Activity In Peregrine May Indicate A Raise Is Coming
(Thomson Reuters ONE) -
Peregrine Pharmaceuticals (NASDAQ:PPHM) broke out of its 52-week range Monday on
chatter over a possible drug company partnership for lead cancer compound,
bavituximab. Shares were up 25% to $2.86 at Monday's close, a $0.40 increase
from the previous $2.46 high. Bavituximab completed Phase II trials for second-
line use against Non Small Cell Lung Cancer (NSCLC) and the compound is also
undergoing earlier trials for a variety of other oncology indications. Cotara,
the company's other oncology drug, is in Phase II trials for treatment of
glioblastoma multiforme, and notably, shares of PPHM have taken investors on a
volatile ride over the years when clinical results have been reported. In May,
the company reported a 1.5 month increase in Progression-Free Survival over
placebo with Bavituximab (for NSCLC) and the company plans to release more data
in the second half of this year. Despite these data, investors did not rally
PPHM, even though in June, the largest cancer meeting of the year, ASCO, was
held after the positive data was released. It is curious that no smart money has
become involved in the stock and that there is limited investment bank
sponsorship despite the "positive" news. In fact, through the early part of the
summer, PPHM was so out of favor that the NASDAQ warned the company of being
delisted.
However, in July, shares started moving north on little new news. PPHM has risen
~400% since early last month. On July 30 Peregrine reported that it had regained
NASDAQ compliance due to the significant increase in the stock price. While the
company has indicated that it is well-positioned to ink a pharmaceutical company
partner for bavituximab later this year, PPHM only has $18 million in cash.
Given its past cash burn rate of about $38 million annually (before bavituzimab
moves into more expensive later stage trials), it appears that the company only
has 6 months of cash left, hardly enough to be in a position of strength when
negotiating with potential partners. In fact, most biotech companies move to
strengthen their balance sheet ahead of such negotiations. So investors beware
the strong move in PPHM on rumors of a partnership or take out. With a caustic
balance sheet and Phase II data that did not compel investment professionals to
pay attention, the recent rise in PPHM shares may be a head fake. PPHM
definitely needs capital, and the clinical data leaves open questions,
particularly because management has only released "top-line" results thus far.
Should the company move to raise capital in the near-term, shares of PPHM could
fall precipitously. Afterwards, investors will need to judge fundamentals on the
full Phase 2 data set when released.
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Datum: 14.08.2012 - 17:51 Uhr
Sprache: Deutsch
News-ID 174558
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