must Be Made

In our opinion, underpinning Peregrine's extreme losses, dilution, and stockholder value destruction are Peregrine's three independent directors, Eric S. Swartz, Carlton M. Johnson and David H. Pohl, who we believe are primarily responsible for Peregrine's problems. With little-to-no interest alignment with stockholders, no experience with contract manufacturing, track records of enormous stockholder losses and questionable public company dealings outside of Peregrine, we do not believe it is appropriate for these individuals to continue serving as directors of Peregrine. We believe that radical changes to Peregrine's Board are urgently needed to ensure that stockholders' best interests are appropriately represented in the boardroom.

After someone called on me to rethink my position on the BoD I can see how a change can be useful. I am glad there starts to be some people that see that Ronin must not be the replacement (if they have the Broker Non-Votes because they control the BoD and the question formulation for shareholders votes in addition to their large position then they can keep Dart out of influencing the vote and that means they do whatever they want, not necessarily what they promised because I am sure an event will occur that gives them the needed excuse to NOT DO what they told us they would and claim it is in OUR BEST INTEREST. That is how this usually goes.)

But ES has virtually 3 votes. Ronin's letter has the merit to provide us with research and sources emphasising something that has been said here on the PPHM board since long, that there is some incestuous relation between independent BoD members.

ES can have ONE vote, because he is INVESTED, took the risk with his OWN cash to safe PPHM when NOBODY wanted it and had NO GUARANTEE that he would get it back (he is at a DEEP LOSS). Also compensation with remunerations cannot in FULL be seen as getting his investment back.He takes the risk of being a BoD member and that includes being in a CA. So the two side wheels have to be removed, Pohl and CJ, and I think they are of sufficient age to justify that. ES will, after all the years, have build Biotech BoD member experience and in my perspective he is the poison pill guardian. Just for that, which to me is the guarantee of letting US SHAREHOLDERS get our fair share of the PPHM return on investment, is the reason he should stay. He has a LOT to loose as he invested million. Otherwise then Ronin ES did not buy in at an average of 0.60$ pre-RS and makes a profit. And if his remuneration is over the top it is only the over the top part that covers his lost investment and for the rest he performed and was at risk of presecution of something wnet wrong. That is being a BoD member or CEO.

I'd like to see a Dart representative on the BoD and also at least one new face such as the HALO CEO as replacements. I would also like at least one of the science CoriPhäes on the BoD if possible. Dr Brekken (in the end Brekken is, as is CEO King, a pupil of Dr. Thorpe without whom we would all not be here), or Dr. Garnick who does certainly know the biotech/pharm world inside out, or even Dr Antonia, Gabrilovich, Birge and of course Dr. Wolchok. All these scientists will at least know that PS-targeting is part of the second war in Immuno-Oncology: The combination therapies (chemo, radio, IO (PD-1, CTLA-4, CAR-T, etc) with bavituximab and see the importance to keep Bavi/BB/etc outside the hands of a single BP.

And of course CEO King must remain there too. IMO this is a MUCH better option than letting 3 Ronin guys take over as puppets, which is no different then the current incestuous situation. Ronin would have proposed one new BoD member maybe we would have given it a tough but 3 at once is a South American putsch!

Severe Interest Misalignment with Stockholders

Messrs. Swartz and Johnson have each served as directors since 1999, while Mr. Pohl has served as a director since 2004. Despite their unusually long tenures, these three independent directors collectively outright own less than 0.22% of the shares outstanding. Although these directors have been granted hundreds of thousands of stock options, most of these options are deep out-of-the-money, meaning they don't have much of a vested financial interest in the Company. More telling as to just how little skin in the game these directors have is that no independent director has personally made an open market purchase of Peregrine shares in over nine years,3 and Mr. Pohl has not purchased a single Peregrine share in his nearly 13 years on the Board, and owns just 286 shares outright.

