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The Fall from Grace of Peregrine Pharmaceuticals

Published: Wednesday, October 17, 2012
Last Updated: Wednesday, October 17, 2012
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On September 24, 2012, the company announced the discovery of ‘major data discrepancies’ between reported results and patient treatment code assignments.

The discrepancies relate to their randomized, double-blind, Phase IIb clinical trial investigating bavituximab as second-line treatment in stage IIIb and IV Non-Small Cell Lung Cancer (NSCLC) patients.

Bavituximab is a first-in-class phosphatidylserine (PS)-targeting monoclonal antibody that is believed to trigger vascular disruption, and enhance antitumor and antiviral immune responses.

Last month, the company had revealed exciting interim data suggesting patients in the treatment arm of the study receiving bavituximab and docetaxel had a median Overall Survival (OS) of 12.1 months compared with 5.6 months in patients treated with docetaxel alone.

Given the magnitude of the apparent success of this drug in terms of median OS, the trial raised a few eyebrows as to its legitimacy. Half of the patients enrolled were from Eastern Europe and India with no clear geographic breakdown, so racial disparities as well as regional clinical trial standards cannot be accounted for.

As many biotech devotees will remember, previous unrelated studies conducted in Eastern Europe disappointed shareholders after showing distinctly positive results that could not be subsequently repeated in US trials, a la Medivation’s Dimebon.

For Peregrine followers, the high survival rates and ex-US cohort draws into question whether patients were appropriately categorized as late-stage second-line NSCLC patients across all geographies, or whether their classification as having failed first-line treatment is ambiguous.

Peregrine’s warning to shareholders to disregard the data due to disparities proves their own lack of faith in the trial results.

Peregrine asserted the issue is specific to this clinical trial and will not impact other ongoing bavituximab trials; however, the company’s credibility has been drawn into question before.

In March 2012, Peregrine presented data from a clinical trial for first-line use of bavituximab in locally-advanced or metastatic NSCLC patients.

The results were later independently reviewed and determined to be unexpectedly high in Progression-Free Survival (PFS) in lung cancer patients receiving standard chemotherapy.

Peregrine admitted to results being skewed by principle investigator bias rather than drug inefficacy or fraudulent reporting but this did not fare well for their reputation, as was demonstrated in the dip in share price at the time.

Data discrepancies like these are raising concerns, and the trend of unfounded positive results shown in the treatment arms of trials is alarming.

The company is trying to salvage data from the most recent trial, but this deluge of shifting information has investors losing faith in bavituximab’s potential to progress to Phase III of clinical development, as well as Peregrine’s ability to conduct clinical trials. This is clearly reflected in the sharp fall of the firm’s stock price to $0.86 from its 52-week high of $5.50.

Peregrine Pharmaceuticals’ commercial viability and future development of its pipeline products is now at risk. The company’s creditors, Silicon Valley Bank, Oxford Finance, and MidCap Financial, filed a default on a loan of $30m which was underwritten a week prior to the release of initial positive results for bavituximab.

The loan was issued pending positive results from the Phase IIb study and has since been recalled after Peregrine deemed the trial success unsubstantiated. Law offices of Howard G. Smith are also investigating the company, citing possible violations of federal securities laws.

With the current turn of events, it is unlikely bavituximab will ever see Phase III clinical trials. Due to these financial constraints at Peregrine, the company only has enough money to fund operations until April 2013.

With bankruptcy looming, Peregrine Pharmaceuticals needs to address any trial data discrepancies as a matter of urgency, identify the root cause of this issue and further communicate its impact on bavituximab results.

The company is obligated to clarify to shareholders the error made by the third party commissioned with coding the treatment arms, admit where the responsibility lies, communicate any positive data from the interim results of other Phase II trials of bavituximab, and present the corrected results for the Phase II trial in question.

Cotara, the company’s second oncology pipeline product, is based on proprietary technology and has demonstrated to increase OS in patients based on interim results from Phase II studies.

Peregrine could package the two products into a portfolio to entice investors or a pharmaceutical company as a possible acquisition target.

The entire pharmaceutical industry can learn from the failures of Peregrine in presenting results prematurely. The company is now facing a bleak future of either bankruptcy or acquisition. Those investors who were initially bullish from the positive trial results have since concluded the clinical data to be invalid and have, more notably, lost faith in the integrity of the company.

Investors should await clarification of the results from Peregrine Pharmaceuticals and closely monitor the company’s next moves before deciding the fate of the company.

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