VIM's Disclaimer and Transcript

This is a transcription of the conference call which I did myself.  It is as accurate as I was able to do, but since I am human, there may be mistakes contained herein.  I did dispense with many of the greetings and pleasantries in order to focus on the meat of the presentation.  Any people's names, company names, or drug names listed herein may be grossly misspelled, for which I apologize in advance, and anyone who would like to proof read and correct some of my mistakes, I would welcome your help. Thank you, vic_in_monkeytown

Peregrine Pharmaceuticals
Conference Call
June 8, 2001

Opening Remarks

 

Good morning, everyone, and I would like to thank everyone for joining me on this conference call.  As this is the first conference call that I have participated in since becoming CEO in April, I would first like to say that I am pleased to be here and that I'm honored and excited about heading Peregrine Pharmaceuticals.

Earlier today, we released an announcement concerning our direct targeting agent Oncolym.  I wanted to hold this conference call in order to directly address any questions that our shareholders might have about this announcement, and any other questions that are of concern to you right now.  I'll make a short statement first and then I'll open the floor for questions.

As the press release explained, Peregrine is taking over the development of Oncolym from Schering AG Germany.  As part of this agreement we are reacquiring the world-wide marketing rights and distribution rights to the drug.  Though we regret that Schering will no longer be working with us as a licensing partner, we believe that this transaction is the best for the Oncolym project.  Peregrine has already conducted extensive clinical trials on Oncolym, in which 114 patients received therapeutic doses of the drug before Schering licensed the technology from us.  Based on this prior clinical data and in reaction to competition in the lymphoma marketplace, Schering decided to reposition the drug as a one dose protocol.  We are highly optimistic of Oncolym's potential under a one dose protocol and believe it has significant characteristics that will make it a competitive product for the treatment of B-cell lymphoma.  Furthermore, after reviewing Schering's development program, we are confidant that we can seamlessly assume management of their program and that we can do so at a cost effective level.  Under our arrangement with Schering, we were paying 20% of the development costs which translated into payments by Peregrine of approximately $1.7 million since 1999.  We anticipate that by proceeding with the phase I/II on our own, we will have a budget of approximately $700,000 plus the cost of our drug, spread over the next year.  This amount includes the cost for hiring one additional employee to manage the study.  The reason for this is simply that we are a smaller company and we have significant experience in radiopharmaceutical drug development.  In addition, Schering has laid the groundwork for the study that will negate the need for substantial expenditures by Peregrine.  We had already budgeted for 2 additional Cotara clinical studies to be initiated this year, so the Oncolym trial will now take the place of one of them and when our cash position is increased, we will initiate the additional Cotara study that had already been planned.

 In addition, we are going to be actively exploring licensing and joint venture opportunities for Oncolym.  We will be publicizing the availability of the drug for licensing at the Bio-2001 biotechnology convention which is taking place a little bit later this month in San Diego, and we will also contact groups which have shown an interest in Oncolym in the past as well as companies that we know are actively seeking clinical stage products.  We have had interest from several foreign entities for licensing Oncolym in certain geographic areas over the seas, and we will pursue all of these opportunities.

Even though Oncolym was the focus of today's announcement, I want to highlight some of the other things going on at Peregrine.

This year, we have launched 5 phase I's for Cotara this year at Stanford University and the Mayo Clinic.  These studies are actively recruiting patients.  Our association with research institutions of this caliber provides an important validation of the potential of our technology.  We are also compiling the data on our Phase II brain cancer trial and remain confident that we will move into a phase III with that by the end of this year.

We are also anticipating that our Chinese partner, Brilliance Shanghai Pharmaceuticals, will receive regulatory approval to market Tumor Necrosis Therapy in China sometime this year.  I know that many of you are as eager as we are in anticipation of this achievement.  It will be a very important validation of what we have been working on for so long.  Peregrine will provide any assistance requested by Brilliance in their commercialization efforts of TNT in the Peoples Republic of China.   As soon as we are informed by Brilliance of their government's decision, we will make an announcement.

We are also working on potential licensing and joint venture opportunities for our TNT platform as a targeted delivery molecule for a variety of anti-cancer compounds.  We are preparing the fully human TNT clone for entry into human clinical studies.  This clone will be the backbone of our licensing and joint venture programs for the TNT platform.

I remain very excited about the potential of our Vascular Targeting Agent platform technology being developed through our joint venture, Arcus Therapeutics.  Vascular Targeting Agent technology represents a new generation of anti-cancer drugs, and I am confident that Vascular Targeting Agent technology will eventually be recognized as one of the most promising new approaches to cancer therapy.  Peregrine and Arcus intend to work harder to bring this Vascular Targeting Agent technology into the mainstream.  We are actively pursuing licensing opportunities with multiple parties for the Vascular Targeting Agent technology platform.

We are also preparing our anti-angiogenesis and our non-conjugated therapeutic antibody programs for human clinical studies.  Now we haven't publicized these technologies much, but they are none the less very important technologies in our anti-cancer arsenal.  We believe these technologies may eventually prove to have significant market potential, and represent excellent joint venture and licensing opportunities for Peregrine.

We are conducting the final toxicology and pre-clinical efficacy studies on our lead compound for our vasopermeation enhancement technology platform.  Our lead compound will be our fully human TNT antibody with our proprietary permeation enhancement peptide vaso-active compound attached.  We expect to enter this compound into clinical studies in the first half of next year.

We have been working diligently to prepare our manufacturing facility for potential contract manufacturing.  Due to the extreme shortage of monoclonal antibody production capacity worldwide, we believe this can be a viable positive cash flow creating business for Peregrine.  We intend to aggressively pursue contract manufacturing opportunities.  We will release more details of our plans and projections for our manufacturing facility when we sign our first contract.

As many of you know, I have been conducting an extensive road show.  Every other week I present Peregrine's business plans in a new city.  In all, I have given over 40 presentations to investment bankers and institutions.  Reception has been very positive from both groups.  Many of these groups are conducting more due diligence on the company and I am confident will create significant buying in the future.  I am certain that Peregrine is now on the radar screen of entities that have never heard our story before.  As we continue to make progress in the advancement of our business plans,  I am confident more parties will become active in building a position in our company.  I intend to continue this road show until I have covered the entire United States and Europe.

As part of the road show, I have been in discussions with several parties about equity investment in Peregrine.  I am confident we will be able to obtain the financing we need to continue with our aggressive development plans.  Along with equity we will fund our operations through manufacturing and licensing revenue.  Once we have tested the market for contract manufacturing, we will be better able to predict how much revenue contract manufacturing can generate.  If the contract manufacturing market is as strong as we believe it is, our goal would be to fund all of our operations from contract manufacturing cash flow.

In closing, I would like to say that Peregrine Pharmaceuticals has assembled a very impressive pipeline of very broad platform technologies that I believe have the ability to generate tremendous value for the shareholders.  I personally have been a large investor in the company since 1989, and never have I been so confident about the future of the company.  With that said, I would like to open the floor for questions.

Questions and Answers (Q. & A.) [ Ed's Answers ]

 

Nick Fratello, Global Capital Securities:
Q: Do you feel that we can move Oncolym faster with a different partner as oppose to Schering?  Were there some delays going on in their development schedule?

A: We think that, first off, we would like to get control of the technology and really move it faster on our own as we look for another partner.  I think the real goal of the technology is that we would like to have a partner before the pivotal study, mainly because we are just not going to be able to compete from a marketing standpoint with much larger companies that are already in the marketplace, so we think we can move along the phase I/II very quickly on our part, mainly because we have a lot of experience in the radiopharmaceutical field and we are, you know, just a much smaller company.  Then I think as time goes by here in the phase I/II, that it will take some time to get a joint venture on or a licensing partner on board, so that gives us time to move the technology maybe a little quicker.

