Peregrine Pharmaceuticals, Inc. F4Q08 (Yr End 04/30/08) Earnings Call Transcript

Peregrine Pharmaceuticals Inc. (NASDAQ:PPHM)

F4Q08 Earnings Conference Call

July 14, 2008 11:30 am ET


Barbara Lindheim - Director of Investor Relations

Steven King - President and Chief Executive Officer

Paul Lytle - Chief Financial Officer


Ren Benjamin - Rodman & Renshaw

Richard Feracusa - Merrill Lynch

Michael Jacobs - Private Investor

Fine Black - Private Investor


Welcome to the Peregrine Pharmaceuticals fourth quarter 2008 financial results conference call. (Operator Instructions) I would like to turn the call over now to Ms. Barbara Lindheim.

Barbara Lindheim

Thank you for joining us on today’s call with the management of Peregrine Pharmaceuticals. We’re here today with Peregrine’s President and Chief Executive Officer, Steven King and Chief Financial Officer, Paul Lytle to discuss the company’s results for fiscal year 2008 reported this morning. 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 Pharmaceutical’s 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 Pharmaceutical’s 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, 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.

Steven King

Thank you, Barbara. I'd like to start by thanking everyone who is participating in today's fiscal year 2008 year-end conference call. I will start with a brief recap of developments since our last conference call. Paul will then go over the financial highlights for the fiscal year and I will conclude with a more detailed review of our accomplishments, which will be followed by a question-and-answer session.

The past few months have been an extremely busy time at Peregrine. Since our last quarterly conference call, we completed enrollment in the initial set of patients in our Phase II study testing Bavituximab in combination with Docetaxel in breast cancer patients and reported promising early results from this study. In addition we initiated patient enrollment in a second Phase II study testing Bavi in combination with carboplatin and paclitaxel in patients with lung cancer and are poised to begin a third Phase II study in next few weeks.

In addition to these clinical developments, we had our first ASCO presentation for the Bavituximab cancer program, at the 2008 annual meeting. Needless to say, it was an exciting few months for the Bavi cancer program that has set the stage for an even more exciting end of the coming year.

While moving to cancer program forward, we had an equally exciting few months for the Bavi Anti-Viral program. We continue to move forward with our HCV, HIV co-infection Phase I trial and just a couple of weeks ago, announced that we had entered into a contract with The Defense Threat Reduction Agency or DTRA to evaluate and develop Bavi and a human equivalent antibody for the treatment of viral hemorrhagic fever virus infections. This contract potentially worth over $44 million over a five year period is a tremendous outside validation for the company and in particular for the Bavi Anti-Viral Program.

In addition to these Bavituximab developments we have continued to be active in our Cotara clinical program, including a presentation at the ASCO 2008 annual meeting and we have continued our activities and our research collaborations on the anti-viral front. In addition to advancing our product development efforts, positive momentum is also apparent in our Avid Bioservices unit, which as Paul will discuss has been successful in significantly increasing its revenues and in attracting new revenue generating services including the recent agreements have become their first U.S. preferred vendor for a highly regarded proprietary antibody production system.

I will now turn the call over to Paul and will come back later to discuss our clinical and development progress in greater detail.

Paul Lytle

Early this morning we released our financial results for fiscal year 2008. This earnings release outlines the financial results in greater detail and includes finical tables. So I encourage everyone to read the entire release. We also plan to file our Form 10-K later today and both of these documents will be available on our website.

Now during the next few minutes, I will walk you through our financial results for fiscal year 2008. I'll then briefly discuss our financial position and will conclude with a discussion of two other important topics.

Now let me begin with the finical results for fiscal year 2008 starting with revenues. Total revenues for the year ended April 30, 2008 were up 64% to $6.1 million compared to total revenues of $3.7 million reported last fiscal year. This increase was mostly driven by increased revenues coming from third-party customers of Avid Bioservices, our wholly-owned contract manufacturing business.

