Avid Bioservices Inc (CDMO)

[cjgaddy]

Roth/J.Pantginis 9-10-14 PPHM update…

Roth Capital /Joe Pantginis - init. 7-15-10 Buy/PT=$10, CURR: Buy/$5 http://www.roth.com
. . .Universe (click link bottom right): http://roth.bluematrix.com/docs/pdf/BLUE.pdf

9-10-14/PPHM: FY1Q15 RESULTS; BROADENING BAVITUXIMAB'S PROFILE

PPHM announced FY15/Q1 results, reporting EPS of ($.08), compared to our and the consensus estimate of ($.06). Total revenues for 1Q15 were $5.5mm vs. our est. of $5mm and consensus est. of $6mm. With IST data readouts in the upcoming months, we believe mgt. will be able to leverage that into expanding bavi's profile and further drive partnership discussions. The company ended Q1 (7-31-14) with $73.3mm in cash, which mgt. believes is sufficient to fund operations for ~12 mos. PPHM reiterated guidance for contract mfg. revenue for FY2015 of $19-$23mm.
Reiterate Buy and $5 target.

IMPACT
Alongside the SUNRISE Phase III study ongoing in over 130 sites, there will be addl. focus on data readouts from other programs in the upcoming months:
1) The Phase I/II study of bavituximab in combination with sorafenib in Hepatocellular (Liver) Carcinoma will have data presented at the Annual Meeting of the Society for the Immunotherapy of Cancer (SITC http://www.eventscribe.com/2014/sitc ) in early November
2) The Phase Ib of bavituximab in combination with carboplatin+pemetrexed in untreated stage IV NSCLC will have preliminary data presented at the Chicago Multidisciplinary Symposium in Thoracic Oncology (MSTO http://www.thoracicsymposium.org ) in late October.
Additionally, PPHM will present more data from the immuno-oncology program combining bavituximab with other immunotherapies, specifically, an anti-PD-1 checkpoint inhibitor, at SITC.
Data from the Liver Cancer study as well as from the immunooncology program should increase visibility, driving up potential partnering interest for bavituximab.
Recall that PPHM also indicated that it is looking to expand bavituximab's profile into other indications, particularly in Breast Cancer. At ASCO 2014 PPHM presented data from an IST of bavituximab+paclitaxel in HER2-neg. metastatic breast cancer, showing that 85% of patients achieved ORR, with 15% achieving CR by RECIST.

ACTION
We reiterate our Buy rating and $5 target. With Peregrine being a pivotal stage company, we view the risk/reward profile as favorable, and we believe visibility from the broadening bavituximab profile and partnering potential should drive the stock in 2014.