Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM)
F2Q10 Earnings Call
December 10, 2009; 11:30 am ET
Steven King - President &Chief Executive Officer
Paul Lytle - Chief Financial Officer
Rob Garnick - Head of Regulatory Affairs
Chris Eso - Vice President of Business Operations at Avid Bioservices
Jennifer Anderson - BioCom Partners
Richard Siracusa - Merrill Lynch
Roger Adams – Private Investor
Michael Anthony – Private Investor
Welcome to the Peregrine Pharmaceuticals second quarter fiscal 2010 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 now like to turn the conference over to Barbara Lindheim with BioCom Partners. Ms. Lindheim the floor is your ma’am.
Good morning and thank you for joining us on today’s call with the management of Peregrine Pharmaceuticals. We’re here to discuss the company’s results for the second quarter of fiscal year 2010 reported this morning. With me today are Steven King, President and Chief Executive Officer; Paul Lytle, Chief Financial Officer; and Dr. Rob Garnick, Head of Regulatory Affairs of Peregrine, as well as Chris Eso, Vice President of Business Operations at Avid Bioservices.
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 the 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, 2009.
Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from Peregrine Pharmaceuticals expectations, and Peregrine Pharmaceuticals expressly does not undertake 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.
Thank you, Barbara. I would like to start by thanking all of you for participating in today’s fiscal year 2010 second quarter conference call. I am very pleased to be here with Paul Lytle our CFO, Chris Eso, Vice President of Business Operations at Avid and the newest edition to our management team Dr. Robert Garnick our Head of Regulatory. Since our last quarterly conference call we’ve continued to see significant achievements throughout our business.
We made advances in our bavituximab and Cotara including completion of two bavi Phase II clinical trials, completion enrollment in our Cotara dose confirmation and dosimetry Brian cancer trail, presentation of promising data from both the Cotara and bavi clinical programs.
In addition we added world class cancer drug development experts to Peregrine. Dr. Bruce Chabner of Harvard Medical School and Massachusetts General Hospital as a clinical advisor and Former Genentech Regulatory Chief Dr. Robert Garnick who has joined us the Head of Regulatory Affairs.
Individuals whose knowledge and stature are already providing invaluable insight into our development efforts and perhaps most importantly, we recently completed successful discussion with the FDA regarding our bavi clinical program, helping solidify our regulatory strategy and clinical plans moving forward.
In addition we recognized record revenues through our Avid contract manufacturing business and our TMTI government contract and strengthened the management team at Avid as you prepare for future growth and additional commercialization opportunities. It’s obviously than an extremely busy time of the company and we believe these advances are setting this stage for a very positive and existing 2010 for the company.
I would now like to turn the floor over to Paul Lytle who will provide a financial overview for the quarter. Paul.
Thanks Steve, thank you Barbara and thank you everyone for joining us. Early this morning we released our financial results for the second quarter of fiscal year 2010. This earnings release outlines our financial results in greater detail and includes financial tables, so I encourage everyone to read the entire release.
During the next few minutes I will take you through our financial results for the second quarter of fiscal year 2010 and then discuss our currents financial position and I will conclude with they discussion covering our capital resources and our plans moving forward.
Now let me began with the financial results for the second quarter of fiscal year 2010 starting with revenue. I am please to report that total revenue for the quarter ended October 31, 2009 increased 255% to $6.9 million, this compares to $1.9 million in the total revenue reported in the same prior year quarter.
Let me just mentioned at the company have two significant revenue sources. Contract manufacturing revenue and government contract revenue and I am please to report that both sources of revenue saw positive growth this quarter and Chris Eso will provide with a little more insight into Avid’s contributions in just a few minutes.
Now as we look to the rest of fiscal year 2010, we projected total revenues would be in excess of $20 million and of that amount we have achieved $13.6 million in total revenue during the first six months of fiscal year 2010. That being said we believe we are on track to achieve at least $20 million in total revenue in fiscal year 2010 representing a record revenue year for the company.
Now let me turn to expenses. Total cost and expenses increased $2.9 million or 45% this quarter to $9.4 million. The increase was mostly driven by an increase in the cost per contract manufacturing directly related to higher reported manufacturing revenue. In addition our R&D expenses slightly decrease during the quarter by $169,000 or 4%, while SG&A expenses increased $234,000.
