Tim Brons - IR, Vida Strategic Partners Steven King - President and Chief Executive Officer Joseph Shan - VP of Clinical and Regulatory Affairs Stephen Worsley - VP of Business Development Paul Lytle - Chief Financial Officer

Joe Pantginis - Roth Capital Partners Thomas Yip - FBR and Company George Zavoico - Jones Trading Rahul Jasuja - Noble Life Science Partners

Good day, ladies and gentlemen and welcome to the Peregrine Pharmaceuticals’ Third Quarter Fiscal Year 2016 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. I would now like to hand the conference over to Tim Brons of Peregrine’s Investor Relations Group. Please go ahead.

Thank you. Good morning and thank you for joining us. On today’s call, we have Steve King, President and Chief Executive Officer; Paul Lytle, Chief Financial Officer; Joe Shan, Vice President of Clinical and Regulatory Affairs; and Steve Worsley, Vice President of Business Development. Today, our team will be providing an overview of the Company’s operations and progress, spanning clinical, pre-clinical, corporate, as well as Avid Bioservices’ contract manufacturing business. After our prepared remarks, we will welcome your questions. Before we begin, I’d like to caution that comments made during this conference call today, March 9, 2016 will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, concerning the current belief of the Company, which involves a number of assumptions, risks and uncertainties. Actual results could differ from these statements and the Company undertakes no obligation to revise or update any statement made today. I encourage you to review all of the Company’s filings with the Securities and Exchange Commission concerning these and other matters. With that, I will turn the call over to Steve King.

Thanks, Tim, and thanks to all of you who have dialed in, and to all of you who are participating via webcast today. It is certainly been an interesting time at Peregrine since our last regularly scheduled conference call. On the downside was the recent announced discontinuation of our Phase III SUNRISE trial. On the upside was the announcement that we had completed formal commissioning of our new biomanufacturing facility and that the manufacturing in the facility was well underway giving us a great new revenue source from which to continue growing the business, which this fiscal year will easily reach an all-time revenue high. So, where do we go from here? First, we continue growing our thriving manufacturing business where we see the opportunity to grow even beyond the new manufacturing facility. Demand for services is at an all-time high and importantly, we are seeing significant opportunities for late-stage clinical and commercial production that can yield a solid base for future growth. So on this side of our business; it is business as usual supporting our clients with their developments and commercial production needs. On the development side, it is a transition time for our bavituximab program. While the results of the interim analysis from the SUNRISE study are unfortunate, and it is a setback for our chemotherapy combinations with bavituximab, it is by no means the end of the program. For starters, we have not yet completed patient follow-up in the SUNRISE study with the goal of learning as much as we possibly can from the trial. Important to note is that patients that enrolled in the study and are still active are continuing to receive chemotherapy and those patients that were on the bavituximab arm have the option to continue receiving bavituximab and some have already expressed an interest in doing so and we will be continuing follow-up on these patients as well as survival follow-up of patients that have already exited the study. At this point, our goal for the study is to obtain data from the trial that can potentially be critical in how we move the chemotherapy combination program forward and even information that can help guide the overall program, which patients did particularly well in the study, what were their characteristics, these are just a couple of examples of the many types of questions that we want to attempt to address as we wind down the SUNRISE trial. So that we can tailor patient selection in future studies. As we generate this data, we will be able to share it at the appropriate time in the future. As for advancing the program, we are as excited and confident as ever about the immuno oncology combination potential of bavituximab. As you may recall, this was already the counterpart to the chemotherapy combinations based on a completely different mechanistic synergy namely to start an immune response in patients lacking a good immune response and then prolong the immune response by blocking the PD-1 PD-L1 pathway that can counteract a strong immune response in patients. This combination hypothesis is still completely intact. We have generated a significant amount of translational and pre-clinical data demonstrating that bavituximab has the potential to enhance the activity of checkpoint inhibitors and our goal for the coming year is to bring many of these concepts into the clinic and to demonstrate the potential of bavi in this important area of cancer therapy. With our I-O combination program having been underway for sometime, long before the SUNRISE results, we have formed collaborations with some of the leading I-O players in the world. A collaboration with AstraZeneca to study bavi with their PD-L1 inhibitor durvalumab, a collaboration with researchers at Memorial Sloan Kettering Cancer Center to study novel combinations of bavituximab with I-O agents, a collaboration with National Comprehensive Cancer Network or NCCN to run multiple clinical studies focused on I-O combinations at some of the 26 leading cancer centers in the US that are part of the network with significant involvements, as part of the program from key opinion leaders at those institutions all in addition to our long time collaborations at the University of Texas Southwestern Medical Center that will continue to be active in pushing forward I-O combinations. The main difference with the SUNRISE results in hand is that the I-O combination program has become our major area of clinical focus and as such, we are working with all of our collaborators to redefine the program in order to have a cohesive and comprehensive strategy that ties together the efforts of all of our collaborators and will allow us to rapidly advance the program. The strategy will involve studies designed to answer specific questions about particular patient populations where we already have evidence that bavi may have the biggest impact allowing us to more quickly generate data that we can build on as we advance the program. These planning efforts are well underway as we speak, and we will look forward to updating you as they are implemented into the clinic. I will now turn the call over to Joe Shan, Vice President, Clinical and Regulatory. Joe?

