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Peregrine Pharmaceuticals (PPHM - Snapshot Report) recently received encouraging news when the company announced that the US Food and Drug Administration (FDA) has agreed on the design for the phase III registration trial for its oncology candidate, bavituximab.

Peregrine Pharma is evaluating bavituximab for the second-line treatment of non-small cell lung cancer (NSCLC). Data from a phase IIb trial in patients treated with bavituximab plus Sanofi’s (SNY - Analyst Report) Taxotere (docetaxel) helped determine the phase III trial design.

The randomized, double-blind, placebo-controlled phase III trial (n=600) will be conducted across the world among stage IIIB/IV non-squamous NSCLC patients, whose disease progressed after standard front-line treatment, with the primary endpoint being overall survival. The study will compare bavituximab plus Taxotere to Taxotere alone.

We note that bavituximab is a key pipeline candidate at Peregrine Pharma. In addition to second-line NSCLC, bavituximab is being studied for other indications including front-line NSCLC, front-line pancreatic cancer, breast, liver and rectal cancers.

The agreement of a phase III trial design by the FDA is a major relief for Peregrine Pharma considering the controversy surrounding bavituximab’s phase II results. Last year, the company had presented results on bavituximab from a phase II study for second-line non-small cell lung cancer. However, later on, Peregrine Pharma had said that the data could not be relied on due to certain discrepancies between some patient sample test results and patient treatment code assignments.

Then, earlier this year, Peregrine Pharma provided an update on the situation and gave information from an internal review of the discrepancies and said that discrepancies were isolated to the placebo and 1 mg/kg treatment arms of the trial with no evidence of discrepancies in the 3 mg/kg treatment arm of the trial.

We expect investor focus to remain on updates on the future development path for bavituximab. The successful development and commercialization of bavituximab would be a major positive for Peregrine Pharma which currently has no approved drug.

Peregrine Pharma currently carries a Zacks Rank #3 (Hold). Right now, Anika Therapeutics, Inc. looks attractive with a Zacks Rank #1 (Strong Buy).Celgene Corporation (CELG - Analyst Report) also looks well placed with a Zacks Rank #2 (Buy).

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