Avid Bioservices Inc (CDMO) 2007 Q4 法說會逐字稿

Hello and welcome to the Peregrine Pharmaceuticals fiscal year 2007 financial results conference call.

(Operator Instructions). For your information, this conference is being recorded.

Now, I would like to turn the call over to Barbara Lindheim. Ms. Lindheim?

Good morning and thank you for joining us on today's call with the management of Peregrine Pharmaceuticals. I'm here today with Steven King, President and Chief Executive Officer, and Paul Lytle, Chief Financial Officer. We're here to discuss the Company's fiscal year 2007 results that we reported this morning.

Before I turn the call over to Mr. King, I would like to read the cautionary note regarding forward-looking statements. This conference call may include statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Peregrine Pharmaceuticals' current views about future events and financial performance. These forward-looking statements are identified by the use of terms and phrases such as believes, expects, plans, anticipates, on target, and similar expressions identifying forward-looking statements. These factors include but are not limited to the risk factors detailed from time to time in Peregrine Pharmaceuticals' filings with the Securities and Exchange Commission, including but not limited to the annual report on Form 10-K for the year ended April 30, 2007. 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 Peregrine Pharmaceuticals' expectations. Peregrine Pharmaceuticals expressly does not undertake any duty to update forward-looking statements whether as a result of new information, future events, or otherwise.

I'd like to turn the call over now to Steven King. Steve, you may begin.

Thank you, Barbara. I would like to start by thanking everyone participating in today's conference call. We're happy to have this opportunity to update you on recent developments at the Company.

I will start with a brief recap of recent developments. Paul will then go over the financial highlights for the fiscal year. I will conclude with a more detailed review of our product development strategy as we move into fiscal year 2008. We will then give you the opportunity to ask questions in a Q&A session.

Over the past few months, we have achieved a number of key milestones for each of our three clinical programs. First, we completed enrollment in and reported promising topline results from a bavituximab combination therapy trial in advanced cancer patients. These results have helped set the stage for the Phase II efficacy studies we plan on initiating this year. Second, we initiated a Phase II Cotara brain cancer trial in India, a trial designed to confirm the promising results we have seen in earlier Cotara trials. Third, we initiated a new bavituximab HCV clinical trial in patients coinfected with HIV. This study was supported by promising clinical results in HCV patients reported earlier this year and is designed to look at an extended dosing schedule in a new HCV patient population -- again, major advances in all three of our clinical programs.

While we have focused our efforts on the clinical development of our lead compound, we have also seen progress on a number of other fronts. These developments included a number of presentations at the annual meeting of the American Association for Cancer Research, including preclinical data confirming the potential of our selective VEGF inhibitors for cancer therapy, data validating our amino cytokine fusion protein approach to treating cancer using our proprietary Vascular Targeting Agent platform, data supporting the exciting potential of bavituximab to reprogram the immune system to fight cancer, resulting in a reduction of tumor burden by over 99.9% in the models tested, and data further supporting the robust potential of bavituximab in combination with chemotherapy.

On the business front, we also realized several significant advancements, including entering into a development collaboration with Dios Therapeutics, completing a licensing agreement with M.D. Anderson to further strengthen our preclinical programs in the Anti-phospholipid area. Perhaps most importantly, we completed a significant financing to support our ongoing efforts and future plans. We believe this financing will be critical as we continue to aggressively advance our clinical programs in order to build stockholder value.

As you can see, it has been a very productive past few months. Before going into more detail on these advancements, I would like to hand the conference call over to Paul Lytle for a financial summary. Paul?

Thanks Steve. Thank you, Barbara, and thank you, everyone, for joining us.

During the next few minutes, I will take you through our financial results for the fiscal year. I will then discuss our cash on hand, the recent financing and how we expect to immediately put these proceeds to work. Let me start now with the financial results for the fiscal year ended April 30, 2007.

This morning, you may have seen our earnings release covering the full fiscal year. This release outlines our financial results in greater detail and I encourage everyone to read the full release as well as our entire 10-K that will be filed later today.