Last year, we projected record revenues for Avid in fiscal year 2008 and we achieved that goal. We are now projecting another record year for Avid in fiscal year 2009. Our revenue projections for Avid in fiscal year 2009 are expected to be in excess of $10 million based on current signed contracts from third-party customers. This is an addition to the important manufacturing services Avid provides Peregrine in supporting our three ongoing clinical programs.

If you were to value those Avid services provided to Peregrine in fiscal year 2008, valued at market rates, it would equate to over $6 million in additional revenues to Avid, but since Avid is a wholly owned subsidiary, these inter company revenues are eliminated in financial consolidation. These numbers just reemphasis the value Avid provides to Peregrine.

Now let me turn to expenses. Total cost and expenses increased at $30.2 million for the current fiscal year. This compares to total cost and expenses of $25.6 million reported in the same prior year period. This increase of $4.6 million was primarily related to an increase in research and development costs as we continue to advance our pre-clinical programs combined with an expected increase in the cost of contract manufacturing, directly related to higher reported revenues from Avid.

In addition, we saw an increase in SG&A expenses in the current year of $704,000. This increase partly reflects our increased investment in business development including the expansion of our business development team and our enhanced partnering efforts.

Now let me turn to the bottom line. For fiscal year 2008, Peregrine reported a net loss of approximately $23.2 million or $0.10 per basic and diluted share. This compares to a net loss of approximately $20.8 million or $0.11 per basic and diluted share in the same prior year period. This increase in our net loss was mostly related to our increased investment in research and development of $2.4 million as previously discussed. Steve King, will discuss our R&D progress in more details later in the call.

Now let me shift your attention to the balance sheet. We ended the fiscal year with approximately $15.1 million in cash and cash equivalent at April 30, 2008. This compares to $16 million in cash and cash equivalents reported at our last fiscal year end April 30, 2007.

Now let me conclude with two additional important points. As I stated in the last call in March, our goal was to as rate as little capital as possible to enable us to reach the next major inflection point in our clinical trial programs. I believe we have achieved that goal as a result of our ability to grow our projected Avid revenues in fiscal year 2009, based on our current backlog for services, as well as from the projected funding from the recently signed multiyear government contract and we believe accomplishing this goal without tapping into the equity markets has been especially important in view of the current depressed market conditions.

Now based on our current financial projections, we believe we have sufficient cash on hand when combined with our anticipated cash inflows from Avid’s business, again based on signed contracts and from the anticipated cash inflows from the recently signed DTRA contracts to operate our business through at least fiscal year 2009 based on our current planned operations. Although this is good and we feel confident about our likely cash inflows from these contracts, there are potential uncertainties associated with all financial projections that limit our auditor’s ability to rely on these future cash inflows.

Even though these revenue generating contracts are signed, our projected cash inflows have not been accounted towards our future operations in accordance with auditing standards and therefore it’s these potential uncertainties that costs our auditors to issue an audit opinion with a going concern qualification. Let me state that this opinion has no impact on our current operations nor our NASDAQ listing.

So, instead of raising extremely dilutive capitals through a pipe transaction or a registered direct transaction before the filing of the 10-K, we decided to accept this qualified opinion and rely upon our anticipated cash inflows from the growing business of Avid and the newly awarded government contract to move our business forward. We believe this was the right decision for the company and the right decision for shareholders.

That being said, we have been actively seeking to raise additional capital through non-dilutive structures such as a term-loan or similar debt structures. Although we will have to repay this debt, we believe that we are successful in negotiating a debt transaction. This funding could provide an extended rendezvous of capital, as we continue to advance our programs.

In addition to the debt financing, we continue to pursue opportunities that could monetize our Avid business. We are projecting record revenues in fiscal year 2009 and as revenues increase, the valuation of that business should likewise increase. It’s important to note that while we are actively pursuing ways to monetize this asset, we are seeking to do so in a way that protects the manufacturing needs of both our clients and the needs of Peregrine. Monetizing our Avid asset continues to be a great opportunity and we will continue to pursue this potential transaction under the right terms.