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Despite Peregrine's abysmal stock price performance during their tenure, the continuous dilution of stockholders and repeated clinical failures, these three directors have collectively earned over $10 million in total compensation since the start of FY 2010, and that is not even counting whatever they have received after April 30, 2016!4

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The average director compensation for LARGE pharmaceutical firms Pfizer Inc., Merck & Co., Inc., Johnson & Johnson, Eli Lilly and Company and AbbVie Inc. is approximately $301,000 per year, with only one of such company's average director compensation being higher than $300,000.5 As disclosed in Peregrine's proxy statement for the 2016 Annual Meeting, the Company's independent directors each received an average of over $518,000 in total compensation, over 72% higher than the average compensation received by directors of the aforementioned highly successful large-cap pharmaceutical companies.

With immaterial stock ownership and unjustifiably high compensation, there is effectively no interest alignment between the Board and Peregrine's stockholders. We have little doubt that this interest misalignment has played a key role in the relentless dilution which has led to the destruction of stockholder value.

The interest misalignment also appears to extend to Peregrine's management team. Steven W. King (CEO) and Paul J. Lytle (CFO) have each been at the Company for 20 years. Despite their long tenure, combined they own outright less than 0.14% of the Company. Peregrine's five named executive officers ("NEO's") own outright a combined 93,467 shares of the Company, a mere 0.21% stake!6 While the NEO's have been granted over 1 million options,7 only a fraction of those options are in-the-money, leaving them with a minimal vested financial interest.

Most recently, on April 28, 2017, Messrs. King and Lytle and Joseph S. Shan (Vice President) each filed Form 4's indicating purchases of 19,941 shares, 37,389 shares and 39,177 shares, respectively.8 Even though these shares were purchased on April 28th, a day on which Peregrine's stock closed at $0.6156 per share, these insiders purchased their shares for $0.2712 per share, giving them an instant gain of over 125%. How was this possible?

Messrs. King, Lytle and Shan purchased their shares through Peregrine's Employee Stock Purchase Plan, which gives certain insiders a six month look-back window (the two windows ending October 31st and April 30th) to purchase stock at 85% of the fair market value on either the first or last day of the window. With April 28th being the final trading day of the window, insiders were allowed to purchase stock at 85% of the price of Peregrine's shares on either April 28, 2017 or November 1, 2016. Accordingly, despite the price of Peregrine's stock rising materially from its close of $0.319 per share on November 1, 2016, Peregrine insiders were able to purchase stock from the Company on April 28, 2017 at 85% of the price of Peregrine shares six months ago (i.e. $0.2712 per share).

Peregrine's Employee Stock Purchase Plan, which allows management to profit at the direct expense of stockholders, is yet another example of the misalignment of interests and the cultural leadership plague that has harmed Peregrine's stockholders. Management being allowed to profit directly at stockholders' expense is insulting. We believe these purchases are unfair, dilutive and fail to properly incentivize management.

For starters I removed TWO tables that are in the letter. The tables are CORRECT and prove the salaries and stock positions of the BoD members in the current state. Here Ronin has a point and is 100% correct, with the exception of ES whose large position is smoked away in generalisation over all BoD members. Yes, Pohl and CJ are in an opportunistic way sitting in that BoD, don't put their skin in the game, lower the average shares BOUGHT per BoD member and life on received equity. And that is explained by the fact that they sit there to loyally vote with ES. CEO King has a package of shares and he went through a divorce and we have no idea what arrangement behind the screen keep him from investing more. He also had to defend himself in winning 3+1 appeal=4 CA rounds and has other skin in the game such as the patents (via UTSW for Bavituximab) and directly granted to PPHM for the BetaBodies. But I guess Ronin conveniently overlook that when they isolated the shares from the totality of exposure to make their point.

There must ALSO come a solution for OPTION prices. Maybe the proposition in the CA is a good one, FIXED DATES and no possibility to tune and accommodate. I never realized the difference but if the Ronin example is correct then Ronin is right and that must change.

