Avid Bioservices Inc (CDMO)

[Protector]

Analyse It Better 7.0

Introduction to Update (Previous version)
- New parts are in GREEN - skip there for fast update reading
- Made it again more easy to use for D&D (embedded links)
- Added links of KT related to inside trading.
- Added 13G comments from JR's post
- Added Peregrine Cash state from Krakonos post
- Elaborated and rephrased on control arm matters
- Added Signal Seeking goal of PII
- Added Annual Meeting comment

Sources

SRC1: SEPT 7, PR - Peregrine's Interim Data Announcement 2nd line NSLC

SRC2: SEPT 10, PR - Peregrine's First Quarter FY 2013 report

SRC3: SEPT 22, PR - Peregrine Announces Credit Swiss participation

SRC4: SEPT 24, PR - Peregrine's Discrepancies Announcement

SRC5: SETP 24, Filling - Peregrine's Court Filling agaisnt CSM

SRC6: SEPT 26, PR - Peregrine Announces that on SEPT 24 it's 2x15Milj loan was retracted

Chronology
- In MAY, 2012 - Peregrine unbinds data of it's 2nd line NSLC clinical trial
- On SEPT 7, 2012 - Peregrine Announces Interim Data for it's 2nd line NSLC Clinical Trial.
- On SEPT 10, 2012 - Peregrine holds a quarterly and CC (the one where management seemed tired)
- On SEPT 12, 2012 - Peregrine PRs Credit Swiss participation
- On SEPT 19, 2012 - Peregrine removes Credit Swiss, and later Vienna from the events calendar on their web-site. (Bungler's post)
- On SEPT 20, 2012 (on and about) - Peregrine knows about Major Discrepancies in unblinded data (on SEPT 18 possibly, on SEPT 19 for sure).
- On SEPT 21, 2012 - Peregrine Closes above 5$, @5 Calls get exercised.
- On SEPT 24, 2012 - Peregrine Announces Discrepancies in 2nd line NSLC clinical trial and PR's it at 7:30 AM.
- On SEPT 24, 2012 - Peregrine files a lawsuit against Clinical Supplies Management Inc, but doesn't PR it.
- On SEPT 24, 2012 - Peregrine receives a letter that it's 2x15Milj$ loan is retracted, but doesn't PR it.
- On SEPT 24, 2012 - A trading HALT at 7:30am due to important news announcement resumes around 1.5$ with only 60K shares traded before HALT.
- On SEPT 25, 2012 - The first of a series of announced investigations and/or class acts is announced.
- On SEPT 25, 2012 - The share price starts a remarkable recovery of nearly 50% up and almost touches 2$.
- On SEPT 26, 2012 - Peregrine files a SEC From 8-K disclosing the loan retraction.
- On SEPT 26, 2012 - The asynchronous loan news SEC filing results in a second price drop.
- On SEPT 27, 2012 - The lawsuit information and filling are discovered by IHub PPHM board members.
- On OCT 6, 2012 - 1 Year Survivals results for 2nd Line NSLC target date (possible delay due to enrollment and start treatment gap).
- On OCT 18, 2012 - Peregrine holds it's Annual Meeting (changed location)
- On OCT 24, 2012 - Deadline for Clinical Supplies Management Inc to respond to the initial lawsuit filing.
- On MAY, 2013 - Peregrine will have run out of cash unless they come up with a partner deal, new loan or use the ATM.

Questions & Answers

What is this all about
It is about Peregrine discovering Major Discrepancies during unblinding of clinical trial data which makes the previously announced Interim Data results unreliable for investment decisions.

What trial is this
Peregrine's 2nd line Non Small Cell Lung Cancer (NSCLC), an FDA Gold standard (FDA Guidance Draft PDF) Randomized, Double-Blinded and Placebo-Controlled Clinical Trial. This trail finished to enroll on OCT 6, 2011.