The decreased in R&D expenses reflects a slower expenditure rate for our current clinical trials that are nearing completion. While the increase in SG&A expenses was mostly driven by increases in headcount that where necessary to support that corresponding increases in total revenue.
Now moving down the statement of operations to the other income and expenses category we saw expected increases in interest expenses during the quarter of $284,000. This is directly related to the $5 million non-convertible term loan we closed last December.
Now let me turn to the bottom line. For the quarter ended October 31, 2009 we reported a decline in our net loss of 38% to $2.8 million or $0.06 per basic and diluted share. This compares to a net loss of approximately $4.5 million or $0.10 per basic and diluted share reported in a same prior period.
This decrease in our net loss as a direct result of the revenue growth we have seen from both Avid and under our government contract. In view of the tough economic times we are still challenged with today, we are please that we are success of an increasing revenues and significantly reducing our net loss while advancing the programs that are the key value drivers for Peregrine.
Now let me shift your attention to the balance sheet. We improved our cash position and ended the quarter with $13.6 million in cash and $17.7 million in liquid assets which represents cash and receivables. This compares to $10 million in cash and $13.7 million in liquid assets at our fiscal year end April 30, 2009.
Now let me conclude with one other important topic related to our various sources of capital and our plans moving forward. As a backdrop let me say that advancing the clinical pipeline is our No. 1 priority. As you know our clinical pipeline provides the greatest potential upside to each and every stockholder, but as we get closer to starting later stage clinical trials required for commercialization. Drug development becomes more expensive, but the potential returned is also much greater.
Let me discuss our current sources of capital as we move closer to these later stage trail. First our preferred sources of capital has always been non-diluted capital and unlike most biotech companies, we are fortunate to have two key sources of non-diluted capital which has helped us reduce our overall reliance on the capital markets.
In fiscal year 2009 we generated $18 million in total revenue and we believe we could generate in excess of $20 million in total revenue during fiscal year 2010 and this revenue we generate reduces the amount of capital we would ultimately need to raise on the capital markets. We are also experiencing continued interest in our clinical programs from potential partners.
We will continue to pursue these opportunities and the potential sources of capital they represent. Along with these potential sources of capital we must plan for the future. At the current time we are designing the most important clinical studies in the company’s history that could set the stage for commercialization and our goal is to match our financing strategy with our clinical strategy to insure we have the necessary capital resources to advance these clinical studies.
Over the past few quarters we have been able to do this by closely from matching our capital needs with our capital resources by increasing revenue and by raising additional capital under aftermarket issuance agreement. This financing vehicle allows us to raise additional capital when market opportunities arise by selling shares at market prices and without issuing a single warrant.
During the current quarter we have raised $5.2 million in net proceed using this mechanism and these share were sold at an average selling price per share of $3.78. Finally during the quarter we implemented a stockholder approved reverse stock split allowing us to streamline our capital structure and achieve full compliances with NASDAQs continued listing requirements.
Now with our current capital structure combined with our clinical program being at a very promising stage, we believe we are very attractive company for institutional investors. That being said we are planning and active investor outreach campaign in 2009 including presenting at relevant investor conferences and conducting a number of institutional investor meetings.
Our goal these campaigns are to continue to increase the overall awareness of Peregrine amongst the investment community as well as to increase the institutional ownership of our stock. We are very enthusiastic over the potential of both bavituximab and Cotara to treat these life threatening diseases and we want to share this enthusiasm with the investment community. Thank you for your time today and for your continued support of Peregrine.
I will now turn the call over to Chris Eso, Avid’s VP of Business Operations to discuss Avid’s financial and strategic progress and its plan pursue new market opportunities. Chris.
Thank you Paul and thank you everyone for joining us today and providing me the opportunity to update you on some of Avid’s achievements. As Paul mentioned total reported revenue for the company was $6.9 million for the second quarter and $13.6 million for the last six months.
Avid our contract manufacturing CMO business generated $5.3 million of that total for the second quarter up 440% and $7.4 million for the last six months up more than 230%. Avid not only generates third party revenue to offset Peregrine’s research and development spend, but it also provide strategic and monitory value by producing all the drugs material required for the company’s pipeline.