Robert Brower, Private Investor:
Q: I am relieve to here that we're looking at alternative forms of financing.  Is it fairly far advanced?  Are we looking at direct investment?  Can you elaborate a little bit on that?

A: Well as you know I have been giving an extensive road show talking to a lot of difference mainly institutions and investment bankers.  From the investment banking side, we are still probably a little premature for getting a tremendous amount of interest from investment bankers just mainly because our stock price is so low, but they have all showed interest and really are watching us.  We have provided additional data to several of the analysts that are out there for large banks and we know that we are on their radar screens.  So what we really have targeted is to try to get large institutions to invest in the company.  As you know, there is not a lot of institutional ownership at Peregrine, and I would like to see that ownership rise to probably 15 to 20 percent if not higher of the company, and to do that I think you need to get a quality investor on board that will be recognized by everybody, that has done a significant amount of due diligence, and is making a tremendous bet on the company as it moves forward.  I have worked diligently about attracting that type of investor, and that's who we are really trying to bring on board.

Same Questioner:
Q: And then I guess the strategy might be to hand it off to more traditional investor such as or traditional capital raiser like an investment bank?

A: Exactly, Bob.  I mean, the real goal here is that we probably have to take it into the $3 range before the larger investment banks are going to start taking interest, and the goal would be to position the company as we get the stock price up into the $8 - $15 range, the big banks could come in and raise us some significant capital, and when I mean significant capital, $50 million or higher, and that would really allow us to take the drug to the market ourselves, market our Cotara drug, basically do everything that we would want to do internally and become a fully integrated pharmaceutical company.  Obviously, if that doesn't work, then we will take these technologies through a little bit later stage and then we will find licensing partners for them, after we have created value by the clinical data.

John Welch, HFBC
Q: Should we get full approval in China, would that mean that we can pursue a fast track program or would the FDA allow to be fast tracked at that time?

A: Really, from a regulatory standpoint, what happens in China will really not affect the US.  The main reason for that is that they are using a different clone in China then we are using here.  The reason we did that is that, in 1995 when we licensed this technology to the Chinese, we were just really getting our plans laid for our TNT-1 clinical program in the United States, and under FDA regulations if there is a problem with your product anywhere in the world, you must report that to the FDA, and we didn't want a situation to where they had a problem with our drug in China and it would stop our US program, so they are using basically a little different clone over there, its called our TNT-3 clone, and it targets single stranded DNA versus our histone complex on DNA which is what our TNT-1 program targets, so I really don't expect it to have any effect on the US from a regulatory standpoint.  What it really does for us is puts us in the position of knowing the technology works, that it is approved in a country, and, of course, receiving revenue from the sales overseas.

Pat Ryan, AG Edwards:
Q: The clinical trials in China, or the way they used it in China, I sure if it was in a formal type clinical trial but, were there any particular types of cancer that Brilliance is saying that this is where is worked best and this is the types of responses we got that you can share with us?

A. You know, I have personally only seen spotty data.  I think 2 or 3 years ago we released some data on brain cancer from the study they did over there.  We released that they had told us that they got 7 of 8 complete remissions in primary brain cancer, and the data the we have seen there, you know, between then, has been from, you know, our researchers going over there and getting a look see at the data.  We haven't really been able to bring data our of China and really go through it like you would want to from a scientific standpoint, so I would say that from our standpoint we have, you know, pretty much anecdotal data.  What I will tell you is that there are several cancers that they believe that this drug works very will on, and it may necessarily be a way around the way they administered the drug.  Administration of the drug can be just as critical as the drug working properly itself, and they have been able to, based on the flexibility of their regulatory stance in China, they have been able to really experiment with different ways to administer the drug.  They can do things a lot faster over there than we could ever dream of doing  here in the United States, so based on that, I really would hate to go out on a limb and tell you things.  I can tell that there are several very large cancers they have done well on.  They intend on releasing that data at some point and time after they get their approval, and then I guess we will all see it at the same time.

Myron Greenspan, Shareholder:
Q. Thank you for the information.  My experience with CEO's are mostly financial people, but you seem to be really on top of the technology as well, which makes us stock holders feel good.

A. Well, really I am from a financial background, but I think the technology we have is very exciting and it’s a hobby of mine to learn more about it.

Q. My question is really a very simple basic question.  I have owned this stock for about 2 and 1/2 years.  I am long the stock, I know the pipeline very well, and I don't understand with all of your predecessor's trips and your trips why the stock price is not higher than it is.  That would be my primary question.

A. Well, I think that, first off, it’s a series of small steps that we have to take here.  I don't think any of my predecessors have ever done the type of road show that I am conducting right now.  I am relentless in doing this.  We are doing lots of meetings.  Every other week we are meeting with new groups.  Now, you have to understand that I have targeted the institutional investor.  Institutional investors are a lot more diligent in their due diligence, and they don't care about getting a stock at $2 or $3 or $4, or $5, what they care about is insuring that they have done the proper amount of due diligence, and they realize that if they hold the stock for 4 or 5 years that the upside is very big, so if you are looking at the current stock price and the trading that has happened with the stock price.  When I came on board, the stock was about $1.25 and we have been up around $1.75 so obviously something is starting to work, but it’s a process.  Its not going to happen overnight, and to be frank with you, I don't want it to happen overnight because when you have very fast rises in the stock, you are always going to see the stock do a major pullback.  I would much rather see a nice steady rise in the stock, building bases as we go up, and eventually we are going to get there.  I think we have some very critical stuff happening this year, especially through the summer, and I am confident that we will get up to the levels that you will be very happy with, at least that I'll be happy with. You have to understand that I have been in this thing since 1992.  I want to move it forward.  I want to make as much money as you do.  And more importantly, I want to help cancer patients that can possibly be helped with our drugs.

Same Questioner:
Q: Absolutely, cancer has touched every family that I know.  One last question, I have, and again this is not bashing the technology but, one of the things that has worried me since the genetics technology has come about in the past year or so, that our technology might become somewhat antiquated with the human genome technology that I read about every day.  Do you have any remarks about the competition of that sort of technology?

A. I could probably spend the 3 and 1/2 hours talking to you about the prospects of genetics.  I think its pretty standard that investors really need to, when you think about new technologies that are coming to the market, you have to take yourself back and say, what's realistic?  You know, the news media really front runs this, because when things are in the news. the news media makes things seem like the whole world is crashing around us, but, you know, I want to remind everyone that monoclonal antibodies were invented in 1973, OK?  The first products have really started to come to market in the last 3 to 5 years.  It takes decades to move new technology platforms into the marketplace.  So I know that everyone is making it seem like our technologies will be obsolete, but that can't be farther from the truth, we are going to have a very, very good run with the biologics.  The monoclonal antibodies are moving in to the forefront of the treatment business, and they will remain there probably for several decades before you start seeing some really significant gene therapy technologies come out.  Now one thing that this also highlights, I think, one of the aspects of our drug development programs that you should take into consideration.  And mainly it is this, that if you look and I am sure you are reading everyday that they have identified a new genetic marker for this cancer and for that cancer, but what we have done at Peregrine is said look, we don't believe that cancer should be treated as a hundred or 200 different diseases, we believe that cancer can be treated as one disease, and that's what we have developed is technologies that treat cancer as basically one disease.  So we believe there is a tremendous amount of value in those type of technologies and we think our technology platforms will withstand not only the test of competition but the test of time.  And don't forget, we have got a pipeline,  we've got our vascular targeting agent technologies, we've got a lot of stuff in the pipeline here that can compete and fill our pipeline for many years to come, so I'm not too worry about any threat from the genetic side.

Yaya Fishani, Shareholder
Q. The question really is in regards to China again.  I thought that we were talking about China getting approval this summer.  Now it appears that we are pushing it off to sometime this year...