Now, for the financial results. For fiscal year 2007, Peregrine reported a net loss of approximately $20.8 million or $0.11 per basic and diluted share. For the same period last year, we reported a net loss of approximately $17.1 million or $0.10 per basic and diluted share. The current year increase in our net loss was primarily driven by an expected increase in R&D spending of $3.5 million, combined with a net decrease in other nonoperating income. These amounts, then, were offset by an increase in revenues.

Let me discuss these year-over-year changes in more detail and I will start with revenues. Total revenues for fiscal year 2007 were up 16% to $3.7 million, compared to $3.2 million in the prior year. The majority of this increase came from Avid Bioservices, the Company's wholly-owned contract manufacturing subsidiary, which reported fourth-quarter revenues of $2.1 million. In addition to the revenues that are generated by Avid, it is critical to note that Avid's strategic importance comes from its ability to timely develop, timely manufacture and timely deliver Peregrine product candidates bavituximab and Cotara to clinical sites as we advance these promising compounds. This work will significantly increase as we look to initiate up to six Phase II studies over the coming months with bavituximab for the treatment of cancer. This is in addition to the ongoing Cotara Phase II study that was recently kicked off and the coinfected HCV/HIV clinical study that was just initiated yesterday.

Now, let me turn to our expenses. Total costs and expenses increased to $25.6 million. This is $3.3 million more than last fiscal year. If you look at our statement of operations, you'll notice one primary driver that clearly stands out, research and development costs. We saw an increase in R&D investment of approximately $3.5 million, again this increase primarily driven by the advancements of the Company's three separate clinical programs. I want to expand on this and Steve will discuss our development efforts at greater detail in a couple of minutes.

Now, if you look at our other cost and expense category, there are a couple of other positive things to note. First, our costs of contract manufacturing remains flat despite a 16% increase in total revenues. Second, our SG&A expenses slightly declined, about $118,000, in light of our expanding operations.

Let me shift gears now to other income. In the prior year, we reported a $1.2 million gain related to a recovery of a note receivable, in essence reducing our net loss in the prior year by $1.2 million. This other income item did not reoccur in the current year, in essence contributing to the increase in the current year's net loss as compared to the prior year. Under the same other income heading, we also saw a net increase in interest and other income of $0.3 million, primarily related to an increase in interest income. This was due to a higher average cash balance on hand over the year, combined with higher prevailing interest rates.

Let me shift your attention now from the statement of operations to the balance sheet. We ended the fiscal year with approximately $16 million in cash and cash equivalents. On June 28, we significantly enhanced our ability to internally move our products forward when we raised approximately $20.9 million in net proceeds from several institutional investors. When you include these net proceeds, our cash on hand at June 30, 2007 was approximately $32.5 million, sufficient capital to run multiple Phase II studies over fiscal year 2008.

Before I talk about the recent financing, let me assure you that this financing was not an easy decision, but we believe it was the right decision. Developing drugs is expensive and time-consuming and it is critical that we have the resources to push forward on our Phase II studies, studies we believe are major value drivers for any biotech company. We also believe the value we would attain in any collaboration or partnership would be significantly enhanced once we have some positive Phase II data in hand.

Here are some important points on the financing. First, the timing of the financing came right on the heels of some very promising topline cancer data from our Phase 1b bavituximab India study. We were deeply disappointed in the performance of the stock price in light of this news and other positive news events around the same time. Unfortunately, our stock price is a factor of many forces that we cannot control. But what we can control are the fundamentals of the Company, moving drug development forward, and we remain optimistic about the future.

A second important point of the financing is that we now have more cash on hand than ever before in the Company's history. Phase II studies are expensive but they potentially add significant value. This is why we raised the amount we did. We now have the fuel to drive our aggressive clinical plans for at least the next 12 months.

A third key point to remember is that we raised this capital without any warranty coverage. As mentioned on previous calls, we have continued to clean up our capital structure and overhang for the past four years and have gone from 20 million warrants outstanding at fiscal year end 2003 to a mere 360,000 today. We even had some investors back out of this past deal because no warrants were offered. If you look at similar deals closed on or near the same day we announced the financing, a number of them included 50% warranty coverage.

