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|Stock Price At Underperform Recommendation:||$2.24|
Peregrine Pharmaceuticals Profile
|Market Cap||$250 million|
Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS
Peregrine has gotten a lot of mileage from their phase IIb trial of bavituxumab in second-line advanced NSCLC showing a doubling of ORR from 8% in control to 15% and 18%. They're now a four-bagger and counting from the June low of 0.43, and predictably I bailed out of my green thumb with plenty of points left on the table. Now, of course, the upward momentum is pure speculation in the usual game of baby biotech chicken. Ultimately, we know that ends up with someone splattered on the pavement.
Red flag one is that bavituxumab has been around for like, forever. Longer than I've been following biotech. That's a long time for a miracle drug to reveal its miraculous nature.
Red flag two is that PFS was only 4.5 months vs 3 months for standard of care. Better than nothing, but not necessarily predictive of prolonged survival. Ultimately a drug has to treat patients, not CT scans.
Red flag three is that the company released very little of the data from the trial. Statistical significance?
Red flag four is that the share price didn't start taking off until a month after the data release in May. Trial data doesn't get around by Pony Express and smoke signals. The delayed reaction reeks of manipulation and speculation.
Red flag five is courtesy of Adam Feuerstein, who points out that Peregrine has made a business model out of selling stock through unannounced ATM financings for years. If they've got something so great, why are they selling stock and diluting shareholders as hard as they can all the way up?
If you don't want to miss that kind of dilution and you can't bring yourself to pore through the quarterly SEC filings, just remember to click that cash flow link under Financials on Yahoo Finance. They can dilute without telling you in PR, but they can't hide their Sale Purchase of Stock.
Foolish Bottom Line
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