Thanks, Steve. I’d like to start by speaking about our Phase III SUNRISE trial, which we discontinued in late February. The decision to stop the trial was based on the recommendation on the study’s Independent Data Monitoring Committee or IDMC following a pre-specified interim analysis. While the interim analysis show that the bavituximab combination group was performing as expected according to the original trial assumptions in terms of overall survival, it also demonstrated that the docetaxel group had dramatically outperformed overall survival expectations based on the original trial assumption and as compared to recently published studies. Nevertheless, enrollment has been stopped and we are now in the process of winding down the trial. As part of this process, patients who are still receiving study treatment are given the option completing their chemotherapy and for those patients assigned to the bavituximab arm, they continue to receive bavituximab if the investigator believes this is in the patient’s best interest. Because I-O agents can elicit delayed responses and prolonged survival, we are continuing to follow such verification to evaluate their outcomes. Such information will certainly be valuable and help us form future decisions for the company. As we continue to collect and clean the remaining data, we are also conducting a thorough evaluation of the already available clinical data. While we perform these analyses, we’ve put a hold on the trials that combine bavituximab with chemotherapy until we have a clearer understanding of SUNRISE study results. Specifically, we have put our recently initiated phase II/III breast cancer trial on hold, as well as the start-up activities for a Phase II early-stage breast cancer trial. It is our plan to publish our findings from SUNRISE when it is completed and we will provide an update on this process next quarter. Looking ahead, our priority is to generate clinical evidence of bavituximab’s ability to improve patient outcomes when combined with immunooncology agents. To this end, AstraZeneca and we are currently evaluating a trial design for the two previously announced clinical trial combining bavituximab with AZ’s PD-L1 inhibitor durvalumab. In light of the recent development in the SUNRISE trial, our companies are currently working together to identify the optimal path forward for demonstrating potential mechanistic synergies between bavituximab and durvalumab in different patient populations. We are particularly interested in combing bavituximab with checkpoint inhibitors because it has been observed that checkpoint inhibitors are most effective when there is a pre-existing T-Cell response in tumors. Importantly, we have pre-clinical evidence that bavituximab like antibodies triggers CD-positive T-Cell responses which can be prolonged by the addition of PD-1 checkpoint inhibitors. Another important observation we’ve recently made is that our PS signaling pathway inhibitors demonstrate multiple signs of immune activation in low or negative PD-L1 expressing tumors. We believe that this holds great potential to increase the number of patients able to respond to checkpoint therapies. Based on these observations, we believe that by combining these two projects the potential exists for a more complete and lasting anti-tumor immune response. Lastly, I’d like to comment on our newest collaboration with the NCCN. The goal of this partnership is to build upon the company’s clinical development program of bavituximab in combination with I-O agents for the treatment of a range of tumors. NCCN is a not-for-profit, alliance of 26 of the world’s leading cancer centers dedicated to improving the quality effectiveness and efficiency of cancer care. Through this collaboration, Peregrine will have an opportunity to fund multiple investigator initiated clinical and correlated studies with bavituximab in a range of cancers at the NCCN member institutions and their affiliate community hospitals. We believe this relationship will prove to be highly valuable as it will allow Peregrine to expand and augment our bavituximab clinical development program through experienced investigators and world-class institutions. It would be impossible for a company of our size and stage to gain access to incredible institutions and clinical thought leaders otherwise. This collaboration remains quite new, but we look forward to reporting our progress in the not too distant future. This concludes my comments today. I will now turn the call over to Steve Worsley to give an overview of the business development and manufacturing activities. Steve?