Another key point is that this deal was done with several institutional investors. Our goal is to broaden the interest in and support of the Company and to bring more institutions into the stock. This is a big step in that direction and the right time to bring on an investment bank, which takes me to the next point. We now have a top-rated investment bank on our team. We believe having an investment bank on-board is extremely important at our clinical stage of development. An investment bank can provide a number of value-added services, including [non-deal] roadshows, strategic advice, access to investor conferences, sales and trade support, and possible analyst coverage. These services should all increase the Company's visibility among a variety of audiences, including institutional investors and the financial media, as we plan to drive more clinical data this year than ever before in the Company's history -- again, a perfect time to tap into the resources and support of an investment bank.

My final point is that this added capital provides more strength and partnering discussions. We have been and are currently in active discussions with a number of potential partners. The value we would attain through any collaboration with a Phase II drug is significantly enhanced and we now have the capital to internally move these products aggressively in that direction.

It is important to note that there is no such thing as nondilutive capital. Licensing opportunities, partnered earlier rather than later, significantly dilute your future earnings potential, including lower milestones, lower royalties, lower profit-sharing, and so on. It was extremely difficult for the Company to raise this capital at these stock prices in light of all the positive news and progress we have made in the past year, but in the end, we believe it was the right decision that was essential to move these products forward.

In closing, we believe PPHM is well positioned for fiscal year 2008. We have three active clinical programs for indications with significant market potential. We plan on initiating up to six Phase II cancer studies this year with bavituximab, one of which we just announced this morning. We recently opened enrollment and are actively recruiting patients in the Cotara Phase II study in India. We just opened enrollment in the bavituximab HCV/HIV study. And we have a runway of cash, $32.5 million at June 30 to drive these exciting programs. Taken together, we are the most promising point in the Company's history.

I would like to thank you for your time. This concludes the discussion of the financial results. Steve will now continue to update everyone on the Company's achievements and our major objectives for the coming months. Steve?

Thank you, Paul. I would now like to take you through recent developments in our clinical programs as well as our upcoming plans for our clinical studies. Let's start with the bavituximab cancer program.

I hope you saw the good news we released this morning announcing that we have filed the protocol for our first Phase II clinical trial for bavituximab, an important milestone in this key clinical program for Peregrine. I will come back to that trial in just a few minutes.

Over the past few months, we completed enrollment and released encouraging results from a pilot bavituximab Phase Ib combination therapy trial. In this trial, we were treating patients with advanced cancer who had failed multiple attempts to treat their disease. These patients were treated with a combination of bavituximab plus one of three common chemotherapies. Enrollment in the trial went extremely well and we have been encouraged by the results. There were a number of key findings in the study, including 50% of all evaluable patients enrolled in the study had either objective tumor responses or stable disease, both considered by cancer experts to be signs of anti-tumor activity, with 75% of the patients receiving bavituximab plus gemcitabine having objective tumor responses or stable disease, and half of the patients receiving bavituximab plus carboplatin and paclitaxel showing objective tumor responses, which is defined as a greater-than-30% tumor shrinkage. In addition, the safety profile as a combination therapy appeared similar to chemotherapy alone. These are very encouraging findings in this very ill late-stage population of patients.

While completing this combination therapy study in India, we have continued our Phase I bavituximab cancer trial in the U.S. and have implemented a number of changes in the protocol. These changes included modifying enrollment criteria and the trial design. We felt it was important to address these changes at this time not only to expedite the ongoing trial but also to make running future Phase II trials in the U.S. easier.

We believe that the clinical data generated for bavituximab from the combination therapy cancer study, the ongoing U.S. cancer study and the two completed HCV clinical studies, in addition to robust preclinical therapy data showing the potential of bavituximab in combination with chemotherapy and radiation, strongly support moving the bavituximab program into Phase II cancer studies. In fact, we believe the supporting clinical and preclinical data is so compelling that we plan to initiate up to six Phase II clinical trials this year and consider it the top priority for our clinical group.

