Christopher Keenan - Senior Director, Investor Relations Steven W. King - President and Chief Executive Officer Paul J. Lytle - Chief Financial Officer Joseph S. Shan - Vice President, Clinical and Regulatory Affairs Jeff T. Hutchins - Vice President of Preclinical Research

Joe Pantginis - ROTH Capital Partners George Zavoico - MLV & Company Roy Buchanan – Piper Jaffray

Good day ladies and gentlemen and welcome to the Peregrine Pharmaceuticals, Incorporated Second Quarter Fiscal Year 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Christopher Keenan of Peregrine's Investor Relations group. Mr. Keenan, you may begin.

Thank you, Karen. Good afternoon and thank you for joining us. On today’s call, we have Steve King, our President and Chief Executive Officer; Paul Lytle, our Chief Financial Officer; Joe Shan, our Vice President of Clinical and Regulatory Affairs who is joining us from San Antonio Breast Cancer Conference where we will be presenting data later this week and Jeff Hutchins, our Vice President of Preclinical Research. Steve will begin by providing a brief overview of the Company's progress over the last quarter, including advances in our SUNRISE Phase III trial, achievements coming out of our preclinical immuno-oncology or IO development program, the Investigator-Sponsored Trials or ISTs as well as the Company strategy for the second half of the fiscal year 2015. Joe will follow with the review of the SUNRISE trial as well as other clinical advancements. Jeff will then review the quarterly and more recent advances from our IO programs and Paul will then finish with the summary of our financial results for the second quarter of fiscal year 2015, as well as provide an update on our wholly-owned subsidiary, Avid Bioservices including the announcement today regarding our facility expansion. After our prepared remarks, we welcome your questions. Before we begin, we would like to remind you that during the call, we will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ. These forward-looking statements reflect our current views about future events and financial performance, and are identified by the use of terms and phrases such as believe, expect, plan, anticipate, on target, and similar expressions identifying forward-looking statements. These risks include, but are not limited to, the risk factors detailed from time-to-time in our filings with the Securities and Exchange Commission, including, but not limited to the Quarterly Report on Form 10-Q for the second quarter fiscal year 2015 ended October 31, 2014, which was filed today. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. And we expressly do not undertake any duties to update forward-looking statements, whether as a result of new information, future events or otherwise. And with that, I'll turn the call over to Steve. Steven W. King: Thanks, Chris, and thanks to all of you who are participating in this afternoon’s call. The product development activities at Peregrine are dedicated to bringing our lead clinical program bavituximab to the market. Bavi represents the most clinically advanced agent that target the immuno-suppressive PS signaling pathway. And while our initial focus is on non-small cell lung cancer, bavi has broad potential across many different oncology indications where there remains unmet medical need. Not only does bavi have broad potential across many tumor types, it also has the potential to be combined with many different types of treatments that are already the standard of care as well as with compounds that are still in development. This includes chemotherapy, radiation as well as other immuno-oncology agents. We are running a broad clinical program as well as a broad development program for bavituximab. Leading the way are chemotherapy combinations highlighted by our global Phase III trial named SUNRISE in the second-line non-small lung cancer. The SUNRISE trial is now open for enrolment at over a 150 centers worldwide with an anticipated completion enrolment by the end of 2015. Recently I had the opportunity to visit quite a number of clinical sites and meet with clinical teams and investigators. I have found these discussions to be quite encouraging and felt a general sense of enthusiasm for bavituximab and its position as a promising immuno-oncology agent. And while this is our lead indication we have been studying bavi in combination with multiple different types of treatments and in multiple indications, including breast, liver, front-line non-small cell lung cancer, rectal adenocarcinoma and melanoma. In addition, preclinical proof-of-concept studies support development in many other indications and with other combinations. Joe will give an update on the clinical programs following my introduction. Perhaps the most exciting development in the oncology space over the past couple of years has been the emergence of new compounds that enhance immune system activity against cancer. Taken together, these compounds are referred to as immuno-oncology or IO compounds and includes investigational compounds such as bavituximab as well as the proved compounds that target PD-1 and CTLA-4 pathways. Immuno-oncology agents have the potential not just to slow tumor growth but in some patients to induce long term remissions even cures. While exciting, generally the majority of patients do not have these dramatic anti-tumor effects. This has led to numerous studies combining immune-oncology agents that stimulate the immune system at different points, referred to collectively as immune check points, all with the goal to have more patients respond to PD-1 or CTLA-4 targeting compounds. The more data we see and the more we learn about the PS targets, the more excited we have become about the potential of bavituximab in combination with other IO agents, especially those targeting PD-1 and CTLA-4, what is apparent from a growing body of preclinical proof of concept data is that bavituximab is able to block tumor mediated immuno suppression and to activate immune and anti-tumor immune responses, essentially taking the breaks off the immune system and hitting the accelerator for anti-tumor immune activity. The most recent preclinical data that has been presented highlights the potential of bavituximab to increase the number of subjects responding to either PD-1 or CTLA targeted therapies resulting in the majority of subjects actually responding. These results along with initial translational data from a bavi liver cancer IST have us very excited about the potential of bavituximab in combination with other IO compounds. And in fact the first study evaluating these combinations in the clinic is already underway evaluating the combination of bavi plus the approved CTLA-4 targeted compound Yervoy in melanoma patients. We anticipate several other studies to be planned and executed evaluating the combination of bavi with other IO agents in multiple