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This Weeks Stock Pick

7-19-2010 STW Recommendation PPHM - Strong Buy

PPHM is has been on our radar for several years. They are one of those rare biotech-pharma companies that have the ability to earn income and show a strengthening balance sheet, while in reality they are a developmental company. The recent dramatic reductions in share price can be attributed to reductions in profits and income on PPHM Licensing and contract manufacturing and also to the luster wearing off from the long stream of excellent PII news. The truth is that when you look at PPHM as a developmental drug player they are a real value. With several trials showing better than expected results in the past year and other trials in early stages the profit potential of any one of these drugs will be enough to send the share price soaring when given FDA Approval.

With so many different trials going on and a long ride to FDA approval we see a roller coaster 18 months a head for share price but we feel that at current levels around $1.70 it is very undervalued. While Technical analysis shows conflicting signals and we can not rule out further price erosion possibly as low as $1.50 and recommend building a position over the next few sessions based on this uncertainty. We see the stock as being oversold and believe that it should climb back to $2.25 in the near term absent any trial news. As positive trial updates are released we see spikes between $3.00 and $4.00 and believe that any bad news will be buffered by the fact that they have so many different trials underway. As the pipeline moves into PIII we see the price stabilizing between $4 - $5 and long term on FDA approval for any of the dreaded cancers PPHM is treating we project a share price above $20.

 We see little downside & great upside with PPHM and give it a STRONG BUY

Recent PPHM Related Press Releases

Peregrine Initiates Second Randomized Phase IIb Lung Cancer Trial Using First-In-Class PS-Targeting Monoclonal Antibody Bavituximab

Promising Tumor Response and Median PFS Data Reported at ASCO Lead to New Phase IIb Trial

TUSTIN, CA -- (MARKET WIRE) -- 07/14/10 -- Peregrine Pharmaceuticals, Inc. (NASDAQ: PPHM), a clinical-stage biopharmaceutical company developing first-in-class monoclonal antibodies for the treatment of cancer and viral infections, today announced that it has initiated a second randomized Phase IIb non-small cell lung cancer (NSCLC) trial, this one in front-line patients. The clinical trial will compare bavituximab plus carboplatin and paclitaxel versus treatment with carboplatin and paclitaxel alone. A first-in-class phosphatidylserine (PS)-targeting monoclonal antibody, bavituximab is now being evaluated in combination with standard chemotherapy in two Phase IIb trials, the first in refractory patients and the second in front-line NSCLC patients.

Positive data from a previous Phase II signal-seeking trial which preceded this new Phase IIb trial were recently presented at the ASCO 2010 Annual Meeting. Data from this previous study showed an objective response rate (ORR) of 43% (21 of 49 patients) and median progression-free survival (PFS) of 6.1 months for front-line NSCLC patients treated with bavituximab in combination with carboplatin and paclitaxel. These results exceeded the ORR of 15% and median PFS of 4.5 months following treatment with carboplatin and paclitaxel alone in a separate front-line NSCLC trial.

"Bavituximab represents an entirely new targeted approach to cancer therapy," said David E. Gerber, M.D., assistant professor, Division of Hematology/Oncology at the University of Texas Southwestern Medical Center. "Earlier lung cancer studies combining bavituximab with conventional chemotherapy have shown encouraging response rate and progression-free survival data compared to historical outcomes using chemotherapy alone. Chemotherapy has been shown to increase the exposure of phosphatidylserine on tumor blood vessels, thereby enhancing bavituximab's cancer targeting. Bavituximab has been shown to fight tumors by reactivating the immune system and causing vascular changes. This mechanism of action could provide a new treatment option against this deadly form of cancer."

"Building on the promising data reported at ASCO from our earlier Phase II trial, we are launching this new Phase IIb study to advance the development of bavituximab as a potential new, broad-spectrum therapeutic option for cancer patients," said Joseph Shan, vice president of clinical and regulatory affairs at Peregrine. "Our goal is to complete patient enrollment in this trial by mid-year 2011. As this trial is unblinded, we plan to report interim data as this trial progresses while we continue to monitor median overall survival from our earlier Phase II NSCLC trial."

