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Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM)

F2Q09 Earnings Call

December 10, 2008 11:30 am ET

Executives

Steven King - President and Chief Executive Officer

Paul Lytle - Chief Financial Officer

Joe Shan - Head of Clinical Programs

Barbara Lindheim - Investor Relations, BioCom partners

Analysts

Ren Benjamin - Rodman

Richard Siragusa - Merrill Lynch

Roger Adams - Private Investor

Operator

Welcome to the Peregrine Pharmaceuticals second quarter fiscal year 2009 financial results conference call. All participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today’s presentation. (Operator Instructions)

I’d like to turn the conference over to Barbara Lindheim with BioCom Partners. Ms. Lindheim.

Barbara Lindheim

Good morning and thank you for joining us on today’s call, with the management of Peregrine Pharmaceuticals. We are here to discuss the company’s results for the second quarter of fiscal year 2009 reported this morning.

I’m joined hear this morning by Steven King, President and Chief Executive Officer; Paul Lytle, Chief Financial Officer; and Joe Shan, who is Head of Clinical Programs at Peregrine.

Before I turn the call over to Steve, I would like to read the cautionary note regarding forward-looking statements. This conference call may include statements that are not historical facts and are considered forward-looking within the meaning of Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Peregrine Pharmaceuticals current views about future events and financial performance.

These forward-looking statements are identified by the use of terms and phrases such as believes, expects, plans, anticipate, on target and similar expressions identifying forward-looking statements. These factors include but are not limited to the risk factors detailed from time-to-time in Peregrine Pharmaceuticals filings with the Securities and Exchange Commission, including but not limited to the Annual Report on Form 10-K for the year ended April 30, 2008.

Investors should not rely on forward-looking statements, because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from Peregrine Pharmaceuticals expectations and Peregrine Pharmaceuticals expressly does not under take any duty to update forward-looking statements whether as a result of new information, future events or otherwise.

I’d like now to turn the call over to Steven King. Steve, you may begin.

Steven King

Thank you, Barbara. I’d like to start by thanking everyone who is participating in today’s second quarter fiscal year 2009 conference call. I will start with a recap of some key developments since our last conference call. I will then go over the financial highlights for the quarter and I will conclude with a more detailed review of our product and corporate development activities. We will then ends with a question-and-answer session.

Because of the unusual market conditions we currently find ourselves in, I would like to start by first briefly discussing our overall strategy during these extraordinary financial times. Our strategy for some time has been to take advantage of our strategic assets to create positive cash flow to support our clinical development efforts while controlling operating expenses.

We are fortunate to have two significant revenue sources; our wholly owned contract manufacturing subsidiary Avid Bioservices, through contract manufacturing related services provided to clients and through execution of our contract with the Defense Threat Reduction Agency or DTRA; which covers salaries, part of our overhead and a significant amount of services being provided by Avid, as an approved subcontractor under the contract. In addition to these revenue sources, we announced today that we have entered into a loan agreement with funding up to $10 million to support our ongoing development efforts.

On the cost side, we have been able to reduce our overall R&D and corporate expenditures even as clinical trial activity has increased. This was achieved by reducing or eliminating preclinical work not directly related to our Bavituximab and Cotara clinical programs, by controlling general costs and by having existing personnel fill almost all of the positions necessary to coordinate and execute the DTRA contract.

The exceptions to this have been programs where outside support has been available, such as work in the viral hemorrhagic fever area which is part of our DTRA contract and work in the HIV area supported by NIH and gates foundation funding. This has allowed to us reduce our overall R&D and corporate expenses while continuing to move our key clinical and preclinical programs forward.

On this note our focus is on product development and we have continued to make significant progress in developing our novel cancer and virus infection therapeutics over the past few months since our last call.

Highlights include the recent announcement that 71% of evaluable patients in stage A, of the Bavituximab, plus docetaxel Phase II breast cancer study, achieved partial tumor responses and an enrollment in Stage B of the study is now underway; announcement that we had completed patient enrollment in stage A of two other Phase II studies, testing Bavi in combination with carboplatin and paclitaxel in lung and breast cancer patients.

Also we had the presentation of promising data from our ongoing Anti-PS HIV collaboration with researchers at Duke; we had a high profile publication in the journal, Nature of Medicine of data validating our Anti-PS antiviral approach with the folks on Bavituximab; and we had the issuance of a broad patent covering an important part of the Anti-PS antiviral technology. This added significant commercial value to the program.