Thanks, Joe. As Joe provided an update on our collaborations with AstraZeneca and the NCCN, I’d like to provide an update on Peregrine’s other I-O-focused collaboration with the Memorial Sloan Kettering Cancer Center. The goal of this partnership is to evaluate combinations of bavituximab with other checkpoint inhibitors and immune stimulatory agents for the purpose of developing new and increasingly effective anti-cancer treatments. This work is advancing well. To-date, we have seen initial signs of activity with new combinations with bavituximab and other treatment modalities such as checkpoint blockers, T-Cell agonists, and radiation. Our plan is to spend the next year investigating these possible combination potentials. We are also renewing the contract for next year as we’ve seen exciting results thus far. I’d now like to discuss our biomanufacturing business as we announced earlier this week our new state-of-the-art commercial biomanufacturing suite which we call the Myford facility has been formally commissioned. As part of the commissioning process, all relevant regulatory agencies have been notified and GMP production is currently underway. The new facility, which is being operated by Avid Bioservices will more than double the company’s prior manufacturing capacity. The 40,000 square foot biomanufacturing facility which is located adjacent to the company’s current campus in Orange County, California is outfitted with cutting-edge, single-use equipment to accommodate a fully disposable biomanufacturing process for late Phase III clinical and commercial production of biologics. Despite its world-class design, the Myford facility was completed for a fraction of the cost of building comparable facilities something of which we are quite proud. The suite is capable of operating reactors as large as 2000 liters in volume. GMP material produced in new facility can be used either in clinical trials or for commercial sales once Peregrine or its partners make the appropriate regulatory filings. Demand for this new production capacity is high and we already have locked commitments extending well into 2017. As this demand continues to grow, it leads us to consider options for potentially adding more production capacity in the near future. We are currently evaluating a number of opportunities to meet this demand and are extremely optimistic about the growth of this business. We believe that the Avid business will continue to be a tremendous source of new business for Peregrine and it is our goal to pursue every opportunity to build demand and expand capacity. That concludes my comments. I will now turn the call over to Paul Lytle, Chief Financial Officer who will discuss the company’s financial performance including additional details regarding our Avid Bioservices business. Paul?

Thanks, Steve. We are pleased to report that we continue to see significant growth in our contract manufacturing business. Last quarter, we raised our fiscal year revenue guidance from $30 million to $35 million to a range of $35 million to $40 million and today, we believe we can exceed this guidance and top $40 million in contract manufacturing revenues for the full fiscal year 2016. This represents revenue growth of approximately 50% over the prior fiscal year in addition to the continued growth we’ve seen over the last several years. I would also like to point out that our manufacturing revenue for the full fiscal year 2016 will be solely derived from our existing manufacturing facilities and our newly commissioned facility has the potential to generate an additional $40 million in manufacturing revenue. Now turning to the current quarter, we generated contract manufacturing revenue of $6.6 million representing an 18% increase in manufacturing revenue compared to the same prior year quarter and year-to-date, we recorded manufacturing revenue of $25.6 million or a 47% increase compared to the same prior year period. Our outlook for this business remains very positive with our customers continuing to book available production capacity. Our revenue backlog has grown from $49 million reported in the last quarter to over $58 million as of February 1, 2016, the beginning of our fourth quarter. Looking ahead, we expect Avid Bioservices to continue to play a critical role in our business Avid continues to generate non-diluted income that significantly reduces the amount of capital we need to raise by other means. For this reason, growing the Avid business will remain a high priority for the company. Now turning to expenses, R&D expenses for the quarter increased primarily due to the increased manufacturing cost associated with bavituximab combined with increased cost associated with the previously planned Phase II trials in breast cancer and lung cancer, while G&A expenses remained relatively flat quarter-over-quarter. A more detailed analysis of our statement of operations is included in our Form 10-Q that will be filed later today. This concludes my financial overview and I will now turn the call back over to Steve to discuss some important upcoming milestones. Steve?

Thanks, Paul. As you’ve heard from our team today, Peregrine remains a strong company with a valuable clinical asset and a rapidly growing biomanufacturing business. The important work of developing bavituximab as an anti-cancer therapeutic continues. We believe our relationships with AstraZeneca, Memorial Sloan Kettering, UT Southwestern, and with the NCCN will be invaluable as we establish and execute our overall strategy for advancing the bavituximab I-O combination plans in a range of cancers and our Avid Bioservices business continues to outpace our initial projections providing a steady growing revenue stream. The Avid business grew 20% in fiscal year 2015 to $26.7 million in revenue, and is expected to grow to exceed $40 million in revenue in fiscal year 2016, with our new facility now online to help drive further revenue growth in fiscal year 2017. It is fair to say that Avid has experienced significant success and we are evaluating a number of opportunities to continue to expand this important business. This concludes our prepared remarks and we would now like to open the line for questions.

