On December 12, 2016 Peregrine Pharmaceuticals, Inc. (NASDAQ:PPHM) (NASDAQ:PPHMP), a biopharmaceutical company committed to improving patient lives by manufacturing high quality products for biotechnology and pharmaceutical companies and advancing its proprietary R&D pipeline, reported financial results for the second quarter of fiscal year (FY) 2017 ended October 31, 2016, and provided an update on its contract manufacturing business, clinical pipeline and other corporate developments (Press release, Peregrine Pharmaceuticals, DEC 12, 2016, View Source [SID1234517052]).
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Highlights Since July 31, 2016
"The Avid business is on track to continue its revenue growth this fiscal year as we move toward overall profitability within the next 18 months. Our two facilities have the potential to generate in excess of $80 million in revenue, leaving additional capacity for revenue growth beyond fiscal year 2017 revenue guidance," stated Steven W. King, president and chief executive officer of Peregrine. "We are moving forward with our plans to construct a third manufacturing facility, with an eye toward efficiencies that will reduce the overall cost of construction and operation. While this may delay the new facility launch until later in calendar year 2017, we currently have adequate existing capacity to continue meeting the needs of our current clients while also bringing in new customers so we do not expect it to impact our near-term ability to grow top-line revenue as originally planned. Independently, Avid is a successful and growing CDMO business generating significant revenue and one of our key goals going forward is to help ensure that its value is appropriately represented in the market cap of our overall business."
Mr. King continued, "During, and subsequent to, the second quarter, we announced a series of important findings, all of which will contribute to our future development of bavituximab. Our ongoing analysis of the Phase III SUNRISE data has revealed a promising biomarker that may give us insight into key patient populations. We are actively evaluating additional potential biomarkers and we hope to identify a profile for patients who will receive therapeutic benefit from treatment with bavituximab. Concurrent with our internal clinical work, our collaborators at NCCN are in the process of initiating trials for three new bavituximab combination treatments, which we expect to begin enrolling patients in the coming months. What is exciting is that the NCCN studies will help build on developments we are seeing from our internal scientists, as well as our collaborators at Duke, Rutgers and Memorial Sloan Kettering Cancer Center. Together, we presented compelling data supporting our long-standing belief that bavituximab significantly impacts the tumor microenvironment, creating a more immune active environment in which other therapies, including checkpoint inhibitors, are able to have a greater anti-tumor effect. These findings are highly validating and we look forward to continuing our work with these world-class institutions to help guide clinical development."
Avid Bioservices Highlights
"Growing top-line revenue is a key focus and we are pleased to report a 53% improvement in contract manufacturing revenue for the current six-month period compared to the same period last fiscal year. In addition, our revenue guidance for the second quarter was targeted to exceed $20 million and we achieved $23.4 million in contract manufacturing revenue as we worked closely with the third-party testing laboratory to resolve the unexpected delays in testing we encountered during the first quarter. As a result, we reaffirm our manufacturing revenue guidance of between $50 and $55 million for the full fiscal year," stated Paul Lytle, chief financial officer of Peregrine. "We also continued to advance the validation of three separate manufacturing processes related to third-party customer products that could lead to future commercial manufacturing for these products. While these activities generally have a higher cost of manufacturing, which impacted our gross margin during the second quarter, we believe our investment in these products will provide us future revenue opportunities once these products are approved."
The company reaffirms its manufacturing revenue guidance for the full FY 2017 of $50 – $55 million.
Avid’s current manufacturing revenue backlog is $73 million, representing estimated future manufacturing revenue to be recognized under committed contracts. This backlog mostly covers revenue to be recognized during the remainder of fiscal year 2017 and fiscal year 2018.
Clinical Development Highlights
Through the ongoing analysis of the Phase III SUNRISE data, Peregrine scientists identified a correlation between overall survival and pre-treatment levels of the biomarker, beta-2 glycoprotein-1 (β2GP1), which we presented at ESMO (Free ESMO Whitepaper) in October.
