Peregrine Pharmaceuticals Inc (NASDAQ:PPHM) Explodes Higher

We at Insider Financial have been pounding the table all year on Peregrine Pharmaceuticals Inc (NASDAQ:PPHM). We've been saying that the company remained undervalued and that better days were ahead for the company and its shareholders. The latest news vindicates our bullish calls and signals what we believe is a new bull run getting started for PPHM.Peregrine Pharmaceuticals Inc is a company focused on continued revenue growth from its contract manufacturing business and developing its novel immuno-oncology products. The company is working to evaluate its lead immunotherapy candidate, bavituximab, in combination with a range of novel immuno-oncology (I-O) agents for the treatment of various cancers. Peregrine’s in-house cGMP manufacturing capabilities are provided through its wholly-owned subsidiary Avid Bioservices Inc, which provides development and biomanufacturing services for both Peregrine and third-party customers.Bavituximab is an investigational chimeric monoclonal antibody that targets phosphatidylserine (PS). Signals from PS inhibit the ability of immune cells to recognize and fight tumors. Bavituximab is believed to override PS mediated immunosuppressive signaling by blocking the engagement of PS with its receptors as well as by sending an alternate immune activating signal. PS targeting antibodies have been shown to shift the functions of immune cells in tumors, resulting in multiple signs of immune activation and anti-tumor immune responses.What got investors excited about the stock was the news that Avid Bioservices generated $44 million in revenue for fiscal year (FY) 2016 compared to $26.7 million in contract manufacturing revenue in FY 2015. Peregrine said that it expects to continue to have double digit contract manufacturing revenue growth, and for FY 2017, the company is providing revenue guidance of $50-55 million for Avid, due in part to the revenue backlog of $56 million under committed contracts from existing clients. Peregrine expects this trend, driven by increasing client demand and several ongoing expansion initiatives, to lead to future sustainable profitability for the company in 24 months. CEO Steven King said:

“The past several months have been a busy and productive time at Peregrine as we work to optimally position the company for future success with both our contract manufacturing and drug development businesses. We are very pleased that Avid exceeded its revenue projections for fiscal year 2016 and excited for what we expect will be continued growth for that business. At the same time, we continue to work to advance our phosphatidylserine (PS)-targeting platform. In order to move toward overall profitability while continuing to generate valuable clinical data, we will focus our future development efforts on small, early stage clinical trials evaluating combinations of bavituximab and immuno-oncology (I-O) agents. This strategy will be supported through our current and future collaborations, which we believe will efficiently generate the clinical data required to identify and pursue the most valuable opportunities for bavituximab.”

Overall, it was a great report from PPHM. The company exceeded its revenue target for Avid Bioservices by 10%, or $4 million. The recently commissioned second manufacturing facility completed its initial process validation runs and is ramping up to conduct multiple new process validation runs for three current clients. Because of strong demand, PPHM is in the process of designing a third manufacturing facility focused on clinical manufacturing. This suite will significantly increase the company’s manufacturing capacity, with the potential to generate up to $30 million in additional revenue annually. The company has secured a 25,000 square foot location in close proximity to its current campus and expects the new clinical suite to be complete and ready for clinical manufacturing activities by the first half of calendar 2017.Currently trading with a market cap of $132 million, PPHM has been one of our high conviction trades this year. The latest news and the move higher is just the start of much more to come. When one considers the potential of Bavituximab, its $61 million in cash, billionaire Kenneth Dart's 13.1% stake, and its revenue growth, it's an easy case to make in owning shares of PPHM. We will be updating Insider Financial as soon as we know more. For continuing coverage on PPHM, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in PPHM and have not been compensated for this article.