While moving forward on our product development efforts, we also continue to build our revenue generating potential by successfully continuing work under our contract with DTRA, by expanding our client base through a new contract at Avid and by adding production capacity and response to customer needs at Avid and we believe these developments have set the stage for continued revenue growth in the future as well as future product development milestones.

I will now turn the call over to Paul and will return later to discuss our clinical and product development efforts in greater detail. Paul.

Paul Lytle

Thank you Steve, thank you Barbara and thank you everyone for joining us. Earlier this morning, we released our financial results for the second quarter of fiscal year 2009. This earnings release outlines our financial results in greater detail and includes financial tables, so I encourage everyone to read the entire release. We also plan to file our Form 10-Q later today and both of these documents will be available on our website.

Now during the next few minutes, I will take you through our financial results for the second quarter ended October 31, 2008. I’ll then briefly discuss our current financial position and I will conclude with a discussion of our recent financing we just announced this morning.

Now let me begin with the financial results for the second quarter starting with revenues. Total revenues for the quarter ended October 31, 2008 were $1.9 million and were slightly higher compared to the same quarter last year. Before I go into more detail on revenues, it’s important to note that the company has two separate revenue sources, contract manufacturing revenues and government contract revenues. Let me first discuss our government contract revenues.

As a backdrop, our government contract revenues stem from our contract with the Defense Threat Reduction Agency, which is a division of the Department of Defense. The purpose of the contract is to study our product Bavituximab and a fully human equivalent antibody as potential broad spectrum treatments for viral hemorrhagic infections. These passages are listed on the category A, bio defense watch list by the CD C, representing an important viral family for which treatments are necessary.

The contract is potentially worth up to $44.4 million over a five year period, with $22.3 million potentially available over the initial 24 month base period. The contract is on a cost plus fixed fee basis whereby we are reimbursed for all allowable costs under the project including internal salaries, overhead, G&A expenses, plus we receive an additional fixed fee for our efforts.

Now during the current quarter, we reported close to $1 million in revenues under this contract and since this was a recently signed contract, there is no corresponding revenue in the same prior year quarter. I believe it’s also note worthy to mention that although we have recognized $1.3 million to date under this contract, we have actually billed the government close to $3 million as of October 31, 2008; just four months into the contract and we will recognize this additional $1.7 million as revenues once we have met with the deliverables in accordance with Generally Accepted Accounting Principles.

Our second source of revenue was generated from our wholly owned contract manufacturing business, Avid Bioservices. As stated on the previous call, we are projecting a record year for Avid in fiscal year 2009, potentially topping $10 million in revenues and these projections are based on current signed contracts from third party customers.

Contract manufacturing revenues generated by Avid were about $1 million for the current quarter, compared to $1.9 million for the comparable prior year quarter. This decrease in Avid revenues was primarily due to the timing of product shipments to customers. Several batches of product that were manufactured during the second quarter were not shipped until the third quarter.

In essence, this year we will see a shifting of revenues from quarter two to quarter three, since under Generally Accepted Accounting Principles revenues cannot be recognized on manufactured product until the physical shipment take place. We now expect to generate total revenues in excess of $5 million just in the third quarter alone and we are on track to make this happen. So far in the third quarter we have recognized close to $3 million in revenues.

It’s also important to mention that these revenues are in addition to the critical manufacturing services Avid provides Peregrine, in supporting our three ongoing clinical programs. As you can see, Avid continues to be an important asset for the company in more ways than one.

Now let me turn to expenses. I am pleased to report that total cost and expenses decreased almost $2 million or 23%, during the current quarter to $6.5 million. This compares to $8.4 million reported during the same quarter last year.

This quarter we were able to decrease expenses significantly in both R&D and SG&A line items. The decrease in R&D expenses of almost $800,000 during the quarter reflect a decreased cost achieved by our planned reductions in spending on our preclinical programs and we achieved this decrease in overall R&D cost at the same time we were increasing our spending on our clinical candidates Bavituximab and Cotara, as we continue to advance these later stage programs.

In addition to R&D, we achieved a 21% decrease in SG&A expenses for the current quarter compared to the same prior year period from $1.9 million in fiscal year 2008, compared to just $1.5 million in the current quarter. It is note worthy that this decrease resulted from a reduction in SG&A expenses across the board, reflecting the company’s commitment to reduce discretionary expenses.

Lastly, these decreases in expenses were augmented by a decrease in the cost of contract manufacturing, related to lower reported contract manufacturing revenues in the current quarters. Now under the other income category, we saw a decrease in interest and other income of $300,000, mostly due to the average cash balance on hand with a lower average cash balance on hand, compared to the same period last year.

