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My favorite line in the Piper Jaffray report (since he agrees with my work and point of view) is as follows:
"Bavi Controversy unfairly weighing on shares in our view."
IMO it is logically obvious, as previously stated, that the test was much better than the new official version.
First line data, IMO, should be very supportive. I base this opinion on the fact that enrollment was concluded in Sep 2011 and that bavi second line data was close to first line SOC efficacy. For some reason I seem to be on the low side of predictions re MOS but I would not be surprised to see 16-18 months. This would be 25-50% above SOC with low AEs. Sooner or later the weight of the numbers is going to become apparent to even the dimmest wit at the slowest moving BP.
The third thing I note is that Charles Duncan first became interested in PPHM when he worked at JMP and has followed the company for a long time. Therefore I give no credit to IR for this sponsorship and am still eagerly awaiting some sign that all the IR institutional meetings can produce something positive.
Best Regards,
RRdog
The Schwartz article in SA seems thin to me.
The length of PPHM existence is irrelevant since it is a re- formed corp.
The fact that bavi has been under development for several years is not unusual. Nor are the salaries taken by PPHM execs unusual.
Bavi does make PS a logical target for cancer treatment but Schwartz does not really comment on the brilliant horizontal application of this target.
Phase II studies are not designed for stat sig. What Schwartz does "not" say is that prior to the coding error
the second line Phase II study was remarkable for coming very close to stat sig. We know logically that since the 3mg arm was unaffected the placebo arm could not have been longer. (Therefore, actual improvement is over 100%.) Even with the combined placebo arm the percentage improvement with the treatment arm is still remarkable.
Schwartz does state that the 3mg arm had MOS of ll.7 months. He does not say that this arm posted the best result in history vs this difficult disease (2nd line NSCLC).
Schwartz does state that the HR was .73, He does not say this is one of the best HR postings in the history of this disease.
Schwartz does say that the official P value is .217 He does not tell you that this value was arrived at after having to combine the placebo arm with our own drug 1mg bavi and raising the placebo arm by 40% duration and lowering the treatment N to 40 from 80. I'd say omitting these facts are material to understanding what actually happened in this trial and how these P values were arrived at. Not to mention these facts is a material omission and very thin journalism to say the least.
Schwartz does say there was sufficient 3mg data not to have needed a 1 mg arm. That's his opinion. He does not talk at all about dose optimization for patients or economic optimization for PPHM as a business.
Schwartz begins to attack the pending 1st line study re the N of 86 before the results from the trial are even presented. This is really thin.
Schwartz does comment on the excellent PC results doubling ORR but claims MOS was not stat sig (or as we know only mediocre improvement above SOC). He does not comment at all on how late stage sick and dying these patients really were.
Schwartz does not comment in any of his remarks how the safety portfolio of numbers (N) from all combined trials is growing geometrically.
Schwartz glosses over Cotara saying that PPHM does plan to initiate a Phase III based on imput from the FDA. This is true.
Schwartz does say PPHM would push the burn rate to upper limits if it initiates Phase III clinicals. He does not mention that PPHM would likely only go forward with partners that would fund Phase III CTs and that PPHM burn rate has been coming down for many quarters. IMO I would expect burn rate to continue lower when the qtrly cc discusses this issue because trial expenses are lower and Avid revenue and efficiency is rising.
Schwartz comment that Avid is not yet cash flow positive is incorrect and he doesn't understand the cash flow contributed by Avid every quarter and rising.
IMO all and all this is a very thin article in spite of the trouble it can cause among skittish shareholders.
Best regards,
RRdog.
I agree with FTM that Kudos goes to Mojo for being the closest in MOS guesstimate. I would have thought the MOS in 3mg arm would have moved slightly to the right. My guess here is that the clinical trial advisors told PPHM to be ultra conservative in all numbers going back into the FDA and that is the position PPHM took with censored patients whether they could get an exact read or not. This way there will be no discussion of the 3mg result at EOPII meeting. IMO PPHM is correct in the long term to be extremely conservative going back to FDA because the real issue is not Phase II results but excellent protocols for Phase III and Phase III efficacy results.
The second negative I hear is that the "N" in the 3mg arm is too small a number. Here my opinion is more mathematically based.
Though the N is only 40 in 3mg it is clear that the other 38-40 in the 1 mg arm must have had a fairly potent effect in order to drag the combined placebo MOS from 5.6 months to 7.3 months. QED the real N for effective treatment is closer to 80 patients.
The third negative I hear is that the FDA will not accept this altered placebo arm as a valid proof. I dont have a QED mathematical answer to this question. However, IMO Garnick MO is to constantly talk with the FDA and that he would not have taken this conservative course without a general "understanding". This is the same MO Garnick used in Cotara negotiation over a long course of talks and the same MO he has used throughout his long career.
The fourth negative I hear is that the P value is not below 0.2
Again it is clear to me that had coding errors not interfered and the original 5.6 MOS held for the placebo then QED the P value would have been well below 0.2 This is not an issue I would worry very much about.
One positive I gather from all the back and forth is that PPHM management will be more realistic in their partnering negotiations. Remember it takes agreement from both sides to make a deal and IMO I agree that PPHM may become more realistic on the milestones and therefore more effective in their negotiations.
Best Regards,
RRdog
Disappointed that the 3mg arm moved left. Very impressed with the P ratio considering the control arm artificially inflated.
Overall a very good result in a really tough disease.
Best Regards,
RRdog
"Hell, there could be patients still enrolling (this is not uncommon at all), can they not change the medien?"
Wake up and follow the libretto. There are no new patients enrolling in the 2nd line test. Enrollment is closed.
Best Regards,
RRdog
Much higher on a percentage basis than Mojo estimate. We are still operating in house.
I would give you the great bull quote from Buffett for both investing and trading purposes that "It is better to be generally right than precisely wrong".
Best Regards,
Just my humble opinion (but I can average and I can add and I can guesstimate on opening dates of various test centers and I do have years of perspective re interpreting PPHM statements that have been cleared by their legal department)
RRdog
FTM,
I really like this piece of work and particularly your comparison of the 5 standard deviations to that which it took to find the Higgs Boson.
As for your other piece 111122, I agree that Mojo projections for MOS at >50% increase over SOC in various diseases for Bavi is a good result for PPHM. However, our work finds him on the low side. In particular, I find him pathetically low in 2nd line NSCLC MOS projections for the 3 mg arm.
Hopefully, top line results for 2nd line will be published shortly and whatever the result it will be deemed favorable for PPHM and improve the companies chances of partnering and progress at the FDA.
Best regards,
RRdog
Firefox,
A really excellent post with a reasoned logical thread running through the whole argument.
Thanks for your imput.
Best Regards,
RRdog
Bungler,
I think your roulette wheel analogy is inapt and there are much better analogies.
With a roulette wheel you are inferring a game of chance with the odds always stacked against the player.
With PPHM the math and science is heavily stacked in favor of the player and getting better as time passes.