Independent Directors Have Records of Value Destruction and Questionable Dealings
(pls refer to original for long text with many non formatable elements in Cut & Paste)

I am not going to discuss Pohl and CJ. Ronin provides clear references that they have been sitting on BoD of companies that all had trouble. Ronin does however NOT say at what point they joined these companies (maybe already in trouble) and how many other BoD members where there on each vote (at least 3 others). They are easy to blame but it is indeed questionable that they have ONLY be sitting in the BoD of companies that NEVER MADE A SINGLE DIME in their existence. If they are not in it for anything that at least it was/is a bad career decision that NOW works against them. Of course they will argue that all that ENDED in 2011 (according Ronin's table) and that PPHM in whose board they sit now DOES have revenue, but still it seeds doubt and I agree that we no longer need this in this end-game phase where PPHM is about to become profitable and everyone wants in. So they become a vulnerability.

As for ES, Ronin for the second time merges people (CJ/ES) in one statement so that we cannot really lift ES out of it to evaluate him on HIS doings alone. In essence Ronin can only say that ES, who came out of the financial markets and works oversees, has a business as there are many that facilitates financing of penny stocks. ES is certainly not the only player on the market and apparently we do NOT FIND HIM BACK in these companies. The used term be Ronin,'involved', is one for which they count on OUR PERCEPTION to place ES in those BoD's but he was NOT. And since the list is incomplete it can well be cherry picked. There are thousands of penny stock companies in the US alone and only 16 are on Ronin's list. So they do not prove that all other penny stock majorly get similar facilitation and are successful or that they provided only companies that in the 2008-2016 crisis, with HIGHT in 2010/2011, got in trouble in that year while other ES customers are not shown. So BE CAREFUL with that list in Ronin's letter for starter and secondly those companies results are in NO WAY related to ES (until proven otherwise).

What is also important to remember is that the NEWLY presented Ronin BoD candidates have ZERO shares of PPHM and are puppets of the real share holder Ronin. So will they from their OWN POCKET (not sponsored directly or indirectly by compensation from Ronin or any other party) buy in a substantial amount of PPHM shares, behind what ES has now because Ronin clearly said that NO CURRENT BoD Member has skin in the game, that includes ES. I think they will QUICKLY back of of that position, don't you think so! ES had/has a pre-split 7 digits position.

ISS Has Previously Recommended WITHHOLD Votes Against ALL Independent Directors

Based on the results from last year's annual meeting, where every independent director received at least 30% WITHHOLD votes with respect to their re-election, it is clear that we are not the only ones who are extremely displeased with the composition of the Board and ready for immediate change. In addition, leading independent proxy advisory firm Institutional Shareholder Services (ISS) recommended a WITHHOLD vote with respect to each of Peregrine's directors, stating:

"WITHHOLD votes are warranted for compensation committee members Carlton M. Johnson Jr., David H. Pohl, and Eric S. Swartz due to continued problematic pay practices and the board's failure to adequately respond to shareholder concerns."

In fact, ISS has recommended WITHHOLD votes against ALL independent directors at each of the past THREE annual meetings. While change is desperately needed at Peregrine, the incumbents appear committed to a pattern of entrenchment. In fact, we are concerned that the Company may have deliberately taken action to frustrate our nomination of director candidates, including by closing its transfer books for an extended period of time.

The status quo, as evidenced by the outrageous equity dilution and abysmal corporate governance practices, has proven untenable, which is why we have formally nominated three independent, highly-qualified candidates, Gregory P. Sargen, Brian W. Scanlan and Saiid Zarrabian, for election at the upcoming 2017 Annual Meeting. In the 16 months since bavituximab's failure of its Phase III SUNRISE trial, the Board has failed to address the Company's problems, and instead, stockholders continue to be diluted at a preposterous rate. We believe the individuals we have nominated possess the financial, operational and strategic acumen the Board urgently needs to enhance stockholder value.