The next topic, I would like to address pertains to our continued listing on NASDAQ. Let me first say that we have announced some of the most significant developments of the company a few weeks ago, including the multiyear government contract award for up to $44.4 million and the encouraging results from our Bavituximab Phase II breast cancer study, showing that 14 of the 14 valuable patients have achieved stable disease or better. That being said, the market price of our stock remained relatively unchanged.

Now, as I stated on the last earnings call in March, our closing bid price needed to be $1 or higher for 10 consecutive trading days by July 21, in order to regain compliance with NASDAQ’s $1 minimum bid price rule. If you count back the 10 trading days from July 21, we needed to be above $1 starting July 8. Even with some of the best news in the company’s history, our stock price did not reach that mark. So, the question is what’s next.

Let me discuss our next steps and some new encouraging developments we have learned from NASDAQ. These next steps are basically a process we plan to follow to maintain our NASDAQ listing. Let me explain the process in detail, so you’ll be aware of what’s happening as we move through the process to regain NASDAQ compliance.

First, we expect a delisting notice from NASDAQ on or about July 22. At that point we will issue a press release announcing the receipt of the NASDAQ notice; don’t be alarm by this, our stock will continue to be listed and traded as normal. This is a normal part of the process.

Second, we will appeal that decision within the seven calendar days and request a hearing from NASDAQ. Again our stock will continue to be listed and traded as normal during this time.

Third, we will have a hearing with NASDAQ that generally occurs within 30 to 45 calendar days from our request date. At that meeting, we will present a definitive plan that we believe will enable us to achieve and sustain long-term compliance. Again our stock will continue to be listed and traded as normal during this time.

Fourth, I have some encouraging new information. For discussions with our NASDAQ listings qualifications analyst, there has been a very recent shift in philosophy at NASDAQ. Previously, the hearing panel at NASDAQ was fairly adamant that a non-compliant company needed to resolve this deficiency within a very short period of time and exceptions were verily awarded. For our recent discussions with them, the philosophy at NASDAQ has now been modified. Perhaps in response to the poor market conditions that are taking a toll in so many NASDAQ listed companies.

NASDAQ’s new philosophy is to provide companies with the maximum discretion under the current regulations to regain compliance assuming a company has a valid definitive plan in place. In that sense, the maximum discretion under the regulations should provide us an additional 180 day period or until mid January 2009 to regain compliance and again NASDAQ has told us that our stock would continue to be listed and traded as normal during this time.

Now that being said, a definitive plan to regain compliance with the minimum bid price deficiency must include a plan for reverse stock split. This is in case the price of our stock does not attract to any future potential milestones that maybe achieved; therefore if required at that time, we will ask shareholders to approve a reverse stock spilt at the next annual meeting with the intent to utilize this mechanism if necessary at the board’s discretion. If the company is able to regain compliance without implementing a reverse stock split it is the board’s current intention not to affect a reverse split. We believed that this is good news for shareholders and provide some additional time to achieve NASDAQ compliance in the normal course of business.

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

Steven King

I will now go into a little more detail on the clinical and research highlights I mentioned earlier. I would like to start with the Bavituximab oncology program. We have built considerable momentum for the program over the last few months and are very happy with the promising early data coming out of the Phase II trails. The highlight of the past few months was achieving and surpassing the pre-specified primary endpoint in stage I of our ongoing Phase II clinical trial testing Bavi in combination with chemotherapy drug Docetaxel, in patients with advanced breast cancer.

This opens the door for expanding the trial II, included an additional 31 patients. I would like to go through the early results of the study in a little more detail. This Phase II study is a two stage trial testing Bavi in combination with Docetaxel in advanced breast cancer patient. 14 of the 15 patients enrolled in stage I were deemed to be a valuable for tumor response and up to this point, none of the patients have shown any signs of tumor growth, with the first patients in the study now out over five months.