Thank you. [Operator Instructions] And our first question is from the line of Joe Pantginis with Roth Capital Partners. Please go ahead.

Hey guys, good afternoon. Thanks for taking the question. Couple questions, so bear with me if you don’t mind. First, with regard to the overall operations of Peregrine, you are obviously looking at increased revenue from Avid, so with that in mind, how are you looking to fund the company going forward with regard to the Avid revenues, your outstanding ATM, and is there a potential for restructuring following the SUNRISE news?

That’s a good question, Joe. We are very committed to maintaining a solid cash position to run our business. We’ve always said in the past that our goal is to maintain a balanced financial approach, so we like to complement our cash position with the revenues that are coming in for Avid. We can utilize potential offerings through the equity markets if we need to and then obviously we're looking at other opportunities. Different collaborations, different revenue streams, and growing the Avid business I think will be imperative for the company as we advance our business. So, again we are looking at maintaining and sustaining a very operational business here and to support our customers.

And with regard to the size of the business and any potential restructuring?

Currently, we have no restructuring in terms of the size of the business. Our goal is to continue to grow the business and we have plans to do that.

Okay, and switching to the I-O combination program, Steve, you made a comment about how the program is going to be redefined now, can you talk a little more about what that means; specifically, I know you had some certain views about what the AZ protocols might have looked like. Have those changed and what have your discussions been with AstraZeneca since the SUNRISE news?

One of the things we’ve done, which is prudent, is, based on the SUNRISE data and the fact that we really need to understand what happened in that study - why did the control arm way outperform what we expected going into it. As Joe mentioned in his remarks, we have put on hold a couple of the clinical studies that would have been starting otherwise. This does two things – one, it gives us a chance to give more data from the SUNRISE trial and to make sense out of it; the 2nd is that it also controls expenditures in those areas and those were a couple of significant expenditures for the coming year. In addition, our overall strategy, and this pertains to both questions, is really to focus our clinical dev. efforts on studies that can yield, #1, quick data or as quick as possible, but also smaller studies that really allow us to build on early successes and then to grow our knowledge base as we expand into larger trials. It’s a huge benefit to be able to do that based on the tale, if you will, of good clinical data. Yes, we’ve entered into discussions with AstraZeneca, we are having discussions with NCCN, with our other collaborators at Sloan Kettering & UT Southwestern about, how do we put together a cohesive program, because we don’t want a bunch of individual activities that don’t fit well together, what we want is a program that allows us to answer critical questions in multiple indications simultaneously and then to build on solid clinical data, looking at patient populations such as PD-L1 negative, where we have already shown in some of our translational work and pre-clinical studies that may be where we can have a big impact, so we’ll be able to look at that in a clinical setting. But, taken overall, it also helps to control the burn rate until we can generate good clinical data that’s positive and then that of course should help both on the partnering as well as the funding fronts. So, we're taking this very step-wise, and continuing to grow the Avid business just makes good sense, because that really helps cover the overall business operations.

Now that’s helpful. Thank you. And then would you say that there has been no change to the tenor of your discussions with AstraZeneca?

Yes, I mean, what I would say is that the tenor of discussions has changed just because, what now makes the most sense, because the rationale for running the Phase II study in NSCLC was little bit different. It was really meant to augment a positive clinical study in chemo combination, and so they then had coverage for both the I-O combination as well as the chemotherapy combinations. I think now the goal has changed somewhat, and I think for both of us into, how do we now build on good clinical data and find those patient populations that are most likely to respond. So, it’s sparked of a lot of a new conversation, all which I think is very positive and I think also which will allow us to not just run studies with AZ, but also to incorporate what we are doing with NCCN, Sloan Kettering, UTSW into that overall plan which benefits both Peregrine & AstraZeneca and everyone involved.

Okay, and then my last question, if you don’t mind, it’s a quick one. You mentioned regarding SUNRISE that patients will be able to, if they request, remain on bavi. Do you have a sense of how many patients that might be, and the potential cost associated with it?”