Now, let me turn to the bottom line. For the second quarter of fiscal year 2009, we reported a net loss of approximately $4.5 million or $0.02 per basic and diluted share. This compares to a net loss of approximately $6.2 million or $0.03 per basic and diluted share in the same prior year period, reflecting a decline of $1.7 million or 28% this quarter. This decrease captures the decreased costs we have been successfully achieving in many areas of our business.

Now let me shift your attention to the balance sheet. We ended the quarter with approximately $8.2 million in cash and cash equivalents at October 31, 2008. This compares to $15.1 million in cash and cash equivalents reported at our last fiscal year end, April 30, 2008.

Now if you look at liquid assets on the balance sheet, representing cash and receivables, we had $10.8 million in liquid assets at October 31, 2008, compared to $15.7 million at our fiscal year end April 30, 2008 or a decrease of $4.9 million during the entire six month period. With two important revenue sources, liquid assets will be an important measure of our capital resources, representing cash on hand, as well as assets that can quickly be converted into cash.

Now let me conclude with a discussion of our recent financing we just announced this morning. I am very pleased to report that we have entered into an agreement for a working capital loan with funding up to $10 million, of which $5 million will be funded upon final closing and let me say that we have achieved this goal under reasonable terms and during the most complicated and difficult financing environment in recent history. Our lenders are experienced in the healthcare industry and have performed extensive due diligence on the company and this loan represents another outside validation of the company and its technologies.

Let me cover a few important points of the working capital loan. First and foremost, this loan is not convertible into common stock and has no conversion features. This loan is a pure term loan that will be repaid in cash. Interest-Only payments will be made during the initial six month period; principal and interest payments will then be made during the next 30 month period.

The second point I would like to make is that this loan provides an option to obtain a second $5 million trench if a number of conditions are met. These conditions include both financial and clinical milestones.

Now point number three; the purpose of this loan is to provide us with resources to achieve that next major inflexion point in our clinical trial programs and to hopefully bridge ourselves to more favorable market conditions. We believe this loan, when combined with the anticipated revenue from both Avid and our government contract should provide us that additional time.

The fourth point I would like to make is that this loan agreement is a superior financing vehicle for the company during these very tough and volatile times in the capital markets. Although we issued 10% warrant coverage on the initial trench, this is a fraction of the potential shares and warrants that we would have been required to issue under an equity based deal.

These are tough economic times where raising new capital is nearly impossible and we are very pleased with this deal and the quality of the lenders who have committed to support Peregrine and the advancement of its promising technologies.

I would like to thank you for your time and attention. This concludes our discussion of the financial results. Steve will now update everyone on the company’s recent achievements and our major objectives for the upcoming months. Steve.

Steven King

Thank you, Paul. I would like to now go into more detail on the company highlights I briefly mentioned earlier. The primary focus of our product development efforts is moving forward our key pre-clinical programs which have outside funding support and our internally supported clinical trials.

On the clinical front, over the past few months we have continued to build on the progress we started earlier this year; particularly in the Bavituximab oncology program. Progress has come through the announcement of additional promising data from part A of the Phase II study evaluating Bavi, in combination with docetaxel and breast cancer patients and through beginning patient enrollment in the second part of that study.

Additional progress was seen as we completed patient enrollment in stage A of two other Phase II studies testing Bavi in combination with carboplatin and paclitaxel in breast and lung cancer patients. Patient treatment and follow up in these studies is continuing and we look forward to updating you on results from these trials before the end of this year or early next year. We expect data from these ongoing studies to be a key value driver as we move through the end of this year and into 2009.

Now a little bit more on the Bavituximab plus docetaxel Phase II breast cancer study. Let me start by saying, we continue to be very pleased with results coming out of this study. As a quick reminder, this is a 46 patient, two-stage Phase II study, with 15 patients enrolled in stage A of the study and 31 patients to be enrolled in Stage B of the study. The study is testing Bavi in combination with docetaxel, in advanced breast cancer patients.

This study was actually designed based on an earlier study testing Avastin in a similar patient population and docetaxel dosing regimen. In that study, the combination of Avastin and docetaxel result in a 52% response rate and other prior studies indicated a likely response rate in the 35% to 40% range for docetaxel alone. So, although we are still early in the ongoing study, we are very encouraged to have a 71% tumor response rate in the first 15 patients in the study.