I will leave this for what it is. We know that a number of parties where not completely happy with PPHM making direct deals, such as with Western Capital. Also PPHM changes of analysts (e.g. Piper J) and the documented things that such companies then do to retaliate to their ex-customers may all play here. The ISS is not a neutral player but represents an interest group, Ronin is an financial company by the way, and their objection started shortly after the CA started. Coincidence or not? Someone would have to show us the : "due to continued problematic pay practices and the board's failure to adequately respond to shareholder concerns.". The second frustration we understand because we retail shareholders have the same need for information BUT AT LEAST we don't expect to get it in a PRIVY way over all other shareholders. The pay practices are vague, what could PPHM have for pay practices OTHER THEN paying interest to PPHMP holders. I have NEVER seen any of the PPHMP holders say to not have receive the quarterly interest.
So for now, for me, this just adds to the theatrical smoke screen that is put up for us to just drive us in the little moment of emotional weakness that opens the door to the PPHM BoD, the poison pill disable mechanism and the PS-targeting and Avid hi-jacking for our OWN GOOD :) by a new puppet board that doesn't has ANY experience in the PPHM IO business (we will come to that later below).

Our Director Nominees: Qualified, Successful, Independent

Gregory P. Sargen ("Greg") is the former Chief Financial Officer and currently the Executive Vice President of Corporate Development of Cambrex Corp. ("Cambrex"), a $1.9 billion market capitalization contract manufacturing organization headquartered in Rutherford, New Jersey. In 2017, Cambrex received 24 awards at the CMO Leadership Awards, for capabilities compatibility, development, expertise, quality, and reliability. During the period of Greg's role as CFO (February 2007 – January 2017), Cambrex's stock price increased approximately 408%, a 17.7% annualized return for stockholders over a 10-year period. As CFO, Greg played a key role in overseeing Cambrex's revenue growth of over 94% and its earnings per share growth of over 625%. Greg has a track record of executive leadership, strong stockholder returns, and excellent experience within the advanced pharmaceutical ingredients (API) contract manufacturing industry. Greg received a bachelor's degree from Penn State University and an MBA from the Wharton School of the University of Pennsylvania.

So this guy is a CFO mainly. We see the success story of the company were other people made the revenue and he overlook finances. But where is Greg NOW, what did Greg do that was NOT SO SUCCESSFULL? This boils down to a JOB description of 10 years but NOT that he was CFO for 10 years. Maybe he became it the last year and they fired him because he sucked at it. How will tell? We are not getting Cambrex, do we? We are being proposed Gregory! What is his relationship to Ronin for them to pick him? What is his incentive to leave the successful Cambrex's if he is such important part of their success as CFO. But one thing is for sure, he ate no cheese of PPHM's main business "immuno oncology".
cambrex about awards, all for there core business (they have by the way a high CSM grade for part of what they do). Well, Avid ALSO got 6 extra Awards (on top of the two they already had) for their manufacturing, so I guess no need for this guy there, because it is our so hated CFO Lytle that oversees that Avid leg! So he must be good for something.

Brian W. Scanlan ("Brian") is Managing Partner of Freedom Bioscience Partners, LLC, a pharmaceutical services business advisory firm providing direct, dedicated senior leadership support, strategic direction and industry expertise. Brian also currently serves as a director of Callery, LLC, a spin-off of BASF that is a global leader in highly reactive chemistries. From March 2011 to October 2013, Brian served as President and Chief Executive Officer of Cambridge Major Laboratories, Inc. ("CML") (n/k/a Alcami Corporation), a leading global chemistry outsourcing provider of integrated drug development and manufacturing services to the pharmaceutical and biotechnology industries. Brian initially joined CML in 2002 and held various leadership positions prior to becoming President and Chief Executive Officer, including Chief Business Officer, Vice President – Corporate Development, Vice President – Business Development and Director – Sales & Marketing. He also served on the Board of Directors of CML from 2007 to June 2014. Prior to joining CML, Brian served as Manager of Business Development at Rhodia ChiRex Inc., a multinational technology and custom pharmaceutical development and manufacturing firm, from 2000 to 2002. From 1998 to 2000, Brian served as Manager of Sales & Marketing at Universal Pharma Technologies, LLC, a premiere innovator, developer and supplier of pharmaceutical manufacturing equipment and technologies focused on accelerating drug development. Brian began his career in 1991 as a Research Chemist at UOP LLC (n/k/a Honeywell UOP), the leading international supplier and technology licensor for the petroleum refining, gas processing, petrochemical production and major manufacturing industries, after which he led marketing efforts for UOP's Specialty Chemicals Group from 1995 to 1998. Brian earned his MBA from the Illinois Institute of Technology and a B.S. in Chemistry from Northern Illinois University.