Yes, I think the potential cost will be relatively minimal just because, obviously, it’s going to be a portion of the patients that would be going forward with that, but it was already captured in the initial intent of running the study. But, the benefit far outweighs any expenditures associated with those infusions, because #1 we only have the drug, #2, it allows patients to stay on and as the data matures, our goal is still to get as much data from this study as possible, which includes which patient populations maybe doing better, is there a survival tale – a lot of questions we still want to answer and the more we are able to keep patients on the study, keep them going through, I think the more likely we are to be able to get some really nice data that we can again, really employ as we continue to advance the program.

Okay, thanks guys.

Thanks, Joe.

Thank you. And our next question is from the line of Thomas Yip with FBR and Company. Please go ahead.

Hey guys, good morning. Thank you for taking my questions. Just one – two final more specifically about your ongoing discussion with AstraZeneca, you mentioned it involves finalizing the design of 2 trials. I am just wondering whether it’s still a Phase II trial for NSCLC and then another trial for solid tumors, and if so, which one is the higher priority trial at this point?

Just to remind everyone, we had actually 2 separate collaborations. The 1st one was for a clinical basket-type study, in which we are looking multiple solid tumor indications, where the idea was to combine bavituximab with durvalumab + chemotherapy. The 2nd study was a Phase II study in NSCLC to combine bavi with durvalumab vs. durvalumab alone. Basically, what we want to do now is take a step back, we’ve got data from SUNRISE, what is that telling is - obviously it’s giving us a good reason to consider the trial design for the basket study. Do we at this point just simplify it and have it simply be a bavituximab plus durvalumab study? Those are the kind of discussions that are ongoing. And then, on the Phase II NSCLC study, we're just taking a look at both of those studies and determining what is the right studies to run. My goal for the clinical program is, run studies in which we can quickly ask questions and answer questions and use that to guide the overall program. What we want to do is make it the most efficient program. I think AstraZeneca really sees the value in that and, again, also to tie it in with what we are doing with NCCN, and UT Southwestern, and Sloan Kettering, so that, we get the value of a global program, not just of couple of clinical studies which will answer some questions but maybe leave others unanswered. I think that we are having very good discussions with AstraZeneca and we just want to come out with the best program overall that really allows us to rapidly generate data and to rapidly move the program forward.

Sure, that makes sense. I guess, Can you tell us more detail about your NCCN collaboration? Specifically, what is the selection process of potential immuno-oncology combinations?

The process with NCCN, which is is pretty much kicking off, is that the NCCN is responsible for reviewing, putting together a proposal, and working with us to try to answer questions that are of interest to us, but at the end of the day, they are running the program. What’s important is, the NCCN is some of the leading cancer institutions in the U.S. In addition, it’s really the KOL's at those institutions who will be involved in our particular program and so, we couldn’t be in better hands than working with the key thought leaders to select and run clinical studies that will add the most value to our I-O combinations. So, they're responsible for it. We provide them with all the information we have to-date, where we see the gaps in the program, and then they basically take and run with it. Operationally, it’s great for us. It’s great to be involved with these leading institutions. It’s really just a win-win for us and for the investigators to be able to run these studies.

Sounds good. One last question, this one is about Avid, about the $58 million in manufacturing backlog. So, just want to make sure that this manufacturing is committed for the last fiscal quarter or 2016 and also over the four quarters in fiscal year 2017 and is that correct?

Yes, Thomas, this is Paul, that is correct, that is revenue to be reported in Q4 of this fiscal year and into fiscal year 2017.

Great. Thank you again for taking my questions and looking forward to hearing more progress with bavituximab.

Thanks. Thomas.

Yes, thanks, Thomas.

And our next question is from the line of George Zavoico with Jones Trading. Please go ahead.

Hi, everyone. Hi, Steve, Joe, Steve and Paul.

Hi, George.

Sorry about SUNRISE. I was quite as surprised and the better than expected behavior of the control of docetaxel - that’s killed a bunch of Ph.3 trials already in the last several months - very unsettling patterns. But, we then see how it plays out with the patients that you are still treating. Re: the NCCN pgm, you mentioned in the PR that you are committing $2 million of research expense through the pgm. Can you give us an idea of the scope of what that can cover in terms of how many collaborations, how large the trials, how many trials you might be able to do, and also what the cost sharing aspect of it is? How much of it are you paying and how much of it, if any, is the NCCN contributing?

