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Here's What The Peregrine Pharmaceuticals (NASDAQ:PPHM) Data Really Means

Here's What The Peregrine Pharmaceuticals (NASDAQ:PPHM) Data Really Means
Written by
Chris Sandburg
Published on
October 12, 2016
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One of the hardest things about analyzing biotech companies, especially those at the development end of the space, is interpreting company-public communication. The intentional fluffing of a PR that tries to convey poor trial results can be a red flag, but not always. There is so much jargon surrounding clinical trials, that anything outside of a primary and secondary endpoint hit can enter the realm of confusion when conveyed. This leads to a lot of misinterpretation, and this is what we've just seen in Peregrine Pharmaceuticals (NASDAQ:PPHM).The company just put out a release detailing the numbers it presented at ESMO, and it collapsed on the report. Overnight, however, sentiment looks to have shifted to the total reverse, and the company is up 20% premarket on Tuesday.Admittedly, the release was a bit mixed in its implications, and this is what's causing the confusion. In light of this, and to try and clear things up a bit, here's a look at what the numbers actually mean, and what the whole thing means for Peregrine going forward.First up, readers that haven’t looked at the release (here) might benefit from doing so before we get going, just to get an overview.Basically, and by way of a bit of history, it relates to a drug called Bavituximab, which Peregrine was pitching as a combo to chemotherapy against chemotherapy alone. The company decided to discontinue the trial earlier in the year (at 70% completion), but said it would carry out an analysis of the numbers it had to try and forge a path forward.The latest data are the result of this analysis.Basically, the numbers showed that the drug doesn’t work in the target population, which is the full spectrum of previously treated locally advanced or metastatic non-squamous non-small cell lung cancer (NSCLC) patients. The control arm actually out performed the combination therapy active arm (10.7 months as compared to 10.8 months median overall survival (OS)), and while some will suggest that this is a result of a better than expected performance from control, it doesn’t really matter. The drug is not going to get approval any time soon for a full spectrum population, and that's the bottom line.That's not the end, however.The company has identified a subset of patients that performed better when Bavituximab was included in their regimen – considerably better. These patients have an antibody called beta-2 glycoprotein-1 (β2GP1) at a level between 200 and 240, and in this subgroup, active arm outperformed the control by 5.5 months.There was also some reference of a subgroup of patients with β2GP1 levels ≥ 200 outperforming, but this wasn’t stat sig, so we're ignoring it completely.Now, this is where the investment community will come to arms. Some will argue that mining data like this was bound to come up with some causative benefit, and that it doesn’t really mean anything. Others, and we're inclined to take a post in this latter camp, will argue that because Bavituximab is specifically designed to interact with the antibody in question, there may be some value in the analysis, even though it came about post-completion.Why?Sometimes, in biotech, trial design is a hit and miss science. A company might run a phase III with the goal of hitting the primary, but with a secondary aim of – if not hitting the endpoint – identifying some parameters that might improve the chances of a drug outperforming in a follow up trial.That's exactly what we've got here.Peregrine is essentially saying that its drug works in patients that have levels of β2GP1 between 200 and 240, and that this represents a fairly substantial portion of the patients tested (30%). Substantial enough, that is, that there would be value in an approval to treat this subpopulation from a market potential perspective.Of course, we can't say with any certainty that the link between better performance and β2GP1 is causative – we don't really know how these levels fluctuate, what impacts them etc.With that said, however, it doesn’t need to be causative – correlative would do just fine.If Peregrine can show that its drug outperforms over control in this subgroup, and that there are no major safety concerns over those already established, then the FDA won't need to ask why it outperforms.So that's what we want to see next.First, we want to see Peregrine put together some data that shows how many of these patients actually have levels within this threshold. Second, we want to see a trial put in place that investigates the same combination of therapy, but only in these patients.If the company can replicate the results, it's back on track.Yes, there's risk, and yes, it's going to cost money that will likely dilute holders, but there's a clear path to success here, and that's what' important now.Subscribe below for more insights like this delivered direct to your inbox. Only Insider Financial delivers this sort of coverage on a regular basis.Disclosure: We have no position in PPHM and have not been compensated for this article.

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