Therefore to fully represent the value Avid brings to Peregrine, we need to include the value Avid generates for Peregrine as a result of manufacturing is product including under the TMTI government contract. On this basis Avid’s total output was up more than 260% to $7.5 million for the second quarter and up almost 200% to $16.6 million the last six months.
As you can see we have experiences tremendous growth in our CMO business over the last year, which is an outstanding accomplishment and a testament to the dedication and quality of Avid team. As a result of this growth and as Peregrine continues to advances is pipeline Avid is an increasingly valuable strategic assets of Peregrine, generating significant revenues while supporting the company’s increasing demand for clinical drug supplies and offsetting the overall run rate.
Now let me shift gear and speak to our clients moving forward. As of to date approximately 80% to 90% of Avid revenue is generated from the contact manufacturing services. While we taking it action to insure continued growth in our CMO business, we also want to look for new areas of growth not only to diversify our business, but also to position Avid for long term success.
One of the areas is expanding our business offering, initially through strategic alliances. At the end of September we enter into a global strategic alliance with one of the world’s largest CMOs, Boehringer Ingelheim to become their US, West Coast partner in their global production alliances network. This is a great opportunity for Avid to join in elite group of strategic biologic manufactures and gain access to proprietary new expression system.
Both of which represent key elements in Avid overall growth strategy, by capitalizing on both company’s strength and capabilities this alliances not only allows us to extend our offering in customer base, but also provides both companies clients with added production capabilities and scale, while shorting development time lines.
Additional we are currently in discussions regarding a number of other strategic alliances and partnerships to further expand Avid’s presence, including seeking a partner in the rapidly growing Asia Pacific region. We look forward to announcing additional strategic relationship in the future. The emerging field the biosimilars represents another potential growth area for Avid.
Biosimilars are essentially the generic version of off patent or soon to be off patent 14 drugs such as antibody. However these products are similar, but not identical has traditional generic thought.
In general, biosimilars are the same dose, treat the same disease and are characteristically the same. However, because no proteins are manufactured under exactly the same conditions every time, they cannot be identical. The regulatory pathway is yet to be established in the U.S. to approve biosimilars. However, in Europe, the pathway has already been established and biosimilars are on the market.
It is only a matter of time, before we see the regulatory pathway established in the U.S. for the approval of biosimilars. Actually, it is currently one of the hottest topics in Washington, because biosimilars is part of the proposed healthcare reform legislation and is expected to dramatically reduce healthcare cost.
Biosimilars offer an unprecedented opportunity for a U.S. based company with available capacity, such as Avid, which has the biologic manufacturing capabilities, infrastructure, personnel and the regulator’s track record of producing commercial grade biologic products, capabilities that are relatively scarce and extremely valuable.
What makes this opportunity so exciting is that we are at the brink of an emerging new market, a market that can generate billions of dollars in sales in just a few years time. A situation only seen before in 1984, when the ground-breaking Hatch-Waxman legislation with past.
Paving the way for an abbreviated regulatory approval of generic pharmaceutical products ultimately creating the generic pharmaceutical industry as we know it today; once the U.S. regulatory pathway is determined, Avid will have the ability to commercialize biosimilars product in the U.S. as well as abroad in an expedited fashion. This opportunity has directly aligned with our corporate goal of commercializing at least one product within the next two and a half to five years.
We are now evaluating numerous biosimilar opportunities against a demanding set of criteria. Including identifying those biologics that match our current expertise capabilities and capacity of our existing facility providing the ability to expedite a regulatory approval process and we have limited clinical trial requirement. We will especially anticipate in specialty niche biologics that requires smaller sales and marketing efforts, potentially have less competition in the marketplace.
We believe, we have the right team in place to tackle biosimilars head on, including the recent additions of production and quality expert Truc Le, the regulatory credibility and expertise of Dr. Rob Garnick, along with my background engineers, coupled with the years of experience the Avid team has in successfully developing and producing clinical and commercial grade biologics.
Biosimilars represent a large growth potent for Avid in the near future, both as a provider of contract services to potential clients, but also for Avid directly in potential product revenue or royalty stream from partners, ultimately providing another revenue significant source for the company.