Yes, so, I think overall, George, the funding we're committing is really is our commitment to the program. Obviously providing bavituximab will be other piece of the commitment, but, clearly that’s not an issue, because we manufacture it here. The beauty of the NCCN, as I mentioned earlier, is #1 we’ve got KOL's involved in it, leading institutions who can help guide the program. The idea is that they will put out RFP's. We expect the funding will fund 3, 4, 5 different clinical studies; it’s going to depend on the scope of the studies and the proposals that come through. But basically for us it’s great, because they're operationalizing and running the studies. They obviously are picking sites that have a good track record in quick patient enrollment, good patient enrollment, and really adhering to what they’ve proposed in their proposals. So, for us it’s really a way to run multiple studies all under one umbrella at the same time to really again involve some of the key people that we want to be excited about the program as we go forward.

Okay, I presume that, because of the SUNRISE trial that was ongoing, I suspect you probably don’t have to make any more about bavituximab for a while, so that cost is pretty much covered already for these programs?

Yes, absolutely, we already have adequate stocks of bavituximab to support all these studies we are talking about. We don’t expect any of them to be huge studies to start with, but certainly we have more than adequate supplies on hand.

And I imagine that the $2 million is just a start, if things go pretty well, I'm sure that $2 million was not the ceiling here, right?

No, we can always adjust it. The $2 million is what the original agreement is for and so that covers all the initial scope of what we are trying to do with them. But, certainly if things goes we expect and we generate data we think that will help drive the program forward, we want to continue to work with NCCN and our other collaborators. Joe?

Yes, hey, George, this is basically a research agreement for $2 million, I think over a course of 2 years. So, maybe that gives you a sense of time and as Steve mentioned, typically it ends up being 4-6 investigator initiated trials. These are smaller studies, but I think the key is that, like Steve mentioned, it’s in our strategy of smaller quick studies that we can get.

Absolutely, you're tapping into an existing infrastructure at minimal cost...

Correct.

Given where you are now, that’s probably the best strategy to take. Re: timing, you said you are going to be entertaining RFPs. When do you think you might get the 1st trials underway?

I don’t think we have total clarity on that. We are starting that process of developing that RFP with the NCCN. Again, this is a program that they administer, they oversee, and that 2-year period basically starts pretty soon. As soon as the RFP is developed, they’ll put it out and they are under contract to delivering study results and publications in a 2-year timeframe.

Now, with regards to the MSKCC collab, you mentioned a couple of tantalizing comments that you're already seeing some interesting data. Maybe it’s too early, but can you comment on whether any aspects of it have been submitted for the AACR Meeting perhaps, or ASCO or later on in the fall? When will we start seeing some of the MSKCC data in other words?

Our Sloan Kettering collaboration is obviously ongoing in a number of different areas, and so far we have been very happy with the way it’s progressing. I think some of the data is coming through on that. I can’t comment on what they’ve submitted at this point, but certainly, the goal of both of our groups is to generate data that we can not only go out and present at major conferences like AACR, but also to publish and really help guide the clinical program. I think along those lines, it’s important to note that Memorial Sloan Kettering is one of the institutions within the NCCN, so, obviously that’s another nice fit of how we're putting everything together from a cohesiveness point. So, clearly we'd like nothing better than to see some of the great ideas from our collaborators end up in clinical studies and driving the program forward.

Regarding Avid, you're working with certain margins on the pre-existing facility without the disposables. The disposables enable much less expensive manufacturing… how do you expect the margins to change with the new facility?

Yes, just In terms of our manufacturing contracts, the manufacturing fees are fairly consistent, whether it’s in stainless steel or it’s in single-use bioreactors. So we expect the revenue to be very similar. In terms of the cost structure, a significant portion of the cost structure is really built into labor and whether you are doing it with our traditional facility or with the single-use, the cost structure is fairly similar from a human resource standpoint. The one key thing here is that the changeover time between stainless steel & single-use is much quicker, so we can shrink the amount of time between manufacturing runs and potentially drive a lot more output out of a single-use facility.

Yes, I think just, follow-up on that George, I think the other nice thing about the Myford facility is that it really was built for late-stage clinical & commercial production; ie, meant to upgrade in campaign mode, which means that you will have multiple reactors going simultaneously for a given product and then have a changeover to the next product. So actually the throughput of the facility could be even greater than what we have in our existing facility as we get more and more commercial production. And, as I said in earlier prepared remarks, we’ve seen a lot of interest from late-stage clinical & commercial clients and that’s really going to be instrumental in building a nice solid base for continuing to grow the business, because what you want is to constantly produce materials, make as many batches as you need, and then switchover, because now the client has what they need from a production standpoint and it allows us to move on to the next client and continue our production lines in a continuous way. That’s really a model for how we see the commercial facilities, and we’ve also seen a nice, as we want to continue to grow the business, a really big need for addl. clinical production as well. So, that’s another area of potential growth for the business as we continue to move forward. We are continuing to respond to the market needs by building on a nice solid base of existing clients that will have long-term needs.