A. Well, I say sometime this year because I don't know.  They may get approval by the end of the summer.  I would hate to promise you that they get approval by the end of the summer and then they don't.  I believe they will, but I don't know, so your guess is as good as mine when they are going to get approval, but they have told us that they believe it will be for sure by the end of the year.

If they do get approval, how fast would you get a revenue stream coming from China? We are in discussion with the Chinese right now about what their needs are.  I will tell from our standpoint that we can manufacture clone for them very rapidly.  Then it will be really about how quickly they can get their marketing launched over there, and get the radiolabelling process in place.  We have developed at Peregrine a pretty innovative radiolabelling mechanism, and we would like to get that transferred to the Chinese so those are some of the things we are having discussions with them with, but I think that probably their goal is to start sales early next year if they get approval this summer, and of course if they get approval at the end of the year, then you are probably looking at mid-next year.

Terry Dye, Private Investor
Q. I have a question on Arcus.  With the recent news on Oxigene's financial problems, will this affect the setup?

A. Well, I don't know.  I tell you what, if I had $24 million in cash, we'd probably all be doing back flips down main street.  I don't think that 2 years of cash is a problem for them.  We are really their major project right now, so I am not concerned in the least of the cash position of Oxigene.  I think they have a sound cash position of 2 years of cash in the bank  I know you read the Reuters article, and it’s probably of concern to everybody, but its really not of concern to us and I don't believe its of concern to Oxigene.  You know, I think that, well, lets say that the worse happened two years from now that they defaulted on the loan, well, you know, hopefully we're in a lot better financial position to take over the project and that's exactly what we'd do.

Same Questioner:
Q. So we do have a back door to . . .

A. Oh, sure, if they default on it, then it all comes right back to us, so as long as we are in the position to fund the project moving forward, we'll be OK, but I really don't think that's an issue here.  2 years is a long time to happen.  Oxigene has some pretty good drugs in the development program.  I know that their Combretestatin is being studied by Bristol Myers Squibb, and they are going to get milestones based on that, and, you know, the financing market will probably come back around in the next 2 years that would allow them to tap into the equity markets a little more, so I'm not too concerned about that.  2 years of capital is a pretty good position to be in.  I wish I had two years of cash in the bank right now.

Same Questioner:
Q. And something else, on our Oncolym trials, I realize the protocols have changed.  Are we able to use any of the information from our original trials to help us along on that or has Schering been using any of that?

A. Most Certainly.  Any time you've treated patients with therapeutic doses of your drug, you can use that data, so that data is going to be very important.  Not only has it been important in formalizing the phase I/II protocols, but it will definitely be used in the registration of the drug.  You have to understand we have already done the toxicity profiles and everything on it, so we are pretty much dealing with a known, we are just trying to see if this one dose protocol is going to equal the efficacy we saw with the two dose protocol.

Joseph Sunacorsky, Private Investor:
Q. I am interested in the split with Schering.  I know that when you joined with Schering that stock, I am looking at this from a stock point of view, I think did quite well.  What do you think the impact of the split with Schering is going to have on the stock short term?

A. Well, I don't know.  Only the stock market could tell you that.  I wish I had a crystal ball.  What I can tell you is that we basically have got a product back in our pipeline.  It isn't going to cost us a whole lot of money to move it forward.  You've got to understand, we are a small, we're a nimble company.  We're very efficient at running clinical studies.  We have an excellent clinical program going for our Cotara.  We have 5 phase I's and a phase II running with our Cotara.  So a lot of the resources that you need, just because they are both radiopharmaceuticals, can be spread across both of the products, so we are really not looking at a whole lot of expenditure for us to move the project forward, and we now have full control of the project, so I don't view this as a negative, this is a positive.  And don't forget that Schering has basically already left about $1.3 million on the table that they gave us 3 million up front.  We have spent 1.7 million of that back into the study, so we are up net 1.3 million from where we started and we have basically full control of our project back.  I think the real message that should be read by the shareholders here is that I like Oncolym as a product, but it is one product in a multitude of products that we have here.  We have tremendous technology platforms that we can generate revenue, not only from selling our own products to the market, but we can generate revenue from licensing opportunities, joint venture opportunities.  And Oncolym really I would consider more of a niche product.  It can only work on B-cell lymphoma where all of our other products really are applicable across tumor types, so they have much higher potential.  So if I were to sit back and do a NPV (net present value) and the portion of that related to Oncolym, then I would say that it wouldn't be a significant portion of our market cap, and I think  you've probably seen with the trading today that that's what the market is reading it as, too.

Same Questioner:
Q. I haven't seen it, but thank you, and I just have one other question, Ed, real quick.  What is one dose protocol?

A. Basically, when we originally took our Oncolym product into phase I and phase II, we did two doses, which means you got a dose of the drug and you waited basically 60 - 90 days and you came back and you received another dose of the drug.  When Schering came in and took over the program, there were two factors at weigh here.  One, we looked at all of the data from our 114 patients that received a therapeutic dose, and said look, most of the patients had great responses at the first dose.  If they didn't respond at the first dose, the second dose probably wouldn't make a difference.  If they did respond, the second dose may have increased the efficacy enough, the first dose got you to the point to where you think you could get approval on it.  So it made sense because Corixa's drug is going to be a one dose protocol and you would be taking a product into the market that was already at a marketing disadvantage by having to use two doses in the protocol, so I think it was a strategic decision that was made that let's back it off to a one dose protocol, we think the efficacy will be there to get the product approved, and then we can more effectively compete in the marketplace with Corixa and potentially with Zevalin.

Richard Jakes, Private Investor:
Q. In earlier presentations, you said there might be as many as 5 or 6 partnerships this year.  I would like any kind of progress update you can give on that, and have the folks at the headquarters looked at our potential of staying in the Russell today?

A. I have looked at staying in the Russell, and it’s a pretty secretive process in itself.  We'll know at 5 o'clock today whether we are in the Russell.  I thinks what's working in our favor is there has been a tremendous amount of technology stocks that have absolutely gotten hammered over the last year, so I would say our odds are pretty good of staying in.  I don't know, I have no way of knowing what that cut off is, I think that's a very secretive thing, but I believe at 5 o'clock eastern time today that is posted on the Russell web site, so you'll know as soon as I do.  What was the other part of your question?

Same Questioner:

Q. The partnerships that you alluded to in investor presentations, how is that progressing?

A. It’s progressing actually well.  You have to understand that a lot of the low hanging fruit has been picked off of the tree in the partnership arena, and now I am really dealing with much larger companies on potential partnerships.  These companies do a heck of a lot more due diligence.  They are a lot slower to deal with, so its going to take a little time to get some of the bigger ones closed.  We are advancing pretty quickly on some of the smaller ones, so I think I can still meet that milestone, I just can't give you the exact time frames.  When the deal gets done, you'll be the first to know.

Bruce Adams, Private Investor:
Q. I have 3 simple questions.  First, the Mexico trials.  Can you tell us anything about those briefly.  Are they on-going?  Is there anything else to be learned from Mexico?

A. The Mexico trials are done, and the data will be released or the majority of the data will be released at the Society of Nuclear Medicine which is later this month, and we will post on our web site the actual poster presentation.  So you will be able to see exactly what was done in Mexico, the results that they got from the study, in detail, as much detail as anyone will have, so look for the announcement that we'll do when the Society of Nuclear Medicine comes around and then you can go to our web site and pull down the poster presentation.  I am currently putting on the web site a new section to try to get more scientific data into your hands so that you can research it and review it any time you want to, so that should be coming up on the web site here very soon.  We are going to work a lot harder.  I know I have missed a couple of opportunities here of getting the word out about some of our technologies and some of these presentations.  It's totally my responsibility and it’s my fault that it hasn't been followed up properly, and we will correct that in the future.

Same Questioner:
Q. The second question is, and I may have missed this, but would you say something more about the time tables for the Oncolym trials I and II, and my last question relates to that, are these studies going to be conducted mostly in Europe or also in the United States, and where?

