TUSTIN, Calif. ( TheStreet) -- The results presented Friday on Peregrine Pharmaceuticals' ( PPHM) lung cancer drug bavituximab -- a jaw-dropping doubling of survival compared to a control arm -- were spectacular. But are the data from the midstage study credible? Every cell in my body screams, "No!!!" The idea that Peregrine, a dismissed biotech penny stock as recently as two months ago, might be sitting on one of the most effective lung cancer drugs ever developed, doesn't just strain credulity, it beats credulity to death with a baseball bat. Still, Peregrine's bavituximab lung cancer data look awesome. Second-line nonsmall-cell lung cancer patients treated with a combination of bavituximab and docetaxel reported a median overall survival of 12.1 months compared to 5.6 months for patients treated with docetaxel and a placebo. That's a six-month improvement in survival or a statistically significant, 50% reduction in the risk of death. Cancer drugs that double survival or halve the risk of death are rare. They don't exist in lung cancer. Avastin, Roche's ( RHHBY) $7 billion-per-year cancer uber-drug, improves first-line lung cancer survival by two months. Peregrine may well have a blockbuster lung cancer drug on its hands. The possibility can't be denied outright. But as a die-hard biotech skeptic, I'm not going to be fully convinced until Peregrine produces a lot more answers. Neither should you. I want to see data that parse bavituximab's response rate and overall survival by geography. The phase II study enrolled half of its 117 patients in Russia, Ukraine, the Republic of Georgia and India -- geographies with a reputation for producing overly positive results that cannot be reproduced in later, larger confirmatory trials. The remaining 50% of patients came from the U.S. Not to sound xenophobic, but data culled from U.S.-based centers carry more weight and are less likely to be biased. Survival is a hard endpoint to fudge -- a patient is either dead or they're not -- so fabricating survival results isn't the biggest concern. I'm more worried about Eastern European or Indian doctors enrolling lung cancer patients who haven't yet truly failed first-line therapy and therefore shouldn't be eligible for the second-line bavituximab study. Peregrine's study is small enough that a handful of relatively healthy patients living longer could have skewed survival results.
In trading on Thursday, shares of Peregrine Pharmaceuticals Inc.'s 10.50% Series E Convertible Preferred Stock were yielding above the 12% mark based on its quarterly dividend (annualized to $2.625), with shares changing hands as low as $20.34 on the day. As of last close, PPHMP was trading at a 11.40% discount to its liquidation preference amount.