In addition, at the stage first eight-week evaluation point, still early in the study, seven of the 14 valuable patients had already achieved objective tumor responses; a positive sign of activity that surpass the predefined endpoint for expanding the study into the second stage of patients. Patients from stage I are continuing to receive treatment along with continuing assessments of their tumor response and we look forward to sharing more data from this study as patient treatment and follow-up continues.

A second positive development for the Bavi cancer program was the recent initiation of patient dosing and a Phase II trial design to evaluate the safety and efficacy of Bavi in combination with chemotherapy agents, carboplatin and paclitaxel in patients with non-small cell lung cancer, the leading cause of cancer deaths in the U.S. The primary objective of this study is to assess the overall tumor response rate and so far the trial has proceeded very nicely; in fact we were able to treat several patients in just the first week the trial was opened.

Our third Phase II study, testing the same combination in breast cancer patients is said to begin shortly. Taking together, these Phase II studies are setting the stage for a potentially very exciting rest of the year on the clinical front.

Now, on to the Bavituximab Anti-Viral program, we recently announced a significant development in our Bavituximab Anti-Viral program with the award of a five-year contract potentially worth over $44 million to test and develop bavituximab and a at Fully Human Equivalent as potential broad spectrum agents for the treatment of viral hemorrhagic fever infections.

The contract covers testing and development efforts totaling up to $22.3 million over the initial 24 months base period. With 5 million available immediately and the remainder expected to be appropriated over the rest of the two-year base period. The contract can be extended beyond the base period to cover up to the $44.4 million in funding over the five-year contract period.

Work with the contract literally began the day it was signed and we have already had a start up meeting with representatives of the DTRA and other groups that will be involved in overseeing the contract. It took countless hours of work on behalf of ourselves and DTRA to finalize the contract and this is an exciting opportunity to work with the DTRA to develop bavituximab and achievement equivalent as agents to potentially fight life-threatening diseases that we otherwise would not have been able to pursue.

Equally significant is the fact that this program dovetails so nicely with our ongoing efforts to develop Bavi for the treatment of HCV virus infections. This contract represents non-dilutive capital that supports work which will be directly beneficial for all of our bavituximab development programs and in return, we will continue to generate data from our ongoing trials and preclinical research that will help guide and support the use of Bavi for the potential treatment of hemorrhagic fever virus infections; truly a potential win-win opportunity for both us and the DTRA.

In addition to initiate the DTRA contract, we have also continued our pre-clinical collaborations with Researchers at Duke and other institutions evolved in evaluating our Anti-PS platform for use in the possible prevention and treatment of HIV infections. While we had hoped to have data related to the collaboration publicly available by now, the delay has been caused by an expansion of the collaboration and the generation of additional data that only makes the story potentially more interesting.

There are currently more than 40 scientists at nine institutions involved in the collaboration. While I cannot share more at this time, I look forward to being able to update you on these activities in the not so distant future.

While moving these collaborations forward we have continued to make progress in our ongoing multi-center trail of bavituximab and HCV, HIV co-infected patients. While there is not much of an update at this time, I can say that we are happy with the results we have seen to date and that we remain enthusiastic about the study and that we look forward to providing an update at an appropriate time in the future.

Next, I would like to turn it over to Cotara brain cancer program. Over the past few months, we strengthened the foundation for progress in the Cotara clinical program, by initiating additional sites in our two ongoing trails of Cotara and patients with GBM. While patient enrollment until reasonably has been modest, we are now seeing an increased number of patients screened and treated as a result of expanding the number of clinical sites in these trials. We will continue to closely monitor progress in the trials and to take additional steps if necessary in speed patient enrollment.

