Shares of Peregrine Pharmaceuticals Inc. have maintained an upward course this year on anticipation for a drug under development to treat lung cancer.
The Tustin-based company’s shares are up nearly 150% for the year, at about $2.30 last week, with a market value of about $242 million. They’ve picked up steam in the last two months, with an average of more than 2 million shares trading daily.
Peregrine remains far off its high—shares of the 31-year-old company reached $50 in 2000.
The company, which employs about 160 workers, most in Tustin, posted a loss of $42.2 million on revenue of $15.2 million last year. Its shares had fallen below $1 around midyear.
The recent gains have come in tandem with signs of progress with its lead drug candidate, called bavituximab.
Peregrine released trial results May 21, including indications that the drug is effective in shrinking tumors.
“We’ve done a really good effort to go out and speak with the financial institutions and really make sure that the data registered on their radar screens,” Chief Executive Steven King told the Business Journal last week.
Next up are more results from the trial, slated for a presentation at the Symposium of Thoracic Oncology in Chicago on Sept. 7.
“I think, really, this data’s going to be positive,” King said.
Peregrine is looking to start a third-phase trial—a key step in drug development—in the second quarter of 2013. It has held talks with 15 to 30 potential partners to develop bavituximab, according to King, who said the prospects include mainly Big Pharma companies, with some specialty drug makers in the mix.
“We’ve really had a surge in partnering interest around the bavituximab program,” King said.
An ideal partner would be a company with a good deal of overseas sales because Peregrine wants to maintain as much of the U.S. rights as possible, he added. Peregrine has made it clear to any potential partner that it’s not interested in selling itself, King said.
The company’s lead drug is years away from Food and Drug Administration approval, and it has its detractors.
Report
The recent run-up in its shares saw a hiccup last week, with a 17% drop on Aug. 22 that followed a report on investor website Seeking Alpha, which called bavituximab’s clinical results “overhyped and inconclusive.”
The report is attributed only to someone writing under the name “Apsara Biotechnology Research,” and the author acknowledged holding a short position on Peregrine shares.
“In our opinion, investors are assigning an overly inflated valuation to an unproven Phase II drug with an unusual mechanism of action on a substantially incomplete subset of data,” Apsara wrote. “[Recent trading] speaks more to some combination of bullish newsletter articles, investment banking chatter and then a short squeeze to top it off, rather than any great market faith in [bavituximab].”
Peregrine declined comment.
Other critics have hit Peregrine for past practice of selling shares to finance operations.
“Our plan for financing the company going forward is to secure some debt financing,” King said.
The company had $18 million in cash on hand as of April 30, the end of its fiscal year.
Peregrine hopes to have news about potential debt financing on Sept. 10, when it has its next earnings call, King said.
He said the company’s Avid Bioservices Inc.—a manufacturing unit that produces drugs for other companies on a contract basis—accounted for almost all of Peregrine’s revenue for the 12 months ended April 30.
Peregrine is thinly tracked, covered by Newport Beach-based Roth Capital Partners LLC and two other firms.
“We continue to believe that Peregrine is attractive both for near and long-term investors given bavi’s broad clinical profile with multiple clinical data catalysts ahead,” Roth biotech analyst Joseph Pantginis wrote in a recent investors note.
Pantginis noted the drug potentially could be used to treat other types of cancer and multiple conditions. Peregrine intends to study bavituximab for pancreatic cancer. The company also is developing brain cancer drug Cotara and other biopharmaceuticals.