Best regards,
RRdog
Thanks to FTM and CJ Gaddy and Investing Dog for the affirmations.
To Investing Dog point about the Phase III: I believe it has been stated by PPHM that they still want to do the larger Phase III 2nd line NSCLC test in essentially the same format as the Phase II test (minus any coding errors).
It is possible that the 1 mg dose may come very close to the 3 mg dose in "efficacy" in the larger trial. If this becomes the case, it would be beneficial to PPHM on the cost side as they would only have to use one third the amount of drug for patients after FDA approval. Patients might be able to pay a little less for the drug and PPHM margins might still be a little better.
For patients I always feel it is a benefit to take the least amount of any drug needed to optimize effectiveness.
Best Regards,
RRdog
On Sabotage:
I have followed the discussion on sabotage initiated by C.P. with a sense of wry humor. The two most likely causes of "coding errors" are "incompetence" and "sabotage". Since CSM has numerous systems in place to ensure competence, sabotage has to be considered. Sabotage is not something I worry about since were it to be true it would only accrue to PPHM benefit and I generally concern myself with events that would be detrimental.
Were sabotage able to be proven (even less probable) the real question is the "quality" of said sabotage. Were it to be done by a disgruntled employee or employees that might help PPHM wind up its lawsuit and settlement more efficiently and it would be very difficult to "blame" PPHM for such an event.
However, were there a paper trail to a saboteur that would have much larger consequences for "good". Alas, a paper trail is even less likely since saboteurs are generally competent.
Enough said on this somewhat tangential subject.
Topic II Clinical "Logic":
Remember how we all felt in those halcyon days after the Sept 7th 2nd line NSCLC clinical trial announcement and before coding errors. Remember how things felt when PPHM price was heading north of 5/share. Well I submit the following:
a. If the 3mg arm of the 2nd line trial is unaffected by coding error and the results are "valid" for this arm as PPHM PRs and Zavoico suggests in the Benzinga article (BTW Zavoico has also issued a 14 page report to private clients where he repeats the validity of the 3mg arm),
b. then by irrefutable logic the errors are between the placebo arm (soc) and the 1 mg arm of the same clinical trial.
c. Some of the placebo arm received 1mg dosage at least some of the time and vice versa some of the 1mg arm received placebo at least some of the time.
d. Therefore in the original release of 9/7/2012 the placebo results were probably a bit higher than they might have been because of the 1 mg addition by error and the 1 mg arm results probably were a bit lower than they might have been due to the addition of some placebo.
e. Therefore the overall test in all probability was better than reported in the 9/7/12 release QED. If we can understand the logic of this we can be sure that Garnick, the FDA, and BP can understand the logic.
IMO (and as I have said often in the past) much to much attention is paid to "price" and too little attention is paid to "value creation". As I have said before "price" often has little to do with ultimate "value" and that is particularly true in biotech. Ultimate value will be determined by the FDA and BP.
IMO lower prices into an increasing value proposition is an opportunity to accumulate. IMO PPHM is increasing value in the bavi platform, Cotara platform, and in Avid business growth which decreases the burn rate.
Best Regards,
RRdog
FTM,
My guesstimate on PPHM phase II results for Pancreatic is "currently" at 11 months MOS with a 95% chance of falling between 9-13 months MOS. This might go longer as the trial appears to be still running.
Best Regards,
RRdog
Thank you Bungler for that excellent answer to CP's question. It was terse and to the point in your usual style.
SK has long stressed the importance of safety data. My understanding of the 2nd line NSCLC test is that whatever coding corrections are used the safety data was abundant.
Of course the other audience that PPHM is talking to is BP. BP's have a whole different set of criteria for "milestone partnering" drugs (or drug platforms) they think might be "efficable" than the FDA has for acceptance. Usually, BP raises the stakes as each milestone is passed.
Best Regards,
RRdog
CP,
When Garnick made his comments "I know when to kill a drug" he was not referring to Avastin. He did not "jump ship" to leave
Genentech to join Peregrine.
If anything Avastin proves just how "ruthlessly effective" Dr. Garnick can be with a flawed drug that may have been the best possibility at that time.
PPHM is lucky to have such a tough street fighter on the team.
IMO It is important that you get your facts straight and stick to areas that you really know about so that your "credibility" remains high and you are not assumed to be just another "pumper" of a cheap biotech stock.
Your post 107513 is much better. IMO your math and understanding of dilution is still fuzzy (doesn't take into account additional dilution from low priced options for example) and recent forays into crystal ball gazing TA are open to attack and criticism.
However, IMO your summary of potential time line events going forward is really excellent. That is a really well thought out and "reasoned" bullish case. I hope you see the difference I am getting at and why. It is not necessary to "swing at every pitch in the dirt". In case you are not familiar with that American idiom, I am suggesting you pick your spots carefully.
I am surprised that you do not emphasize the "one salient fact" in all the recent BS about PPHM. That is ---- the 3mg unaffected arm of the 2nd line NSCLC trial was the best trial result in the history of that disease. That is the key fact. What the FDA will do or partners will do is open to speculation but that fact stands out.
Best Regards,
IMO (and meant with best intentions for strengthening PPHM comments)
RRdog
MD1225,
Don't you feel that in some ways your sources were precisely wrong.
The error was not between the two bavi arms with the placebo arm pure. The error was between placebo and 1 mg with the 3mg pure.
Or do you just now consider that the source was simply in the right general direction???
My point is that the ground shifts constantly and I would like to understand what you now think the scenario is.
Regards,
RRdog
Thank you FTM
Now we are getting closer to the truth. The rap will be too few people in the test so we will have to do large phase III and we should need a partner to go into the
FDA with.
With the highest regards,
RRdog
FTM,
Why dont you do the analysis of the 3mg results vs all previous results???? That's where the truth lies.
Best Regards,
RRdog
For a long while now I have noted that PPHM is understating the strength of Avid and low balling Avid revenue projections, earnings and free cash flow. Todays strength at Halo underscores that belief.
Recently, PPHM raised their ridiculously low projection for the fiscal year at Avid (outside revenue) from 15mm to 18mm. My own projection is 20mm+.
For the following fiscal year my projections for outside revenue are for 30mm+. The large govt/IBT order comes in over a ten year period.
In addition Avids' revenues are high quality (see "advances" to hold slots). Should PPHM wish to, they could easily do some receivable financing in the neighborhood of 15-20 million with no onerous corporate restrictions. PL (no favorite of mine) has already shown you he can place debt without encumbering IP.
Some of the top institutions in "receivable financing" are Welles Fargo, Citicorp, CIT, Consolidated Financial.
For literally thirteen years now this mgmt team and CFO know only one way to finance their deficits and that is some form of equity sale. This is highly "rutted thinking" and there are many options available to PPHM. (One would think with all this history of rutted thought that PL would at least be good at timing his ATM placements. Sadly he is not even good at that.)