The highlights of the Cotara program of the past few months was a presentation at the 2008 ASCO annual meeting, reinforcing Cotara’s safety and it’s ability to target radiation precisely to the tumor, while avoiding healthy organs. The data demonstrated that the concentration of Cotara in brain tumors was at least 100 fold higher than in healthy organs, further reinforcing its potential in the treatment of GBM the most deadly and aggressive type of brain cancer.

These positive data validate a key principle underlying of Cotara program, confirming its abilities to specifically concentrate a high-dose of radiation in tumors. Even more than the validation of Cotara’s targeting potential, we are encouraged by the fact that all patients in the cohort presented at ASCO live longer than the expected medium survival time for GBM patients of first relapse. We look forward to updating you on further advancements in the Cotara clinical program as more data becomes available later this year.

On the corporate side, the biggest advancement in our business operations has been the growth of Avid, as a contract manufacturing business. While Avid has always been and continues to be a major strategic asset for Peregrine and its clinical programs, we see tremendous potential in growing the business. This year we project Avid to be a profitable standalone business, while providing services to Peregrine. The group at Avid has responded to the challenge and I can say that manufacturing and associated activities of Avid are currently by far at the highest levels we have ever experienced.

This growth at Avid has not come at the expense of Peregrine programs, but rather has enhanced the quality of service. Peregrine is of course still a primary inter client in all of our needs just like our other clients are being addressed extremely well. We look forward to updating you on future advancements at Avid as the business continues to grow.

On the business side, interest in our bavituximab and the Cotara clinical programs from potential partners remained strong and the level of interest has increased as a result of the data we are generating on the clinical front. We are confident that a steady flow of upcoming data from our clinical and pre-clinical programs will lead to significant licensing opportunities.

Before I open this floor to questions, I want to note that Peregrine management appreciates that our current depressed stock price and thread of NASDAQ listing are very difficult on shareholders. We ourselves are shareholders and we share your frustration. While it would be easy to blame the current share price on the general market conditions and in particular that depressed small-cap biotech market, I believe this just means that we have to work that much harder to over come these additional challenges and achieve value creation.

We will take the necessary steps to maintain our NASDAQ listing, which is obviously critical as we move forward. As far as creating value for the company, over the past few weeks we have in my opinion had the best news in the history of the company, including major outside validation in the form of the DTRA contract and promising clinical data. We need to build on this momentum in the form of further clinical data and outside validations supporting our programs.

We have set the stage for more clinical data through our ongoing and upcoming Phase II studies. An outside validation can come on several fronts, from peer-reviewed publications, from technology partnering and from continued growth of our manufacturing revenues, all of which are within reach based on our current conditions as a company and ongoing discussions. We are dedicated to making the company successful and appreciate your continued support as we move forward.

We are now ready to open the floor for questions.

Question-and-Answer Session


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

Ren Benjamin – Rodman & Renshaw

You mentioned, having a plan ready for discussion at the hearing. You mentioned one particular item, the reverse split you try to address and stay on the NASDAQ, can you comment or talk about any other options you may have besides your reverse splits?

Steven King

At the NASDAQ hearing from my understanding they want to understand your clinical programs, your goals, your future milestones that you plan to achieve, which I think we have a very strong position in. In addition they just want to make sure of a stand back position that you do have a reverse stock split in place or available to you, to either a upcoming shareholding meeting or an existing shareholder meeting that you can address the minimum bid deficiency at that point in time when it’s necessary and the reminder of the continued listing requirements, we easily meet or exceed all the other standards from the NASDAQ capital market standpoint.

Ren Benjamin – Rodman & Renshaw

On the clinical side if we are just starting off with Bavi and the oncology program. On the Docetaxel trial can you tell me what short of patients are being treated here? You mentioned advanced breast cancer patients, but are they docetaxel refractory or how should we characterize them?

Steven King

No. Patients in the study have not received prior docetaxel treatment. They are more refractive to agement therapy and this is front line metastatic treatment.

Ren Benjamin – Rodman & Renshaw

Okay, front line metastatic; and so what sort of the response rate would you expect with docetaxel alone?