Data demonstrated that patients with pre-treatment β2GP1 levels between 200 and 240 µg/mL – representing approximately 30% of randomized patients – achieved a statistically significant, 5.5-month improvement, from 7.7 months to 13.2 months, in median overall survival as compared to patients in the control group with the same range of β2GP1 levels.
Peregrine’s research collaboration with NCCN is advancing as planned, with grants awarded to three investigators to support research of bavituximab in combination with other therapeutics for the following studies:
Phase I Trial of Sorafenib and Bavituximab Plus Stereotactic Body Radiation Therapy (SBRT) for Unresectable Hepatitis C Associated Hepatocellular Carcinoma
Phase I/II Clinical Trial of Bavituximab with Radiation and Temozolomide for Patients with Newly Diagnosed Glioblastoma
Phase II Study of Pembrolizumab and Bavituximab for Progressive Recurrent/Metastatic Squamous Cell Carcinoma of the Head and Neck
The company expects these trials to begin over the coming months.
Research Highlights
Peregrine scientists and collaborators from Duke University Medical Center, Rutgers University College of Medicine, and Memorial Sloan Kettering Cancer Center each presented compelling data demonstrating that shifts in the tumor microenvironment from immune suppressed to immune active occurred when a bavituximab equivalent antibody was administered as part of a combination treatment regimen. Presentations addressed multiple phosphatidylserine (PS)-targeting combinations, including those with checkpoint inhibitors such as anti-PD-1, anti-PD-L1 and anti-LAG3, as well as with radiation or chemotherapy. These data suggest that the addition of PS-targeting reverses an immunosuppressive tumor environment, creating an immune active tumor microenvironment that can potentially convert patients that generally do not respond to immuno-oncology (I-O) therapies into responders. Key presentations were made at the Second International Cancer Immunotherapy Conference (CIMT) (Free CIMT Whitepaper) in September, the American Association for Cancer Research (AACR) (Free AACR Whitepaper)’s Tumor Immunology and Immunotherapy Conference in October, the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) in November, and the San Antonio Breast Cancer Symposium in December.
Financial Highlights and Results
Peregrine continues to execute its previously-announced strategy to reach sustained profitability by increasing contract manufacturing revenue while decreasing research and development expenses, with the goal of reaching profitability 18 months from now. During the first six months of FY 2017, the company made significant progress toward this goal with contract manufacturing revenues increasing 53% compared to the first six months of FY 2016 and research and development expenses decreasing by 45% compared to the first six months of FY 2016.
Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services provided to its third-party customers increased to $23,370,000 for the second quarter of FY 2017 compared to $9,523,000 for the second quarter of FY 2016. In addition, as previously-announced, a backlog at a third-party testing lab, unrelated to product quality, required that the recognition of some revenue be shifted from the first quarter to the second quarter of fiscal year 2017.
Total costs and expenses for the second quarter of FY 2017 were $27,447,000, compared to $23,347,000 for the second quarter of FY 2016. For the second quarter of FY 2017, research and development expenses decreased 51% to $7,022,000, compared to $14,190,000 for the second quarter of FY 2016. Cost of contract manufacturing increased to $15,441,000 in the second quarter of FY 2017 compared to $4,741,000 for the second quarter of FY 2016, primarily due to an increase in the cost of contract manufacturing associated with higher reported revenue. Also contributing to this increase and impacting gross margins for the period is the higher cost of operating the new Myford facility as well as the higher cost associated with performing process validation runs during the quarter. For the second quarter of FY 2017, selling, general and administrative expenses increased to $4,984,000 compared to $4,416,000 for the second quarter of FY 2016 primarily due to the company’s growing manufacturing business.
Peregrine’s consolidated net loss attributable to common stockholders was $5,498,000 or $0.02 per share, for the second quarter of FY 2017, compared to a net loss attributable to common stockholders of $14,578,000, or $0.07 per share, for the same prior year quarter.
Peregrine reported $49,055,000 in cash and cash equivalents as of October 31, 2016, compared to $61,412,000 at fiscal year ended April 30, 2016.
More detailed financial information and analysis may be found in Peregrine’s Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.