Earlier such Gold trials have been done for Docetaxel the current Standard Of Care (SOC) and Erlotimib and a lesser Randomized Open Label trial type for Pemetrexed. The SOC, docetaxel (Taxotere, Sanofi-Aventis) had a Median Overall Survival (MOS) of 7 months and 15 days and a 1-year survivors of 30% as can be found in the FDA Lung Cancer Working Group Paper.

Where the announced interim data results good?
Yes, they where extremely good and equally important statistically relevant, certainly for the 3mg/Kg arm.
Median Overall Survival (MOS): 13.1 months or almost double the MOS of SOC.
Overall Response (OR) 17.9%
Progression Free Survival (PFS): 4.5 months

Although the 1mg/kg arm performed a little less good the combined results of both arms are excellent with MOS=12.1 months, OR=16.5% and PFS=4.1 months. The MOS event for the 3mg/Kg arm isn't reached yet (at least not on SEPT 7th) and is therefore still improving.

Another thing to remember is that Peregrine's CEO, Steve King, said during a conference call that the majority of patients where still alive and that the MOS event was not expected soon, reason why the company decided not to wait for it to prepare it's FDA end of PII meeting to move onto PIII. This is promising for the 1 Year Survival numbers that should be announce shortly because the last patients was enrolled on OCT 6, 2011 a year ago. A slight delay is possible because Peregrine can only check patients ones a month and the treatment from the last patients could have started some days later then the enrollment.

Last but not least this clinical trial confirmed that Bavi is extremely well tolerated and has few side effects. This is a major criteria for a drug because it makes no sense that a drug slows down or cures your cancer but kills you with the side effects of the treatment. That also may impact the 1 year survival and possibly even the Complete Response (CR=total cure) numbers that we are still expecting. Bavi for breast cancer clinical trials reported the disappearance of tumors in a few cases.

Who discovered these discrepancies
Peregrine's team during review of the data that was unblinded in May 2012. It was not discovered by a potential partner as part of data review, nor by the CRO (Clinical Supplies Management Inc), nor by the FDA (that data was never presented to the FDA at that point).

What exactly was discovered
Major discrepancies in coding, not anything else such as wrong survival data, problems with censored patients, the use of wrong substances, Avid deliveries, etc.

What coding then?
Coding in labeling of Treatment Groups, that is, which patients must receive what treatment. There are 3 arms to which a patients can be assigned, the control arm that receives SOC+placebo (SOC=docetaxel) and the two investigation drug product arms, the Bavituximab arms,that received SOC+1mg/Kg or 3mg/Kg Bavituximab.

Is all lost?
No, on the contrary, all could even end up better. The randomized assignments of patients to the 3 control arms is not involved. That would have been a problem because if it was it would almost for sure invalidate the trial. The control arm is not affected either, which means that MOS of the control arm is and stays <6 months. Here also this is important because it is the baseline to evaluate against to check if the Bavi arms have any effect and if their results are sufficiently good to justify a move into FDA PIII. If the control arm was not affected and the errors occurred only in the Bavi arms then their individual MOS may be affected but not the combined MOS and also not the survival count. This discovery does in no way invalidate the fact that most patients where still alive on SEPT 7th and therefor proof that Bavi works. So potential problem must be found in whether the FDA accepts this is duly proved, accepts the data with corrected discrepancies, to be able to move onto PIII or if first whole or part of the clinical trial has to be done over.

What are the chances that we must do the trial all over again
That is hard to say without any precise information on the discrepancies and the number of patients involve, in other words what did "some" mean. Ultimately it will all depend on the FDA's assessment of the impact of the discrepancies on the validity of the results, or at least the results of importance, to claim that the signal seeking goal is achieved on a sufficiently large sample with statistical relevance.
The expectations for MOS where maximum 8 months and even our combined MOS beats that. For signal seeking that would have to do because in PII we do not need to show efficacy. Also the side effects of Bavi are extremely low which is another important fact to enter a PIII where larger groups of patients in earlier staged of the illness will be exposed to Bavi.
I would personally estimate that we have a good change that we will be allowed to enter PIII if the combined MOS holds, which it looks like it will because it is an establish result no matter what the patients where administered with even if treatment arm patients received placebo. The exception would be that the patients didn't received any Bavi at all, which would be completely unthinkable, because then you cannot assign the good MOS results to Bavi.