Steven King

Yes, in the study we based our study on docetaxel had a response rate of about 30% and in that study which was the Avastin study they saw the combination of Avastin plus, docetaxel with about a 50% response rate.

Ren Benjamin – Rodman & Renshaw

That’s overall response rate including FD’s?

Steven King

That is the objective response rate, though the partial responses are complete responses.

Ren Benjamin – Rodman & Renshaw

Regarding the non-small cell lung cancer study, can you talk to us a little bit about when we might see when enrollment might complete and when we might see data and just a little bit of information on the trial design?

Steven King

Yes, a little bit on the trial design; first this is a two stage, what’s known as a Simon two stage trial design. In the initial set of patients we will be treating up to a 21 patients. If we see suitable response rates which have been pre-defined, then we would move on to an additional set of 28 patients for a total of 49. The patient population is at relapse. As far as enrollment goes we’re extremely happy with the way the trial has started enrollment as I mentioned earlier.

We had several patients actually enrolled in the study even just during the first week and we’re still bringing the number of clinical sites up to full speed. I would anticipate probably in the September timeframe would be our goal to have completed the enrollment phase of the study and I think we can continue with the moment we already have early in the study; that’s certainly achievable. Then at that point we’ll just be waiting for that eight-week scans to come through and be able to update on that.

So, I would anticipate really some enrollment updates including entry into the other breast cancer study we’re going to run and then being able to throughout the fall and have follow-up data, both from the docetaxel study as well as the carboplatin and paclitaxel studies.

Ren Benjamin - Rodman & Renshaw

And do you know, at what conferences these data might be presented at or will it be more inline with, let’s say press releases; how do you envision the data coming out?

Steven King

Yes, we’re certainly trying to identify some good to high profile meetings for the docetaxel study, because that will be a little more mature, will have some of the actual response data to talk about. So, we’re really shooting for those this fall. That would be our preferred method of getting the news out there, because it obviously updates our shareholders, but also the medical community in general, which is one of our goals for the program.

Ren Benjamin - Rodman & Renshaw

Moving on to Bavi and infectious disease, it’s just more a question regarding the contract that you just signed and we’re award and congratulations on that. What is the potential for stockpiling here, is there a mechanism involved for potential stockpiling, or is it completely just a research based contract?

Steven King

Yes, this contract only covers research and development efforts. So included in that is of course the animal testing and then vitro testing that would lead to validation of the potential for this drug in viral hemorrhagic fever infections. As far as stockpiling, well the second is on the development front.

It covers activities such as scale-up of production, formulation studies, so a lot of the activities that are part of this overall contract will be performed by Avid Bioservices just as it would any other outside contract. As far as stockpiling goes that would be part of procurement by the government. So, this current contract does not anticipate stockpiling material but rather developing the message for producing large amounts of material which then could be stockpiled by the government if we are successful.

Ren Benjamin – Rodman & Renshaw

And then just when might we see updated data from the Cotara program?

Steven King

It’s probably looking at the fall. As mentioned earlier patient enrollment was somewhat slower than we really had hoped when we started the trail. We do not have the trail up to full speed if you will. We are continuing to enroll patients. I would expect this fall we should be able to have an update on how the trail is going, how enrollment is going, as well as how the patients are doing on the study.

Ren Benjamin – Rodman & Renshaw

Will it be fair to say that the AACR or EORTC meeting would be some -- a timeframe to take a look at?

Steven King

Yes, absolutely, that would be one of our nice targets.


Your next question comes from Richard Siracusa - Merrill Lynch.

Richard Feracusa - Merrill Lynch

I think you mentioned on the DTRA, did you mention that 22 million would come in the first 2.5 years?

Steven King

Yes. The base period for the contract is two years. So that $22.3 million is essentially budgeted for the first two years of the contract.