Some of the posters on this board have suggested the aggressive pursuit of "grants".
PPHM has also had success in the past with the aggressive pursuit of government contracts.
In all the new job postings I don't see any positions offered for experts in financing through either grants or government contracts. Why not??? Are we just so blindly devoted to dilutive equity sales???
Another option would be to use the strength at Avid to underwrite the private placement of a callable convertible bond. The free cash flow at Avid would easily support a rate of interest that would be interesting to investors while the conversion price on the equity would be much higher than current prices. This would be used if necessary as stop gap financing until partnering.(Private placement of convertible debt is really not much harder than private placement of equity. Onerous restrictions on PPHM are a red herring).
Given the history of rutted thinking I do not expect any change in the behaviour at PPHM but strangely, the more I think about the alternatives the more I realize the underlying financial strength and flexibility the company has.
I do also note on the positive side the decline in burn rate by approx 33% year over year in the last quarter. I expect the burn rate to continue to trend lower if PPHM shows spending restraint on any new initiatives until such platforms as Cotara and Bavi are partnered.(As an aside-- most businesses on planet earth have a business plan. It would be nice to hear what PL projections are, in time, for reaching zero burn rate without a partnering event.)
Given the strength and growth rate at Avid it is worth IMO almost all the current market cap of PPHM. That means that PL is selling ATM valuing at near zero all of the bavi platform, Cotara platform, Imaging, Massive Patent Portfolio. Whether these sales are self serving or merely allow management to be opportunistic from time to time is an open question.
PPHM is essentially in my opinion a "bi polar organization". While they are very strong in the scientific development of IP, clinical trials, regulatory, they are weak financially, IR and shareholder relations, BOD. When people ask "if the IP is so strong why is the price so low???"-- they are really asking the wrong question. They should be asking "why continue this bi polar behaviour???"
Best Regards,
IMO and congrats to Halo
RRdog
FTM,
We do have a long history of trials suggesting a mean average of MOS in some of these diseases. I don't expect the mean average in PPHM control arms using the same substances as before to vary unduly from prior averages. Therefore, the longer the trials go the more optimistic I become.
Regards,
IMO
RRdog
I for one appreciate your fact checking.
In the surf here I wouldn't want to miss the interesting following points:
1. Biotech is a predatory game. The fact that several potential competitors are failing in their NSCLC trials IMO increases the mathematical probability that PPHM will ultimately find a suitable partner for their drug in this indication (or platform in general).
2. It is interesting to note that ONTY is down 50-60% on a failed drug trial. PPHM was down approx 80% on a trial that didn't fail but needs to be sorted for third party coding errors.
That does seem rather severe and an underlay mathematically considering ONTY not likely to come back without a new drug while PPHM only needs to solve the coding error.
Best Regards,
RRdog
PS
Merck kga moves up on the scale of "offensive" partners for PPHM, i.e., partners that want to attack this potential market.
Roche remains the lead candidate IMO from a market "defensive" strategy.
Frustrated,
You may be surprised that many posters on this board share your frustration in multiple areas.
My particular red button is the absolutely moronic, dilutive financing via ATM in the face of multiple better alternatives. I can't stand watching Lytle finance at the approx value of Avid. That means he is literally giving the rest of the company away for zero.
What is very strange to me is why Garnick doesn't look up from his reg book and tell Lytle "Hey Putz I just did a masterful job at the FDA that took me over a year on Cotara and you are selling it for Nothing??? What are you crazy??
Why doesn't Thorpe pick up the phone and tell Lytle " Hey putz I've just spent over a decade doing Nobel prize quality seminal research on cell surface transfers of lipids that potentiate the immune system vs cancer and virus and you are selling my work for nothing??? What are you crazy???
Why doesn't Shelley Fussey pick up the phone and tell Lytle "Hey putz I've just spent over a decade creating the premier patent position -- over 150 separate patents-- in any small biotech on the planet and you are selling my work for nothing??? What are you crazy???
Why doesn't somebody in Thorpe's lab pick up the phone and tell Lytle "Hey putz we are creating the next leap forward in "imaging". We've been working on this tech for years and it represents not only the next level in aiding surgical procedures but it has valid apps in diagnostics, prognostics, and drug development. It may be a billion dollar business opp all on its own and you are giving it away for nothing?? What are you crazy??
Even Masten at Avid ought to pick up the phone and call Lytle and say " Hey Putz at the rate Avid is growing, with the free cash flow and with a large part of a 100mm gov't contract still to come, Avid may shortly be worth much more. I have lots of options in PPHM so why are you giving all my growth away for zero??? What are you crazy???
Most of all I dont understand why Eric S. doesn't pick up the phone and call Lytle and say "Hey Putz, I'm a master of the universe and I own over 3.5mm shares of this PPHM and I've financed over 2 billion dollars for various early stage companies and I can think of 20 ways to finance PPHM better than giving away my equity for nothing. What are you crazy???
But Mr. Frustrated, that's just me and maybe my frustration will evolve as events play out. I suppose your particular brand of frustration is evolving. A while ago it used to be "We've been working on this Cotara for over 18 months with the FDA and still nothing". I suppose you've evolved now to "Well how come we don't have a deal yesterday --that's frustrating".
Hopefully my frustration will evolve also as PPHM realizes that too little debt impedes progress just as too much debt weighs on progress and creates risk. No debt and the constant sale of equity for zero is way to "conservative" to be euphemistic. (Memo to Lytle -tying debt to your clinical schedule or that of the FDA is insane. Tying debt to the inability to raise equity when the timing is appropriate is also insane. On my planet--earth--equity raises only make debt more secure not less secure.)
For all my friends and fellow long term holders of PPHM, be of good cheer in the holiday season. Under all this horse manure there is a pony somewhere. Garnick, who should know something about clinical trials, described the PPHM 2nd line NSCLC results prior to Sept 24th as the best he'd seen. There are no guarantees as to how the FDA will deal with clinical "coding errors" but there is also no way "coding errors" caused the across the board outstanding results prior to the 24th. If there were, then doctors spanning the globe would be recommending "coding errors" to their cancer patients. So therefore:
I say again to fellow long term holders be of good cheer and seasons greetings.
Best Regards,
IMOO
RRdog
CP,
Your article is well written today and your reference to Nash Equilibriums quite sophisticated.
Now, get your head out of your rear and stop your long winded defenses of ATM at LESS THAN 5% OF CURRENT DISCOUNTED VALUE.
There are many better ways to finance PPHM.
With best regards and no disrespect,
IMO
RRdog
I see the update on Clinical Trials. Gov but where do you see an update on discrepancies????
Best
RRdog
This is good.
Best
RRdog
FTM
Yours is an interesting post.
Don't you think they are "already de facto announcing that 2nd line trial has been fixed"???? Logically isnt it difficult to extend the trial, continue dosing patients with Bavi, extend the MOS target and --- abort the trial for bad data--- all at the same time.