Now, without being absolutely sure, this guy may be in the type of company that suffers and will suffer more with the upcoming Avid. He CANNOT be at MPFBP and at the same time in Avid. That would NOT be good for us as there is a clear conflict of interest. But Avid is the better FUTURE ORIENTED vehicle so I would not be surprised if he will be VERY WILLING to jump ship now that Avid's recepie has been proven by OTHERS and one is able to take the credit instead. But, hey, this is the SECOND guy Ronin proposes with a clear Manufacturing oriented situation, even if these 3 would want to keep PS-targeting they would have no clue what to do with it. And how can Ronin be so sure of what those 3 are going to do, even agree with each other, UNLESS he has control over them one way or another. And in that scenario WE DON'T OWN PPHM, Ronin owns it with a MINORITY postion compared to the sum of us. Smart!

Saiid Zarrabian ("Saiid") has nearly 40 years of board and executive/operational experience in multiple industries, including 23 years experience in the biotech, pharmaceutical & instrumentation industries. He currently serves as an advisor to Redline Capital Partners, S.A., a Luxembourg based biotechnology and pharmaceuticals focused investment firm. Saiid has been involved in multiple turnaround situations, including most recently as Chairman of the Board of La Jolla Pharmaceutical Company during the company's transition from an OTC-traded penny stock company to a NASDAQ-listed company with a successful phase three drug. He previously served as CEO, President and a director of Cyntellect, Inc. (2010 – 2012), a stem cell processing and visualization instrumentation company, where he led the company's annual revenue growth from $800,000 to $11 million, culminating in a sale of the company in 2012. Some of Saiid's notable engagements include serving as a consultant/acting COO for SciTegic, Inc. (2002 – 2004), an informatics company with 10X revenue growth culminating in a sale of the company at >35X invested capital within 2.5 years of his engagement; a director of eMolecules, Inc. (2009-2011), a chemistry eCommerce portal whose revenues grew from less than $500,000 to over $20 million; and a director of Penwest Pharmaceuticals Co. (2010), where he was a director nominee of an activist investor and the company was sold at ~3x its share price in less than 1 year. Saiid's professional experience also includes serving as an executive of Intrexon Corporation, Senomyx, Inc., Pharmacopeia, Inc., Molecular Simulations, Inc., Symbolics, Inc. and Computervision Corporation. Additional directorships he has held in the industry include Immune Therapeutics, Inc., Exemplar Pharma, LLC and Ambit Biosciences Corporation.

This profile illustrates how careful we must be in reading these. "Investment firm", "been involved", etc. I also have been involved in things but that doesn't means I was a major player. TVIP (another Dart investment) also delisted and came back as a NASDAQ listed stock. There we know the circumstances. That is no different for the company mentioned above and I thing that Ronin, and these 3 gentlemen, probably think that the moment has arrived for PPHM and hence it is time to climb aboard so that in a next round they can write: "served in the BoD of PPHM and turned it around from a company losing money to a very lucrative etc etc". Of course they will not add that the company was at the point of becoming sustainably profitable ALREADY. The Cynthellect achievement, while bravo, compares into nothing with what PPHM did with Avid. Only it is less visible because PPHM has an R&D consuming funds and cluttering the end results. Easy target as long as PS-targeting and the R&D leg doesn't return revenue which is about to happen with Exosomes.

We strongly believe that the Company's stockholders will benefit from the addition of Messrs. Sargen, Scanlan and Zarrabian to the Board and we look forward to providing stockholders with an alternative to the status quo at the upcoming 2017 Annual Meeting.

So IMO not really the type of BoD members that we would add ourselves (even if not slightly hand forced by Ronin). Are these guys related to Ronin, his sons in law, school mates, etc, because leaving such brilliant careers for PPHM with its worthless PS-Targeting and poorly managed Avid would require a leap of faith, wouldn't it, unless you know what is there that you want. But then we want oit too, thank you, because WE SPONSORED ALL THAT, NO RONIN!