And finally, two just really quick questions about the Avid as well. Are you considering at all expanding into fill and finish? Also, have you increased the number of clients you are actually working with now or will be working with?

Yes, we definitely have new clients that have come onboard, and that’s what’s helping to drive some of the work we are seeing over in the Myford facility, the nice backlog in business for now building up over there. That’s been great, because when you build a facility, you're never quite sure what the response was going to be, but it’s been pretty overwhelming right now, which is good. On the fill/finish side, that is something we do have an interest in, particularly to support our clinical clients, for those in clinical stages of developments, because it will be a big benefit for them and I think another draw for bringing in that early-stage business. Commercial manufacturing is a different beast altogether, so that’s one that as we get experience in fill/finish and see that there's a good track record we’ve built up, then moving in a commercial production might be something down the road. But, right now, quite frankly, we are so busy with bulk drugs substance manufacturing, and we want to continue to do what we do well and continue to grow that business.

Okay, great. Good luck going forward. Thank you very much.

Yes, thanks, George.

And our next question is from the line of Rahul Jasuja with Noble Life Science Partners. Please go ahead.

Hey good morning guys. Couple questions. One on the immuno oncology program and then one on the SUNRISE trial. Let me start with the SUNRISE trial, looking at the remnants of what you can salvage in terms of data here, you talked about looking at the immuno therapy effect in the remaining patients that are on bavi, or choose to stay on bavi. What immunological metrics will you be looking for? Are you looking for just tumor reduction or are you looking for particular immune metrics in the tumor micro environment that you are collecting as well?

Yes, I think it’s a combination of all the above. We built into the SUNRISE study a lot of collection of samples & specimens from patients throughout the study that would allow us to do analysis, but while the trial was blinded we wouldn’t really be able to make sense out of it. Now that the study is unblinded, we can actually do the analysis of those samples and then start to put that together with the actual patient outcomes. One of the things that we can monitor closely with our collaborators, through NCCN or through our collaborations with Sloan Kettering and UTSW is, what all do we want to learn now, and in particular focus on those patients that really did well in the study, because the ultimate goal is to be able to select patients for future studies that are more likely to respond to therapy. There is every likelihood that within the SUNRISE study, that that information could be available, and we just want to be very methodical in how we generate that data, the testing we do to make sure that we get the maximum use of those samples that have been collected. So there's a lot of work that’s going on right now to finalize the plan, then over the coming months, we can complete the analysis and then at that time, we should have a much clear picture. #1, we’ll have more patient follow-ups, so we’ll know how more patients did, then to combine that with the data from the analysis we think can yield some really valuable information.

This is a question about indications in combination with bavituximab. We did see pretty good data with AstraZeneca’s combination with PD-L1 , is the same what you guys are using monoclonal antibody and their own CTLA-4 in mesothelioma and NCSLC. In fact, they do have orphan disease status and fast track with the FDA combining a CTLA-4 and a PD-L1, and these are PD-L1 low expressing tumors. So, extending into the rationale behind bavituximab also showing efficacy in PD-L1/ PD-L1 low tumors, is there a plan, given that data you're looking at, the PD-L1 approaches, and I think that some of the work was done by Scott Antonio, who's also an advisor to Peregrine. Is there a plan to move beyond, just NSCLC in combination with PD-L1 and in other PD-L1 low expressing tumors?