We look forward to generating more data as the additional 31 patients in part B of the study are enrolled and patient treatment, follow-up and evaluation continues. We anticipate being able to update you further on this study during the first half of 2009.

Now turning to the Bavi antiviral program; over the past few months we had a couple of significant events around our Anti-PS antiviral programs. In September, Duke University researchers presented for the first time, data from our collaboration at the aids vaccine 2008 conference call. As a reminder, the collaboration is primarily funded by the NIH and gates foundation to evaluate the potential of Anti-PS antibodies in preventing or controlling HIV infection.

The data presented at the conference highlighted the potential of Anti-PS antibodies to broadly neutralize HIV infection, with antibodies provided by Peregrine being the most active in the testing. This data opens the door to a number of potential commercial applications including post-exposure prophylaxis and topical microbicides.

Combined with the data we are generating from the ongoing clinical study of Bavituximab in patients chronically co-infected with HTV and HIV, we have considerable opportunities to learn more about the Anti-PS technology platform and the prevention and treatment of HIV and we look forward to updating you over the next few months on additional advancements in these studies and again as we move forward, we do anticipate the potential for a number of high profile publications coming out of this research.

A second significant recent event was the high profile publication in Nature Medicine of data related to our Anti-PS antiviral program, with a particular focus on the potential of Bavituximab, for treating life threatening viral infections. Nature Medicine is one of the top research journals in the world and this publication has brought our Bavituximab and Anti-PS technology platform to the attention of medical researchers and the bio-pharmaceutical community all over the world.

Media coverage of the article was literally worldwide in the scientific business and lay press. This publication and the recent award of a broad patent, covering an important part of the Anti-PS antiviral technology platform, were a significant validation for the technology, from both a public and a commercial perspective. Data presented in the publication showed the potential of Bavituximab to prevent, to protects and cure animals with lethal infections of viral hemorrhagic fever in cytomegalovirus or CMV.

In addition, data in the study showed that PS becomes exposed in response to infections from a wide variety of other virus families. This publication for the first time showed that PS is a drug able target for treating serious virus infection. In fact it was data from these studies that helped support our application and subsequent successful negotiations for our contract with DTRA. That contract is now well underway and we are making significant progress in evaluating Bavituximab as a potential broad spectrum agent for the treatment or prevention of viral hemorrhagic fever infections.

As I mentioned earlier, we are continuing our clinical trial evaluating Bavituximab in patients co-infected with HTV and HIV. Enrollment is continuing to proceed in a moderate but steady pace. This quarter in order to move the trial more quick to a conclusion, we added a new clinical sight to the study. We expect to have an update from this study in the first half of 2009.

Next I would like to move to our Cotara brain cancer program. We continue to work diligently to increase enrollments for our two ongoing trials of Cotara in patients with GBM and while these efforts have had some positive effects, patient enrollment has continued to be modest, but has improved.

We are in a position to move into the final quarter of patients in our dosimetry trial and continue to enroll patience in the ongoing Phase II study. We will continue to closely monitor progress in these trials and to evaluate the best way to continue development of this program, which we continue to believe has great promise in the treatment of this devastating disease.

On the corporate side, our Avid corporate manufacturing business continues to be a bright spot. Avid has always been and continues to be a major strategic asset for Peregrine and our clinical development efforts. We continue to see significant growth potential in very high levels of activity at Avid. We continue to believe Avid is on track to be a profitable stand alone business this year, providing critical clinical supplies to Peregrine and growing in value as an asset.

Evidence of this potential was seen this quarter as we broadened our client base through a new contract and expanded our production capacity through the addition of two new bioreactors at the 101,000 leader scale. The addition of this new capacity was in response to signed contracts underway at Avid. We look forward to updating you on further advances at Avid as the business continues to grow.

Operator, we are now ready to open the floor to questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Ren Benjamin - Rodman.

Ren Benjamin – Rodman

A couple of questions; unfortunately I can make it one question, but it will be broken up into multiple parts, so however they want to take it. What are the additional conditions that are required to trigger the second trench of this loan?

Steven King

What we will be doing Ren is, we’re filing an 8-K to add a lot of details, but what I can say is they are clinical based milestones that we need to achieve and they are also financial based milestones that we need to achieve and what the main concerns of our lenders are and our programs continue to move forward which is key and is part of the collateral, and also we have the financial stability to continue to move those programs forward.

I think that’s all we can say at the present moment. We have been into the wording of the agreement and we have built the wording around goals that we can and believe we can achieve to drawdown that second $5 million trench.