A. Concerning the Oncolym, we think it will be at least a year in the current phase I/II.  I don't know.  We have to get our hands around it, and I really going to be very cautious about giving you a time frame until Dr. Chew has had a chance to get into all the centers and talk to everybody, and he'll have a much better idea of exactly what the time lines are, but I would say at least a year before we are through with the phase I/II, and we will give you an update a little bit later after Dr. Chew has full control over it and has spent time with all the investigators in all the centers.

Same Questioner:
Q. OK, and the last part was, where are these studies being conducted, in Europe only, or will they be expanded to the United States?

A. They are all in the US.  We have 9 sites that are open and running for Oncolym, and one that will come on board probably within the next 30 days.  And as we move it probably into the pivotal studies, we will probably open at least 20, maybe 30 centers.

 

Joe Beechy, Private Investor:
Q. You talked about China.  I am wondering what kind of revenue could the success in China create for Peregrine?

A. We have a 10% profit share with Chine, so 10% of the profits that come out of China go directly to Peregrine.  What I am trying to accomplish is that, our goal is to help them get this drug manufactured and marketed in China as soon as possible.  They currently don't have manufacturing capabilities and we do, so we think there is an opportunity there for us to manufacture while they build our their manufacturing facility.  The regulations in China are a little bit different.  I won't say its better or worse than the US, but from an investor standpoint, it holds a lot less risk than the process in the United States in the fact that in China they let you get the drug approved and then you are able to build the manufacturing facility and all that infrastructure, which really from a risk standpoint is a much better way to go.  I am sure that the FDA has its reasons, and I know the reasons, for having the manufacturing infrastructure in place before you get approval.  So it’s probably going to take them at least a year and a half to 3 years to build out all their manufacturing infrastructure.  In the meantime, I would like to be in the position to contract manufacture for them.  We can ship antibody to them manufactured here at our current facility, and that is where I really think our near term revenue potential is going to come from the collaboration.  So my goal is to enter into contract with them.  We are in discussions with them. I can't make any guarantees.  What I can tell you is that, if we don't hook them on as a partner, there is  plenty of other business out there that we are going to go after, but our real goal would be to get the TNT marketed and make it a big drug in the Peoples Republic of China, and generate some manufacturing revenue from that.

Same Questioner:
Q. And one last thing about the road show, are you going to be in San Diego this month?

A. Actually, I had planned on doing 2 days in San Diego a little bit later this month, actually, around the bio-conference.  I had two days planned.  I had to cancel them because  I have several meetings with some investors, but I will come back to San Diego for sure.  It’s a hot area, and I will be there.  Basically, if you are anywhere in the United States, I am going to be somewhere in your area in the next year.

Shelton Blackman, Private Investor:
Q. I was wondering, what was our price to reacquire Oncolym?

A.  A big fat zero.

Jim Wade, Private Investor:
Q. I am very interested in the contract manufacturing facility.  I know previously you guys have had some experience with the manufacturing facility, I think it was a year or two ago, and guess I am really interested in what kind of initially capital outlay are you guys expecting to get up and running, and in addition to that, what type of time from are you looking for a revenue stream?

A.  OK, manufacturing...  You know, it’s ironic.  This manufacturing facility that we've built here is really a very fine asset, and the people who built it did a superb job at designing it and at building it.  Its really a first rate facility.  It’s also a facility that about ran this company out of business in the past.  The market has now changed.  All of a sudden monoclonal antibodies are the hot new drugs.  Everyone in the world is developing some kind of monoclonal antibody program, and now no one can find any place that will manufacture the drug, and more importantly, its very difficult to get early clinical trial and pre-clinical trial lots of antibody made by anybody.  The larger companies just don't do it, or you have to wait a minimum of 2 years.  So as we announced, I think, in '99 when I came back in on the board of directors that we were going to mothball the facility and we were going to put it up for sale.  Now, we really didn't mothball the facility because it was worth more if we could bring somebody into it and say look, you've got a facility that you could step into and operate.  So although we cut back the staffing on it, we cut back, most of the staffing was related around paperwork, but not necessarily around people who actually operate the facility and manufacture the drug.  So, we had cut back in the areas, and what we really did during this timeframe, over the past year and 1/2, was we implemented new types of manufacturing.  And what I mean by that is we are now using a lot of disposables in the process.  It raises the per batch run cost of the drug slightly, but it eliminates a tremendous amount of validation and cleaning work that has to be done in these manufacturing processes.  So we are really much more efficient in our manufacturing and we are able to manufacture using fewer people.  I think the disposable is going to be the wave of the future for a small facility like this.

As for our capital outlay, we really are not going to have hardly any capital outlay.  The facility is ready to go.  We manufacture our own drugs in there right now.  What I will tell you is that right now we have in the facility a 100 liter reactor, a 300 liter reactor and a 30 liter reactor.  What we would like to do is replace that other 30 lithe reactor with a 300 liter reactor.  That whole think was probably cost around $400 grand, and we would do that solely out of cash flow from contract manufacturing.  Now, I am not going to lock in a price right here for what we can get per run, but I can tell you with those three bioreactors, if we ran 20 runs per year with each of them, the not only could we fully fund all of Peregrine's operations, but we would make a profit, too, so that is our goal to try to do that.  Now, first off, we want to hold back signing too many deals with people until we find out exactly what the Chinese want to do.  We want to make sure that we can deliver drug to the Chinese to support the launch of our TNT drug in China.  If they in fact decide that they want to use a Chinese manufacturer then we will fill that pipeline with US companies, and we do have interest here, so we are working out all the details on the manufacturing and probably what we will do is that we will do what we call a rolling hire, which is we will max out our capacity of personnel at the facility.  When we are overworked we will bring on one more person, but we are going to do that all out of cash flow, so I don't view any additional outlay of cash from our equity.  It’s really going to fund itself through cash flow.

Same Questioner:
Q. Excellent, now I have to question you because I am just trying get a flavor for exactly the revenue streams coming on next year, and it sounds like it's going to be the middle of the year where potentially we get not only the potential revenue streams from China, but also for the manufacturing facility..

A. I tell you what, I need to sign my first manufacturing deal and then I will come clean with all the details of the numbers of what we are charging per run, and that will be part of the process of letting everyone know that we can manufacture antibody for them.  We have very good timelines, I mean, you are looking at a 2 year wait for all the other manufacturers in the industry and we can get the drug out there pretty quickly for people, so I think we can fill that pipeline, but I don't want to lock in a price.  We are going to charge what the market will bear, so when I have a contract in hand and I know what the market will bear, then I will come clean on what the details are.

Corrine Kodia, Eisner Securities:
Q. Just a couple of questions.  One, the relationship with Schering to take back the licensing.  How did this originate?  Was it a difference of opinion, were they dragging their feet, or was it that nothing was happening?

A.  I think it was more of a mutual agreement.  I don't know if you know too much about Schering.  Schering has new management here in the United States, and they have a very, very aggressive program of which I believe they are looking for 40 percent growth per year for the next 5 years.  To meet that they had to have things moving very quickly.  Now, I am not sure if from their standpoint they said well, you know, maybe Oncolym is moving too slow for some of the other stuff they want to do, or maybe they just said look, you know, it better off if we let Peregrine run with this for a while, and maybe they can step back in later.  I don't know exactly what the deal was.  I do know that what we thought was that with the deal we had with them, we were responsible for 20%, and there was really no cap on that.  There was really no cap on how much we would be responsible for, so it is really hard for us to predict in the future what we are going to be paying for our 20% of this, and remember we also pay all of the drug cost involved with this.  So we think its beneficial for both us and for Schering.  I think Schering would be a great marketing partner for the drug when it gets in the market.  They already have a very good franchise in the lymphoma area.  And if we move this thing along quickly, it may go back to them in the future when we have a lot more data that's further along, and see if they want to market this, but I think really there are a lot of people out there looking for drugs.  We are going to move it along in the clinical trials as quickly as we can.  We are pretty efficient at doing this, and then we will find a partner for it.