Lastly, we are expanding our analytical services offering as another potential growth area. We currently have a variety of analytical test methods that we have developed, which present another potential revenue stream beyond our existing contract manufacturing clients. Currently, we are developing more sophisticated test methods internally, that can be leveraged with our clients, but also will be critical for biosimilars, as well as in support of Peregrine owned clinical and commercial effort.
The advancement of these initiatives over the longer term will ultimately prepare Avid for Peregrine’s later stage clinical drug supply needs as well as for potential commercial production. As you can see, we have a lot of activities going on at Avid and a lot to be excited about. We are repositioning Avid to be this primary partner of choice to capture future growth both for our CMO clients and ourselves on a variety of fronts.
With that I’d like to turn the call back to Steve.
Thank you, Chris. We’d now like turn to the clinical discussions portion of the conference call. Joseph Shan, who has our clinical group and is normally on our quarterly conference call, who is traveling this week in support of our clinical programs and will not be able to be with us today. In his absence, I will now provide a brief review of recent progress in our clinical programs and Rob will provide an update on our regulatory efforts.
We have now completed patient enrollment in five clinical trials this year. Four bavituximab clinical trials including a Phase I study and three Phase II studies and one Cotara study. Three of these trial enrolment completions have actually taken place in just the short time, since our last quarterly conference call. I’d like to start with Cotara developments.
The Phase I Cotara study was a dose confirmation and dosimetry trial on brain cancer patients with realistically of glioblastoma. Completion of this trial with an important milestone, because there represents an integral and necessary part of our regulatory data package for the Cotara program and help to confirm the ability of Cotara to specifically deliver radiation to brain tumors, sparing normal organ exposure in concentrating therapy where it is most needed.
This study was necessarily complex and demanding for both patients and the institutions running the trial and we truly appreciate their dedication to completing the study. We consider this trial to have been a successful trial, because we were able to show in just the first two or three cohorts in the study that Cotara was able to deliver up to 300 times more radiation to TB and tumors, compared to normal non-target organs; and we’re pleased to see that patients in these cohorts all either met or exceeded the expected median survival time of six months for recurring GBM patients.
We are currently completing follow-up and data analysis from the entire study and look forward to presenting final data from the study in an appropriate medical conference in the first half of next year. With this study that complete, we are focusing on expanding the ongoing Cotara Phase II study to the sites that were involved in the dosimetry trial. We believe, this will allow us to expedite completion of this trial, which represents the next important keys of our Cotara development package.
This study has already yielded positive initial results as illustrated by a presentation at the World Congress of Neurological Surgery annual meeting showing that Cotara appearing to be well tolerated and demonstrated encouraging signs of efficacy in GBM patients at first relapse. The investigators determined that the interim median were current three survival of the first end patients treated was 33 weeks and that interim median overall survival was 40.6 weeks.
These results represent an important improvement over historical data on expected survival time of patient at GBM, which again is approximately 24 weeks from time of disease recurrence. Based on this data, the study authors concluded that Cotara appears to be feasible, tolerable and as encouraging signs of efficacy in our current GBM patients. We look forward to completing the study and a sharing additional data in 2010.
Now switching gears to our bavi oncology program. Over the past few months, we have seen some very significant results coming from the bavi program. We were able to complete patient enrolment in a bavi mono therapy trial in advanced refectory cancer patients as well as two Phase II clinical trials evaluating bavi with chemotherapy in advanced breast and lung cancer patients. These developments have come on the heels of completing an enrolment in another bavi Phase II clinical trial a little earlier this year.
These ongoing studies have all yielded valuable information. Just this quarter, we recorded a 61% objective response rate and 46 patient Phase II trial evaluating bavi in combination with docetaxel in advanced breast cancer patients exceeding the 41% tumor response data for docetaxel as amount of therapy that was used as the benchmark for the sign of the study.
In addition, analysis of data from the initial 21 patient cohort in our Phase II trial evaluating bavituximab, in combination with carboplatin and paclitaxel in non-small cell lung cancer patients indicated that the median of progression free survival was 6.5 months, which is a very promising improvement to the progression free survival range of 4.2 to 4.5 months reported in the lung cancer trials that were the basis for the design of this trial as evaluating Carboplatin and paclitaxel alone.
