Peregrine Pharmaceuticals (PPHM) may be delisted; clinical trials at risk

Peregrine Pharmaceuticals Incorporated (NASDAQ: PPHM) is in such poor financial shape that it has been delisted has received a notice of its failure to meet continuing NASDAQ Capital Market requirements and may soon be delisted. The stock is currently priced at $0.70 and does not publicly trade.

Why should investors care whether a small biopharmaceutical company implodes like so many long-ago dot coms? Because Peregrine is running several important clinical trials testing whether its product, bavituximab, might be another weapon in the fight against prostate and breast cancers, diseases which kill tens of thousands of Americans every year. In the fight against cancer, every likely beneficial treatment scenario needs to be pursued aggressively.

Peregrine recently raised $21 million from institutional investors in order to fund the continued collection of data in its clinical trials. This is good news, except that the clinical trials are being run not in the US, but in India where there are fewer patient protection policies and data collection and analysis is much cheaper to produce. Presumably, credible evidence from the India clinical trials will convince the FDA to allow clinical trials using bavituximab in the US.

A recent piece of good news for Peregrine is that the Department of Defense is investigating whether bavituximab may be effective in treating hemorrhagic fever. It is possible that Peregrine will be awarded a five-year contract worth almost $45 million to develop treatment protocols and run clinical trials investigating this use of its product. Such a contract would help Peregrine immensely. In its most recent quarterly report, Peregrine recorded a net loss of $4.65 million, less than last year's $5.45 million loss, but hardly good news. Peregrine did post $1.6 million in earnings from its wholly owned contract drug manufacturing subsidiary Avid Biosciences. If bavituximab does prove effective in the fight against some types of cancer, and if the drug does win FDA approval for use in the U.S., then Peregrine will have in-house manufacturing facilities. The need for such expertise currently seems a long ways away for Peregrine, which may be an attractive buy-out candidate by a much larger pharmaceutical company.