Same Questioner:
Q. Have you been in your road shows out in the Boston area?

A. Yes, I have.  I was actually there I guess 3 weeks ago, had some great meetings in Boston.  I will be visiting Boston again.  There's a tremendous amount of institutional investors that have a high interest in Biotech.  I am sorry that I didn't come by and see you, but if you could, email me at [email protected], and next time we come by I will make sure I come in and see you.

Same Questioner:
Q. Just one final little question.  While there is so much enthusiasm and there's real facts that you have been able to present, why would Dr. Chew sell shares?  It was not a big amount, but he was an insider selling shares at the moment.

A. Well, I really don't want to discuss any personal situation with anyone in the company.  I think Dr. Chew is well behind this company.  He is probably the most important person in the company.  Right now, I consider him even more important than I am, because these clinical studies are critical to the company, so I wouldn't read that any certain way in that Dr. Chew needed some cash, so don't read anything into his belief in what's going on.  I would like everyone to not sell the stock, but also you know people have families.  People have stuff going on that they have to take care of.  I think if you look at the dollar value of it, it wasn't very significant in the big picture.

Paul Ernst, Ernst Report:
Q. With regards to lymphoma, I believe everyone on the market now, the Idec and Corixa is targeting the CD-20 antigen, and I am aware of some failures on that especially on retreats.  Sometimes this is due to antigen shift, but in the case of Idec I know that even without the antigen shift Rituxan is failing on some retreats.  I know we have a target different from ..., and does that position us in the marketplace, and I believe Amgen also has a CD-20 target.  Can you speak to that?

A. You bet I can, and that has really been the basis of the value for Oncolym and why we are convinced that it will compete effectively in the marketplace.  The simple fact of the matter is that we are targeting a different antigen.  Our antigen site is highly specific to B-cell lymphomas.  It is really not expressed anywhere but on the surface of B-cell lymphomas.  It is expressed in high volumes on B-cell lymphomas.  So even if we slip the drug into the market and all we do is mop up what the CD-20 market can't get, I think you have a very valuable asset right there, and that is how the drug it being positioned.  We are going after these harder to treat cancers.  We are confident that Idec is going to take Rituxan into the intermediate and high grades.  We haven't seen any data on that, so as soon as we see the data we will see how effective they are.  Just based on the type of data you see out of low grade, all these patients are relapsing eventually and we know that they are going to be in the marketplace for Oncolym.  Oncolym, I believe, is very well positioned for that marketplace just because of the statement of the antigen.  The antigen really doesn't modulate, we haven't seen any problem with modulation of the antigen, and I think we will be well positioned to capture a significant portion of that market.

Same Questioner:
Q. I saw your predecessor in Denver.  Do you have any plans to come to?

A. Actually, I was in Denver, I met with an investment bank there a couple of weeks ago, and I do have plans, I believe, in the fall to get back to Denver, September.  I want to get back there before September.

Same Questioner:
Q. I believe that was Nick.  I could hook up with him if I wanted a recap, huh?

A. Most certainly, I met with Nick's analyst there in Denver, but we have a big investor base in Denver, and I would be more than willing to stop back by if you have an interest and can put the people in the room to hear the story.

Nick Fratello, Global Capital Securities:
Q. Well, I'm back, Ed.  The questions I had, some of them were covered, particularly about the manufacturing facility.  One of the things I guess I wanted to ask about was this, you mentioned that 20 runs per year would fully fund the company and possibly make a profit.  I guess what I am wondering is what is the capacity of the plant.  Have you calculated that?  How many runs do you think you could do in a year?

A. Well, as I said, we want to change out our 30 liter with another 300 liter, and based on that I think its realistic that you could do 20-24 runs a year per reactor, so really you are looking at 75 runs a year would be I think a pretty good ballpark, and we will charge per run.  So basically, when you come in, we will run your clone.  We have to do some work on the clone and we will charge an hourly rate on that, and then when the clone is ready to go into the reactor, then we charge basically per run, so whether you are choosing the 100 or the 300, I don't think will have a big differential.  What's really good about these is these are the types of levels that you need to do your pre-clinical and phase I/II studies.  You don't need a 1000 liter run to do these types of studies.  You need probably a couple of 100 liter runs or a couple of 300 liter runs to give you enough clone to do all of your work.  We think we can compete very effectively with everybody that is out there.  Like I said, I am going to hold off giving you a price on what I can charge, but I will tell you that if we can max out this facility we can be a profitable company based on it.

Same Questioner:
Q. So a 300 liter reactor generates a 300 liter amount of product, is that how that works?

A. No, it works like this, it all works on the yield of your clone.  So your growing a 300 liter batch and whatever the purified yield on your clone is, is how much you get out of it, so that is  particularly strictly based on the production capacity of your monoclonal antibody.  Some clones produce a lot more than other clones.  So if you have a poor producing clone...One of the first things that we do when we get the clone in is see how it produces and we try to maximize it, we try to do what they call optimizing the production of the clone, which is you play around with the clone a little bit, you try to find some higher producing clones that are in there, and use those.  So there are a lot of things that we can do to try to increase the production of the clone, but its solely based on your clone.  Some clones, even our own clones, some of them produce 3 or 4 times more than other ones.

Steven Carlson, Private Investor
Q. A couple of months or so ago, you mentioned a 50 million dollar figure to continue the testing.  My understanding from what you've said today is that outside of manufacturing, equity issue is the way you would raise that money.  Is there a minimum that you would set a stock price at before you would do that?

A. Well, first off, let me correct you on what I said.  I said we need 50 million to take Cotara the distance, and that means to market Cotara as our own company, OK, so there's a big difference there.  I don't need 50 million to get Cotara through the clinical studies.  We believe the clinical studies, the phase III for Cotara is going to cost probably somewhere in the tune of 8 million dollars.  So the 50 million dollars, really what I want to do here is raise it in several tranches.  We would like to be able to raise 50 million or higher probably next year sometime through a traditional investment bank large secondary offering, you know, with the research and that whole bit.  But to move the company forward, we are looking at probably we need as we start our pivotal study later this year, we are going to need around a million to a million two fifty a month to run the company at our current rate.  So, you know, we're pretty lean and mean here.  You know, we have to give up on sides, which means we can't spend as much money as we'd like to moving things as quickly as we'd like to in some areas, but we are focused on clinical studies, getting that data our there, proving these technologies work, and more importantly, generating revenue for the shareholders.  So the 50 million, I would like to see double digits before I would go into that big of an offering, and I think we are fully capable of achieving that double digits.  I made a bet when I came on as CEO.  I've got options that vest at $10 a share.  I've got additional options that vest at $20 a share, and I've got additionally options that vest at $30 a share.  I intend to capture all of these options while I am CEO of this company, so I have basically decided to put my money where my mouth is.  I know what the capability of this company is to develop market cap and value for the shareholders and I intend to work diligently to create that.  But the 50 million dollar raise, I want to do it in the double digits range.

David Mack, PPHM.NET
Q. Most of my questions have been answered, but you had mentioned in the earlier part of your presentation a couple of lesser known platforms, and I was wondering I guess you are going to be looking at some possible partnering in that area, and when might we be hearing something more about these technologies?

A. Well, I was hoping someone would bring that question up because I can't wait to talk about them.  Actually, you know, when I go out and give presentations to people I have an hour basically, that I have to give a presentation.  And we have so much technology that it is practically impossible for me to include them in these presentations.  So really we haven't worked really hard at exposing them.