A very important element to keep in mind is that whatever the discrepancies are the results, MOS, have been achieved baring the consequences of whatever impact the discrepancies may have had on the result. In other words, the effect of the discrepancies is baked into the combined MOS because the MOS measuring is not under discussion. All other results have the same discrepancies baked in them but for them it may result in a change for the worse or the better based on recalculation, for the MOS this is not the case because it is based on survival, a patients is either dead or alive.

How do we know that randomized assignment and control arm are intact?
Peregrine uses the generic term "Treatment Group" coding in the beginning of their PR, only allowing us to exclude the randomized patients assignment from the potential problem list because as far as the 3 arms are concerned this term includes all tree arms, control arm and both treatment arms. Later down in the text Peregrine singles the treatment, Bavi, arms out as the problem. At a point they clearly state : "the independent third-party contracted to code and distribute investigation drug product.". There is consensus in literature as posted on this board that the "investigation drug product", the drug product under investigation, is Bavituximab (Bavi for the friends) and not the placebo. Placebos must qualify as placebo in their own tests before they can be used in this quality in other clinical trials. Peregrine used this strange formulation because as we know now they filed a lawsuit the same day as that announcement and apparently didn't want to disclose the contractor(s) name(s) at that time, which we now know to be one main, master, contractor performing amongst others the tasks explicitly indicated by Peregrine as the area of problems - code the investigation drug product. The fact that we know now that this SAME CRO also did the randomized patients assignment and that Peregrine used the exact above bold-faced sentence, not mentioning randomized patients assignment at all, gives this singling out reasoning even more weight, certainly knowing that had something been wrong with the randomized patients assignment the FDA would most probably not accept the PII results as valid.

Does this mean there where no placebo problems at all?
No, it means there where no problems at all with the control arm and it's placebo labeling and distribution but it doesn't exclude that people in Bavi arms did receive some placebo. However, it is very unlikely they did because for that to happen we need more then just coding and labeling errors! For that to happen we would also need more delivery of placebo and therefor somewhere production and ordering errors because one cannot label what he hasn't received. The other way around it is excluded that control arm patients received Bavi because there is no Bavi in circulation in those arms and the Bavi would have to come from somewhere, Avid for instance and then there would be left over placebo.

What if we wrongly interpret Peregrine's PR what else could exclude the control arm.
There is nothing that can exclude it 100% by reasoning only, we can only assess the probability. The control arms results match an historical clinical trial and are on average about 6 weeks lower then the SOC MOS and a couple of other historical clinical trial's MOS. So, if we look at the combined MOS of the treatment arms, and other past Bavi clinical trials, we know Bavi works at least sufficiently to qualify for signal seeking, which doesn't mean yet that the FDA validate the PII as they must assess the impact of the discrepancies on those results and they will probably not look at past trials results of Bavi for that.
So if this working Bavi would have been administered to the control arm patients then placebo would have been administered to treatment arms patients for the error to be symmetric and go unnoticed by shortage or surplus substance in the inventories and therefor in the complete ordering and delivery chains of these products.
If this is the error that caused the discrepancies then it means some of the involved control arm patients may have lived longer because they got Bavi and some Bavi patients shorter because they received placebo in stead of Bavi. It would mean that Bavi could have even scored better but more important it is not consistent with the <6 months MOS of the control arm. Although never 100% sure, one would then at least have expected control arm MOS results that would be closer or even better then the historical average of such similar control arms and yet on the contrary the <6 months MOS of the control arm is among the historical lowest results.
We could not have made this reasoning if we would not have the treatment arms MOS because this reasoning is completely dependent on the fact that Bavi works. That is why you will see that for some it is important to claim and keep claiming Bavi doesn't work and is not better then a placebo.