Peregrine Pharma Q4 Loss Widens - Quick Facts

July 14 - (RTTNews) - Peregrine Pharmaceuticals, Inc. (PPHM), a clinical-stage biopharmaceutical company developing first-in-class monoclonal antibodies for the treatment of cancer and viral infections, reported a net loss for the fourth quarter of $7.7 million or $0.16 per share, compared to a net loss of $3.6 million or $0.09 per share for the same quarter last year.

Total revenues for the fourth quarter fell to $4.42 million from $7.87 million a year ago.

Analysts polled by Thomson Reuters expected the company to report a loss of $0.09 per share on revenue of $6.78 million for the fourth quarter. Analysts' estimates typically exclude special items.

Peregrine drug shows promise against breast cancer

May 27, 2010 LOS ANGELES (Reuters) - A small, mid-stage trial of an experimental breast cancer drug developed by Peregrine Pharmaceuticals Inc showed that 74 percent of patients responded to the treatment, according to the company.

The Phase 2 trial enrolled 46 patients with advanced breast cancer who were treated with a combination of the drug, called bavituximab, and chemotherapy drugs paclitaxel and carboplatin.

The trial found that, after a treatment period of about six months, 34 patients achieved an "objective tumor response," meaning their tumors shrank at least 30 percent. Four patients, or 9 percent, had their tumors completely disappear.

Patients survived a median of 6.9 months without their cancer worsening and overall survival will eventually be reported, Peregrine said.

By comparison, an older trial showed that treating advanced breast cancer patients with the chemo drugs alone resulted in a response rate of 62 percent and median progression-free survival of 4.8 months.

Side effects were in line with those typically seen with chemo drugs, said Marvin Garovoy, head of clinical science at Peregrine.

Bavituximab is an antibody designed to reactivate the immune system to fight tumors and tumor blood vessels.

Peregrine, which will present the bavituximab data at a meeting of the American Society of Clinical Oncology next month, said it is planning future Phase 2 trials.

Garovoy said the company plans to launch by the middle of this year a controlled study of the drug in lung cancer patients.

Peregrine Pharma lung cancer trial shows promise

Oct 5, 2009 (Reuters) - Peregrine Pharmaceuticals Inc (PPHM.O) said a combination of its experimental cancer treatment with chemotherapy improved progression-free-survival in lung cancer patients as compared to chemotherapy alone in a mid-stage trial.

The trial is testing the overall response rate to Peregrine's bavituximab -- a monoclonal antibody -- in combination with chemotherapy in patients with non-small cell lung cancer.

Monoclonal antibodies are tailor-made proteins that can detect the proteins attached to cancer cells and be used to block their growth.

An analysis from a 21-patient cohort of the trial showed the median progression-free-survival for patients receiving bavituximab and chemotherapy was 6.5 months, compared to a survival rate of 4.2 months to 4.5 months for those receiving only chemotherapy.

Peregrine also said that it completed enrolling the total of 49 patients planned for the study.

Lung cancer kills about 1.2 million people a year and is the top cause of cancer death globally.

Shares of the company were up 14 percent to $0.80 in premarket trade. They closed at $0.70 Friday on Nasdaq.

Peregrine Pharma brain cancer drug shows promise

Sept 2, 2009 (Reuters) - Peregrine Pharmaceuticals Inc (PPHM.O) said its experimental brain cancer agent Cotara appeared well tolerated and showed encouraging signs of efficacy in a mid-stage trial, sending its shares up 21 percent in pre-market trade.

Ten patients with recurrent glioblastoma multiforme -- a deadly, common form of brain cancer -- at first relapse received the brain cancer agent as part of an ongoing 40 patient mid-stage clinical trial, the company said.

Shares of the company rose to 97 cents in pre-market trade Wednesday. They closed at 80 cents Tuesday on Nasdaq.

