WASHINGTON (AP) -- Shares of Peregrine Pharmaceuticals Inc. surged Monday after the company updated investors about previously disclosed discrepancies with a study of its lead product, the experimental lung cancer treatment bavituximab.
THE SPARK: Peregrine said the problems, first disclosed in September, are limited to the 1 milligram dose of the drug. After reviewing testing procedures at various trial sites, the company said there is no evidence that the problems affected results for the 3 milligram treatment of the arm. That study showed that patients taking the drug survived about 13 months after beginning treatment. The company is studying bavituximab as a second option for non-small cell lung cancer.
Roth Capital Partners analyst Joseph Pantginis upgraded the company's shares to "Buy" from "Neutral." In a note to investors Pantginis said, "We believe this is a major step forward for Peregrine in getting bavi back on track, though the company is still faced with a bit of an uphill battle."
THE BIG PICTURE: Peregrine does not have any approved drugs. Its most advanced experimental drug is bavituximab. In early September Peregrine said patients who were treated with bavituximab lived twice as long as patients who received only chemotherapy in a clinical trial, and the shares rose to a three-year high.
A few weeks later the company said it had found problems with the reported trial data and its initial analysis couldn't be relied on. Peregrine said the problem appeared to be tied to another company that was contracted to code and distribute the product. Peregrine said Monday it conducted a review of the vials used to treat patients at all testing sites for the trial.
Peregrine also is studying bavituximab as a primary treatment for lung cancer. It is conducting clinical trials of the drug as a treatment for cancers of the pancreas, liver, prostate, breast, and for the viral infection for hepatitis C.
THE ANALYSIS: Pantginis said that because of the mix-up "the study will still be viewed as 'tainted,' representing a key risk, though we believe the 3 milligram arm data remains impressive." He believes future study results for other indications will raise Peregrine's stock in 2013.
SHARE ACTION: Peregrine shares rose 89 cents, or 66 percent, to $2.24 in trading Monday.