Our lead compound, which would be our 2c3, which I know you have all heard of, is our anti-angiogenesis drug.  We want to move that into clinical studies.  I think the important thing to remember about these other approaches, they are going to be what we call nonconjugated antibody, or other people maybe call them naked antibodies.  Big pharmas love naked antibodies.  They are easy and cheap to manufacture.  They can put a 30000 liter reactor on line and pump these things out day after day, and that's really what Rituxan and Herceptin, both of those drugs are naked antibodies, so the big pharmas love them, and those are the types of companies we will target with these programs.

The other one, we'll release more data on the other ones a little bit later.  I don't want to kill a surprise that will be coming up later this year.  We will know a lot more about it from a scientific standpoint a little bit later this year, but these are two very exciting programs, and what our goals is, we need to produce human antibodies for these things and then get them into the pre-clinical works so we have enough data to take to the big pharma and get their interest.

Now, our goal on these technologies is...one of the things about licensing is you have to be careful on getting to what I call 'aggressive' on the licensing side.  You know, hey, I can make a lot of people happy by going out and licensing these technologies to people, but you have to understanding, early stage products, you are not able to get a whole lot of up front money, a whole lot of milestone money, and more importantly, you get very little royalty.  In an early pre-clinical stage, you are lucky to get somewhere in the 2-6 % royalty range.  We would love to see that into double digits, and to do that you have to either structure your agreement so that your are more like a joint venture or a joint development agreement versus just a straight out licensing of the technology.  So I think with these drugs, I would like to be in a position to do more of a joint development or a joint venture with them versus just strictly out licensing them, and to do that I need to have a little bit more data in my hand to give me a little bit more leverage.

But keep your eye on the tape, we are going to tell you exactly what these technologies are, release some exciting pre-clinical data about them, and then we'll start bringing them into the mainstream of our programs.

Same Questioner:
Q. Well, thanks, Ed, and I also wanted to comment, I am really glad that you have got a first class web site going for us now, too.

A. We've got a lot more work to do on the web site.  I want to get more scientific data on there for you to do your due diligence.  It also helps us when we are out talking to sophisticated institutional investors.  I can point them to the web site, and they can instantly pull down all the published articles, so we've got a long way to go on the web site.  We've working videos in it, so it’s a lot easier for everyone to understand.  We've added some flash video to it, because some of the other videos were a little big and bulky for people on their computers.  The flash videos can be run by about anybody, and we will continue to expand the web site.  It’s just a matter of time and money right now.

Steven Powell, Steiffel-Niclaus
Q. I just want to go back briefly to the manufacturing process here.  It seems like you are holding back on going forward with that until you know more from China, you've stated that.  Outside of that market, what would you estimate the size of the US market?

A.  Well, there are probably 250 that we know of, 250 monoclonal antibodies that are in clinical trials, and I couldn't even begin to tell you how many are under development.  My guess is there are probably 3 times as many.  What we are targeting is not the products that are in later stage, but products that are really on the benchtop, ready to go into pre-clinical and human clinical studies.  So we are really being choosy on the market we are going after.  We are doing that mainly for a reason, because regulations allow us a lot easier to work in this market, and two,  we want short runs.  We want to do a run or a couple of runs for a person and then go on to the next person.  And the reason we want to do this is that, you know, eventually, we are going to have to manufacture drug for ourselves.  And that means that I don't want to get into any long term contracts with anybody because we need to manufacture Cotara for the United States.  So I think in the near term we can rock and roll on the contract manufacturing  side.  Really, I think we can make a profit at this business.  I need a little bit more time to let you know exactly for sure.  We think we can make a profit at it.  But also, the people who were here prior I think did a very good job at laying out the plans for expansion of that facility, and we basically have another 4000 square feet that we can build out in that facility and put in some bigger reactors, a 1500 liter, a couple of 300's, a 30 feeder reactor in there, and we could possibly move our future production of Cotara into that larger facility, and continue to operate a business on the contract manufacturing side that we are planning to do right now, so we have a lot of options, but we want to fund all of that through cash flow.  We don't want to really spend any of our current cash to do that, so it’s going to move a little bit slower, only because I am not throwing a lot of resources at it.  I think as I get resources in hand, I can speed that up a little bit, but I think the real goal is to let it be a self funding operation.

Same Questioner:
Q. Can you estimate the size of that market currently, if possible?

A. It’s huge.  I am confident we can fill out all our capacity.  And if we had two facilities we would probably fill out both of them.  And I am not going to lock myself into a price on what I am going to charge per run, but I will tell you we can do probably 75 runs in this facility a year, and that would be comfortably.  I will give you a little bit more data later, once I have signed my first contract and ready to lock in a price.  I am going to charge what the market will bear, but it is substantial.

Same Questioner:
Q. A question with respect to, in China, once TNT is up and running and such, treatments per patient, does that affect your manufacturing.  So if they are giving, you know, 2, 3 or 4 treatments to a patient, does that increase your manufacturing?

A, I would assume that it would. Yes, it will.  We probably have the ability to manufacture for them for about 2 years, based on the projections that we have seen. They have some very aggressive projections there...

Same Questioner:
Q. Could you share those?

A. I won't share those with you.  I will save that for their IPO.  They are positioning for an IPO, and you'll know everything about what their business plans are, but they really have some very aggressive plans for TNT in China, and I think that they'll outgrow us probably within two years of being in the market, which works perfect for us, because really two years from now we need to be cranking full bore on manufacturing Cotara for the United States.

Robert Brower, Private Investor
Q. Just a follow on question.  In reading the China news announcement again, I wonder if you could verify if this is a true statement.  If Cotara is approved in China, would it be the most broadly applied monoclonal antibody cancer treatment in the world at that time, I mean, if you are applying this to all cancers, I can't think of another monoclonal that is that broad.

A.  Well, you're putting me on the spot here.  I would have to research every drug in the world to give you the exact truth on that statement, but I would say that I'd be pretty shocked to find any other drug in the world that gets as broad approval as what they are looking for, now that doesn't mean that they are going to get that.  You know, we've been told that they are getting approval for life threatening cancer, which we believe that really includes about every cancer.  If they in fact do achieve that approval,  I would say that that is very significant.  But I will hold a little bit short of maybe saying that we are the only drug in the world, but I would like to know of another one that has that type of labeling.

I guess we could say its very broad approval for a monoclonal, anyway. If they get that type of approval, I would say its spectacular from my standpoint, which really would validate what we have been saying about our Cotara, I mean our Tumor Necrosis Therapy technology from day 1, is that we believe that we can treat cancers as one single disease, not as a multitude of diseases.  And we are going to do that with one clone.  And I think that is what is significant about our technology.  And we have 3 technology platforms that work along these lines.  So we are excited about that project in China.  We will do anything we can to help them get that commercialized and help them dominate the cancer market for many years to come.

Sampson Evans, Private Investor
Q. Basically, I would like to know why there was no follow up to ASCO and AACR, when we were told that we were going to be in ASCO and in other places, there is never any follow up on the data presented at these conferences.  Can you tell us why?

A.  Well, I think mainly I will tell you that we dropped the ball on that, and I've gotten a tremendous amount of emails about that.  It is totally my fault.  I accept full responsibility for it.  We will not let it happen again.  We will follow through on all these announcements and try much harder to get the technology into the forefront.  I think one of the things that makes it difficult to do the type of follow up that these people have been asking me to do, is that not just anybody can write the type of scientific follow up that you are looking for.  I have 25 people at this company.  I am running a manufacturing facility.  I am running 6 clinical trials as well as road shows and I am a public company, so we are stretched pretty thin on taking one of my Ph D level people to write the type of data that we think needs to be out there.  I am working with the Atkins Group right now and we are trying to figure out a way we can hire and get somebody more or less on a contract basis to do the type of research that we are looking for, which is compare to other stuff that is out there.  I mean, its not like this data is just sitting out there, you have to go into databases at cancer centers and pull out data to do these type of comparisons.  But we will focus a lot more in the future on giving you the type of follow up that you are looking for.  I know what you are asking for and I agree 100%.  I dropped the ball on it, and I accept full responsibility for it.