oncology indications in the future. One final point that is worth emphasizing is that we believe Peregrine is in a unique position with an immune-oncology program already in Phase III with what has been a positive safety profile and a target that is ideal for combining with other IO agents. Bavi goes after an upstream checkpoint, whereas PD-1 and CTLA-4 are downstream checkpoints. Combined, we believe bavituximab has the potential to be a significant player in the IO combination space. Jeff will update you on the exciting new developments in the IO combination studies during his portion of the presentation. Another important part of our business model is our wholly owned manufacturing subsidiary Avid Bioservices. The second quarter brought continued solid performance of $6.3 million in third party contract revenue for the quarter. This continued growth of Avid is a foundation for the announcement that we made earlier today regarding the expansion of our manufacturing capacity. As you will hear from Paul Lytle, this is an exciting time for Avid and highlights the importance within our hybrid business model which is unique to biotechnology companies of our size. Overall we have made great progress across the company in areas aimed at furthering our mission of developing this immuno – this innovative immuno therapy. As you will hear today the coming months will bring presentations of data, the potential for scientific publications, continued execution of immuno oncology development program updates on the Avid expansion and movements toward data from the pivotal SUNRISE trial. With that, I’ll now turn the call over to Joe to discuss clinical development activities. Joe. Joseph S. Shan: Thanks, Steve. As you’ve just heard from Steve our top clinical priority is to advance bavituximab so that it can be approved and made available to cancer patients as expeditiously as possible. This past quarter we continued to make significant progress with our Phase III lung cancer trial SUNRISE. With over 150 clinical centers across all 14 planned countries now opened for enrolment, our planned for site activation is almost complete and we remain on track to complete enrolment of approximately 600 patients by the end of calendar year 2015. As a reminder, this Phase III registration trial is designed with two planned interim analyses both of which are event driven. Meanwhile, we continued to increase our clinical understanding of bavituximab with the recent data readout. At the society of immunotherapy of cancers annual meeting last month, we and our collaborators presented translational data from six patients in the Phase II IST evaluating bavituximab in combination with sorafenib in advanced liver cancer. This is the first bavituximab clinical trial that was designed to prospectively assess immune changes within the tumor micro environment and respond to treatment. Immunohistochemical analyses presented at the SITC Conference demonstrated that half of the patients we evaluated had an increase in tumor fighting CD8 positive T cells following one four week treatment cycle. Also, this increased CD8 expression generally correlated with time-to-disease-progression. Translational results like –these in treated patients strongly collaborate the immune activation processes we have seen in preclinical cancer models with PS blockade. And this is exactly the type of data which we can build upon to guide further bavituximab development programs and at the same time expand our growing network of world class experts and thought leaders in the field of cancer immunology. Clinical outcomes data from this trial have been accepted in presentation at two upcoming meeting. The first will be a poster presentation at the ASCO GI Symposium in January followed by an oral presentation at the Society of Surgical Oncology's Symposium in March. Both presentations will be made by Dr. Adam Yopp, who is an Assistant Professor of Surgery at UT Southwestern Medical Center in Dallas and the principal investigator of the trial. Next, in late October this year data from a Phase Ib IST evaluating bavituximab in combination with carboplatin and pemetrexed in patients with previously untreated stage IV non-small cell lung cancer were presented at the Chicago Thoracic Oncology meeting. Patients treated with bavituximab in combination with carbo and pemetrexed achieved an overall response rate of 35% in medium progression-free survival of 4.8 month and a medium overall survival estimate of 12.2 month. We believe these positive trends in response rates and overall survival coupled with bavituximab’s favorable safety profile support the further development of bavituximab as a part of frontline treatment regimens for non-small cell lung cancer. Last but not the least we remain committed to the development of bavituximab as a potential treatment option for breast cancer. It’s very timely that we will be presenting exciting, emerging preclinical data at the San Antonio Breast Conference which Jeff will touch upon shortly. We have completed three prior bavituximab trials in patients with advanced breast cancer including a Phase Ib investigator sponsored trial conducted by Dr. Alison Stopeck in which he previously reported an 85% response rate in patients with HER2-negative metastatic breast cancer treated with a combination of bavituximab and paclitaxel. We are in active discussions with a number of key opinion leaders and potential collaborators and will like to advance these into the clinic as opportunity and resources permit. With that I’ll turn the call over to Jeff. Jeff T. Hutchins: Thanks Joe. As Steve mentioned, we have created an immune oncology development plan to highlight the broad potential of bavituximab in multiple indications in concert with the most effective immune activating combinations. The preclinical piece of this plan is essential to learning and designing the next clinical steps to take. My team and I are looking at the PS targeting science and rationale for studies aimed at uncovering the most robust immune oncology combinations, particularly where resistance to anti-PD1 monotherapy is evident. What you have seen over the last quarter from our presentations at leading immunology focused conferences is a growing body of evidence supporting the clinical investigation of bavituximab with downstream immune checkpoint inhibitors such as CTLA-4 and PD-1. The results we are seeing are positive and statistically significant in several models of cancer in multiple labs. What is most impressive is the consistency we are seeing over and over again in experiments that bavituximab drives immune activation inside the cancer with measurable effects on slowing progression towards a tumor free status. At the Annual CRI Conference data showed that the bavi equivalent significantly enhances tumor growth inhibition of anti CTLA-4 antibody in melanoma, as well as the efficacy