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Peregrine Pharma: Not Good Enough to Own, Too Risky to Short

Stocks in this article: PPHM MDVN LLY AZN

I'm not convinced. Let's review a few important "red flags."

1. The control group results seem aberrant. My review of the literature suggests the 5.6 month median OS in the control group is abnormally low. One study, published in the Journal of Clinical Oncology Shepherd FA, et al. J Clin Oncol. 2000 May;18(10):2095-103 , demonstrated a 7.5 month median OS for second-line NSCLC receiving docetaxel. In this trial, even patients receiving supportive care only had a median OS of 4.6 months, which isn't far from Peregrine's control group results.

A second large, randomized study in the second-line setting, also published in the Journal of Clinical Oncology Hanna N, et al. J Clin Oncol. 2004 May 1;22(9):1589-97 , showed similar results. In this trial, docetaxel was used as the control group against another drug, Eli Lilly's (LLY) Alimta. Patients in the docetaxel arm had a median OS of 7.9 months, slightly less than the 8.3 months for Alimta recipients, but far longer than patients in Peregrine's study.

Yet a third study, this one published in the Lancet Kim ES, et al. Lancet. 2008 Nov 22;372(9652):1809-18 , further confirms that median OS for docetaxel-treated second-line NSCLC patients should exceed six months. In this 1,466-patient Phase III trial, docetaxel treatment produced a median OS of 8.0 months. This study also used docetaxel as the control arm, with AstraZeneca's (AZN) Iressa as the study drug. If there were any investigator bias in either this trial or the study versus Lilly's Alimta, it would likely be against docetaxel. These data should give Peregrine bulls significant pause.

Importantly, I did find one second-line NSLC study in which docetaxel recipients had a median OS of 5.7 months, which closely matches the Peregrine results Fossella FV, et al. J Clin Oncol. 2000 Jun;18(12):2354-62 . I'm not sure what to make of these data, which seem like an outlier when compared to other studies I found. Nonetheless, bulls and bears alike must consider these results alongside my other citations.

2. Wide confidence intervals make the data difficult to interpret. Investigators usually report data as a median value accompanied by a 95% confidence interval (95% CI), which is a measure of data reliability. In both bavituximab arms, the lower confidence interval "band" -- 5.2 months and 6.7 months for the high and low dose groups, respectively -- overlaps with the control group (5.6 months, 95% CI 4.4-8.7 months). Although this observation alone doesn't invalidate the data, especially for a Phase II study, it does weaken the study's conclusions.

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