What coding discrepancies are remaining possible then?
The most obvious would be that patients didn't receive the 1mg and 3mg doses as assigned and that symmetric mix-ups occurred. For each error in the 1mg arm there is one in the 3mg arm. It would be hard to believe that docetaxel would have been labeled 'Bavi' or the other way around? Normally the SOC comes standard pre-labeled and only the Bavi must be death with by the CRO because the Bavi arms use no placebo. All arms receive docetaxel. What could also be is that some 1mg or 3mg Bavi wasn't administered at all, or less then their body weight required, but then there would be some spare Bavi around somewhere. Some patients could have received higher doses but then Avid must have delivered them or they must have been taking from patients with follow-up treatment and that could not go unnoticed. It could also be that some 3mg patients received only 1mg, not symmetrically with an error in the 1mg arm, but in that case there would be Bavi remaining. All possible but unlikely compared to symmetric dose mix up that could easily go unnoticed until later review.

How did Peregrine discover this?
Peregrine checked the patient's sample test results and patient treatment code assignments and by correlating them found the major discrepancies for SOME, not all, patients.

In English please!
In a randomized double blinded clinical trial patients have a treatment code that is assigned randomly and that classifies a patient in a treatment group that receives a certain treatment. This is called patients treatment code assignment and neither Peregrine, Clinics or patients can derive what arm a patients is part of from this coding, only the CRO knows. During the clinical trial sample tests are performed and their results recorded. When correlating these test results of each patient with the coding it becomes possible to keep track of whether the patient really received what the coding indicated he/she should have received. Peregrine discovered there where major discrepancies between these sample test results and the coding for some patients in the Bavi arms of the clinical trial.

When did Peregrine discover this, why so late?
Peregrine discovered this on and about SEPT 20, 2012 as they claim in their lawsuit filing. The data was unblinded in MAY 2012, so 3 to 4 months after unblinding. The holiday season and the fact that reviewing clinical trial data is a hard job and needs a lot of time are certainly major reasons. There could also have been delays between the official unblinding date and all the data arriving with Peregrine (in case it had to be collected from the many trial sites, incl. overseas). Also some translation work could have been the cause of delays for overseas sites. All depends on how this was processed locally. Peregrine did not only have to check between consistency of test samples and coding, something that due to the heavy workload and cost involved is usually don't in the course of the end PII preparation when it is known the company will move for PIII, but also first had to calculate the trial results in general. So some months is reasonable. Finally, such discrepancies discovery was probably checked for confirmation before communicating given the to be expected impact on the stock price. Peregrine was, by FDA test standards, not allowed any involvement or data access during the clinical trial and could therefore not be aware of these discrepancies any earlier. It therefor only discovered them during review, part of the course of preparing for an end-of-phase II meeting with regulatory authorities (FDA) after they decided to move for PIII on the general results.

Did Peregrine fulfilled it's SEC disclosure obligations?
Yes, from the lawsuit filing we know that Peregrine was sure about what they discovered, assuming confirmed findings, on and about SEPT 20. We know they must have known on SEPT 19 because they removed the Credit Swiss event from their calendar mid-morning and later the Vienna event. The allowed delay for communications seems to be 4 business days AFTER the news becomes available to at least one management member (KT's post and SEC Final Rule).
Let's assume a worst case scenario and assume they knew on SEPT 18th. Then 19th, 20th, 21th, week-end, 24th (black Monday) is the 4th business day AFTER the day in which the discovery becomes 100% sure and could be communicated to the public.

What about legal firm investigation and class actions?
These class actions are about SEC regulation violations, assumed fraud and other non-medical but trading-investment related issues.