Best Regards,
RRdog
FTM,
Excellent post.
It was discussed at NYAS presentation and was discussed in conversation in the cocktail area. The animal experiments were of great interest in the autopsy results.
Agree that Thorpe lab will be adding to MOA theories, expanding them, and hopefully quantifying them. The more work in this area the better the argument at the FDA for an alternate therapy.
IMO the new imaging technology Thorpe has developed using NIR tech will be a wonderful tool to help them advance the thinking on MOA.
Best Regards,
RRdog
MD1225,
Fair enough. Thanks for the report and your opinion.
Best
RRdog
MD1225,
I appreciate your ability to contact IR. Most of us who try still get that moronic recording. Almost every public company is being sued for something and all have some subjects they can not comment on. Nevertheless, nearly all public companies have IR departments that do not close down and continue to function.
Of the two geniuses PPHM has running IR one IMO is a teller of half truths and for years has been continually amazed at how undervalued PPHM trades and the other still thinks PPHM low price per share is due to evil and panicky retail stockholders. Anyone who has talked to the IR dept. knows the veracity of my statements are axiomatic.
To state that IR is "nice" and "upbeat" is less than worthless.
If Thorpe and Shan are in fact going to speak on clinical developments re Bavi on Dec 5 at IBC while the "review" is still underway, that is noteworthy but, will become validated if and when this is updated on the Web Site.
What would be of interest would by your opinion "updated for progress" from your prior comments to throw some color on matters of interest. Again, I would expect any of your comments to be bracketed by "In Your Opinion Only" and would not be critical if any of your opinions have changed.
Regards,
RRdog
I think todays article is extremely signifigantly on several levels and regardless of short term technical action:
1. No matter how closely you parse things, PPHM has been operating without signifigant side affects (AEs) through hundreds of clinical trial patients. It is the single most consistant aspect of all trials.
2. This article suggests in detail why and how Bavi can be efficable and still not exhibit more AEs than standard chemo. Kudos to FTM for trying to explain this to negs ad nauseum.
3. IMO This article is based on new imaging techniques which allow new proofs of effect.
4. I am further convinced that the imaging portfolio may have a revenue potential in excess of 1 billion dollars when used not only as a surgical tool, but also as a diagnostic, and prognosticator, and treatment measurement.
5. This PR looks like the scientists are again in control and instead of being written by lawyers appears IMO to have been written by the scientists and mgmt and then vetted by the lawyers which IMO is the proper way things should be done.
6. IMO and regardless of the boilerplate in the safe harbor section of the PR, this is an extremely aggressive PR for a company being potentially sued by 16 law firms and shows confidence in the IP and by the legal team.
Best Regards,
IMO only
RRdog
Sure . Thats a lot of deep thought and good sense. In a trial that was double blinded from the clinicians and the patients and then triple blinded from the sponsoring company to make it gold standard-----in such a trial PPHM faked the interim results????
You really should give it a rest.
RRdog
FTM (Good to have you back),
In answer to your question about my model for MOS:
In the 12 trials you list for Phase III studies in 1st Line NSCLC I notice there are over 3,700 patients involved with a mean MOS of 9.8 months. This means the SOC is very thoroughly defined. Though PPHM MOS will be measured against MOS in the control group of its own trial, I would be surprised to see that vary much against such a large data base.
Against this 9.8 months MOS my numbers as of today put PPHM at 16 months MOS with a range of 14-19 months giving you over 95% probability.
If PPHM 1st line MOS runs out to the end of Jan 2013 that would give PPHM approx 19 month MOS with a range of 17-22 months.
The low end of both these end points is 14-17 months MOS or approximately 40-70% improvement over SOC. IMO this is signifigant in many ways.
Best Regards,
IMHO only (but my opinion is well informed)
RRdog
Md1225
Thank you.
Best Regards,
RRdog
PGG76109
I would never put you on ignor. But, neither would you answer a question not even put to you(and before even getting an answer) with the question "How do you know he's not lying??"
The reason I belabor this point is because I already know (after long experience) from certain phrasing in MD1225's remarks that he was indeed talking to PPHM. I would like to hear his answer to my question.
If he chooses not to respond, or can not remember the train of thought in his conversation, then I will know he is not sure of his ground.
Best Regards,
RRdog
MD1225
Sometimes people on this board that are relatively new investors can interpret a conversation with PPHM differently than people that have a longer perspective.
I do not mean to impugn your hearing or your credentials.
However, I would ask you again are you sure that the control arm of the clinical was not affected by the "coding error" to the best of your understanding????????
Thank you in advance for a reply,
RRdog
I think Bungler gets the glory for his original interpretation and parsing of the PR.
I early on agreed with his interpretation after I found the phrase "major discrepancies" was not an oxymoron created by PPHM lawyers but was actually an FDA protocol category.
MD1225 gets the posts of the year award for his confirmation of this parsing.
IMO they are correct but we cannot know with dead certainty until the other shoe PR drops.
The action in the stock was similar to the "control arm" fiasco in phase I NSCLC that was abnormally high vs independently read "local" radiographic scans.
One fact that I can post with "legal document certainty" is that PPHM is spending hundreds of thousands of dollars on Cotara post closure of the phase II test to put Cotara in readiness for phase III. This indicates IMO that Garnick is indeed making progress with the FDA because these are signifigant dollars for PPHM at this moment in time.
It is possible that PPHM could have good 2nd line NSCLC data "revised". The internet attack is already switching from focus on "coding error" to "censoring". Censoring is another bogus issue and was also carried out by third party IDMC not PPHM.
At the same time there could be good news coming in 1st line NSCLC as the MOS refutes the poor control arm early read. (Of course the longer we go before this news the better)
Ditto in Pancreatic and Liver data.
Ditto for good news on Cotara as a possibility.
Avid appears poised for more business, has achieved government credibility with latest offer.
If FDA involvement in 2nd line NSCLC audit (as is logical for 4 reasons I will not bother to detail) IMO it is a de facto lead in to end of Phase II meeting.
All IMO
In spite of the fact that I expect extreme volatility, would continue to slowly accumulate and would be playing for much more than $5.50/ share.
Best Regards,
RRdog
As one of the responders to Dr. West's article I would add the following:
1. I have no idea whether Dr. West has a negative hidden agenda or not. That is of little interest to me.
2. Dr West's article was extremely accurate in every way down to the last two paragraphs.
3. My reasons for responding to his article were fourfold.
a. He left out the major material fact that PPHM was investigating a third party CRO "coding error" that led to "major discrepancies" in the data. This is central to the whole logic of the article.
b. He made a major misstatement of fact when he wrote that PPHM "acknowledged irregularities in the integrity of the survival data". PPHM said no such thing. PPHM acknowleged "major discrepancies in treatment group coding". That is a different statement entirely.
c. Dr West went on to say "We can only hope this doesn't taint the trust of the clinical research process for other drugs and trials too much." I didn't like the implications of this statement and I thought it was a large stretch. "Mistakes happen and should be corrected" would have been sufficient as far as I was concerned.
d. I agree with CJgaddy that the article was mistitled.