Company Background

Peregrine Pharmaceuticals, Inc. (Peregrine) is a clinical-stage biopharmaceutical company that manufactures and develops monoclonal antibodies for the treatment of cancer and viral infections. The Company is advancing three separate clinical programs with its compounds bavituximab and Cotara that are clinical candidates under its anti-phosphatidylserine (Anti-PS) therapeutics and tumor necrosis therapy (TNT) platforms. In addition to its clinical programs, Peregrine is performing pre-clinical research on bavituximab and an equivalent human antibody as a potential treatment for viral hemorrhagic fever infections under a contract awarded through the Transformational Medical Technologies Initiative (TMTI) of the United States Department of Defense's Defense Threat Reduction Agency (DTRA).

PPHM Company Overview (Excerpts taken from 10-k filings)

PPHM is a clinical stage biopharmaceutical company that manufactures and develops monoclonal antibodies for the treatment of cancer and serious viral infections.  We are advancing three separate clinical programs with our novel compounds bavituximab and Cotara® that are the first clinical candidates under our Anti-Phosphatidylserine (“Anti-PS”) therapeutics and Tumor Necrosis Therapy (“TNT”) platforms.

In addition to our clinical programs, we are performing pre-clinical research on bavituximab and an equivalent fully human antibody as a potential broad-spectrum treatment for viral hemorrhagic fever infections under a contract awarded through the Transformational Medical Technologies Initiative (“TMTI”) of the U.S. Department of Defense's Defense Threat Reduction Agency (“DTRA”).  This federal contract is expected to provide us with up to $22.3 million in funding over an initial 24-month base period, with $14.3 million having been appropriated through the current federal fiscal year ending September 30, 2009.

In addition to our research and development efforts, we operate a wholly owned cGMP (current Good Manufacturing Practices) contract manufacturing subsidiary, Avid Bioservices, Inc. (“Avid”).  Avid provides contract manufacturing services for biotechnology and biopharmaceutical companies on a fee-for-service basis, from pre-clinical drug supplies up through commercial-scale drug manufacture.  In addition to these activities, Avid provides critical services in support of Peregrine’s product pipeline including manufacture and scale-up of pre-clinical and clinical drug supplies.

We were originally incorporated in California in June 1981 and reincorporated in the State of Delaware on September 25, 1996.  Our principal executive offices are located at 14282 Franklin Avenue, Tustin, California, 92780 and our telephone number is (714) 508-6000.  Our internet website addresses are www.peregrineinc.com and www.avidbio.com .  Information contained on, or can be accessed through, our website does not constitute any part of this Annual Report.

Products in Clinical Stage Development  

Our products in clinical trials are focused on the treatment of cancer and HCV infection.  The below table is a summary of our clinical trials and the current status of each clinical trial. Additional information pertaining to each clinical trial is further discussed below.

Bavituximab for the Treatment of Solid Tumors  

We are currently running four clinical trials testing bavituximab for the treatment of solid tumors. Three of these clinical trials are Phase II trials evaluating bavituximab in combination with commonly prescribed chemotherapeutic drugs in patients with advanced breast or lung cancer.  These Phase II trials utilize a two-stage design in which an initial cohort of patients is first enrolled, dosed and evaluated and then the study may be expanded if a sufficient number of patients in the initial cohort meet the primary endpoint and the safety profile is positive.  The primary endpoint of the Phase II studies is to assess overall response to the combination of bavituximab and chemotherapy.  Secondary objectives include measuring time to tumor progression, duration of response, overall patient survival and safety parameters.  Tumor responses in all of the studies are being evaluated using Response Evaluation Criteria in Solid Tumors (“RECIST”) parameters.  The trials are being conducted according to International Conference on Harmonization (“ICH”) and Good Clinical Practices (“GCP”) standards.  Our fourth active bavituximab oncology clinical trial is a Phase I trial evaluating bavituximab as solo therapy in patients with advanced solid tumors that no longer respond to standard cancer treatments.