Law Offices of Howard G. Smith Announces
Brower Piven
Law Firm Levi & Korsinsky
Glancy Binkow & Goldberg LLP
Harwood Feffer LLP

These are a typical example of what Peregrine means with loss of goodwill in the lawsuit filing against CSM. The rescind of the clinical trial results and the constrained timing and legal obligations within which Peregrine must handle all this may lead to the loss of goodwill of the market to be willing to believe that Peregrine is a long term honest small biotech company. The above investigations and class acts aim to have a plaintiff say that BoD/Management committed fraud, manipulated their announcement, traded on inside information, etc for their personal profit. In that case the actions should be against 'people' and not Peregrine, unless the company Peregrine would have benefited from it. All this is of course based on assumptions related to announcement timing, possible partners acting in the background, the huge volume of 200Milj shares in a couple of days, option Friday call expiration and black Monday 7:30am Halt, etc, etc. I don't worry about it because most, if not ALL, BoD/Management and employees have everything to win by high stock prices given their 'cheap' :) options and shelf stock. Keep in mind that these firms refresh these call's and that you may be under the false impression that always more firms starts investigations and class acts.

Where is the SEC when you need them?
Rest assured, the SEC will have been monitoring this. They needed to Halt the market and be put in the known by Peregrine that important news was to be announced. This was required because the 'breaker' would not have stopped trading at 7:30am because it isn't active in pre- and aftermarket hours. Given the early morning time, 7:30am, the SEC must have been advised before in order to be able to timely halt trading.

Has all this anything to do with patients censoring?
No, the recent reworked republishing of old articles about patients censoring have completely nothing to do with this. The best argumentation to refute these unprofessional, often manipulative, articles is found in RRDog's post that explains in point 7 that Peregrine is not in charge of censoring in a double blind gold standard clinical trial but that this is done by the IDMC and clinicians. Furthermore it stresses the comparison of the censoring data in a study that is 90% stage 4 death sentence patients to other studies of stage 1,2,3 patients, which is really forcing ones case. Finally it emphasized that censoring is not a bad thing and occurs for many reasons including the obvious one that patients die before they can get a course of treatment or placebo.

Further more all speculations about censoring are by definition useless. If there would have been censoring problems at an extend where it would not be possible to move to a PIII then Peregrine would, on SEPT 7th, have been aware of that and not have started to prepare an end PII meeting with the FDA in order to enter PIII. There is a difference between censoring data being available and the discovery of a discrepancy. The one was known on SEPT 7th the other had to be discovered.

Who is this CRO and why did they hire them?
Peregrine has 3 Bavi related Randomized clinical trials. For this FDA Gold Standard Randomized, Double Blinded, Placebo controlled 2nd Line NSLC clinical trial they hired a contractor, Clinical Supplies Management Inc (e-mail). CRO's are licensed by the FDA to perform these kinds of Gold Standard clinical trials and need to be hired because Peregrine itself is not allowed any direct or indirect (3rd party auditing on their behave) access to the data as long as it hasn't been unblinded. The CRO has to make sure of that and will not allow other parties to look into the data either (e.g.: clinics, patients,etc). CSM is a US based company (Fargo, N.D.) which Peregrine can act upon in the US (North Dakota or Californian courts) without complex and long oversea procedures. This master contractor does as well the randomized patients assignment as the coding/labeling and distribution for the 3 arms within the boundaries of applicable FDA clinical trial procedures.

Is Avid involved?
No, Avid just delivers Bavi to the CRO for labeling and distribution. For Avid to be involved it must have delivered something else then Bavi. If it was the case Peregrine wouldn't have started a lawsuit pointing out the problem and assigning the blame. By the way, Avid is an FDA cGMP licensed manufacturing, banking and storage facility and must document each step of it's manufacturing and shipping process. Just as with ISO9003 this allows to trace back almost everything.
Since Bavi is administered to patients based on body weight and since body weight changes and Peregrine (and therefore Avid) is not allowed any information about the clinical trial (someones unique high or low body weight could single out a precise patients in some cases) Bavi is delivered in bulk. The dosage per patients is done later without any Bavi involvement.

What about the trial?