Same Questioner:
Q. OK, the other question I've got is Supergen and Scotia.  What's the story there?  Are we making any progress with them?

A. Yes, we are.  I know that with Scotia has went into receivership in England, which actually is free money to us, because as part of the contract if they go into any type of bankruptcy proceeding, we will get the technologies back, so we are in the process of legally regaining access to our technology, and we have already started discussions with several other photodynamic therapy companies about using our vascular targeting as the targeting of photodynamic therapy, so the Scotia project is not moving forward, and we are in the process of trying to regain our technology from that standpoint.

Supergen, they are moving forward, I haven't really had an update from them on what they are doing, but I think Supergen is a pretty aggressive company, so I am sure they are moving these projects forward.

 Same Questioner:
Q. The last question I have got is, as you know, we have about 100 million shares outstanding.  Are you looking at all or considering a reverse split to shore up the share price, or is this not even under consideration?

A. Well, you know, I am going to have to be a little selfish right now.  It has been my experience in the past, reverse splits on shoring up the share price is a failed process. Very few companies ever achieve it.  Typically, when you do a reverse split, the stock goes right back down to where it was.  It is not viewed as a positive thing.  What it really does is wipe out the old investors in favor of new people.  And since I am an old investor, and I don't really particularly want to be wiped out.  I've taken all the risk in this deal, and I am not willing to wipe myself out in favor or new people.  I think there are plenty of new people there to come on board.  You have to understand that I don't think the amount of shares outstanding is affecting our ability to move this company forward, nor do I believe it prohibits in any way our ability to create value.  The fact that you really need to look at is the market capitalization of the company.  I think we are still low on our market capitalization, but the shares outstanding time the price is what tells it.  But I think that if you are wanting to do some type of recapitalization, that that type of recapitalization would come in the form of doing a secondary offering in which the bankers come in and say OK, we are going to bring X amount of money in and this is going to buy X amount of the company.  Let's recapitalize the company, and everyone knows with certainty that we go into this transaction what the old guys are going to own and what the new guys are going to own, and that's really the only way that would be acceptable to me to do a reverse split.  If you are looking for one, that is about the only way that I could see one getting through, unless of course the shareholders want me to do one.  They would have to put it on the slate and vote it for themselves.

Davis Marshall, Private Investor
Q. Do you want us to get together on the net and write the PR's for you?

A.  Well, actually, if I could talk 'golfdad' into doing some of our follow ups, I would be very happy with that, so if any of you can help prod 'golfdad' into doing that, I would love to see it.

Same Questioner:
Q. We'll work on it.  You talked about the human TNT and vasopermeation.  I am glad to hear that, the first half of next year.  Do you think that will be an easy trial?

A. No, it won't.  That's one for sure that we will look to partner with people.  I think the real thing that you have to do is get the human clone into human studies.  Actually, Dr Epstein's lab is working very hard on all the pre-clinical.  We are comparing the vasopermeation enhancement with about I think 7 different chemo drugs, and we are showing in animal studies that is does increase the permeability, so it is I think working, and the idea is have the clone ready to go, have it characterized, have the cell bank laid down for manufacturing, and then I think we've built a little bit more value with it to take it into phase I.  We may take it into phase I ourselves and build a little value there, that we have some more data to show the big pharmas, but that type of study would probably be a couple of thousand patient study, and its way out of our capabilities, so that's one we definitely will want to partner, and more importantly I think what's important to remember about that drug is its really going to be much more powerful in the hands of a company that is really experienced in market chemotherapy drugs.  So that is our long term goal for the drug, and our short term is to get into human clinical studies and get some preliminary data on it, but the pre-clinical studies look very good right now.  We are pretty excited about that.

Same Questioner:
Q. Are you looking for non-exclusive licensing?

A. Oh, no, I can't imagine anyone taking a non-exclusive on that, they'd want an exclusive.  What I hope happens with it is that it works good enough that people lose their interest in their chemo drugs, and say, hey, I'd much rather sell a pretreatment to every single chemotherapy treatment that's ever being done.  That's a pretty big drug in itself.  It’s just a matter of convincing people that there is more value in the enhancement than there is in selling the drug itself.  Data will either prove it or disprove it, and that's why you do the studies, to know whether it’s going to work to that level or not.

Well, it's another pipeline. We have a tremendous pipeline.

John Hartselle, T.D. Bank
Q. You had mentioned 10% of the profits.  Are you referring to Brilliance pharmaceutical's profits on the sale of TNT to all the tumor types in China?

A.  That's correct, we have a 10% profit share with Brilliance Shanghai Pharmaceuticals through Cancer Therapeutics.

Same Questioner:
Q. Whoa!......I guess you would be a little hesitant to tell us those numbers, but whoa, that's an enormous number, Ed. Well, we hope so.

A. It just depends on how much drug they can sell in China.

Same Questioner:
Q. We shouldn't gloss over that, because that's something we should be pumping out to the rest of the world, or at least to the investment community.  That's an enormous number.

A. Well, I think we will pump that out at the right time, and I think when they do their IPO is the best time to pump it out, because then we're pumping out real numbers.  Right now, I am pumping out a hope, wish, and a dream, and I can't give you any firm numbers, and when they come out with their IPO and they do all their projections, then its someone else telling you what the number is, and I'd feel much more comfortable doing it that way.  So that's why I have never really touted it.  The agreement was made public in '95, so I mean, its public knowledge that its out there, but to start attaching a number to it, I do it internally myself sometimes, run different models on it for fun, but let's wait to see what they come out with with their bankers and then we will be able to really put some type of validation to it.

Same Questioner:
Q. Well, was that 10% in that agreement that we just announced, so its been reconfirmed?

A. We didn't change anything except giving them more exclusivity, longer exclusivity, basically extended them to 2016 on their exclusivity.

Same Questioner:
Q. Right, and now that profit is going to paid out of the supposed public company that they are going to be setting up?

A. Exactly.

Same Questioner:
Q.  So, very good.  So it’s a public entity that's paying us the money, so there wouldn't be any question about payment then?

A. Well, right now they are a private entity, but when they go public, yes, then, you know, that will be there.

Jeff Hode, Wodchong Capital
Q. Just a couple of quick questions, a couple of them were already answered but I am interested in, you've been there since 1992, what is your share ownership and your approximately cost of the stock that you own?  And the second question is analytical coverage.  I know you talk to investment bankers and analysts.  Is there an opportunity possibly to get a report written about the company, and what kind of milestones do you have to jump through to get that kind of coverage?

A.  We've had discussion with multiple bankers.  First off, let me address mine.  I think fully diluted, I'll own about 9% of the company right now, based on the current structure.  My average cost is, I think the first deal I did with Peregrine, I bought stock at $1.20, and the second deal I did I bought stock at $1.35, and everything else was related to our transaction with Biotechnology Development.  So I am not anywhere near the type of profit I need to see off of the investment.

The second part of your question is about the analyst coverage.  Mainly, I think what it really revolves around is that everyone seems to like our story.  We've got a tremendous amount of shots on goal here.  This isn't a one product company in one little market.  This is a company that has a multitude of products.  We've got a lot of shots on goal.  A couple of these are going to make it into the goal and generate a lot of value.  I think that's very apparent.  And more importantly, working in our favor is that monoclonal antibodies are on fire right now.  People are really buying into the fact that monoclonals are going to be very, very important revenue generate for the biotechnology industry.  So we are very well positioned.  We truly are a monoclonal antibody company.  Just about everything we do is based around monoclonals, and the fact that we have our own manufacturing I think strengthens the story, so I think the story is well received.  I am trying basically a two approach process.  I'm trying to get some of the smaller and regional investment banks, who don't mind doing a research report on a 2 or 3 dollar stock, get them on first and then the bigger guys are going to come into play I think as we approach that 5 dollar range, you know, the 3 to 5 hundred million dollar market cap, then we'll work on that.  So it’s a process.  Its not going to happen overnight, but I am confident that it will happen, and I'll focus on the regional banks right now, get some research reports out of them, and then hopefully we can move up into the range where the big boys will come in and pick up coverage on us.