Ren Benjamin – Rodman

And based on the guidance that you’ve given for the third quarter ‘09 revenue numbers am I being off base or does that seem like it will likely be a profitable quarter for you guys?

Steven King

In the third quarter, it will definitely be a profitable quarter for Avid bio services on a stand alone basis. On a consolidated basis, it’s going to be close, we haven’t put any overall projection out there for the third quarter, but we’re excited about the business; we’re excited about the pent up revenues that we’re going to see here in the third quarter and really the overall revenues for the entire year I think are looking very promising.

Ren Benjamin – Rodman

Okay and then one final question on the financials; how long will this cash last? I’m trying to take into account your cash on hand, the liquid cash if you will for the working capital of about 10.8, as well as let’s just say the first trench which is guaranteed right now of $5 million. So you’re talking about $15 million or so; how long does that take you out to?

Steven King

I think that that’s somewhat of a tricky question to answer depending on how we do the analysis. If you look back over the past six months, I believe the change in our liquid assets was probably around $5 million for that entire six month period. So if we project that going forward and again we do believe as we grow the revenues at Avid, that we have the potential to again continue to execute on the clinical side and maintain that sort of burn rate, then of course that money is going to go a fair distance.

What makes it a little bit difficult from a projection standpoint is, we need to be conservative on how we are looking at our numbers. We’ve tended to base all of our revenue projections and what we’re projecting on the revenues from Avid now is based on essentially not just signed contracts, but also signed authorizations to actually do work.

So we do believe this money can get us out. Our goal in entering into this loan agreement was to build a run way out through 2009. We do have the ability of course to match our product development efforts with cash inflows again from the loan as well as from Avid and from the government contract.

So that’s kind of our goal as to how this money goes out through 2009, but essentially it can get us out through 2009, get us through these tough economic times and again with the income coming in I think it gives us a great ability to really achieve that goal.

Ren Benjamin – Rodman

And then a couple of questions of Bavi in the oncology settings; you have the three trials that are ongoing. In the docetaxel breast cancer study you have primarily data from stage one; stage two is ongoing. Can you give us an update as to how enrollment is going with stage two? When do you think enrollment will be complete and I believe you mentioned that we’d probably get an update from this in the first half of calendar ‘09 and so is that correct and how is enrollment going?

Steven King

Yes, so I think we’ve actually been very pleased with the second part of the study. It essentially seemed to pick up right where we left off after the first stage A of the 15 patients. So far it’s really taking off very nicely.

As far as guidance on completing enrollment in that, it’s probably going to be toward the ends of the first quarter, the beginning of the second quarter of next year. It could go a little bit faster, but we are kind of entering that holiday period here coming up and that always kind of throws as little bit of a month wrench into everything, but so far doctors picked right up. Obviously they were still engaged and very excited to move into the second part of the study and so enrollments have been very brisk; actually a little bit quicker than we actually anticipated as we started the second part of the study.

Then on the two carboplatin and paclitaxel studies, again we should have some data coming out towards the ends of this year, beginning of next year. Of course those are event driven. We want to meet our pre-established milestone to move to the second part of those studies, but so far we are very happy with what we are seeing and I’m optimistic that we are going to get there pretty quickly.

Ren Benjamin – Rodman

And so just to summarize on those two trials, the part A’s are complete for both those trials. The patients are being followed and if they meet the pre-specified response rate, you will then start enrolling in part B, but that hasn’t starter yet.

Steven King

That is correct.

Ren Benjamin – Rodman

Okay. What is the pre-specified end points for both trials or response rates you’re looking for as a minimum?

Steven King

I don’t think we’ve been out there publicly with those numbers, but again it’s going to be in the same general ballpark as with the docetaxel study. Each study has its own particular end points and it depends on the expected effectiveness of the chemotherapy in that particular regimen.

Ren Benjamin – Rodman

Okay and we’ll expect this data by the end of this year, early next year, correct?

Steven King

Correct.

Operator

Your next question comes from Richard Siragusa - Merrill Lynch.

Richard Siragusa - Merrill Lynch

I’m just curious, since the nature publication of Dr. Phillips paper and followed by that issuance of that very strong blocker patent, I’m curious to note like what you’re seeing different at Peregrine? What’s different in Tustin now as a result of that and how this might all relate to the forthcoming Duke paper?

Steven King

I think the importance of that paper was, and just the fact that Nature of Medicine shows that how the scientific community viewed this, is almost like a whole new way of thinking about the treatment of viral infections and there has been previous articles out there showing that PS and these immunophospids are involved in virus infection from various virus, but really this is the first demonstration that as a drug target you can actually go after this and have antiviral effects.