Plaintiff: Peregrine Pharmaceuticals Inc (our attorney)
Defendant: Clinical Supplies Management Inc and e-mail
Case Number: 8:2012cv01608
Filed: September 24, 2012

Court: California Central District Court
Presiding Judge: Josephine Staton Tucker
Referring Judge: Arthur Nakazato

Full Filing text

What do we learn from the filing?
First it confirms that we are really talking about discrepancies in the data and that this company was only responsible for 1 of 3 trials (3 = 2 x Lung Cancer and 1 x Pancreatic). It confirms that there is no impact on any other ongoing Bavi trials. It removes all uncertainties about who is claimed responsible for what, a US or overseas contractor, whether there are more then one direct contractors, whether the problem originated in the treatment centers or not, and it takes Avid completely out of the equation.

Secondly and most importantly we now know that Peregrine filed for "Neglect", not sabotage, malicious intend, etc. This is important because Peregrine asks for damages due to loses/cost/expenses related to all this and the fact that it had to rescind it's prior announcements resulting in loss of goodwill (e.g.: loan retraction) but ONLY ADDITIONALLY files for CSM's breach of contract that may cause a delay in bringing Bavituximab to market (that includes doing the clinical trial all over).

What does this mean for partnering negotiations!
At the most some delays. A decent knowledgeable partner doesn't play itself out of the game when he sees that a company, outside it's own control, gets delays. This will not affect the fact that patients survive, combined MOS holds, randomizing and control arm are intact, and that therefor there must be a working drug, Bavi, somewhere in the equation! Furthermore playing poker with Peregrine is a dangerous game considering what they have and considering that a competing BP could get it's hands on it. Otherwise then suggested Peregrine is far from an easy target for BPs and they can solve this situation quickly, even before the Annual Meeting. Believe me, they have a personal incentive to do so because standing before your shareholders without further news will be a really unpleasant experience.

Could potential partners be buying our stock on the open market!
Could? Yes! Would? Probably not or at least not in a direct way where this stock could ever surface. Why not? Each of the potential partners has for sure signed a non-disclosure agreement before the negotiations. No matter whether they are still negotiating or are one of the potential companies that didn't make the final negotiation, they are and remain bound by the non disclosure. If any of these parties would buy stock based on what they learned, BEFORE THE PUBLIC DID, it would be trading on inside information (KT's SEC link). So if one or more of them would be responsible for this volume then that stock will very probably be held by an offshore company and never used for voting or withing the context of an acquisition, hostile or not, but serve as revenue only. From that point of view it is good for us if they did because they reduced liquidity and supported the share price but it would still be illegal.

The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading.

Although it looks kind of illegal to me very probably we will never hear from it unless 'people' can be directly or indirectly linked to it during some investigation towards company constructions.

Furthermore we will know if parties have piled up more then 5% of the stock. As JR pointed out all purchases of more the 5% of the Outstanding Stock must be filed with a 13G 10 business days following the purchase. That would mean that at the last on Thursday 11 OCT we must see the SEC filing assuming that the last part of the 5% would have been acquired on SEPT 26, as of which point one has the 5% and the 10 business days countdown starts.

What about Peregrine's finacial situation
Peregrine reported that they have $18,991,000 in cash and cash equivalents at July 31, 2012. In the SEC listing (SOURCE 6 at the top) they claim that they have sufficient cash till end of APR 2013. They made a number of reserves based on unknown income or expanses. This document was listed before Avid's new announced government contract which is a new source of income, but one of which we do not know the extend. We only know the gov budget is 102Milj$ over a 10 years period for the manufacturing of anti-bodies. We have also no idea if and how CSM wil have to make Peregrine hole after the Lawsuit. Other expenses may include defense against class actions if these firms succeed in finding a main plaintiff, which up to now over a two week period hasn't been accomplished since they keep reiterating the request for main plaintiffs that feel they lost more then 150.000$ due to Peregrine's fault.

