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Peregrine Pharmaceuticals 'The Art Of The Deal'

Peregrine Pharmaceuticals (NASDAQ:PPHM) management just may have taken advice from Donald Trump and his book "The Art of the Deal." With recent collaborations from world-renowned cancer research center Memorial Sloan Kettering (MSK) and pharmaceutical giant AstraZeneca (NYSE:AZN), two of Trump's tips for success from the book resonate: tip #1: "Think Big," and tip #7: "Get the Word Out." In the world of immuno-oncology (I/O), there is no one "Bigger" than MSK and no institution with more credibility to "Get the Word Out." MSK is the #1 cancer research hospital in the world, and with this distinction, MSK has literally their pick of any collaborator in the pharmaceutical industry. With finite time, lab space and manpower, to collaborate with MSK is no easy achievement; a company and their I/O asset must pass an intense screening. So why did MSK choose Peregrine Pharmaceuticals? Let's take a closer look.

Peregrine Pharmaceuticals most valuable asset is their monoclonal antibody, bavituximab. Bavituximab is a first-in-class phosphatidylserine (PS)-targeting monoclonal antibody that represents a new approach to treating cancer. PS is a highly immunosuppressive molecule usually located inside the membrane of healthy cells, but "flips" and becomes exposed on the outside of cells that line tumor blood vessels, creating a specific target for anti-cancer treatments. Cancer cells use this PS exposure as camouflage, which in turn allows the cancer to spread and kill the host. Bavituximab targets and binds to PS and blocks this immunosuppressive signal, thereby enabling the immune system to recognize and fight the tumor. Peregrine Pharmaceuticals has over 140 patents protecting their monopoly on PS binding. These patents assure investors there will be no "me too" monoclonal antibodies being developed to bind PS, such as we are seeing in the PD-1 and PDL-1 immuno-oncology space with companies like Bristol-Myers Squibb Co. (NYSE:BMY), Merck & Co. (NYSE:MRK) and Pfizer Inc. (NYSE:PFE), to name a few.

Image of lung cancer:

Bavituximab's unique mechanism of action (MOA)

Peregrine Pharmaceuticals fully owns its immuno-oncology pipeline and carries no debt, a rarity for a small-cap biotechnology company in late-stage clinical development. Peregrine Pharmaceuticals has made it known to investors they are actively seeking a commercialization partner. This partnership, in my opinion, will bring a hefty price tag, for bavituximab is a molecule unlike any other in development in the immuno-oncology space. The "art" of this deal is to know what one has and to know the intrinsic value of the asset. I urge investors to read my last article, where I touch upon the disconnect in the immuno-oncology space and why, in my opinion, Peregrine Pharmaceuticals has traded at a low market valuation, one which, I believe, will readjust to intrinsic value in the near future. Peregrine Pharmaceuticals has primarily funded the company over the past two years through use of "at-the-market" offering. While investors are unhappy with any dilution, I believe both the absolute rate and relative rate of dilution is slowing, whilst the rate of increase in the value of the intellectual property is increasing at a dramatic rate. This is not a stable equation and, in my opinion, will resolve itself with a higher market valuation...


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