I think that was the real nice breakthrough here and again the reason it made it into a very high profile journal, is really establishing a whole new way of thinking about this. I know that even the editor at Nature Medicine felt like this is something that’s really going to drive a lot of reserve interest in this area and of course as we’re talking about potential partners having this validation is huge.

As you mentioned the patent is equally important. From the commercial development standpoint patents are what protect biotechnology products and so that happened that those two events actually happened within a couple of days of each other, but really it was a nice one, two development punch if you will as we move the technology forward and I think this again sets the stage for the next set of publications that we expect to have where we are looking at HIV and other virus infections and really just building on that story.

So this was a nice first step and we got a tremendous amount of attention, a lot of good feedback, a very valuable publication for the company.

Richard Siragusa - Merrill Lynch

Have you seen an up-tick in the level of interest from big pharma?

Steven King

Well, we already had a lot of interest from big pharma. So I would say that just feeding into that interest we had already seen.

Operator

Your next question comes from Roger Adams - Private Investor.

Roger Adams - Private Investor

I’m interested in the comparison of Bavi to Avastin and what types of data you will need and when you think it will be available so that if the results go well, the big pharma and marketplace could see that Bavi is a serious competitor of Avastin as the standard of care in cancer therapy is set.

The second part of the question is, with ASCO will you have enough Phase II data to present at ASCO this year with all these cancer results?

Steven King

I guess I will take those in two parts. As far as ASCO goes, our goal is to be at as ASCO this coming up year and that could come on a number of different fronts, so that’s a priority and we recognize that that’s an important meeting and the presence there is a good thing for the overall program.

I think the reason we gave the Avastin data is that it probably was the closest competitor trial to what we were currently doing. Number two, is it really is kind of a benchmark if you will. Our goal is not to come out of this trial and say we are better than Avastin, but if you take Avastin as a real goal standard these days, in combination with docetaxel for breast cancer, then it does form somewhat of a benchmark based on its historical data and actually our goal was just to see how we’re matching up again a tremendous product that’s really making a huge difference in a lot of patients lives.

So our goal coming into this is really just to look and see how we compare to that. Obviously the better the numbers, the better we feel about it and kind of our goal coming out of this study, we had hoped to be able to at least say that this is a head-to-head competition here, but at least we’re looking good so far and that’s still our goal coming out of the study.

We’re very happy with the 71% coming out of the first part of the study and we will see how that builds into the second 31 patients when all that data is put together. Let’s not lose track to the fact that this is a 46 patient study, but so far we’re extremely happy that it really exceeded our expectations going in and I’m very happy.

As far as how I think potential partners view the data; obviously the better the data the better the response we’re going to get from partners and so as the data comes out there, then they will make a judgment based on; let’s just say for instance be the 71% numbers hung in there, then that’s going to be easy for people to think “Well, there’s really some activity here” or “This drug seems to be doing something that’s well beyond which could be just explained through happenstance or the patient population or patient size, patient numbers.”

So I think we’ll see how it all comes out in the final wash; the better the numbers, the better the response from potential partners and we’re hopefully again with all three of these trials, not just the one where we have the initial data that we are going to see some good results and that is going to drive interest and hopefully at the right timing bring on a nice partner who can help us really push the program forward in an aggressive fashion.

Roger Adams - Private Investor

Is summer the time that you think it will all come out in the wash?

Steven King

Obviously we’re going to have more data by the summer time and again I think it’s a building story. When we get these numbers we forward them to the people we are talking to and use that as the next discussion points and as we get the data from the carboplatin and paclitaxel studies, we’ll do the same thing. I don’t really view it as an all or none. Next May 15, it’s all going o come to bear, it’s really going to be a growing story and it does drive interest and we are happy to see that.

Operator

Thank you. This concludes the time allotted for today’s question-and-answer session. I will now turn the conference back over to Mr. Steven King. Mr. King.

Steven King

Thank you. I’d like to again thank all of you for participating in this conference call and your continuing support of Peregrine. We continue to be very excited about the potential of our technologies and our strategic assets.

Evidence of this was recently seen in the promising early Phase II data we released this quarter. The high profile publication Nature Medicine, our Anti-PS antiviral program and of course the growing revenue potential generated by our technology platform as well as our growing business at Avid.

I look forward to reporting on our continuing progress at the next quarterly conference call. Thank you again.

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