What about reputation loss!
The BPs had no reputation problem with Peregrine before black Monday and they won't have any now. I cannot point to a single fact, as in fact, from which I can derive for sure that it would lead to reputation loss due to actions of Peregrine for which they had other options, apart from the fantasy rich doom on this board, and given their total view on the situation that we don't have.
They communicated the results of the 7th as interim data, they found the discrepancies timely before going to the FDA, they communicated about it within SEC deadlines, they investigate, they started a lawsuit to protect their interests, they don't communicate for now in order to not endanger these interests, so I don't see where they would have lost reputation or creditability, otherwise then in the wet dreams of some.
The stories about reputation loss are, AGAIN, based on BoD/Management having set this up, playing the stock by cherry picking PR timing and style, being part of hidden acquisition plans with BPs buying our stock big time, and all this in their PERSONAL interest and right under the noses of the SEC and FDA which must of course be involved, etc, etc, etc. Well, for being conjection, assumption and fantasy rich that can count!
Remember that everything Peregrine does to secure the company's interests is in the interest of the investors BUT NOT in the personal interest of the individual needs of each separate investors. Peregrine cannot help it that some forgot to read 'interim data', that some didn't wait till PIII if they wanted to be sure, that some planned to step out at 10$ at the end of the month, that some already ordered a boat and that now Peregrine in acting in the interest of ALL investors jeopardized their personal planning and deadlines. If you made some bad trades on the side or made some unfortunate in and out investment moves then remember nobody ask you to do that. My shares were/are on the shelf, currently worth DOUBLE the price of 4 months ago and with a nice cash position increase, so it WAS POSSIBLE! Let's not blame Peregrine for our individual fortunes or misfortunes! It may sound hard but it is what it is!

What about Institutional Investors and other large investors!
We have seen their hop in and out in the past and they will continue to do so now. Many are not investing for their own account but for other parties and are bound to certain rules. Also there portfolios may be affected because they may have restrictions in regards to shorting, buying power calculation and marginable stock or even to the minimum price of a stock policies before it can be added to the portfolio. Ayer hopped in and out for the second time with large listed positions and could have let us believe they where investing rather then trading in this case given their specialization, biotechnology and pharma. Very probably many stops went of on black Monday putting even them out of the game with 5.40 vs 0.80$ drop.
We saw large call option volume for 2.5 and 5$ strikes (50K contracts good for 5Milj shares) for April 2013. The premiums at which they where purchased totaled at that moment to 1Milj$. This is not a small party, the trades passed in time & sales console in a matter of minutes clearly pointing to a single logical buy by one or more companies or individuals. Ayer could (speculation) have been forced to clear their position or saw it gone by hitting stops but could the day after recover by buying the calls. Who knows!

What now!
Peregrine intends to communicate further as soon as it is able to determine the impact of this issue, in weeks not months, according private mail exchanged with at least two members of this board who posted it. An undisclosed external body is conducting an investigation (probably the FDA). For now Peregrine advises not to rely on previous announcements. On OCT 18, 2012 Peregrine holds an annual meeting. Up to that date it is very improbable that we will receive any new news about the discrepancy case. Technically weeks not months could be 7 weeks after the SEPT 24th. That would even take us behind the OCT 18 Annual Meeting.

Personal Evaluation
As the cards are on the table at this moment my concern is not about the law firm investigations, class acts, the price per share, the loan retraction, the cash flow or what soever. Not even about reputation loss or creditability, those are easily grasped excuses while everything shows Peregrine had to pick a contractor out of an FDA licensed list and stay out of the picture until the end of PII.

The chronology of facts between SEPT 10 to SEPT 21 even confirms that on SEPT 12, two days after the quarterly and CC, Peregrine still wanted to go to Credit Swiss and that only on SEPT 19th they must have known for sure that became impossible. Given the time needed to consult with legal counsel, set-up a strategy to address this, write PR's, coordinate the Trading Halt with the SEC for announcement of important news AND BEFORE ALL to avoid people trading on leaks, they very probably planned the announcement on black Monday at 7:30am the way they did.