Richard Feracusa - Merrill Lynch

You also mentioned that the reason for the delay in the Duke paper was that they’re gathering additional data which would make hopefully the results even more exciting. How long would it take to together that additional data?

Steven King

Yes, I know the work is ongoing. Essentially the work needed for the initial publication and presentations has pretty much been completed. There’s still a little bit of polish up work going, but again these delays are overall a real positive for the program because what we are finding I think is even more exciting than what we originally had hoped going into the end of the studies and in fact now our effort here internally has probably tripled over the course of the collaboration and the number of outside investigators working with us on the trials, on the studies is also greatly increase. So there is a lot of excitement around what we are doing here, what we are finding and the potential applications of that knowledge base that we are gathering right now.

Richard Feracusa - Merrill Lynch

So the additional data has been gathered than?

Steven King

Yes, some of it has. It’s obviously an ongoing process, so the more we learn, the more we get to do research, but as far as the initial publications, what have you? The data is essentially available now. There are publications that are in process and others that have been submitted and so things are moving along very nicely.


Your next question comes from Michael Jacobs - private investor.

Michael Jacobs

Give in your own words the superior news that’s come out recently, particularly the military news and the results from the trials. Obviously, every shareholder is deeply concerned with the stock price. It seems to have been a very poor, very poor indeed the stock information going out to the shareholders in terms of promotions, Investor Relations; what do you intent to do about that? Do you intend in fact to change the course that you’re on? Get a new PRIR firm involved that can do the job and if not, why not?

Steven King

Well, probably the best step here would be to maybe bring Barbara Lindheim back online and since she is very actively involved in really talking to the media and promoting what we are doing to the media in an effort to raise greater awareness for the company’s technologies. So, Barbara if your available maybe you can jump back on and address this shareholders questions.

Barbara Lindheim

Yes, I hope you all can hear me. Yes, thank you for that question, I think it’s a good opportunity for us to clarify some of what we think is very good work we have been doing, working with Peregrine management. First of all, let me start off by saying that in the biotechnology trade and professional and investor media we’ve been getting excellent coverage; for instance on the DTRA announcement we had a major front page story in Bioworld today which is the most respected and widely read biotechnology trade publication that’s read worldwide by investors and had a tremendous story there. We also had coverage in the more general media by Dow Jones Newswires, by Thomson Reuters.

Certainly we were picked up and covered in quite a few of the online publications that are tracked by private investors such as So, when we look over the overall landscape on that news we think we did very nicely. One thing unfortunately in terms of the general media, I think as you may all remember several years ago there was a great deal of interest in the general media about the issue of bioterrorism.

Unfortunately, the media goes in fashions as everything else does and in fact if you get on Google or Yahoo search and do a search you’ll find there has been virtually no media coverage amongst the general media of bioterrorism related issue in at least a year and a half to two years time. So, although I think we did a nice job in raising awareness among some of the general media about this being another feather in Peregrine's cap for them to keep an eye on the company as we have positive developments right now with $4 a gallon gas and in the turmoil in the financial markets, this is just not an issue that’s resonating; right now it’s the media.

In terms of the cancer data we think they are very exciting data, but I think we also have to be realistic. As Steve’s mentioned, these are our first data, there are 14 patients; we did certainly get the word out. Also we got very nice pick up of those early data amongst the professional trade and biotech investor press and we also made an effort and I think had some success in getting the word out to the general media that Peregrine and bavituximab are absolute compounds that folks want to watch. It’s important to realize that building a media presence is a process, it doesn’t happen overnight and we feel that these first results from the study in Georgia were a very important foundation that we’ll be able to build on and generate some more widespread media coverage around as we generate more data over the coming months.

Michael Jacobs

Well, I appreciate your comments, but the fact is that this stock is not only languishing, but it’s going down with the news that’s coming out. I recognized that there is a very bad market out there, nobodies questioning that, but companies that have this news in the pharmaceutical industry probably ten times what we’re traveling at and we are now at the point we made and getting knocked off, of NASDAQ; so I think a change is necessary.