So, I kept one for the end because this one is going to make you see, WITH PROVE, what is REALLY going on here.

THE REMUNERATION MISINFORMATION

We can all agree that if you point to remuneration you must look at the complete enchilada.
Ronin joint a graph showing that the PPHM BoD makes more then the BoD of the companies mentioned in the quote below.
Try to find those exact SEC listing and then compare. You will see that it make NO SENSE to compare with those companies because these CEOs are remunerated via OTHER ways not directly booked to them. As Ronin starts in 2010 (so PPHM model of 2010 must be based on data of 2009) I did some look up.

This is what Ronin used:

Source: SEC filings from Pfizer Inc., Merck & Co., Inc., Johnson & Johnson, Eli Lilly and Company and AbbVie Inc.

This is what Ronin did NOT emphasise (but I looked it up :) and that you need to keep in mind next time CEO King or BoD members remuneration is discussed and compared:
http://www.cbsnews.com/news/merck-executive-pay-36-million-use-of-private-jet-cash-bonuses-despite-failures/" rel="nofollow" target="_blank" >http://www.cbsnews.com/news/merck-executive-pay-36-million-use-of-private-jet-cash-bonuses-despite-failures/[tab]Merck Executive Pay: $36 million, Use of Private Jet, Cash Bonuses Despite Failures[/tab]
http://www.cbsnews.com/news/merck-ceo-clark-gets-a-helipad-on-top-of-old-schering-hq/" rel="nofollow" target="_blank" >http://www.cbsnews.com/news/merck-ceo-clark-gets-a-helipad-on-top-of-old-schering-hq/[tab]Merck CEO Clark Gets a Helipad on Top of Old Schering HQ[/tab]

And if you think this is ONLY Merck...

Merck employs a compensation consultant, Towers Perrin HR Services, to help the company calculate executive base pay and total cash compensation. The company's policy is to set executive pay at "the 50th percentile (median)" of comparable executive pay at "peer" companies. Those companies surveyed by Towers Perrin are: Merck, Abbott Laboratories, Amgen, Astra Zeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Hoffman-LaRoche, Johnson & Johnson, Novartis, Pfizer, Sanofi-Aventis, Schering-Plough, and Wyeth.

So CEO's & BoD members of large companies, of even Management levels, get other possibilities. At the time Bombardier (Canada) provided private Jet facilities to its directors but you would NO WHERE find that back in their calculated total remuneration. But if you fly private instead of paying tickets from your own pocket then in my book that is a form of compensation in kinds that keeps you from spending your OWN money.

CONCLUSION

I was initially (at the first 13D filing of Ronin) quite favourable to Ronin based on the visible top of the ice-berg, their few positions and Stafford IIIs last endeavour. However, this letter, its timing, its quite transparent camouflaged soft hostile-take over by winning the ONLY PARTY that can BREAK the poison pill protection, namely the retail shareholders, in order to open the door to a potential rip-off made me change my mind. One BoD member could have passed, but replacing them all and putting CEO King in a fire-able position, NO, not if I have any say in it.

So now it is up to you to make up your minds. I will not be added to the POLL LIST on this PPHM board and if I was on it I would have asked to be removed.

This is how CEO King worded it to the employees, and I think he is TOP ON. Pls PPHM needs change BUT Ronin is WORSE then what we have now! AIMO.

As you may have seen, today two of our stockholders, Ronin Trading, LLC and SW Investment Management LLC, together released a letter to stockholders about our company and submitted nominations for three candidates for election to the Board of Directors at the Company’s Annual Meeting of Stockholders. As many of you may know, this type of activist engagement by shareholders has become commonplace for public companies – especially in the medical and biotech space.

I have put a LOT of work in this since early this morning and I hope it helps. That being said it is now time for PPHM to show that they are going to open up, make some BoD changes and START COMMUNICATING!. I am sure many of us want to help the good fight for the patients with cancer that need Bavituximab.

AIMO.