I do think this episode has exposed a weakness in the way double blinded trials are conducted that is unfair to the patients, doctors, and biotech development companies that have expended millions of dollars to test in deadly diseases. I look forward to the FDA and other responsible bodies putting in better safeguards against third party errors.
To further elaborate on the whole incident away from Dr. West's blog:
IMO the premise of the discussion is backwards. The premise of all the negs and bashers is that if there were coding errors then the data is no good. I would ask the question the other way round as the following:
1. What is the possibility that coding error in "some" patient samples and in conjunction with low range control arm numbers "have been responsible" for the outstanding across the board results of the PPHM Phase IIb double blind stage 3/4 patient NSCLC trial????? The preliminary answer that I get from clinical statisticians is that this possibility is infinitesimally small.
2. What is the possibility that the outstanding results of this particular trial could have been caused by the SOC doxy?? After dozens of trials with thousands of patients showing doxy results in an MOS range of 5-7 months this possibility is infinitesimally small.
3. If 1 and 2 above are unlikely to the point of "infinitesimal" and we rule out such phenomena as "religious miracles" then perhaps some other substance accounted for the results. I leave it to readers of the message board to decide for themselves what that substance might be.
The clinical truth will have to be sorted by Dr. Garnick, the FDA etc. and the appropriate path forward determined. The commercial truth will have to be sorted by PPHM and BP.
The market place has already voted on short term valuation. The market places less than 100mm valuation on all of PPHM, it feels that the whole trial is invalid and would have to redone, that there is a two year setback, that PPHM faces delisting, bankruptcy and massive dilution to shareholders.
I disagree with the market verdict and that is why I say "dont confuse price with value." Sooner or later IMO the truth will out. IMO there are reasonable ways of dealing with the third party coding errors, with the FDA and with BP. IMO PPHM (which has no debt) will not go bankrupt. IMO PPHM has a number of ways to finance without massive dilution and IMO PPHM would not face delisting until long after all these issues are resolved if ever.
In addition, Avid is not only growing but thriving and throwing off more and more free cash flow and PPHM overall burn rate continues to signifigantly decline.
For myself, I continue to slowly and steadily accumulate and await further developments.
Best Regards,
IMOO
RRdog
CP
Excellent summary, recap of the entire chain of events.
Best Regards
RRdog
I feel like Romney. Can't address the 50% of people that are congenitally negative. So my opinions are really for the long time shareholders that have some perspective on PPHM and the Thorpe MOA analysis. I have placed on "ignor" most of the new posters.
1. I've met Zavoico. I've questioned him and I've heard him talk. His report is not about trying to position MLV to do more ATM. He is a very conservative analyst with a PHD in relevant science and he knows pretty much everything going on in the cancer field. (His overview is very good). I repeat, for him to recommend PPHM at this level is very positive. He is the only analyst that appears not to be a follower but is prospective. Though his target of $2 is modest, his best case is interesting and aggressive at $5.
2. Quietly lost in all the flap is the tremendous achievement at Avid. Many investors prior to the run up in price believed Avid to be worth the greater part of a $1/ share. My DD on this ABL/NIH contract in HIV (IMO) could be worth the better part of 10MM in the next twelve months and more every year going forward. The total grant appears to be $102mm over ten years. My guesstimates are that Avid outside revenues could be up as much as 66% over the next year and backlog could swell also. Avid has been running at approx 33% gross profit and IMO close to 45-50% free cash flow on outside business.
I believe the PPHM burn rate continues to come down signifigantly.
3. It is amazing to me that PPHM acted so quickly to close out the loan with Oxford plus a penalty. I would have recommended escrowing the loan until the full audit was known because I am not sure PPHM is in breach of any covenants on the first tranche which was not collateralized by IP nor was it contingent. It was the second tranche that was contingent on eopII meeting and phase III go ahead. The attorney at Oxford must have advised that this third party error constituted a breach but PPHM could still have adjudicated this matter.
Nevertheless this takes bankruptcy off the table as there is no debt and as Zavoico pointed out saves PPHM about 1.2mm cash flow per year in interest. It does of course reopen the financing discussion and ,as before, PPHM has many ways to address the issue. I would watch this carefully. IMO there is a possibility that PPHM had something else in mind other than ATM when they repaid the loan.
4. PPHM will easily deal with any class action suits. IMO the law and reporting requirements are overwhelmingly on their side.
5. People miss some of the point on the lawsuit vs CSM. By filing this suit PPHM pinpoints the source and type of the problem and puts investors, shareholders and the FDA on notice. I doubt whether PPHM will be able to recover second derivative losses such as market value. Nevertheless, the suit could be materially large enough to matter. If I were CSM and the facts were clearly negative as may be the case, I would want to settle up as quickly as possible both for monetary reasons, insurance reasons, and reputational reasons and I would assist PPHM in any way possible in unraveling coding errors. Though PPHM could probably win substantially more money in the long run I would advise them to take any settlement in excess of the first tranche of Oxford loan. A smaller amount of money now is much more important to PPHM than double or triple those amounts later. ( I would modify that opinion if PPHM reaches any substantial non dilutive deal in the near future.)
6. Never confuse price with value.
7. The censoring discussion IMO is nonsense. First of all (and yet again), PPHM is not in charge of censoring in a double blind gold standard clinical trial. That is done by the IDMC and clinicians. To compare censoring in a study that is 90% stage 4 death sentence patients to other studies of stage 1,2,3, is absurd. Censoring can occur for many reasons which I will not enumerate now but including the obvious that patients die before they can get a course of treatment or placebo.
8. The article that claimed PPHM had talked about "censoring" is false. PPHM only talked about "coding" discrepancies and has never addressed censoring.
9. I do not think negatives, shorts, bashers are advocating opening positions at these levels. IMOO shorts and bashers have various agendas among which are:
a. To enable coverage of existing short positions at lowest possible level.
b. To accumulate new long positions at lowest possible levels.
c. To facilitate transactions for outside entities they may communicate with and have a relationship with.
d. IMO they have many surrogates.
10. PPHM has clearly stated the current discrepancies do not affect any other trials. I look forward to additional data. Of course the longer those trials go the better I like it.
11. Lastly, in spite of "coding discrepancies" there are a lot of patients walking around alive at double the mos of soc. That is of interest to me and may be of interest to knowlegable parties. Coding errors do not affect life or death. Odds are if patients are still alive it wasn't the placebo.
Best Regards,
All IMO
RRdog
In case this is of use--this is a very courageous rec from MLV analyst. Even though his target is legally $2, in one of his scenarios he could see PPHM going right back to $5.
Best Regards RRdog
EQUITY RESEARCH
Life Sciences | Biotechnology
Lower Target Price September 27, 2012
IMPORTANT DISCLOSURES AND CERTIFICATIONS.
