NEW YORK ( TheStreet) -- It's been awhile since a stock has stirred up so much emotion among my fellow biotech investors and traders as Peregrine Pharmaceuticals ( PPHM), and honestly, I'm not going to pretend that I have strong conviction one way or the other . My friend Adam Feuerstein already did a great job explaining some of the question marks surrounding the outstanding phase 2 data presented last Friday. There are other issues with the bavituximab data: If bavituximab were truly an active drug, why aren't we seeing more side effects when it's added to chemotherapy? And the fact that bavituximab barely improved progression-free survival is a concern, as is the company's refusal on Monday to provide an exact geographical breakdown of the phase II data other than, "the data were similar across all geographic regions." That being said, to just dismiss the data as being too good to be true might mean missing the next great cancer stock play. Frankly, the bavituximab question marks are very similar to what we heard years ago with a little prostate cancer drug called Provenge. I was one of those traders who thought Dendreon's ( DNDN) Provenge data were quite suspect and could not be confirmed or repeated for a lot of the same reasons the biotech world is now questioning bavituximab. But Dendreon believers won that argument when Provenge was approved and Dendreon's shares rose from $3 per share to $43 in two years' time. If one does not believe the bavituximab data were tampered with somehow -- and I count myself in that camp -- there is a real possibility that this lung cancer drug does what it was designed to do and actually stimulates the immune system to recognize cancer cells and kill them. There is also the possibility that this result was a false positive and will not be repeated in a larger, more robust trial. However, crossing my fingers and waiting several years does not seem like the greatest strategy for a biotech trader. With Peregrine, traders are looking at a stock with the potential for big upside and downside. When I lack conviction equally about the bull and bear case, here is how I tend to trade:
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.