On July 14, 2016 Peregrine Pharmaceuticals, Inc. (NASDAQ:PPHM) (NASDAQ:PPHMP), a biopharmaceutical company committed to improving patient lives by delivering high quality biological products through its contract development and manufacturing organization (CDMO) services and by advancing its novel R&D pipeline, reported financial results for the fourth quarter and fiscal year (FY) ended April 30, 2016, and provided an update on its contract manufacturing business, clinical pipeline and other corporate developments (Press release, Peregrine Pharmaceuticals, JUL 14, 2016, View Source [SID:1234513888]).
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Highlights Since January 31, 2016
"Peregrine’s business strategy is to focus the company’s resources primarily on continuing to grow its biomanufacturing business while advancing R&D efforts through small, proof of concept clinical trials and the development of new technologies. Together, this will allow Peregrine to reach profitability, increase shareholder value by steadily increasing the worth of the company’s established CDMO business, and retain significant upside potential from bavituximab and other R&D programs," stated Steven W. King, president and chief executive officer of Peregrine. "Over the past year, the company has taken huge strides toward future revenue growth, including the commissioning of a new commercial facility which is already completely booked into early next year with potential new commercial projects. The facility has the potential to generate over $40 million in revenue at full capacity during commercial production. The company continues to see such a high demand for additional manufacturing capacity and in response, has already begun designing a new facility for clinical stage products that could eventually transfer into one of our commercial production facilities. We expect this new facility to be commissioned by the middle of 2017, and there is already a backlog of existing business earmarked for the new facility. The company expects the continued growth of its manufacturing revenues at these new facilities, as well as the potential addition of new capabilities, to be a major driver toward consistent overall profitability."
Mr. King continued, "Concurrent with growing its manufacturing business, Peregrine will continue to leverage its phosphatidylserine (PS)-targeting platform in two ways. First the company will continue to extract critical data from the SUNRISE Phase III trial that can be instrumental in guiding the advancement of bavituximab in combination with immune stimulating therapies. In addition, the company announced earlier today that it has signed a license agreement with its long-term collaborator, UT Southwestern Medical Center, for a novel PS-exosome technology with the potential to detect and monitor cancer at an early stage through a simple blood test. Given the company’s tremendous knowledge base in targeting PS and its infrastructure for developing and validating tests for biologic samples, Peregrine is uniquely positioned to advance this technology. The company believes that, for a modest capital investment, it can quickly reach proof of concept with a goal of partnering the technology with an established diagnostics company. Overall, Peregrine believes this strategy will allow the company to continue its research and development activities with significant upside coming from partnering as it moves toward profitability."
Avid Bioservices Highlights
"The company’s manufacturing business has experienced substantial revenue growth over the past several fiscal years with a five-year compounded annual growth rate of 39% and year-over-year growth of 66%. In addition, this revenue growth came entirely from Avid’s first manufacturing facility and the company is positioned for continued revenue growth with the launch of its second manufacturing facility that became fully operational in March 2016," stated Paul Lytle, chief financial officer of Peregrine. "With these two operational facilities, the company is projecting manufacturing revenue of $50 to $55 million for fiscal year 2017 that is supported by a current revenue backlog of $68 million under committed contracts."
On June 2, 2016, the company announced the goal of achieving overall future sustained profitability in 24 months.
The company is projecting manufacturing revenue for FY 2017 of $50 – $55 million.
Avid’s current manufacturing revenue backlog is $68 million, representing estimated future manufacturing revenue to be recognized under committed contracts. This backlog covers revenue to be recognized in fiscal year 2017 and into fiscal year 2018.
In March 2016, the company formally commissioned its new, state-of-the-art biomanufacturing facility (Myford facility). The Myford facility is designed to utilize the most cutting-edge, single-use equipment to accommodate a fully disposable biomanufacturing process for late Phase III clinical and commercial production of biologics. The facility was designed to operate in commercial campaign mode whereby multiple bioreactors are simultaneously in operation, which more than doubles the facility’s manufacturing capacity.
The recently commissioned Myford facility has completed an initial process validation campaign with a second process validation underway and two more planned for later this year.
In response to demand for manufacturing services, the company is now designing a third manufacturing facility dedicated to clinical manufacturing that is anticipated to significantly increase Avid’s manufacturing capacity. The new clinical suite is expected to be complete and ready for clinical manufacturing activities by mid-2017.
Clinical Development Highlights
SUNRISE Phase III Trial – Peregrine is currently conducting an extensive review and analysis of the available clinical data and testing the numerous collected biomarker samples in order to determine if certain subgroups or patients with other characteristics benefited more from bavituximab treatment. The company believes such information could be critical in helping guide the bavituximab clinical program including its collaborations with the National Comprehensive Cancer Network (NCCN), AstraZeneca, and other clinical collaborators.
Going forward, Peregrine’s clinical development strategy is to focus on small, early stage proof of concept trials with other immune stimulating therapies. The intent behind this strategy is to control research and development costs, while continuing to generate clinical data to further validate bavituximab’s combination potential that will be critical to bringing onboard a partner to help advance the program.