Christopher Smith, Private Investor
Q. A topic that is near and dear to my heart.  At the end of last year, there was a PR that announced 2 patents on truncated tissue factor and vascular targeting, that were specifically stated outside of Arcus.  What is our development plans with that?

A.  Well, everything to do with the truncated tissue factor is within Arcus.  Any conjugated vascular targeting agent is within Arcus.  So the only thing that is outside of Arcus is nonconjugated antibodies for vascular targeting.  So that's our lead compound within Arcus is going to be an antibody that uses the truncated tissue factor as the coagulation effector, so that is the lead compound for Arcus Therapeutics.  We will move that into the clinic as soon as we can.

Same Questioner:
Q. Ok, and I have one other question for you,  and that is are we looking to potentially take some of our other technology to China, because of their regulations and approval process?

A. You're killing my thunder here.  Yes, that's one of the things that we want to do.  We'd love to fill their pipeline with everything that we can.  I think that the Chinese have a real unique opportunity here.  They've got pretty much a very undeveloped pharmaceutical market in comparison to the US and many western countries.  We'd love to get as much of our technologies as we can into their hands and help them build a mega-company.  So that's our goal.  We're going along at their pace.  They're calling all the shots right now, but we think we are pretty confident that as they start moving into that arena of getting into the public markets, that they are going to need a broader pipeline, and that's one thing we have is broad pipeline of technologies, so that's one of my goals is to get our technology into their hands and work with them, but it is going to be really driven from their side.

Joe Griffith, Private Investor
Q. Can you tell us a little bit about the ongoing phase I trials, how those are going?

A.  All the phase I's are enrolling right now.  I think we've been through several cohorts in one of the cancers and we are finishing up cohorts in the other, so they are moving pretty rapidly.  We are in some cancers that is pretty easy to find patients, so I think they will progress as we had planned, and as soon as they get done we will move into the next phase.

Same Questioner:
Q. When might we see that next phase?

A. I don't know.  Its all based on enrollment, and we don't know what the maximum tolerated dose is going to be, too, so we are flying blind here.  We don't know exactly where its going to top out at.  What you are looking for in your phase I is you basically give a dose at one level.  You wait awhile, then you up the dose and you treat 3 patients at that level, then you wait awhile and you up the dose and you treat 3 patients.  So its called the maximum tolerated dose is what we are looking for.  And we don't know what that maximum tolerated dose is going to be, so I can't give you a firm date on when that's going to happen, but I would say that about a year would be the outside of what it will take.

Terry Dye, Private Investor
Q: On our percentage of the profits from Brilliance, our manufacturing would be on top of that, correct?  We would get manufacturing monies plus the 10% profit?

A.  Yes, the manufacturing will be a completely separate agreement, and I would envision a short term agreement with them.  They have full intentions of bringing up a full GMP facility in China, and to frank with you, I'd like to reverse it in the future and have them contract manufacture for us.  But we will cross that bridge when we get there, but that will be a completely separate agreement from the 10% profit share.  That will be something that we have to negotiate on the side, but the 10% profit share was in our original licensing agreement with them.

Same Questioner:
Q. OK, and on the tTF, I was in contact with Dr. Thorpe on what other uses, and he included non-solid types of tumors, leukemias and everything.  Would that still be under Arcus or would that be under Peregrine?

A. I believe the nonconjugated tTF would be under Peregrine.  I have to see some more data on that before we would move that forward, but Dr. Thorpe has got some tremendous research going on over there, and there is a lot of stuff he's working on that we haven't even told you about that we find very exciting, so we look forward to getting a whole bunch more products out of Dr. Thorpe into the future, and we are very excited about working with the University of Texas, Southwestern.

Well, I'd better do some digging then, I've been lagging behind here. I don't think he's published it yet, we need patents first.  I don't allow publishing until the patents are filed.

Otto Knopp, Private Investor
Q. Hi Ed, I just want to thank you, you've answered all the questions I could think of today, and I just want to thank you for taking control of the company, and you are just doing a tremendous job.

A,  Thank you, and I am sorry I have gapped this off.  I would like to do this at least once a quarter.  It keeps the rumor mill at bay.  I think it’s the best thing to do, to keep the information flow from the company with the shareholders so you all know what our plans are and how we are going forward.  You know, there are competitive issues that come into play.  I know a lot of times you think we don't publicize things like we should, but, you know, there are competitors out there, there are patent issues that are in play, and a lot of time we do things for a reason, not just to not keep you informed.  I'll work a lot harder at keeping you informed, and I think as you see now, I've pretty much cut off all the leaks in the company, and news is a surprise to everybody.  We are all on equal footing on the news side, and I am pretty happy about that.  I think in the future, I am looking forward to a very exciting year for the company and a lot of stuff going on behind the scenes here.

Yaya Fishani, Private Investor
Q. What is the time line on this public offering in China?  And number two, there is a company called Immunogen, I don't know if you know them or they know you, it looks like a perfect fit between you two guys...

A.  Public offering in China, I don't know.  They have their own time lines and haven't really relayed them to me.  My guess is that they need to raise money for the manufacturing, that they are going to do that probably within 3 to 6 months after approval.

As for a merger with another company,  At these prices I wouldn't even consider it.  Obviously, if anything decent came is as an offer, we'd put it in front of the shareholders as a vote.  But the way I look at it is we're first and goal.  We're on the 10 yard line, and I don't think now is the time to hand off the ball.  Its time to take it in for the touchdown, and make the money for the people that have taken the risk in this company.

 Joe Griffith, Private Investor
Q. One more question, a while ago in one of your presentations, you had mentioned using Cotara in people's pets.  Any comment on that?

A.  Yes, We think there is actually quite a large market for veterinary uses of TNT.  You have to understand, we target a universal antigen, so it doesn't matter if it’s in an animal or a human, the antigen that we target exists in both.  Right now, its not a high priority just because we don't have the resources to move it forward, but what we'd like to do is, probably at least one a week if not more that we get calls in here about people wanting their prize horse or their bull or their dog treated with our drug, and there is obviously some veterinarians out there that are aware that we can do this, so I'd like to maybe develop a little more pre-clinical work on it, if I get the resources in place to do that, and then maybe either spin that off as a separate company, or probably find a company that has significant experience in veterinary medicine, and try to license that to them or do some sort of joint venture.  Right now I don't have the resources to look at it, but I think its a lot bigger market than most people think.

Same Questioner:
Q. One more thought.  What about Cotara as an imaging agent, how's that going?

A. Cotara and the imaging agent.  As we announced earlier, we have started a preclinical work with Paul Scherrer Institute in Switzerland for PET imaging agents.  We are going to continue to do our preclinical on that and see how that comes out, and we are also exploring other types of imaging agents that we may possibly use for Cotara.  The real key was getting that human TNT backbone ready, and that's what's going to be the basis for any imaging agent.  That human TNT was critical to get the master cell bank laid down for that and get really all the pre-toxicology work done for it so we can move it into human studies, and that will be the backbone for our VEA, for our imaging and enhancing agents, and for all other types of licensing opportunities in the future.

Closing Remarks

OK, I think with that I've got a lot of work to do.  I appreciate everyone coming on board and showing an interest in the conference call.  I do promise to do additional conference calls on a timely basis for you, if anything just to keep the rumor mill at bay, but I am very excited about the prospects of the company and you have my guarantee that I will not stop until everyone has heard about Peregrine Pharmaceuticals.  With that, thank you.

 

PPHM.NET wishes to thank Vic on behalf of all "Clonies" and "Peregriners",  for his tireless efforts to get this all transcribed.