On September 8, 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 first quarter of fiscal year (FY) 2017 ended July 31, 2016, and provided an update on its contract manufacturing business, clinical pipeline and other corporate developments (Press release, Peregrine Pharmaceuticals, SEP 8, 2016, View Source [SID:1234515016]).
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Highlights Since April 30, 2016
"Since the start of our first quarter, we have steadily executed on our R&D and contract manufacturing objectives. On the R&D front, we recently achieved two important milestones beginning with the recent announcement that the National Comprehensive Cancer Network (NCCN) has awarded grants to three investigators to support bavituximab clinical research. In addition, we are pleased to announce today, that top-line data from our Phase III SUNRISE trial have been accepted for a late-breaking oral presentation at the upcoming meeting of the European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress to be held in Copenhagen in early October," stated Steven W. King, president and chief executive officer of Peregrine. "The presentation at ESMO (Free ESMO Whitepaper) will be a great opportunity to share clinical data from the trial in conjunction with initial results from our ongoing biomarker analyses which are already highly encouraging. The primary goal of the biomarker analysis is to identify a biomarker pattern for patients that receive the most benefit from a bavituximab-containing therapeutic regimen and we look forward to sharing the results of the ongoing analysis with more data expected later in the year. Our collaboration with the NCCN has been an important part of our plans for advancing the bavituximab clinical program in a cost effective way. The grants that were awarded represent clinical trials with novel bavituximab combinations in glioblastoma, head and neck cancer, and hepatocellular carcinoma including an immunotherapy combination, which is a major focus for advancing the program. Taken together, these developments are setting the stage for new data throughout the rest of 2016 and into 2017."
Mr. King continued, "On the manufacturing front, it remains an extraordinarily busy time. Based on the high demand for services, we remain on track to meet our current fiscal year revenue projections as we look to continue growing the business. Our ultimate goal remains to reach overall profitability within the next 21 months and Avid will be an important driver for achieving that goal in combination with making strategic investments in R&D while pursuing partnerships to help advance our programs."
Avid Bioservices Highlights
"Our biomanufacturing business was extremely busy this past quarter as the team remained on track according to the planned production schedule including initiating several process validation runs and ongoing commercial manufacturing activities. Despite being on track from a production standpoint, first quarter FY 2017 revenues were lower than expected due to a testing backlog at a third-party testing laboratory that delayed the shipment of manufacturing runs. As a result of the backlog being resolved, we expect revenue to exceed $20 million in the second quarter as we shift revenue recognition from the first quarter to the second quarter of fiscal year 2017. We believe this delay to be an anomaly, and we reaffirm our revenue guidance of between $50 and $55 million for the full fiscal year," stated Paul Lytle, chief financial officer of Peregrine.
The company is projecting manufacturing revenue for the full FY 2017 of $50 – $55 million.
Avid’s current manufacturing revenue backlog is $71 million, representing estimated future manufacturing revenue to be recognized under committed contracts. This backlog covers revenue to be recognized during the remainder of fiscal year 2017 and into fiscal year 2018.
In response to demand for manufacturing services, the company is 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 calendar year 2017.
Clinical Development Highlights
SUNRISE top-line data, including initial biomarker profile data, have been accepted for oral presentation at the European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress in October 2016.
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 in early calendar year 2017.
Research Highlights
Our internal efforts and collaboration with Memorial Sloan Kettering Cancer Center continues to advance. The goal of this pre-clinical work is to evaluate combinations of bavituximab with other checkpoint inhibitors and immune stimulatory agents for the purpose of developing new and increasingly effective anti-cancer treatments. We expect initial results from our internal work and this collaboration to be presented at multiple conferences during the Fall of 2016.
Peregrine in-licensed a novel exosome technology from 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.
Financial Results
Total revenues for the first quarter of FY 2017 were $5,609,000, compared to $9,671,000 for the same quarter of the prior fiscal year. The first quarter FY 2017 decrease in revenues was primarily attributed to a decrease in contract manufacturing revenue.
Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services provided to its third-party clients decreased to $5,609,000 for the first quarter of FY 2017 compared to $9,379,000 for the first quarter of FY 2016. The first quarter decrease was primarily due to a backlog at a third-party testing lab and unrelated to product quality that shifted the timing of revenue recognition from the first quarter to the second quarter of fiscal year 2017. The company does not expect this delay to further impact revenue projections for the fiscal year, and the company remains on track to generate revenue in excess of $20 million in the second quarter FY 2017.
Total costs and expenses for the first quarter of FY 2017 were $16,691,000, compared to $23,425,000 for the first quarter of FY 2016. This decrease for the first quarter of FY 2017 was primarily attributable to a decrease in research and development expenses associated with the Phase III SUNRISE trial combined with a decrease in personnel cost and manufacturing costs related to preparing bavituximab for commercial manufacturing.
For the first quarter of FY 2017, research and development expenses decreased 38% to $8,569,000, compared to $13,918,000 for the first quarter of FY 2016. In addition, cost of contract manufacturing decreased to $3,062,000 in the first quarter of FY 2017 compared to $4,608,000 for the first quarter of FY 2016, primarily due to lower reported revenue compared to the same prior year period. For the first quarter of FY 2017, selling, general and administrative expenses were $5,060,000 compared to $4,899,000 for the first quarter of FY 2016.
Peregrine’s consolidated net loss attributable to common stockholders was $12,437,000 or $0.05 per share, for the first quarter of FY 2017, compared to a net loss attributable to common stockholders of $15,101,000, or $0.08 per share, for the same prior year quarter.
Peregrine reported $44,195,000 in cash and cash equivalents as of July 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 Annual Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.