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Zero transparency = 100% shenanigans. Always will.
They call it "liquidity," which anymore means allowing non-equity participants into the market. Completely naked. No underlying equity whatsoever. Churn as many shares as you want hiding behind the market maker exception to Reg SHO.
Unfortunately when there is zero transparency in the market and unlimited phantom shares to jerk with, this will happen. Another observation is on the volume. Very low interest in beneficial shares. It's stunning how much of the normal trading volume is either HFT, market maker shenanigans, or both.
Market makers must be exhausted from all the trading today. You guys can go have a beer now. You earned it.
We have seen several huge volume days this days not supported by any event of immediate significance and instead weakly attributed to internet posts or other non-drivers.. I suspect there was more to it than that unless millions of investors simply woke up one morning with an irresistible urge to suddenly pile on.
The class action lawsuit is complete BS grounded in a ridiculous legal argument already rejected by the Court, but it does give rise to one legitimate question of potential impropriety: When did the plaintiffs that brought forward the "confidential witness" revealing the AbbVie discussions know about that information, and did any of them trade on it?
How do we know they didn't resume discussions with AbbVie after the trial discrepancies were reviewed and Phase III approval with FDA? Whether there is current interest with AbbVie or someone else, deals do not happen over night. Notwithstanding possible delay from the CA lawsuit, there is still the matter of traditional due diligence on IP, GMP, and a host of other metrics, all of which are time consuming. I suspect that some sort of agreement in principle is on the table right now, subject to conditions, and it's simply a matter of time before an announcement.
From what I can find on the internet, Federal Rules allow CSM 21 days to answer (after service). If CSM is going to push the responsibility to an employee as a defense, I suspect that will be in its answer to the complaint. Also: a question for the lawyers on the board, do Federal Rules allow for a blanket denial? Or is an explanation required?
Great weekend all!
I think either the mere existence of the CA is a concern for a partner, or it is not. I don't think any analyst would attempt a more nuanced determination based on the "validity" of a lawsuit. Untold millions (if not billions) are paid out every year in this country on lawsuits that most of us would characterize as not "valid", lacking in merit, ridiculous, etc. Like everyone else here, I am simply speculating. It would be nice if someone with experience and insight into a partnering deal could enlighten us on whether the CA might be a sticking point, or not.
Good point. But on what would you base a reserve figure? The CA suit, after multiple amendments, hasn't even moved beyond the motion to dismiss. There is no discovery or other information to review. Assuming the suit is an impediment, wouldn't it be easier to just wait until May 5 and see if the judge bounces the suit altogether?
There are many reasonable explanations for the status of a partnership, including that these thing sometimes simply require long periods of interaction before being finalized. I think the reason many speculate that something is already in play is the inexplicable recent trading activity. It seems like there was much more volume than necessary for someone to execute a simple pump and dump scheme, so what else does that leave? An impending partnership could certainly explain the volume, whether the deal is contingent on closing the CA suit, coordinating multiple players, "just around the corner" or something else.
What we do know about a partner...
According to pleadings in the CA lawsuit, Peregrine was in partnership discussions with BP, specifically, Abbvie, but discussions halted upon the discovery of the NSCLC Phase II coding discrepancy in Sept. 2012.
Following the discovery of the coding discrepancy, Peregrine concluded a review of the trial data that took a conservative approach of combining the placebo and 1mg/kg treatment arm into one treatment arm and comparing the results to the 3mg/kg arm. This analysis still showed a meaningful improvement in median overall survival, and the company reached agreement with FDA on Phase III trial design. Further, Peregrine received Fast Track designation from FDA.
Because of the conservative approach to the analysis of Phase II NSCLC data, it would be reasonable to conclude that the promising survival data was, if anything, understated since it was compared to a control arm that actually contained Bavi. With the Phase II discrepancy addressed, one could expect that partnership discussions with Abbvie and/or other BP resumed. Indeed in March, SK stated that discussions with potential partners are active and that we will be updated as partnerships are brought to fruition over the coming year.
So why no partnership announcement yet?
- The Phase II discrepancy has been favorable resolved. Phase III has been initiated.
- Recent preferred/ATM financing leaves the balance sheet very healthy.
- There was an unprecedented 80 million share run-up (perhaps some of the volume phantom shares, but certainly not all of it) on the common stock with no corresponding news to justify such sudden interest.
One possibility is that a partnership deal(s) has been agreed to with a condition precedent being the disposal of the CA lawsuit. Others here disagree, and state that the CA lawsuit would not serve as such an impediment. I would argue that active lawsuits create unknown liability (The outcome of litigation is notoriously difficult to predict. Just read the news or ask a lawyer). I'm not saying that my theory is the only viable explanation for the current state of affairs, but I would ask those in opposition to such a theory what evidence/experience they have that the presence of the CA lawsuit on Peregrine's financials would not be a significant sticking point in partnering negotiations.
All imho.
How much of the 80 million share price surge was market makers (who are exempt from Reg SHO) shorting into the run-up? Wouldn't it follow that they would walk the PPS back down after the volume dried up in order to cover their naked short positions? Between that and HFT shenanigan, it seems impossible to discern how many "beneficial" shares actually changed hands (and hence determine a reasonable support level) and how much was counterfeit volume. So we are back to where we started with hopefully at least some new long positions. All imo.
The First Amended Complaint filed on March 28 alleges with specificity that the switching was deliberate (compared to the more general allegation of "errors" in the original complaint):
Either that or there is a mention on CNBC and it rockets to $3.65 on huge volume. Ya never know with PPHM.