of anti-PD-1 in B16 melanoma and EMT-6 breast cancer models, two models that are considered resistant to anti-PD-1 monotherapy. This exciting data concludes that targeting and blocking PFS with our bavi equivalent significantly improves the anti-tumor efficacy of an immune check point blockade in robust models of melanoma and breast cancer in fully immuno confident animals. With a goal of sharing these results with the IO community, we next presented a data at the annual meeting of the society for immunotherapy of cancer conference showing that the combination of our bavi equivalent and an anti-PD-1 antibody yielded statistically significant increases in the CD8 to CD3 T cell ratio in the tumor micro environment compared to the anti-PD-1 antibody alone. This data is very similar to the data Joe mentioned in our translational liver study showing increases in CDA cells in the tumor micro environment. So what does this mean? We actually are increasing the numbers of the most important immune soldiers on the war on cancer. What is also exciting was that the combination also decreases levels of Arg1, a molecule predominantly expressed by myeloid derived suppressor cells or MDSC as well as immuno suppressive M2 macrophages in the tumor microenvironment. We know that these two key cell types contribute to immunosuppressive activity in animal models of melanoma and in the case of MDSCs increased levels contributing to poor patient prognosis in the clinical setting. So lastly, in a presentation to be made later this week in -- at the San Antonio Breast Cancer Symposium, a leading conference for breast cancer specialist our researchers will discuss new immune activating data focusing on the attractiveness of breast cancer as an indication. The importance of these data beyond the findings themselves is that they support previous data generated in the same model system and presented at SITC indicating that the combination of our bavi equivalent and an anti-PD-1 antibody demonstrates statistically significant tumor growth inhibition in mice bearing breast tumors compared to anti-PD-1 alone. That0 T-cell infiltration in the tumor is significantly increased in tumors of mice treated with the combination of our bavi equivalent and anti-PD-1 compared to the single treatment alone. And finally, that the combination treatment resulted in significant reduction in MDSCs, whose presence plays a predominant role in suppressing the immune system associated with tumor progression and metastatic in animal models. So taken together this preclinical data reinforces our belief that bavituximab treatment is capable of converting non-responding anti-PD-1 therapy patients into clinical responders. With that, I’ll turn the call over to Paul for our financial update. Paul? Paul J. Lytle: Thanks, Jeff. Now turning to our financials, it’s important to note that we continue to closely manage our operations in line with our cash position while balancing our various sources of capital. One important source of capital is derived from our contract manufacturing business Avid Bioservices, which generated $6.3 million in revenue this quarter and we anticipate the contract manufacturing revenue will be between $19 million and $23 million for the full fiscal year in line with our previous guidance. Based on the success of our contract manufacturing business, today we announced strategic plans to expand our manufacturing capacity for Avid Bioservices. The new capacity will help meet both the increased demand of this growing business, as well as creating sufficient manufacturing capacity for the potential commercial launched of bavituximab. As a quick backdrop, the success of our client’s products and their immediate and anticipated manufacturing needs has been extremely positive for growing this business. We are now at a time where we have anticipated manufacturing needs and exceed our current available capacity. So therefore, our choices are to either outsource our bavituximab manufacturing needs to a third party manufacture and incurred additional expenses or to expand our internal manufacturing capacity. Being mindful of our capital, we performed a thorough analysis to compare the cost of adding new internal manufacturing capacity versus the cost of outsourcing this capacity specifically focused on bavituximab only. Our cost benefit analysis clearly points to adding new internal capacities that will not only support the potential commercialization of bavituximab, but should also have tremendous upside from our contract manufacturing business. Let me share a few highlights of this new commercial manufacturing facility that is beginning to take shape. First, the new manufacturing clean room and infrastructure will be placed in a vacant warehouse where we recently leased approximately 40,000 square feet. Second, the leased space is located adjacent to our existing manufacturing facility. This will help us achieve operational efficiencies and will help minimize overlapping costs that would be incurred with a distinct facility. Third, the new clean room design will utilize a more efficient and cost effective disposable technology. This is a leading trend in bio manufacturing and does not require the massive utilities that are needed with traditional manufacturing facilities. It is also important to note that the cost of building and manufacturing clean room that utilizes disposable one-time use technology is a small fraction of traditional facilities. From a capacity standpoint, the commercial facility will accommodate multiple single use bioreactors up to 2000 liters in size. On a volume basis this facility can more than double our existing capacity and allow for continued growth at Avid while meeting our bavituximab manufacturing needs. Again, we took great care in making this decision as we followed a careful cost benefit analysis of this initiative and we look forward to bringing those new capacities on line in mid 2015. Now turning to our statements of operations, we saw an expected increase in our net loss this quarter compared to the same period last year as we continue to execute on advancing the Phase III SUNRISE trial. As we invested in the Phase III trial, R&D spends increased to approximately $10 million this quarter thereby increasing our net loss to approximately $12 million. As a result, we saw a similar increase in our net cash burn from operations to $9.9 million this quarter representing our net loss minus non-cash expenses. Our financial goals are centered on maintaining a solid cap position and investing these proceeds into our novel Immuno-Oncology program lead by bavituximab and our revenue generating manufacturing business. We will closely manage our operations in line with our cap position while balancing our sources of capital. We look forward to keeping your updated on our progress. And we will now open the call up for your questions. Karen?