In my mind, and based on reasoning, i discarded all types of Peregrine BoD/Management and employees involvement in a set-up to make personal profit out of this situation based on stock or option trading. If there was a reasonable chance that this would be the case the SEC would have announced an investigation to the public by now as they always communicate early and call for information. All those riding that track want the keep the attention away from the basics of the case so they can use this window of opportunity of uncertainty till OCT 28 to play the stock, hoping that most people will act as bears! They like to throw words as speculation, assumptions and conjection around for the smallest peace of information in a detailed reasoning while their own cases, advertised as one liners, are mostly based on assumptions or self proclaimed trued such as that management are scams, Bavi doesn't work, or others they can probably shuffle easily through uninformed readers throats. As to the newbies on this board, we know they always show up and why. By their comments we know they hardly know that Peregrine is a bio-pharm company. Sell now, it's going to go down, watch and learn, the next dip is coming, etc, etc.

Saving us from ... from what actually! From keeping our shares! Why is it so fracking important to them that we longs sell our shares? Why are they prepared to lie and spread nonsense to achieve that goal! Why do they not just buy option calls and leave us alone, no, they specifically want us to sell our shares! Why, Why, Why!

I concentrate ONLY on the possible impact on modified results of the clinical trial. The market has reacted as if the results are going to be worse, possibly because it often is in such cases. Of course they reacted in minutes after the announcement. Many on here commented on the large volume in the next days and the fact that the stock isn't trading at 10 cent! Probably the market did the D&D and came to the conclusion that it may have overreacted.

I posted on black Monday, and I repost now with more up to date information, that i see no way for the results to get worse, on the contrary they should get better. I requested for scenario's where the results would get worse but saw no posts with such scenario's, with the exception of those that had to make their case by starting from the assumption that PR's, presentations, and even clinical trials where all falsified or lies and those posts that fabricated their own trued with own or befriended posts and articles and then build their case on top of it to make their scenario's work. I am still interested in a post with a clear and detailed scenario which would result in worse results and which acknowledges the facts, such as PR and SEC filing texts and lawsuit filing text.

Possible impact of the dose-mix up scenario on results
If patients in the 1mg arm received 3mg and patients in the 3mg arm received 1mg and given the fact this mix up occurred only to some patients then this must impact the results.

The 3mg arm performed only slightly better then the 1mg arm which points to such possible mix-up. After correction, when the patients that got 1mg in the 3mg arm and those that got 3mg in the 1mg arm are switched the results of the 1mg arm will get worse because they loose there 3mg patients and the results of the 3mg arm will get better because they get rid of their 1mg patients and receive 3mg patients in stead. This will not change the excellent combined MOS results because the total number of patients and the arm population count doesn't change. As said before we must be dealing with symmetric errors otherwise this problem would have surfaced for other reasons.

Peregrine must only have one winning arm to enter FDA PIII. With a doubling of MOS both arms would have done so. If now one of them, most likely the 3mg, improves they are even better of. The survival data is an important element to support all this because no one believes that the patients of both Bavi arms miraculously and against all statistics and odds survived the control arm patients on water and fresh air. These survival results support the administration of Bavi in sufficient dosages in both arms to bring the patients up to the 1 year survival point that we currently reach (OCT 6, 2011 to OCT 6, 2012) for the last enrolled patients. Not a few, but the MAJORITY of them where still alive on SEPT 7, and there is no data problem with that. MOS was claimed not to be reached in the near future and the MOS event still hasn't been reported.

My personal conclusion
Bavi 3mg/Kg body weight is a winner, and probably as i personally expect, the beginning of a cure or at least the additive making a cure for many cancers possible combined with chemo or radio where today these treatments often result in patients death due to the damage and side effects of the treatment. In all that we often forget the broad spectrum of applications in oncology, viral and digital imaging and how well Bavi is supported by patients and results in almost no side effects.

In that I stay with my believe that Peregrine is the Microsoft or Qualcom equivalent in Biotech.