Also amazing how they walk down the price with small trades. I'm lost on the whole modern electronic trading paradigm. Bid and ask sizes seem to contradict the price direction. What's going on? Phony sizes being posted? Averaging to fill a large order for someone?
Okay Level II guys...any thoughts on the bid ask ratio?
Quiet before the storm. Recent pattern seems to be price fade, then volume dries up...then BANG!
Something seems very familiar about the lack of volume. It's like deja vu all over again.
I took my first position in TCLN at just over a dollar (all approx pre-split figures) and then added more as it bottomed near $0.25 and then closed most of my position for tidy profit when it quickly moved back to the $1.00 dollar range. I thought I was a genius..and then I watched it spike to almost $16.00 over the next few months. It might feel bad to watch a paper gain erased, but it's not nearly as bad as closing your position and getting left in the dust during a massive breakout.
Pretty clear a deal is in the works. We also know that there was interest on the part of AbbVie that stalled because of the phase II labeling problem, but we do not know the time-frame or conditions precedent to close that deal. Whether Abbvie is back in on the table, or it is others, I would not be surprised if the terms a deal(s) have already been agreed to and will be inked after conditions are met. All imo, of course.
Don't the current Federal Rules already permit the judge to issue sanctions equal to legal fees if the case is determined to be frivolous?
How is that "wrong?" Price was above $2.00 at March options expiration, and according to your logic below, any "wall" in April would be at $2.30, or 17% higher than today. Also, by sucker bet, are you suggesting that the options were mispriced on the high side? Not totally discounting the "max pain" theory btw. It just seems overstated.
One hopes this would lead to early dismissal. This lawsuit is a mockery of the legal process, and the plaintiff's open defiance of the Court's earlier rulings calls into question whether its primary motives are collateral even to the classical improper objective of settlement extortion.
The same argument was made about March options, and yet the PPS closed well above $2.00 on expiration day.
When would the case file reach the judge? Would PPHM have to file a motion for immediate review?
The plaintiff's last ream of baloney is pathetically disingenuous and is clearly interposed for the purpose of delay. Moreover, it is potentially stalling progress in an emerging cancer therapy. It is precisely this sort of nonsense that erodes at public confidence in our legal system. Perhaps it is time for California to revisit its standards for membership in the Bar.
WOW! I only skimmed the 31 page piece of rubbish, but the word that immediately comes to mind is DEFIANT. If I were a judge reading this (Which, of course, I am not) I would be, to put it delicately, pissed off. Nothing new. Instead, it looks like the smart alecky plaintiff's attorney is petulantly claiming that the judge got it wrong the first two times he dismissed her case. Pretty outrageous, imo.
Depends on what your expected ROI is. PPHM is a goldmine for day traders and swing traders, but longs would have to pick the top and not lose their position in a big breakout.
Evaluating ongoing litigation is an essential part of any due diligence investigation and usually carries some weight in the evaluation. To suggest that such a concern is "very silly" is, dare I say, a tad naive.
CP - I was thinking more broker-dealers who can turn a nice profit filling orders from inventory. But the larger point is that I think that number of shares held and traded by traditional "retail investors" tends to be overstated. I.e., the theory that there are so few shares out there that big buyers and hedge funds need to "steal" shares away from "retail" holders.
According to NASDAQ, there are 26,283,501 institutional shares held. I seriously wonder how many of the remaining shares are held by retail longs and how many are in MM inventories, offshore, or getting flipped back and forth between hedgies and day traders.
What about the concern that the cash a partner puts into the company could be used to pay off the CA clowns instead of running clinical trials?
I wonder what the extent of beneficial ownership actually is and how many share sit in MM inventories or get traded back and forth as phantom shares. HFT guys can churn the hell out of a stock for spreads and rebates causing high volume with little interaction of "natural" buyers. Not sure if this fits the pattern on the large PPHM volume days. It seems like the computers would hold a tighter range through the volume, but I don't have an trained eye to spot all the possible HFT shenanigans.
The CSM suit should have a negligible impact since there is no potential for liability for PPHM other than that bankers and possibly partners don't like active litigation of any sort. I doubt the ambulance chaser lawsuit is over today. I think they have until midnight to file a response to the motion to dismiss, and unless the plaintiff fears sanctions from the judge when he discovers that they have once again recycled legal theories that he has already twice rejected, they will probably file a B.S pleading hoping that they remain a costly enough nuisance to extort a settlement. I do believe the CA is a potential delaying factor, but that it will be resolved in May and allow the company to move forward on (or formalize) some significant matters. (Fortunately the company has amassed a decent war chest with the recent preferred and ATM sales and can afford to wait the P.O.S...ahem, plaintiff, out until May.) There should also be a dollar amount for the CA suit that is currently priced into the PPS, so it would be reasonable to expect a bump equal to the perceived liability as soon as this nonsense gets dismissed. All imo.
They do it because they can. Too many shares out there to jerk with, not to mention phantom shares from HFT.
I don't think PPHM is on anyone's hard to borrow list right now, but interest risk would actually increase with short interest. I'm familiar with the strategy of short arbitrage, where one shorts against preferred to profit from mispricing, but I can't find anything published on the math for shorting against preferred to "lock in" a profit.
Was anyone NOT expecting a retracement before the next leg up?
In the below hypothetical, wouldn't the 10.5% dividend be diluted by the amount of the fee for shorting?
I don't think they will settle at all. (my last reply neglected to add quote tags to the original post so that may not have been clear.) But since the plaintiff's lawyer probably isn't counting on surviving the motion to dismiss, why are they hanging on by a thread? Maybe they know they are the wrench in the machine right now and hope to get bought off. All imo.