At this point, I think it is worth a few minutes to review how these trials all fit into our overall bavi oncology development strategy. Several years ago, we’ve recognized that because of our considerable experience with bavi and both in HCV an oncology setting, that we had a unique opportunity to initiate signal seeking Phase II studies, combining bavi plus chemotherapy and patients with different solid tumors, while simultaneously completing the Phase I study evaluating bavi alone and advanced cancer patients.
By signal seeking Phase II studies, we mean studies to evaluate the safety signals, when bavituximab is given along with different chemotherapeutic agents in advanced breast and lung cancer patients. In addition, our second goal was to look for early signs of antitumor activity from these combinations, which would support advancing the program to definitive Phase II trials.
By definitive, we’re referring to studies to sign to solidly confirm patient benefits for patients receiving the combination of bavi plus chemotherapy, versus the standard treatment of chemotherapy alone, this is the ultimate goal of virtually every development program in oncology and are the types of studies that can support eventual product licensure.
By this strategy, we were able to complete enrolment in the Phase I and Phase II signal seeking studies in the same timeframe and successfully generate meaningful clinical safety data with early signs of antitumor activity that we strongly believe support of moving the program into definitive Phase II studies. Completion of the Phase I studies.
Completion of the Phase I study, evaluating the bavi alone with a natural point at which to engage in discussions with the FDA regarding the future development plants for bavi. A critical interaction point with major implications, in preparation for this meeting, as for guiding future development efforts, we expanded our team and we’re extremely fortunate to be able to bring Rob onboard at a critical juncture.
Our team more diligently to compile and integrate it’s summary of all the studies we have run to-date, along with other supporting data that were submitted to the agency. As a result of these efforts, we were able to make significant progress with the agency and defining the correct status of the program and setting the stage for moving into definite studies. Truly an excellent outcome that met were exceeded all of our expectations going in the discussions.
With that I would now like to turn the call over to Rob Garnick, our new Head of Regulatory Affairs, who will take a few minutes to share to the initial thoughts about our upcoming and regulatory strategy and opportunities. We are delighted to have Rob onboard, his extensive industry background in getting new drugs approved and as 24 years of overseeing clinical and regulatory strategy in Genentech is already proving in valuable as you plan for the next Phase of our clinical programs. Rob.
Thank you, Steve, and thank you everyone for joining this call. I am really very pleased to be here with you today since I’ve been working with Peregrine from 18 months. In this call, I’d like to focus and sharing with some general observations that I have made on Peregrine and its product type line. Let me start by telling a little bit about myself.
I spent all of my professional career working in the area of drug development focusing on the regular scientific, clinical and regulatory assessments that must be completed before any potential new product for medical device can be marketed. As you know, this is typically a very long complex in challenging process. However, the rewards for both drug developers, investors and most importantly the patients whoso desperately need these new products can be quite substantial.
In my own career, I have the good fortune to spend over 32 years in the pharmaceutical industry. 24 years of which were Genentech were almost of the part of the both are the biotechnology industry. I joined Genentech in 1984, and have the unique opportunity delivered a grow up with the company and played a significant role in the development of its products.
At Genentech, I was deeply involved in obtaining marketing approval for 17 drug products and three manufacturing facilities, including such anticancer blockbusters as Rituxan for non-Hodgkin Lymphoma, Herceptin for breast cancer, Avastin for colorectal cancer and non-small cell lung cancer and Lucentis for age related macular degeneration.
After heading up Genentech’s formal regulatory efforts for 15 years in growing my own department to over 1,300 people, in 2008 I decided it was time to retire from the corporate life of a large company and form the biotechnology specialty consulting company through which I was very fortunate to meet the excellent folks herein the Peregrine.
After carefully studying the company’s Phosphatidylserine-Targeting Antibody platform and its lead product candidate bavituximab have become extremely excited and agreeing to work with Steve and his team to help guide the drugs development. Focusing specifically, on traveling you might accelerate its progress towards marketing approval.
I’d like to say that bavituximab reminds me a great deal of a similar and very monoclonal antibody Rituxan because of the biological elegance of its mechanism of action. Because of the similarity, the regulatory approach I’m recommending to Peregrine for bavituximab is very consistent with the approach we took at Genentech for obtaining the approval of Rituxan.