Thank you. [Operator Instructions] Our first question comes from the line of Charles Duncan from Piper Jaffray.

Hi, guys. This is Roy in for Charles… On the manufacturing facility, I know you said it’s a fraction of the standard facility, but can you give us a rough estimate of how much it will cost and when that will start showing up in the income statements?

If you look at 10-Q, so far we have incurred about $2mm in construction & progress related to this facility. From a competitive standpoint, we’re not going to provide any addl. projections, but what I can say is that the cost of outsourcing our mfg. needs is fairly equivalent to the cost of building this facility with tremendous upside from the mfg. side of our business and also the upside of controlling our manufacturing destiny.

Can you breakdown how much of the capacity is going to be used for bavi vs. contract mfg?

Upfront, bavituximab would require only a portion of the capacity, of course. We do have the ability to continue to expand the facility, so we do anticipate it will be adequate to handle bavituximab’s market introduction as well as other potential clients in a facility at the same time.

Hey, guys… On the capacity expansion, what capacity do you have right now bavi-wise; how far can that get you? You obviously have enough capacity to supply your Phase III; what level of early commercialization if approved?

Obviously we’ve been manufacturing bavituximab in our existing facility; it’s been more adequate to provide clinical supplies for all of our ongoing studies and so those are already taking care of. I think the current facility will continue to support all clinical developments up until such time as the new facility is available. It’s anticipated that we would launch out of the new facility; that that would probably pretty close to fully support all the current indications that are underway. Now, of course, it’s going to be driven by clinical data and demand and what have you, but we do think we can launch out of this facility, meet early commercialization demands and with addl. capacity still for continuing to grow the Avid business. So, we do anticipate that there will be good opportunities as we go forward for new clients to come in or even existing clients to potentially move over and become part of fully utilizing that new facility. So, as Paul mentioned, we think it’s really a win-win. It keeps us on track for bavituximab commercialization as well as on track for growing the Avid business.

If I could just switch gears to the Breast cancer indication, obviously you’re doing a lot of background work as you mentioned discussing with KOLs and discussing potential plans. So I guess using your words, ‘pending resources’ - based on all of this background work that you’re doing, how quickly could you go into more advance programs?