Cotara® for the Treatment of Brain Cancer

Cotara®, our first Tumor Necrosis Therapy (“TNT”) based agent, is a monoclonal antibody targeting agent conjugated to Iodine 131, a therapeutic radioisotope that kills tumor cells near the site of localization.  In prior clinical studies, Cotara® has demonstrated encouraging results in patients with advanced brain cancer.  One previous study demonstrated a 58% increase in expected median survival time in a group of patients suffering from recurrent glioblastoma multiforme (“GBM”) who were treated with Cotara® at the anticipated therapeutic dose rang being used in current studies.  This was considered a promising development in this serious and deadly disease.  

Bavituximab for the Treatment of HCV Infection

Bavituximab is a monoclonal antibody that targets and binds to phosphatidylserine (“PS”).  Our researchers and collaborators have discovered that PS becomes exposed on the surface of a broad class of viruses known as enveloped viruses, as well as on the cells they infect.  These pathogens are responsible for about half of all human viral diseases, including hepatitis C virus (“HCV”), influenza, human immunodeficiency virus (“HIV”), cytomegalovirus (“CMV”) and other virus strains that cause serious and life-threatening conditions.  Scientists studying bavituximab believe the drug’s mechanism of action may help stimulate the body's natural immune defenses to destroy both the virus particles and the cells they infect.  Since the target for bavituximab is only exposed on diseased cells, healthy cells should not be affected by bavituximab.

Government Contract with the Defense Threat Reduction Agency

On June 30, 2008, we were awarded a five-year contract potentially worth up to $44.4 million to test and develop bavituximab and an equivalent fully human antibody as potential broad-spectrum treatments for viral hemorrhagic fever infections.  The contract was awarded through the Transformational Medical Technologies Initiative (“TMTI”) of the U.S. Department of Defense's Defense Threat Reduction Agency “DTRA”).  This federal contract is expected to provide us with up to $22.3 million in funding over a 24-month base period, with $14.3 million having been appropriated through the current federal fiscal year ending September 30, 2009.  The remainder of the $22.3 million in funding is expected to be appropriated over the remainder of the two-year base period ending June 29, 2010.  Subject to the progress of the program and budgetary considerations in future years, the contract can be extended beyond the base period to cover up to $44.4 million in funding over the five-year contract period through three one-year option terms.  Work under this contract commenced on June 30, 2008 and direct costs associated with the contract are included in research and development expense in the accompanying consolidated statements of operations.

Pre-clinical Programs  

We have historically developed several earlier stage technologies that are intended to be used as an adjuvant to improve the performance of standard cancer drugs, anti-angiogenesis agents, and vascular targeting agents, that complement our other anti-cancer platforms.  In order to focus our efforts and resources on our current clinical programs, we have curtailed our efforts in developing these pre-clinical programs and we are actively seeking partners to further develop these technologies.

Peregrine Pharmaceuticals Inc Chart - PPHM:NASDAQ

PPHM Technical Analysis Many of the usual TA indicators (MACD, DMA, Stochastics) are showing bearish signals for PPHM we also find many indicators showing the stock is oversold. This oversold condition when combined with our research on the company and understanding of what has caused the share price to fall leads us to be bullish on PPHM.

 RSI
According to the RSI which is currently at 19.25%, below the critical value of 30, PPHM is oversold. This shows that there has been significant recent downward momentum that is not sustainable.

 Williams %R
According to the %R which is currently at -98.94%, well below the critical value of -80, PPHM is oversold.

 Price Channel
PPHM's recent volatility has been greater than usual. This is seen by the increased distance between the upper and lower bands that make up the price channel. Additionally, PPHM is trading near its lower price channel band. Suggesting that the stock price is low relative to the recient price action.

 Ultimate Oscillator
According to the Ultimate Oscillator, currently at 28.3%, still below the critical value of 30, PPHM may be oversold. While this does not always mean that the stock will rally, it does suggest that selling should not be sustainable at the current levels

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