Yes, I think absolutely, that’s really part & parcel of what we think we can do through all of our collaborators, AstraZeneca, the NCCN, Sloan Kettering, and UTSW, is to look at other indications. We’ve generated some interesting data earlier in liver cancer and other solid tumor types, so the opportunity to go into some of those indications where there is still clearly a high unmet medical need and patients not responding as well as everyone would like to the immuno therapy. So, we see a lot of opportunity in multiple indications outside of lung cancer, because we also recognize that lung cancer is becoming a crowded space and as you put more & more drug and drug combinations into the system, where is that an approvable indication? Now, the one benefit we think we will have in a durva, or any other PD-1/PD-L1 inhibitor, combination with bavi, is potentially on the safety side, and that really could pay dividends, because you can keep patients on treatment longer and you may be able to enhance that activity even further. So, that’s some of the things that we want to explore. First & foremost, which patients are going to respond the best, and then it's which indications or which tumor types we think then there's areas of opportunity. We want to simultaneously approach those 2 questions, and piece it together through small studies, generate good data, and then really expand it out from there - that really creates our value opportunity. The CTLA-4 + durva results are very good, but as with all of the other CTLA-4 combos of PD-1/PD-L1 inhibitors, there are significant toxicities and we think that’s where there could be an opportunity in the marketplace for safer combinations that have at least the same or maybe even greater activity.

And, so my final question here is, I mean, is there – are there discussions in conjunction with AstraZeneca, or others, to address other tumors that are PD-L1 low, where conventional checkpoint inhibitors don’t work, or is this just an inate Peregrine-driven effort?

No, I think there is definitely the interest, clearly, in some of the other tumor types that haven’t historically responded as well to the I-O agents; breast cancer for instance, but there are other examples where we think bavi does have activity, and we want to see if we can take advantage of that from a 'priming the system', if you will, to be able to keep that immune response going with the PD-1/PD-L1 inhibitors. Yes, that’s definitely a big topic of interest is how do we, not just continue to add on and add on in lung cancer, but how do we actually get more and more tumor types to respond, and we think we can have a good role there and that’s one of the things we want to explore, either through the AZ basket study or even through some of the other collaborations we have ongoing.

Okay, very good. That’s all I had. Thanks.

Thanks, Rahul.

Thanks, Rahul.

And we have a follow-up from the line of Joe Pantginis with Roth Capital Partners. Please go ahead.

Hey guys. Thanks for the follow-up. To George’s earlier question, how much bavi you have in your stores right now? And what’s the shelf life?

I don’t think we have any public information there, but we have more than enough in supply to basically be able to run all the studies we are talking about through NCCN or with our other collaborator, AZ. So drug supply will not be an issue, which is good because that offers us more capacity for the clients over in the Myford facility. So, that’s all positive at this point. With regard to the shelf life, our goal, as with any commercial product, is multiple years of stability in the bulk stage and then multiple years in the final vial, so, you end up with a lot of shelf life at the end of the day. That's helpful now, and it’s very helpful once you get to the commercial phase.

Now, that’s helpful. Thank you and then there is just a last quick thing. Can you just remind us with regard to the current terms if you will with AstraZeneca, are they supplying durvalumab free of charge?

Yes, they are.

Okay, great. Thanks guys.

Okay.

And we have a question from the line of Joseph Tascalusia. Please go ahead.

Yes, hello. Thank you for taking the question. This is a follow-up to Mr. Pantginis’ question. Is there a plan in place to possibly restructure expenses to more closely align with the Avid revenues, because it would suddenly appear with the stock price at $.40 that the ATM is no longer a viable option?

We are looking at the overall program. #1, we want to continue to grow revenues on the Avid side of the business. So that’s good, more money that’s coming in. On the expense side of things, we’ve already put on hold the other chemotherapy combination studies which were planned to be a significant part of our go-forward strategy, and still may be in the future, we need just more data from the SUNRISE study and then we can reevaluate. But, in the mean time, the concept is we want to be very efficient; the collaborations such as NCCN are very efficient from a cash utilization standpoint. The types of studies we run with AZ, we want to really gear those toward answering specific questions, maybe in a smaller format, which does 2 things: one it allows us to quickly generate data, but then to grow those studies, if you will, based on positive results, and positive results are going to have an impact on the market perception of the drug and what our value is. And so, we want to really take a step-wise approach, but I think we can generate good positive data without running huge hundreds and hundreds of patient studies, but really go through small studies, build on success and then use that as a springboard to even bigger studies with the idea being that, at that point, partners can jump in to help us run those studies. I think the market will respond to positive data in showing that we have good potential with the PD-1/PD-L1 inhibitor-class of drugs.

Okay, thank you. Thank you.

And I am now showing no further questions at this time. I would like to hand the call back over to Mr. Steve King for any closing remarks.

Okay, I’d like to thank again all of you for participating in today’s phone call. As always, I want to thank our stockholders for their continued support, and I would like to especially thank patients, their families and the investigators that are participating in our bavituximab clinical trials. With that, we will conclude the call.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program and you may all disconnect. Have a wonderful day everyone.