We have obviously already generated a significant amount of data in breast cancer in combination with both paclitaxel and docetaxel. Paclitaxel data was presented at ASCO, not this last year but the year before. So I think we have adequate information to drive into that sort of combination. Now, outside of chemotherapy combinations, combinations with other Immuno-Oncology agents in the Breast cancer space are also attractive, given the fact that we already have generated some positive data with bavi in that disease setting. So, we’re in a position where you know really, in a few different ways, we could move into the clinic. We just want to make sure we have the adequate resources to completely fund any study we start. So we’re looking into the trial design, the size of the trials; it’s always the possibility for things like Phase II, III studies and what have you, that kind of have 2 different components which makes them from a funding standpoint easier to just swallow upfront.

Hi. Question about Avid - you mentioned going forward your increasing capacity, does this mean you are expanding on your customer mix? Do you have the some new customers there? 2nd, re: switching over to the disposable technology, does that being another set of regulatory hurdles you need to cross to go from non-disposable to disposable? Lastly, just want to make sure I understand, you’re not filling the 40,000sq right now; you have room to expand in the future?

That’s correct. The bottom line is that we have seen expansion of our mix of customers, which is absolutely driving a lot of the need for considering new capacity, because we’ve being getting closer & closer to max capacity in the existing facility. Re: question #2, we’ve already been manufacturing in our existing facility in both stainless steel and single-use bioreactors, and in fact we have the ability to manufacture bavituximab in either one. So from a regulatory standpoint, it’s one of the goals of doing the facility expansion is actually to be able to keep almost identical systems to what we have been manufacturing bavituximab, to very much limit any regulatory risk. That’s been the primary goal of this new facility, going with disposable systems, they almost exactly mirror what we’re already producing bavi in, and what we make bavi for the Phase III in.

Over the I-O space, a general question both with regard to pre-clinical experiments you may have done, and also the carbo/pemetrexed trial - one of the key features of IO space obviously is that a significant, but small fraction of, patients have a durable response. Do you any evidence of that, do you see any evidence of that in any of your preclinical or clinical studies yet?

I can start off, and I’ll hand it over to Jeff, but that’s one of the things that is most exciting about the information we’re learning about program, because what we’re seeing is that if you look at in pre-clinical models, which mirrors pretty much the patient situation, that really it’s still in some of the systems a minority of the subjects in the study which actually end up having good anti-tumor effects. And what we’re seeing when you add bavituximab to whether it be PD-1 or CTLA-4, what we’re seeing is now that more of the subjects actually respond. So, it’s not necessarily making it work better and the subjects started working great again, but it’s really turning those non-responders into responders. I’ll hand over Jeff to expand on that.

We’ve been very careful as we present this data to not show averages just exactly to this point, at least in smaller squares that when we present data we show the individual animals and how they are responding. It’s exactly what Steve said, it’s the animals in this case that we’re bringing into the active treatment response that is really driving our excitement. When a patient or an animal responds to anti-PD-1 mono-therapy in a good way, it happens and they go on to a cure. So that’s kind of what we’re seeing - we’re after 60% to 80% of patients aren’t responding to the current checkpoint therapy in these models.

If you look at the translational data from the Liver cancer study as presented in SITC, in the patients in which we did the analysis, we saw several patients that went from being low or negative PD-1, PDL-1 levels to being positive, and we know that PD-1 status positive is associated with good outcome on PD-1 therapy and negative associated with poor outcome. It’s exciting, the fact that we may be able to have our 1st evidence that we’re able to convert patients over from being negative to positive with regard to PD-1 status. So, early studies, limited number of patients, but we’re continuing to expand that out. It’s off to an exciting start, and everyone who has looked at the data has been pretty happy with it.

You talked about the SITC conference, and you’re clearly going to a lot of conferences now. So the education as it were of the stakeholders, the caregivers of bavi being an immune checkpoint; it seems like you’re making much better progress now than you did a year ago when you first started out. Can you comment on how that’s going?

We’re much more active out in the immuno-oncology conferences where thought leaders were meeting. We’ve been getting more & more recognition of the role of the Phosphatidylserine (PS) immunosuppressive pathway and its role in controlling the immune system. When you really look at even the PS, PS receptors, there’s actually a lot of activity from other companies even in this space and we are by far the most advanced company or program looking at that particular target. So yes, it’s a lot of work I think being at the conferences, making presentations, getting those interaction points. But secondly, it’s actively working with some of the KOLs in this area, and we are collaborating on several of these programs we’ve talked about with well-known, well-respected individuals in the I-O space, and that’s the other key, to get them to have the positive experience in their hands. And, that’s all underway. We’ve made great progress and we going to keep that until it’s a household name in the I-O space.