Barbara Lindheim

Well, I’ll turn the call back over to Steve and Paul, but I think we would challenge your data. This has been a very, very tough market for small-cap biotech companies across the board. We expect the situation to be temporary and I will turn the call back to management.

Steven King

Yes, I think just following-up on those points there is from a company standpoint we have to continue our efforts to generate additional data that’s going to be supportive of the potential or technologies. Again I think as Barbara pointed out this is early results, very promising early results, but early results nevertheless.

I think as the data matures, we get more patient data, we get these other trials going through, have data coming in through that and certainly the news flow and the potential I would think interest from a PR standpoint is certainly going to only be increasing overtime here. I think as we do in all areas of our business, we will evaluate putting more effort into these areas as we feel we can hit more outlets and have more opportunities to be successful. We do take this very seriously. Again, we’re shareholders as well and we want to see the stock price move in the same direction you do.


Your next question comes from Fine Black – Private Investor.

Fine Black

I’ve got a two part question. It seems like over the next few months here it could be the best of time or the worst of time for Peregrine? I’ve been involved with the company for over 10 years and as a lot of individual shareholders and I’m sure everyone involved we’re not happy with the way things have turned out to a point. Over the next several months it seems like you can be very busy with the Bavi program and Cotara and so on and I know we have a couple of other clinical assets, the VEA, the VTA. One, are you going to be doing anything with them? and two, if we’re not or even if you are, but you’re not going to be able to do much with them; one would it be worth your while to dispose of those assets, one before they become obsolete or two before they become worthless like oncolom and then I have another question if you want to answer that part first.

Steven King

Well, what I can say is we are looking at partnering opportunities for the pre-clinical programs. Clearly our resources are currently earmarked to be as aggressive as we can on the clinical front. On the research side obviously the DTRA money coming through is a big boost for the Bavi Anti-Viral program, but for as far as VEA and VTA’s go, we do have active discussions on those programs.

There’s a lot of interest in them and we certainly as you said don’t want to see them become stale on the shelf. We want to really see those moving forward and again those discussions are ongoing. I’m very hopefully we can bring some of those to a quick conclusion and just see the technologies moving forward while we continue to generate the clinical data that is probably the nearest term, major value drive for the company.

Fine Black

I’m sure this is on the mind of a lot of other individual shareholders. I’ve got a major chunk of my finances invested in this company, a reverse split would be decimating to me. Rather than going that route, would it be better to accept maybe what you would consider a less than a desirable partnership or selling off of some of our assets where we would probably come out ahead, at least from an individual shareholder view point rather than a reverse split?

Steven King

Well, I think the issues you bring up are a little bit hard to address. Essentially I think the company is in a really good position should we have to move the route of a reverse split. We are not moving in this direction. Our stock price isn't depressed because we’ve had major failures and the company just has nothing going for it. In contrast I think we are in a much better position than we ever have been with regard to our development programs. The programs for developing are in very hot areas and in clearly targeted therapies and oncology especially are really the way of the future and I think that’s the reason we’ve had so much interest in the program from potential partners.

We certainly don’t want to sell the company or anything in it for pennies on the dollar, when we feel like the future is so bright for the company. So, I am not sure how to address, could we sell off this or that. Bottom line is I think the most valuable assets for the company, you’re only growing in value and that’s something we want to take advantage of.

We recognize we need to turn that into value from a share price standpoint and again the way’s to do that is more clinical data in addition to further outside validations that maybe very well harboring some of these programs, but again we don’t want to give them away just to get deals done or try to extract some quick value here. I still believe what we are doing has tremendous upside and that if we state at course here, we will be successful.


This concludes today‘s question-and-answer session.

Steven King

I want to thank you all for participating in today’s conference call and for your continuing support of Peregrine. We look forward to reporting on our continuing progress at the next quarterly conference call. Thank you again.

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