I’m extremely optimistic that bavituximab may represent an unique invaluable new approach to the treatment of advanced refractory cancer in combination with chemotherapy or radiation and based on its mechanism of action they potentially be useful in anti-viral and other indications as well. In addition to my personal scientific interest in the potential Peregrine’s technology, I’ve also been very impressed with the Peregrine team and the mixed professionalism, enthusiasm and commitments that are so reminiscent of my early days of Genentech.
As Steve mentioned, this is a very exciting time for Peregrine’s drug development programs, we have recently completed patient enrolment in three signal seeking bavituximab Phase II cancer trails, as well as an early stage bavituximab cancer and Cotara brain segments, and we eagerly anticipate having data starting to come in from these studies in the next few months.
This sets the stage for planning our next step of bavituximab cancer trials and we are actively embarking on that progress. Our goal is to implement a clinical and regulatory strategy, that will maximize our chances of getting that bavituximab approve and to do so in the shortest feasible timeframe.
We’re in the process of designing a randomized blinded and placebo controlled Phase II clinical study for bavituximab in second line non-small cell lung cancer. This type of study is typically the gold standard in the U.S. for drug development and this study will is intended to play a major role in our future approval strategy for this products. Just a minute ago, we had a very successful meeting with FDA to discuss a number of clinical questions in order to help us design the Phase II program in non-small cell lung cancer and the team and I are very pleased with how well it went.
It’s not appropriate to reveal the details of this meeting, but suffice it to say that we were encouraged by the FDA’s positive response and by the fact that we have received such excellent advice as to what our Phase II trails, which I just described should look like. I should say that, while non-small cell lung cancer is our lead indication. They we’re actively exploring other clinical trials and other refractory solid tumor cancers, for which bavituximab may hold particular promise.
We look forward to sharing more about our emerging bavituximab cancer, clinical and regulatory strategy with you in the coming months. I’m just getting to know, the Cotara program and so I’ll hold my comments for now. However, it is noteworthy, but I feel that this drug holds considerable promise for the treatment of such lethal diseases as glioblastoma multiforme, which unfortunately have so few current treatment options.
In view of its sizable long term patient safety database and the promising efficacy results observed in some patients. We’ll be exploring ways in which Cotara might be advanced towards market approval more rapidly and cost effectively. The growing body of scientific evidence that phosphatidylserine targeting antibodies may have application in anti-viral and other anti infective indications and Peregrine’s success in attracting the support of the biodefense establishment and multiple collaborators to further explore their anti-viral potential is encouraging.
I look forward to getting more involved in this program in the appropriate time. In summary, I think this is a very exciting time to be at Peregrine, as it looks ahead its programs to the next critical stage of development and I very much look forward to working with the Peregrine team to advance these promising drug candidates.
Back to you, Steve.
Thank you very much, Rob. For the preceding comments, I hope you can see why we are very pleased with the recent developments in Peregrine and our clinical programs, and why we are still enthusiastic about the future.
Turning to our anti-viral program, we are very pleased at the good progress we are making. Our federally-funded TMTI biodefense initiative to develop our anti PS-targeting antibodies for the prevention and treatment of viral hemorrhagic fever is proceeding well. Our researchers presented promising interim data for this program at the 2009 chemical and biological defense conference.
The result confirmed the broad-spectrum PS-targeting antibodies were able to buy into viral hemorrhagic fever viral particles and all such infected mammalian cells. Initial anti-viral efficacy studies were encouraging, showing that a single dose of a PS-targeting antibody increased the survival of hamsters infected with lethal doses of two viral hemorrhagic fever viruses. Based on these findings, additional efficacy studies are now underway. So we are making excellent progress under our contract, and we and our investigators are actually quite excited about these early results.
Now the growing interest in the potential of our PS-targeting technology for the prevention and treatment of infectious diseases has led us to reorganize our anti-viral program during the quarter, but the intention of ensuring that the many opportunities potentially available to Peregrine and our varied group of collaborators are fully exploited.
The new group has responsibility for coordinating and expanding the company’s multiple external collaborations, currently numbering more than a dozen to assess the utility of Peregrine’s PS-targeting antibody platform for its prevention and treatment of serious infectious diseases.
During the quarter, the value of this approach was illustrated with the award of new federal NIAID funding to our partners at UT Southwestern Medical Center for the expansion of studies in the use of our PS-targeting antibodies and viral hemorrhagic fever infections. This grant provides additional non-dilutive monetary resources and external personnel and expertise to support an ongoing Peregrine program, our win-win situation for all.
