Peregrine Pharma soars 80% on study review

The small biotech lead the markets Monday following positive results of its cancer drug.

By Benzinga Jan 8, 2013 11:50AM
Droplet Falling from Pipette into Test Tube Andrew Douglas Radius Images Getty ImagesBy Scott Rubin

Small-cap biotech company Peregrine Pharmaceuticals (PPHM) was the leading gainer on the Nasdaq on Monday after it updated investors on data problems with its Phase II clinical trial of its lead cancer drug bavituximab.

The stock closed Monday up 80% to $2.43. Shares gapped higher at the open and continued to climb throughout the day, posting an intraday high of $2.55. Volume was extremely heavy at around 62.6 million shares, which compares to a three-month daily average of under 4 million.

Peregrine shares have been on a wild ride the past six months. The stock had risen from $0.50 in mid-June to a high of $5.37 on September 21 due to promising overall survival data from the company's randomized Phase II trial of bavituximab to treat second-line non-small cell lung cancer. The results, Peregrine initially said, showed "a doubling of overall survival."

On Sept. 24, however, the company revealed discrepancies it had uncovered in the trial. Peregrine said in a statement that "it discovered major discrepancies between some patient sample test results and patient treatment code assignments." The company therefore recommended investors do not rely on any of the clinical data from the trial that were presented earlier. Investors, who were fearful that the trial would be completely invalidated, hammered Peregrine shares back under $1.00.

However, according to Peregrine's most recent update, this is apparently not the case. The company said Monday that the data problems are limited to the 1 milligram dose of bavituximab. After conducting a review of testing procedures at various trial sites, Peregrine said that there is no evidence that the problems affected the results of the 3 milligram treatment. Furthermore, that study showed that patients lived an average of 13 months after beginning treatment, or twice as long as patients who were not treated with the drug and received only chemotherapy in the clinical trial.

In the wake of the update from Peregrine, which vindicates the results of the 3 milligram arm of the drug trial, Roth Capital Partners analyst Joseph Pantginis upgraded the stock to "buy" from "neutral." In a client note, Pantginis said, "We believe this is a major step forward for Peregrine in getting bavi back on track, though the company is still faced with a bit of an uphill battle." Due to the data problems, Pantginis added that the study results will "still be viewed as 'tainted,' representing a key risk, though we believe the 3 milligram arm data remains impressive."

Over the last six months, Peregrine Pharmaceuticals has been unbelievably volatile. Investors and traders involved in this name have been given numerous opportunities to either make or lose vast sums of money. In fact, many have probably done both at different times. After Monday's big rally, Peregrine is trading around $2 above its 52-week low and $3 below its 52-week high.

At current levels, PPHM is sitting at its best levels since its nearly 80% plunge on September 24. In light of Monday's good news, there is certainly the possibility of more upside in the stock, but investors should expect continued volatility going forward as the outlook for bavituximab remains murky.

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