Today, we announced that we have taken the first step in achieving this goal by submitting to the Drug Controller General of India, or the DCGI, the initial bavituximab Phase II cancer study protocol for review. This clinical trial is designed to assess the safety and efficacy of bavituximab in combination with paclitaxel and carboplatin in patients with non-small cell lung carcinoma.

The trial has a two stage design. In the first stage, up to 21 patients will be enrolled and evaluated for safety and signs of anti-tumor activity. And, pending positive results, in the second stage, up to another 28 patients can be enrolled, for a total of 49 patients. The primary objective of this study is to assess overall response rate. Secondary objectives include measuring time-to-tumor progression, duration of response, overall patient survival, as well as safety parameters. The clinical trial must now be approved by the DCGI and we can begin patient enrollment once this process is complete. We believe we should be able to initiate these trials by the fall of this year, but will know more as the review process gets underway.

Because each cancer type is truly a different disease, the key for successful development of monoclonal antibodies for cancer therapy by companies such as Genentech and Imclone has been to evaluate a variety of potential combinations with different chemotherapies along with different tumor types. Both of these companies utilize trial designs similar to the one we filed today in India as a way to help identify ultimately successful combinations to move into later-stage development. It is for this reason also that Phase II trials have the potential to drive significant value in any clinical program because, as successful combinations of treatments are identified, the potential of overall success increases dramatically.

In order to follow this model for success, we plan to file protocols for up to five additional bavituximab cancer trials this year, each of which will explore different combinations of bavituximab with standard-of-care treatments such as chemotherapy and radiation in different tumor types. A byproduct of this approach is that we will be generating a great deal of clinical data and news flow which, if positive, should create significant value in the program and for the Company. We continue to see significant interest from potential pharmaceutical partners for the bavituximab cancer program and believe the data from the ongoing and anticipated Phase II study has the potential to drive more interest and move the program to a stage where partnering becomes more financially attractive to Peregrine.

Next, I would like to discuss the Cotara brain cancer program. We are pleased to report that the Phase II Cotara brain cancer study in India is now underway and patient screening has begun. We expect the trial to begin patient treatment in the very near future in this important study. In this trial, we will treat up to 40 patients with glioblastoma and evaluate the patients for median time to progression, median survival time, as well as safety parameters. We believe the trial will proceed quickly as our clinical sites had already begun identifying patients that might be suitable for the trial.

While initiating the Phase II trial in India, we have also been taking steps to help facilitate completion of the dose confirmation and dose symmetry trial in the U.S. In order to achieve this goal, we recently initiated the Medical University of South Carolina, MUSC, as a new clinical site in this study. While MUSC is a new site for this trial, Dr. Sunil Patel, the lead investigator, helped run an earlier successful study of Cotara at MUSC and is a great addition to the program.

In addition to bringing on new sites, we have also continued working with existing Cotara clinical sites to establish a media outreach initiative. These efforts are having an effect, as we have seen enhanced activity at clinical sites involved in the outreach. We continue to see strong interest from potential partners for the Cotara program and believe, based on these interactions, that positive data in the Phase II study will create a great deal of value in the program.

Next, I would like to switch gears to the bavituximab HCV program. In February of this year, we reported positive results from a repeat-dose clinical study in 24 patients with chronic HCV infection. In this study, four doses of bavituximab as solo therapy were administered over a two-week period. Highlights of the data included a good safety profile and promising signs of anti-viral activity.

While running these clinical studies, we have also been collaborating with researchers at Duke and other institutions to better understand the potential of bavituximab in an HIV setting. Significant findings of these studies include data supporting bavituximab binding to multiple strains of HIV and binding to HIV-infected cells. Taken together, the results from the HCV clinical studies and these preclinical studies in HIV support expanding the patient population we are treating to potentially include HIV and HCV co-infected individuals. This is an important patient population that represents up to 30% of the total HIV patient population. In addition, these patients are typically excluded from clinical trials of new HCV agents and often do poorly on current HCV regimens, thereby representing a large and undertreated patient population.

Given this background, we were very pleased to announce yesterday that we had initiated our first clinical trial in this new patient population of HIV patients co-infected with HCV. This trial is a dose escalation trial designed to assess the safety and pharmacokinetics of bavituximab in approximately 24 patients chronically infected with both HCV and HIV. Safety parameters, as well as changes in the HCV and HIV viral loads, as well as other biomarkers, will be evaluated in the study.