A second broad anti-viral patent, we were recently awarded in the U.S. further reinforced our intellectual property leadership in the field of PS-targeting therapeutics and strengthened the rational for this initiative.
Before we turn to the Q-and-A session, I’d certainly hope that you can see why we are as a company, we’re so excited about the future of Peregrine and I think we’re in extremely unique position and really a transition period for the company. We’re really in the process of moving from the goal being to simply move our programs forward to the goal of really aggressively pursuing the ability to market products and get approved products in the next two and a half years.
The two and a half years is our goal from the outset of being unique position through our bavituximab program, Cotara program and through the exciting new area of biosimilars of being able to bring the company to a success point, where we have our own products. Now the actual timeframe for getting products on the market of course will be driven primarily by clinical data.
We want to be in that position to take advantage of very strong clinical data to expedite those timeframes to the market, but we also recognized that we need to be ready for more traditional development pathways. Overall, we think when you combine these three programs. We have an excellent opportunity here to really turn the corner and a tremendous amount of value to the company that will be obviously a positive for all of our shareholders.
With that, I’d like to turn the conference call over to the operator for the Q-and-A session.
(Operator Instructions) Your first question comes from Richard Siracusa - Merrill Lynch.
Richard Siracusa - Merrill Lynch
Steve, before I ask my question, I’d like to preface it with a comment. Peregrine has achieved significantly more than some other biomedical companies that trade with market caps and excess of $1 billion and yet the company does not enjoy the support and sponsorship of the institutional investment community.
Many industry observers believe that this is because there isn’t any high level biotech representation on the company’s Board. Are you considering filling the vacant Chairman’s position with such an individual or expanding the Board to include some top level biotech talent?
I mean, I think when you look at the company, the question is and what is going to attract investors into the company is, are we positioned to develop our drugs. Do we have the talent internally running day-to-day operations that will make us successful and Board representation, we obviously want to add when we feel it’s an appropriate time, members of the Board that will again enhance what we already have in the management team.
I think our focus has clearly been on day-to-day operations, bringing someone again on our management team like Rob, just adds a tremendous amount of day-to-day operational excellence and I can tell you that the enthusiasm level, the level of progress we’ve made in our regulatory strategy, the difference in our interactions with the FDA have been just fantastically better with Rob on Board. I think that’s the kind of leadership we’re look for.
In addition, we added on Bruce Chabner to our Scientific Resource Board. Again another individual, we’re just tremendous insight in the drug development and contacts throughout the industry. So I think, the Board is one level and we’ll of course continue to evaluate that, but if you look at what we’re doing on the day-to-day operations of the company, day-to-day management of both Avid and Peregrine. Again we brought Truc Le on, again with tremendous industry experience.
I think that’s what’s going to get us there and that’s what’s going to excite people and I think as we move into the New Year, our plan is for us to be out on the road telling the story, not just why we’re excited about the future of the company, but the unique position we’re in with three really solid legitimate opportunities to move toward marketable products.
The management team, we believe has the expertise to execute on that plan and really the very unique position we’re in with Avid Bioservices. If there wasn’t for our contract manufacturing business, we would not be in position to really be a pursuing all these opportunities. So I think our feeling is that, that’s what going to bring the institutional investors into the story because again the amount of value we can add over the next few years is potentially astronomical and that’s our goal and we’re going to do everything top to bottom in the company and make sure that happens.
Your next question comes from Roger Adams – Private Investor.
Roger Adams – Private Investor
Regarding the clinical program, if the results in the three bavi Phase II trails recently completed, especially tumor shrinkage were achieved in the first half of the definitive trials you’re now planning for lung cancer. Would you be well position to apply for accelerated approval?
My second aspect of the question regarding the clinical programs, regards the overall median survival time. If since the company has not yet reported on that in any of the three bavi Phase II trails, can we assume that more than half the patients are still living in each of the three Phase II studies?
There’s obviously multiple prongs of your questions here. So I’ll just try to take them in order. I think our goal in the next set of studies, and then I’ll let Rob expand on this, is to really design and execute studies that will support eventual product licensure and accelerated approval is something that will be driven by clinical data.