MLV & Co LLC is a provider of research and execution services. MLV is a member of FINRA. MLV does and seeks to do business
with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest
that could affect the objectivity of this report.
GEORGE B ZAVOICO, PH.D. Senior Analyst THOMAS YIP Associate
gzavoico@mlvco.com 212-542-5877 tyip@mlvco.com 212-542-5876
TICKER NASDAQ: PPHM
RATING BUY
PRICE TARGET $2.00
Price (September 26, 2012) $1.66
Peregrine Pharmaceuticals, Inc.
Recent Loan Facility Fully Repaid; Avid Inks New
Manufacturing Contract
In a Form 8-K filed yesterday afternoon after markets closed, Peregrine Pharmaceuticals, Inc. disclosed receipt of a notice of default
from Oxford Finance LLC regarding its August 30, 2012 term loan agreement. Peregrine repaid in full the $15.0 million loan principal
plus about $1.4 million in expenses and accrued interest owed under the agreement. While accelerated repayment of the defaulted
loan constrains Peregrine's financial resources, it also eliminates an annual interest expense of about $1.2 million. Despite the coding
discrepancy reported on September 24 that caused the loan default, we still believe that bavituximab is a safe and efficacious drug and
note that results of two Phase II trials are expected before year-end. This morning, before markets opened, Peregrine announced that
its contract manufacturing subsidiary, Avid Bioservices, was awarded an HIV vaccine development and manufacturing contract from
privately-held Advanced BioScience Laboratories, Inc. While the terms were undisclosed, the contract underscores Avid's growing
and profitable business. Peregrine guided to at least $15 million in contract manufacturing revenue in its FY13 (ending April 30). We
believe that positive results from the two trials, together with Avid's continuing growth, could restore confidence in bavituximab and
Peregrine, especially if the investigation into the coding discrepancy is quickly and transparently resolved.
x
Based on earlier preclinical and clinical
trial results, we continue to believe that
bavituximab is a safe and efficacious drug
x
x
We envision best- and worse-case outcomes
by year-end based on resolution of the coding
discrepancy and whether any data from Phase
II trial can be salvaged, and outcomes of two
ongoing Phase II trials that can drive the value
of Peregrine's stock higher or lower than our
revised price target (see below)
x
In this regard, we do not advise investors with
low risk tolerance to buy Peregrine stock at
this time, while those with high risk tolerance
who do buy should understand that they could
experience a substantial gain, or loss
x
We have reviewed our model, increased our
discount rate from 30% to 50% due to
uncertainties related mainly to the cause of the
coding discrepancy in the Phase II NSCLC trial
and its resolution and are restoring our BUY
recommendation (from a HOLD) for Peregrine
Pharmaceuticals, Inc., but lowering our oneyear
price target to $2.00 from $4.50 previously
• We note that Peregrine cannot disclose any more information regarding
the coding discrepancy in the randomized, double blind Phase IIb trial of
bavituximab in combination with docetaxel vs. docetaxel alone as second-line
therapy in patients with advanced non-small cell lung cancer (NSCLC). We will
not learn the cause and severity of the coding discrepancy until the internal
investigation is complete and most likely audited by a third party. We will learn
if some patients randomized into the bavituximab arm of the trial received
placebo for all or part of their treatment regimen and vice versa, of if some
patients received both placebo and bavituximab during treatment.
• We note that placebo and drug for clinical trial use are typically coded and
distributed to clinical sites from a centralized facility by a contract research
organization (CRO). We do not know if the coding discrepancy affected all lots
of placebo and drug or just some lots (if there were multiple lots). We also do
not know if all the blame rests with the CRO or whether clinical sites may have
misinterpreted codes. We see a best- and worse-case scenario, understanding
that the outcome can also be somewhere in between.
• In the best case scenario, the coding discrepancy is resolved quickly and at
least part of the Phase II trial results can be salvaged with positive results.
In addition, results from two ongoing Phase II trials in front-line NSCLC and
pancreatic cancer are positive. Median overall survival (mOS) in the former
and top line results from the latter are expected before year-end. With this
outcome, we see the value of Peregrine's stock returning to its highs in the
$5.00 per share range seen earlier this month.
• In the worse case scenario, the coding discrepancy takes longer to resolve
without any data being salvaged from the Phase II trial and the mOS and top
line results from the front line NSCLC and pancreatic cancer Phase II trials are
equivocal or negative. With this outcome, we see the company's stock value
falling below $1.00 per share.
Please see important disclosures on page 6 - 8.
VALUATION
Based on our revised long-term revenue and expense projections, we
think Peregrine could become profitable in 2017 (FY ending April 30)
with continued growth of its contract manufacturing sales revenue and
approval and launch of bavituximab for the treatment of NSCLC in FY:17
(or mid to late CY:16). We previously projected approval and launch in
late FY:15 (or early CY:15), but are now prolonging our projected clinical
development time by up to one year due to the recently-announced
coding discrepancy. We caution investors that approval of bavituximab
by the FDA and its commercialization depend on favorable clinical trial
outcomes. Note that in our model we are not making any assumptions
regarding financial terms of potential collaborative development and
commercialization agreements for bavituximab or Cotara, and exclude
consideration of possible positive outcome, approval and launch of
bavituximab for the treatment of pancreatic cancer. We will update our
valuation as warranted by resolution of the coding discrepancy and its
outcome, and clinical trial results expected by year-end. To account for
our expectation that Peregrine will need to raise additional capital within
6 - 9 months, we have also raised our share count estimate.
We use a discounted P/E model applied to our projected diluted 2017
EPS to arrive at our current value of $1.50 per share and one-year price
target of $2.00 per share. We have raised our risk-adjusted discount rate
to 50% from 30% due to increased uncertainties related to the coding
discrepancy, the timing and outcome of ongoing and future clinical trials,
and whether our projected annual growth rate of Peregrine's contract
manufacturing business (Avid Bioservices, Inc.) can be attained and
sustained. We believe a 25x EPS multiple is appropriate for our projection
of the company's growth. MLV is restoring a BUY recommendation (from
a HOLD) and lowering our one-year price target to $2.00 from $4.50 for
Peregrine Pharmaceuticals, Inc.
INVESTMENT RISK
Investment risks are typical of biotechnology companies in Peregrine's
peer group. These include, but are not limited to: (1) Peregrine may
not successfully complete development, obtain regulatory approval, or
commercialize their drug candidates; (2) superior products developed
by competitors may be approved and marketed prior to Peregrine's
drug candidates, (3) Peregrine has had substantial losses and anticipates
future losses, and may be unable to raise additional capital on favorable
terms to sustain operations, and (4) Peregrine's stock price is likely to
be volatile, with stockholders benefiting only if its stock appreciates in
value as the company does not plan to pay stock dividends. For a more
detailed discussion of investment risks, please refer to our Peregrine
Pharmaceuticals, Inc., Initiation of Coverage report of February 8, 2010.
MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 2
COMPANY DESCRIPTION
Peregrine Pharmaceuticals, Inc. is a clinical stage biotechnology company
engaged in the discovery and development of novel monoclonal
antibodies, including a radiolabeled antibody, for the treatment of
certain cancers and viral infections. Multiple Phase II trials are ongoing
with two lead drug candidates, bavituximab and Cotara. A wholly
owned subsidiary, Avid Bioservices, Inc., provides contract manufacturing
services to external customers and in support of Peregrine's own
pipeline. Peregrine Pharmaceuticals, Inc. is headquartered in Tustin, CA.
MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 3
APPENDICES
Appendix A: Balance Sheet
PPHM Balance Sheet (Fiscal year ends April 30)
($, in thousands; except shares) 2010A 2011A 1Q:12A 2Q:12A 3Q:12A 2012A 1Q:13A
Calendar date 4/30/10 4/30/11 7/31/11 10/31/11 1/31/12 4/30/12 7/31/12
ASSETS
Current assets:
Cash and cash equivalents 19,681 23,075 16,540 18,055 19,761 18,033 18,991
Trade and other receivables 1,481 1,389 1,087 1,191 2,078 2,353 2,271
Government contract receivables 367 93 - - - - -
Inventories, net 3,123 5,284 4,481 3,178 2,744 3,611 5,744
Debt issuance costs, current portion 122 21 - - - - -
Prepaid expenses and other current assets, net 2,004 953 853 1,125 1,238 795 887
TOTAL current assets 26,778 30,815 22,961 23,549 25,821 24,792 27,893
Property
Leasehold improvements 697 932 - - - 1,383 -
Laboratory equipment 4,221 4,391 - - - 4,967 -
Furniture, fixtures and computer equipment 917 1,814 - - - 2,287 -
Less accumulated depreciation and amortization (4,366) (4,928) - - - (5,737) -
TOTAL property, net 1,469 2,209 2,441 2,540 2,659 2,900 2,868
Dept issuance costs, less current portion 21 - - - - - -
Other assets 1,067 1,742 1,613 1,187 960 570 745
TOTAL assets 29,335 34,766 27,015 27,276 29,440 28,262 31,506
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 2,259 4,046 2,959 4,425 3,940 3,492 4,151
Accrued clinical trial site fees 2,666 2,292 2,786 2,222 3,042 2,111 1,909
Accrued legal and accounting fees - - - - - - -
Accrues royalties and license fees - - - - - - -
Accrued payroll and related costs 1,623 1,455 1,532 1,523 2,098 2,468 2,908
Capital lease obligation, current portion - - - - - - -
Notes payable, current portion and net of discount 1,893 1,321 8 29 333 - - -
Deferred revenue 2,406 5,617 4,145 2,012 2,552 3,651 6,056
Deferred government contract revenue 78 - - - - - -
Customer deposits 2,618 1,759 2 89 1,703 2,463 4,865 10,224
Other current liabilities 860 1,189 1,253 1,117 1,104 1,052 1,308
TOTAL current liabilities 14,403 17,679 13,793 13,335 15,199 17,639 26,556
Capital lease obligation, less current portion - - - - - - -
Notes payable, less current portion and net of discount 1,315 - - - - - -
Deferred revenue - 632 554 601 523 361 284
Other long-term liabilities 210 1,037 8 71 844 813 779 742
TOTAL liabilities 15,928 19,348 15,218 14,780 16,535 18,779 27,582
Preferred stock ($0.001 par value) - - - - - - -
Common stock ($0.001 par value) 53 70 72 82 93 101 104
Additional paid-in capital 2 75,208 311,353 3 15,822 328,566 340,054 347,506 349,608
Accumulated deficit (261,854) (296,005) (304,097) (316,152) (327,242) (338,124) (345,788)
TOTAL stockholders' equity (deficit) 13,407 15,418 11,797 12,496 12,905 9,483 3,924
TOTAL liabilities and stockholders' equity 29,335 34,766 27,015 27,276 29,440 28,262 31,506
Shares used in computing net loss per share (000's) 49,065 60,886 70,657 77,523 87,150 83,573 103,284
SELECTED METRICS
Current ratio 1 .86 1.74 1.66 1.77 1.70 1.41 1.05
Working capital (in thousands) $12,375 $13,136 $9,168 $10,214 $10,622 $7,153 $1,337
Book value per common share $0.27 $0.25 $0.17 $0.16 $0.15 $0.11 $0.04
Cash, cash equivalents and investment securities (in thousands) $19,681 $23,075 $16,540 $18,055 $19,761 $18,033 $18,991
Cash, cash equivalents and marketable securities/common share $0.40 $0.38 $0.23 $0.23 $0.23 $0.22 $0.18
Debt (in thousands) $3,208 $1,321 $829 $333 $0 $0 $0
Debt to equity ratio 0.24 0.09 0.07 0.03 0.00 0.00 0.00
Source: Company reports and MLV projections.
MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 4
Appendix B: Income Statement – Quarterly, with Projections
Appendix C: Income Statement – Annual, with Projections
PPHM Income Statement: Quarterly Profit and Loss, with Projections
($, in thousands;
except per share and shares)
1Q:12A 2Q:12A 3Q:12A 4Q:12A 2012A 1Q:13A 2Q:13E 3Q:13E 4Q:13E 2013E
Quarter/year ending 7/31/11 10/31/11 1/31/12 4/30/12 4/30/12 7/31/12 10/31/12 1/31/13 4/30/13 4/30/13
Revenue
Contract manufacturing revenue 5,439 4,154 3,203 1,987 14,783 4,135 3,750 4,000 4,115 16,000
Government contract revenue - - - - - - - - - -
License revenue 2 16 78 78 78 4 50 1 16 78 78 78 3 50
Product sales revenue - - - - - - - - - -
TOTAL Revenue 5,655 4,232 3,281 2,065 15,233 4,251 3,828 4,078 4,193 16,350
Expenses
Cost of contract manufacturing 3,017 3,718 2,484 934 10,153 2,024 2,625 2,680 2,771 10,100
Cost of goods sold - - - - - - - - - -
Research & development 7,760 9,818 9,180 8,930 35,688 6,981 6,750 7,000 8,269 29,000
Selling, general & administrative 2,929 2,732 2,710 3,091 11,462 2,917 3,000 3,200 3,383 12,500
TOTAL Operating expenses 13,706 16,268 14,374 12,955 57,303 11,922 12,375 12,880 14,423 51,600
TOTAL Operating gain (loss) (8,051) (12,036) (11,093) (10,890) ( 42,070) (7,671) (8,547) (8,802) (10,230) ( 35,250)
Interest and other income 1 3 9 9 10 41 8 2 0 2 5 47 1 00
Interest and other expense ( 54) (28) (6) ( 2) ( 90) (1) ( 1,400) (100) ( 99) (1,600)
TOTAL Other income (expense) ( 41) (19) 3 8 ( 49) 7 (1,380) (75) ( 52) (1,500)
Profit or (Loss) Before Taxes and Dividends (8,092) (12,055) (11,090) ( 10,882) ( 42,119) (7,664) (9,927) (8,877) ( 10,282) ( 36,750)
Income Tax - - - - - - - - - -
NET Profit or loss (8,092) (12,055) (11,090) ( 10,882) ( 42,119) (7,664) (9,927) (8,877) ( 10,282) ( 36,750)
Basic shares used in computation (thousands) 70,657 77,523 87,150 99,304 83,573 1 03,284 1 05,000 1 07,000 1 09,000 1 06,000
Diluted shares used in computation (thousands) 70,657 77,523 87,150 99,304 83,573 1 03,284 1 05,000 1 07,000 1 09,000 1 06,000
Basic earnings (loss) per share (0.11) (0.16) (0.13) (0.10) (0.50) (0.07) (0.09) (0.08) (0.09) (0.35)
Diluted earnings (loss) per share (0.11) (0.16) (0.13) (0.10) (0.50) (0.07) (0.09) (0.08) (0.09) (0.35)
Source: Company reports and MLV projections.