An important aspect of this trial is the extended dosing schedule. Patients will receive weekly dosing for up to eight weeks, allowing us for the first time to evaluate longer periods of treatment. It is also noteworthy that our initial site is under the direction of Dr. Stephen Smith, a noted HIV researcher and clinician. His active involvement in the study is another plus for this program and we look forward to conducting this study and to generating data that will help guide our HCV program. In the meantime, our collaboration with the researchers at Duke remain strong and continues to provide new insights into the potential of bavituximab as well as other anti-phospholipid antibodies in HIV. We look forward to reporting on the results of these studies at an appropriate time in the future.

In addition to the HCV/HIV co-infection trial, we are also planning to initiate another new clinical trial in patients infected with HCV in order to establish optimal dosing frequency. The goal of this trial will be to determine how often to give bavituximab in order to achieve optimal effects. Since bavituximab specifically simulates the immune system to attack the HIV -- the HCV infection, in order to get the best effects, we want to work out a treatment schedule that allows the drug to boost the immune response to the virus.

While we begin to gather data from the eight-week dosing schedule in the HCV/HIV co-infected patient population, our clinical group is working with other clinical sites to initiate additional studies to further explore the best dosing regimen. In addition, we are also planning studies in which we will begin to test bavituximab with existing HCV therapies. In order to design these larger and more expensive studies in the most effective way possible, data from the dosing studies, including the HCV/HIV trial, will be invaluable. We have already been working with our clinical advisers to plan these studies and will initiate them at an appropriate point. We and our advisers are very pleased with the results generated today for the bavituximab HCV program and we look very much forward to continuing to move the program forward in this complex area.

In summary, the last year and even the last few months have been marked by significant advances in developing the Company's core technologies. We look forward to even greater progress in the new fiscal year. We have advanced our clinical program significantly and are now poised to have a robust clinical pipeline with up to 11 active clinical trials by the end of the year.

For bavituximab cancer, we anticipate up to six new Phase II studies. We have already filed our first Phase II clinical protocol and anticipate filing up to five more by the end of the year. This is in addition to the ongoing U.S. Phase I trial.

For our Cotara program, we have received final regulatory approval for a 40-patient Phase II brain cancer trial, which is now open for enrollment. In addition, we are expanding the ongoing U.S. safety and dose symmetry trial.

For bavituximab HCV, we have initiated a new clinical trial in patients co-infected with HIV and anticipate initiating at least one additional clinical trial by the end of this year. Each of these trials has the potential to generate positive news flow and create significant value for the Company.

Over the next year, we intend to match our product development efforts with increased efforts to capitalize on the increasing value of our company. On the business front, we plan to expand our business development efforts through the addition of new resources, as well as strengthening our clinical infrastructure to ensure our trials are on track.

We believe we have a multitude of partnering opportunities, encompassing not only our clinical programs but a significant preclinical pipeline stocked with clinical candidates. With an investment bank on board, we plan to take advantage of many of their services to enhance our profile in the investment community, including building a relationship with their research unit, a process we have already begun, enhanced presence at investor conferences, meeting with institutional investors through non-deal roadshows, and support by our bankers' institutional sales and trading desk.

In addition, with the news flow we expect from our clinical programs, we expect there to be enhanced opportunities for broader media outreach associated with those programs. And later stage clinical data is much more powerful ammunition to fuel media coverage. Taken together, we believe these enhanced efforts can have a direct impact on the value of the Company, which should translate to an improved stock price and valuation for the Company.

That is the end of my prepared remarks. I will now open the floor for questions and answers.

(Operator Instructions). [Brandon Cox], a private investor.

Congrats on having two drugs in Phase II. I wanted to ask you guys a couple of quick questions about each drug, beginning with Cotara. Will you be giving patients MRIs every two months? If so, if everything is working the way we expect it will, by two or four months, won't we know if we are blowing standard of care out of the water? Also, as a follow up to that, with fast-track status, shouldn't we be able to roll right into a Phase III in early 2008?