If we feel the data is strong enough and again our goal of running randomized placebo controlled blinded Phase II studies is to make them definitive and to have them provide, what we thing will be unequivocal evidence of drug activity. If the results were good enough then that’s certainly a discussion we want to have with FDA regarding accelerated approval. So we need to see what the results look like from the study and we’ll take it from there. Rob, I don’t know if you want to expand…?
As you know, actually done accelerating approvals in the past and certainly as Steve said, we want to be positioned such that if the data is striking and very compelling that we would be in a position to apply for that and that as you know takes a lot of coordination in across the company, that just in the clinical and regulatory side, but in the manufacturing and quality operations.
We are actually making sure that should such an opportunity occur that we would be in a excellent position in order to take advantage of that. Nevertheless, the real goal though is to obtain definitive data and develop our programs based on having really good solid clinical data in which to continue to develop the product.
I think just to expand on that a little bit more, because this is a big commitment that we’re undertaking moving into these studies, because essentially what we’re saying is, No.1 we’re going to design really top notch, all the bells and whistles clinical trials that will support again eventual product licensure in one way or another.
In addition, we’re committing on the manufacturing side that will also be in the position that if we are successful, we’ll in a position from a manufacturing standpoint, also to take advantage of that opportunity and again that’s what I was referring to earlier that if we didn’t have Avid Bioservices, then making those sort of commitments would be even potentially limiting factor in moving forward, but because we do have this opportunity, we really think we’re well position to take advantage of that.
Regarding your question on median overall survival, those are obviously time points that take a considerable amount of time to mature. I don’t know the exact status on each of the trails, but we’ll certainly report those results as they become clear. Just as we have with obviously initially you get the data on the tumor response rates, then you get progression free survival, and we’ve been reporting those and those data look very promising so far and overall survival will be coming along in the future.
Roger Adams - Private Investor
You haven’t reached that median time yet?
I don’t believe we’ve reached the median time on any of the states.
Your final question comes from Michael Anthony - Private Investor.
Michael Anthony - Private Investor
My question is an excellent quarter. You’re revenue has been climbing each quarter and of course your losses has declines also. Like the first investor from Merrill Lynch, I believe I don’t understand back in 95, your stock went to 17, 18, you didn’t have any labs, you wasn’t in Phase I, Phase II human trails, use the mice trails and you’re so much further today, 10 years or better later, 12 years later and your stock is nowhere near where it was then has depreciated instead of advancing and you’re getting close to the Phase III trails also and shouldn’t that be a positive and doesn’t any analyst cover your company?
I think your point is well taken. There’s two separate parts of our business. One is, executing moving products toward commercialization and realizing their potential of the products we’re developing and absolutely that should be a positive and increasing revenues and keeping our burn under control while making the tremendous progress we have in all of our clinical programs and opening up new opportunities should make the company many, many times more valuable than it is when you’re in preclinical studies and basically treating mice.
The market conditions that those are things that out of our control and again it’s largely driven by the macro environment, not the microenvironments take place at the company. Again we feel we’re on track. Again our goal was to make this is a standalone successful company, cash flow positive and see a growth from there. So we’re controlling the things we can.
I think we wanted to do a better job of getting out telling the story and making sure that the investment community recognizes, what a tremendously valuable asset we have here and that’s our goal going into the New Year as to try to create that enthusiasm for the company from the investment community.
We have reached the allotted time for today’s conference. I will now turn the conference back over to Steven King. Mr. King.
I’d like to thank you all again for participating in today’s quarterly conference call. I hope today’s review can base the reasons why we believe that Peregrine has entered a new stage in its evolution. They include tangible progress in every one of our clinical programs.
Our recent positive interactions with the FDA on our next set of bavituximab and cancer trails, the growing importance, sophistication and value of our Avid manufacturing group, the expansion of our senior team to include highly experienced and accomplished industry leaders, the strengthening of our capital structure and our continuing ability to optimistically reinforce our cash position. Together we feel like, we’re in a very unique position with many opportunities for success that we look forward to sharing further advancements with you into the New Year.
With that, I’d like to end today’s quarterly conference call and thank you again.
Thank you, sir. This does conclude today’s events. At this time, you may disconnect your lines. Thank you.
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