As part of this clinical strategy, Peregrine’s research collaboration with the NCCN is advancing as planned. The purpose of this collaboration is to expand the company’s ongoing clinical research and development of bavituximab for the treatment of a range of tumors. Selected trials are expected to be initiated by the end of calendar 2016, or early 2017.
Exosome Program
Peregrine in-licensed a novel exosome technology from the UT Southwestern that has potential for cancer detection and monitoring applications.
This technology aligns directly with the company’s expertise, its proprietary PS-targeting platform and the bavituximab development program. As such, there are opportunities to use this technology as both a complementary tool in bavituximab’s ongoing development, as well as more broadly as the basis for novel cancer detection and monitoring tests that can be the focus of partnering efforts.
The licensed technology is designed to detect PS-positive exosomes within the blood. These exosomes are highly immunosuppressive, which is consistent with the immunosuppression that is often seen in tumor microenvironments.
Preliminary studies have provided evidence that the levels of PS-positive exosomes present in the blood of cancer patients are higher than levels found in the blood of healthy volunteers. Furthermore, study findings also suggest that there is a correlation between the level of PS-positive exosomes detected in the blood of cancer patients and the severity of disease burden.
Peregrine has the existing infrastructure, staff and expertise to develop, optimize and validate testing methodologies for detecting PS-positive exosomes in blood samples. The company expects to secure a partner to develop the final commercial test kit.
Supportive Research Highlights
Peregrine plans to continue conducting pre-clinical and translational studies to support ongoing and future clinical development activities. The goal of these studies will be to generate compelling translational biomarker data that inform the selection of treatment combinations featuring bavituximab. The company believes that data from these studies will be important for partnering bavituximab.
Positive results presented at the 2016 American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting provided further support for Peregrine’s strategy of evaluating bavituximab in combination with a range of novel immuno-oncology (I-O) agents for the treatment of various cancers. The presentation of preclinical study data demonstrated enhanced anti-tumor activity and immune activation for a combination of the preclinical bavituximab equivalent (ch1N11) and anti-PD-1 therapy in models of breast cancer, including triple negative breast cancer (TNBC).
Financial Results
Total revenues for the fourth quarter FY 2016 were $18,783,000, compared to $9,308,000 for the same quarter of the prior fiscal year. For FY 2016, total revenues were $44,686,000, compared to $26,781,000 for the prior fiscal year. The fourth quarter and fiscal year 2016 increases were attributed to an increase in contract manufacturing revenue.
Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services provided to its third-party clients increased 102% to $18,783,000 for the fourth quarter of FY 2016 compared to $9,308,000 for the fourth quarter of FY 2015 and increased 66% to $44,357,000 for FY 2016 compared to $26,744,000 for FY 2015. The fourth quarter and fiscal year increases were primarily attributed to an increase in demand for contract manufacturing services. Current contract manufacturing commitments from Avid’s third-party customers are approximately $68 million, covering services to be provided during FY 2017 and into FY 2018. Based on this current backlog, Peregrine expects contract manufacturing revenue for FY 2017 to be between $50 and $55 million.
Total costs and expenses for the fourth quarter of FY 2016 were $30,698,000, compared to $21,477,000 for the fourth quarter of FY 2015. For FY 2016, total costs and expenses were $101,046,000 compared to $77,280,000 for FY 2015. These increases for both fourth quarter and fiscal year 2016 were primarily attributable to an increase in research and development expenses associated with the Phase III SUNRISE trial, the clinical costs associated with two previously planned phase II trials, and higher manufacturing costs related to preparing bavituximab for commercial manufacturing. For the fourth quarter of FY 2016, research and development expenses were $16,265,000, compared to $11,531,000 for the fourth quarter of FY 2015, and for FY 2016 were $59,529,000 compared to $42,996,000 for FY 2015. In addition, cost of contract manufacturing increased 104% to $9,721,000 and 47% to $22,966,000 for the fourth quarter of FY 2016 and full FY 2016, respectively, primarily due to higher reported revenue compared to the same prior year periods. For the fourth quarter of FY 2016, selling, general and administrative expenses were $4,712,000, compared to $5,188,000 for the fourth quarter of FY 2015 and for FY 2016 were $18,551,000 compared to $18,691,000 for FY 2015.
Peregrine’s consolidated net loss attributable to common stockholders was $13,264,000 or $0.05 per share, for the fourth quarter of FY 2016, compared to a net loss attributable to common stockholders of $13,513,000, or $0.07 per share, for the same prior year quarter. For FY 2016, net loss attributable to common stockholders was $60,136,000, or $0.28 per share, compared to $54,054,000, or $0.30 per share, for FY 2015.
Peregrine reported $61,412,000 in cash and cash equivalents as of April 30, 2016, compared to $68,001,000 at fiscal year ended April 30, 2015.
More detailed financial information and analysis may be found in Peregrine’s Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission today.