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Why Peregrine Earnings Won't Show Profits

By Dan Caplinger - Sep 5, 2013 at 10:48AM

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The tiny biotech is still waiting on its pipeline drugs -- or a suitor.

Peregrine Pharmaceuticals (NASDAQ: PPHM) will release its latest quarterly report on Monday, and investors are under no illusions that the company will avoid losing money again this quarter. Their hope, though, is that in the long run, one of the biotech's treatments will win approval and help finally send Peregrine earnings to profitability.

With its monoclonal antibody treatment and diagnosis method for cancer and other diseases, Peregrine has the potential to deliver groundbreaking products that could save and extend countless lives. Yet as with any small biotech or pharmaceutical company, the trick is whether Peregrine can actually deliver on its promise. Let's take an early look at what's been happening with Peregrine Pharmaceuticals over the past quarter and what we're likely to see in its quarterly report.

Stats on Peregrine Pharmaceuticals

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$4.75 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Peregrine earnings look better this quarter?
In recent months, analysts have gotten a little less optimistic in their long-run views on Peregrine earnings. They haven't changed their July quarter loss estimates, but they've widened their loss projections for the current and next fiscal years by $0.04 per share each. The stock has performed even worse, falling 20% since early June.

One major problem that Peregrine has had is that its study data have been inconsistent at best. News earlier this year that Peregrine got FDA approval to start its bavituximab phase 3 trial for non-small-cell lung cancer got a hugely positive response. Yet one reason for that response is that after facing controversy over contradictory phase 2 results, investors were relieved that the FDA would even allow Peregrine to begin a phase 3 trial.

Subsequently, that inconsistency has continued, with an initially encouraging report of new data showing a substantial survival increase of 4.4 months for non-small-cell lung cancer patients giving way to later data in late June that showed much less benefit. Peregrine decided as a result to stop studying one particular treatment combination, leading to a big part of the stock's recent drop.

Peregrine's strategy going forward is to start its phase 3 trial by the end of the year, which will compare the combination of bavituximab and Sanofi's (SNY -0.86%) docetaxel against results from using docetaxel alone. Peregrine will also look for other areas in which bavituximab and other phosphatidylserine-targeting antibodies could be effective. A presentation last month at the Cambridge Healthtech Institute's Immunotherapies Congress highlighted the importance of targeting that specific lipid component on immune response.

More importantly for investors, the presentation also suggested a number of potential combinations that could produce beneficial health results. Bristol-Myers Squibb (BMY 1.57%) and Merck (MRK 1.16%) have been working on therapies based on targeting the PD-1 protein, which Peregrine specifically noted as a potential downstream immunotherapy combination worth further study. Meanwhile, Gilead Sciences (GILD 0.65%) could potentially find PS-targeting antibody technology helpful in studying treatments for HIV, hepatitis, and other viruses. Many shareholders hope that one of these companies will make a buyout bid for Peregrine, giving them a potential payoff without having to wait for the long process of potential approval for bavituximab.

In the Peregrine earnings release, watch for an update on the status of the phase 3 trial preparations, as well as news on any other studies. Patience will be essential for investors, but eventually, the stock could move sharply higher if Peregrine's studies go well.

Click here to add Peregrine Pharmaceuticals to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
$89.52 (1.16%) $1.03
Sanofi Stock Quote
$48.66 (-0.86%) $0.42
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$62.00 (0.65%) $0.40
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$74.96 (1.57%) $1.16

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