PPHM Income Statement: Annual Profit and Loss, with Projections (Fiscal year ending April 30)
($, in thousands;
except per share and shares)
2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E
Fiscal year ending 4/30/09 4/30/10 4/30/11 4/30/12 4/30/13 4/30/14 4/30/15 4/30/16 4/30/17
Revenue
Contract manufacturing revenue 12,963 13,204 8,502 14,783 16,000 16,800 17,650 18,550 19,500
Government contract revenue 5,013 14,496 4,640 - - - - - -
License revenue 175 2 43 3 50 4 50 350 3 50 350 350 350
Product sales revenue - - - - - - - - 112,850
TOTAL Revenue 18,151 27,943 13,492 15,233 16,350 17,150 18,000 18,900 132,700
Expenses
Cost of contract manufacturing 9,064 8,716 7,296 10,153 10,100 10,100 10,300 10,500 10,700
Cost of goods sold - - - - - - - - 16,950
Research & development 18,424 24,658 29,462 35,688 29,000 35,000 40,000 43,000 45,000
Selling, general & administrative 6,979 8,182 11,421 11,462 12,500 13,000 14,000 15,000 20,000
TOTAL Operating expenses 34,467 41,556 48,179 57,303 51,600 58,100 64,300 68,500 92,650
TOTAL Operating gain (loss) ( 16,316) ( 13,613) ( 34,687) ( 42,070) (35,250) ( 40,950) (46,300) ( 49,600) 40,050
Interest and other income 200 1 16 1,052 41 100 1 50 250 350 500
Interest and other expense (408) (997) (516) ( 90) (1,600) (200) (250) (300) (300)
TOTAL Other income (expense) (208) (881) 5 36 ( 49) (1,500) ( 50) - 50 200
Profit or (Loss) Before Taxes and Dividends ( 16,524) ( 14,494) ( 34,151) ( 42,119) (36,750) ( 41,000) (46,300) ( 49,550) 40,250
Income Tax - - - - - - - - -
NET Profit or loss (16,524) ( 14,494) ( 34,151) ( 42,119) ( 36,750) ( 41,000) (46,300) ( 49,550) 40,250
Basic shares used in computation (thousands) 45,246 49,065 60,886 83,573 106,000 1 21,000 130,000 135,000 138,000
Diluted shares used in computation (thousands) 45,246 49,065 60,886 83,573 106,000 1 21,000 130,000 135,000 143,970
Basic earnings (loss) per share (0.37) (0.30) (0.56) (0.50) (0.35) (0.34) (0.36) (0.37) 0.29
Diluted earnings (loss) per share (0.37) (0.30) (0.56) (0.50) (0.35) (0.34) (0.36) (0.37) 0.28
Source: Company reports and MLV projections.
MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 5
IMPORTANT DISCLOSURES
Analyst Certification
The research analyst, George B Zavoico, who is primarily responsible for the preparation of this research report, certifies that (i) all views
expressed in this research report accurately reflect the analyst's personal views about any and all the subject issuer and security featured in
this report and (ii) no part of the the analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations
or views expressed in this report.
Rating and Price Target History
MLV disclosure price charts are updated within the first fifteen days of each new calendar quarter per FINRA regulations. Price charts for
companies initiated upon in the current quarter, and rating and target price changes occurring in the current quarter, will not be displayed
until the following quarter. Additional information on recommended securities is available upon request.
All required current disclosures on subject companies covered in this report may be obtained by contacting Randy Billhardt at MLV at
212-542-5882 or rbillhardt@mlvco.com.
MLV RATING ALLOCATION (as of September 26, 2012)
Buy: MLV projects that the subject company’s stock price will increase in value by 20% or more in the next 12 months.
Hold: MLV projects that the subject company’s stock price will trade in a range that is not more than 20% above or below its current price.
Sell: MLV projects that the subject company’s stock price will decrease in value by 20% or more in the next 12 months.
COMPANIES UNDER COVERAGE INVESTMENT BANKING SERVICE WITHIN 12 MONTHS
Rating Count Percent C ount Percent
BUY 64 75.29% 31 36.47%
HOLD 21 24.71% 5 5.88%
SELL 0 0.00% 0 0.00%
Issuer Specific Disclosures
MLV or any affiliates in the past 12 months managed or co-managed a public offering of securities for Peregrine Pharmaceuticals, Inc..
MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 6
MLV or any affiliates in the past 12 months received compensation for investment banking services from Peregrine Pharmaceuticals, Inc..
MLV or any affiliates in the past 12 months received compensation for products or services other than investment banking services from
Peregrine Pharmaceuticals, Inc..
MLV or any affiliate expects to receive or intends to seek compensation for investment banking services from Peregrine Pharmaceuticals,
Inc. in the next 3 months.
Additional Disclosures
The analyst primarily responsible for the preparation of this research report is a registered agent of MLV & Co LLC. An analyst or a member
of its household may not purchase the securities of a subject company 30 days before or 5 days after the issuance of a research report or
a change in ratings or price target, trade inconsistent with the views expressed by the research analyst, and all transactions in a research
analyst's personal trading must be pre-approved. Neither the research analyst nor a member of his or her household may own any securities
of the subject company based on the same standards used to compute beneficial ownership for the purpose of reporting requirements
under 13(d) of the Securities Act of 1934. The research analyst has not made a public appearance in front of more than 15 persons to discuss
the subject company and does not know or have reason to know at the time of this publication of any other material conflict of interest.
Neither MLV nor its research analysts have any knowledge of any material conflict of interest involving the company(ies) mentioned in this
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MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 7
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MLV & Co Investment Research Peregrine Pharmaceuticals, Inc.
September 27, 2012 8
FTM,
Could you send me a private message with an e mail address.
Thanks in advance.
RRdog