PPHM Chart

What: Shares of Peregrine Pharmaceuticals (NASDAQ:PPHM) a predominantly clinical-stage biopharmaceutical company engaged in discovering immunotherapeutic products to treat cancer, rose by 10% in January, according to data from S&P Capital IQ, after the company announced positive data regarding its pipeline.

So what: According to the Feb. 9 press release, in preclinical models of breast cancer and melanoma, phosphatidylserine (PS)-targeting antibodies helped to enhance the ability of select immune checkpoint inhibitors (PD-1 and CTLA-4), leading to a statistically significant improvement in anti-tumor activity.

PS-targeting antibodies look to suppress cancer cells' ability to mask themselves from the body's immune system. PS is often found on the inside of healthy cells and acts as a signal to the immune system not to destroy that cell. In cancer cells, PS is expressed on the outside of the cell, masking it from the immune system. The press release specifically notes that myeloid-derived suppressor cells, one of the primary components that allow tumors to go unrecognized, fell by more than 40% when compared against an anti-PD-1 monotherapy.

This data release implies that Peregrine's PS-targeting model could work in other cancer types beyond non-small cell lung cancer, which is what its lead drug bavituximab is currently being tested for in the phase 3 SUNRISE trial, and that combo therapies may be in its future. Combinations would be great news, especially if Peregrine can find a partner willing to bear some or all of the burden of clinical trial costs.

Now what: Despite being preclinical, this data is important for Peregrine as it serves as more evidence that its PS-targeting antibodies would be suited for combo therapies. Peregrine is likely to continue burning through cash, so any licensing deals or combo therapy collaborations it can reach are bound to be good news. The big question is whether potential partners will wait to see Peregrine unveil its phase 3 results for bavituximab, or if they'd consider partnering here.

Source: Peregrine Pharmaceuticals.

However, the more immediate driver for Peregrine is bavituximab's results. Non-small cell lung cancer needs more effective treatments, and its phase 2 study gave the market just that. Unfortunately, errors at a third-party laboratory botched the results from this study to the point where little credence is being paid to bavituximab until we see those phase 3 results.

My gut and the phase 2 data suggest bavituximab will be a success, but history demonstrates otherwise with small-cap biotech stocks faring miserably in phase 3 and Food and Drug Administration decisions when it comes to oncology products. My suggestion would be to keep Peregrine on your radar, but to patiently wait for the SUNRISE data to tell us where Peregrine is headed next.