Yes, we are obviously very excited about this Cotara cancer study. We will be doing periodic MRIs of the tumor volume. The primary endpoints of the study are median time to progression as well as looking at median survival time. But, you are right. I mean in the spot patient population, the median survival time and median time to progression are relatively short as compared to other tumor types. So, certainly, as we enroll patients, we should start to really see some signs of the activity of the drug as it relates to the -- especially the median time to progression as the first end point the patients might reach. So, yes, we think we can progress this trial very quickly. Certainly, we will take every effort to update the shareholders on progress in the trial as well as, if there are appropriate times, interim data on the trial. I think that should be a real positive.

As far as initiating the Phase III studies through fast-track designation, we certainly believe that, if we can approach the numbers with regard to median time to progression as well as median survival time that we saw in the earlier Phase II study, that this should be a good candidate for Phase III clinical trials.

Real quickly, with regard to the Phase II bavituximab trials for cancer, how sick will these lung patients be? And how will their immune systems compared to the patients in the Ib trial? While you are talking about that, can you tell us what happened to the Ib patients with objective responses to continued treating? Are any of them now cancer free?

What I can say on the patients from the Phase Ib study is that there are patients that are still on follow-up treatment, which is a good sign. Because they are no longer on our protocol, they are not being monitored and in a structured way where we have the same level of access to data from those patients. But we certainly see that as a positive sign that patients are still on follow-up treatment.

With regard to the patient population in the upcoming Phase II studies, this will be a -- if I can use the term -- a healthier patient population. Typically in Phase I studies, you are looking at patients who have already failed not just one attempt to treat their disease but often multiple attempts to treat their disease. So we do believe this will be a healthier patient population. The status of their immune system will probably vary from patient to patient but again, receiving less rounds of chemotherapy and radiation therapy should result in essentially a healthier immune system, if you will, in this new patient population.

Please note that participants will be afforded the time for one question. [Robert Braurer], private investor.

It's my recollection, on the last conference call, that management suggested the joint venture money would mitigate if not eliminate the need to raise capital through pipes. In view of the recent financing, what have you learned from the failure of management to raise joint venture capital? How and when can we expect to actually raise capital by this method? Also, I just want to be assured that no managerial bonuses were paid related to the pipe. If they are, that should be added to the cost of raising this capital.

Well, I can tell you that no managerial bonuses were paid with regard to the last financing. Essentially, the way to fuel these clinical trials in an aggressive fashion was either to raise money and be able to move the programs forward ourselves in an aggressive fashion -- and we certainly did not want to just limp into Phase II studies. Because of the nature of those Phase II studies, you really want to be able to be aggressive, look at multiple tumor types with different chemotherapy combinations.

At this time, the Board and management felt that the dilution we would take from trying to, if you will, force a partnership or take a partnership at this level was a much larger dilution than the financing that we eventually decided to go with. We feel that we can really drive a lot of value in the program through these Phase II studies and that is really coming from historical experience from other companies that have done this.

So, secondly, we're just I think really pleased with the results of the trial to date, the robust preclinical data which seems to match up very nicely with what we're seeing in clinical studies. So we felt that, based on really the strong support of data, this was the right move for the Company. We believe we can drive a lot more value in this program than the dilution, if you will, we took on this last financing.

Just a final comment, not a question -- I think shareholders would appreciate that stock price performance be a bigger component of managerial bonuses as well. Certainly, we need to bonus you for success in trials and putting trials together, but we long-suffering shareholders deserve to have an element of performance put into your bonus package. Thank you.

Richard [Syracuse], Merrill Lynch.

How are you doing? Congratulations on the progress. It's kind of amazing for such a small company to be in four or five clinicals. In any event, with the Indian Phase II solid tumor trial -- I'm just curious as -- of all the solid tumor types that you could have selected, you decided to go first with small cell lung. Is there a reason for that?

Yes. The reason we chose the non-small cell lung carcinoma was that is a natural combination with the paclitaxel/carboplatin chemotherapy. So, getting patients on the trial should be somewhat easier than if we had selected another indication where it's a less common chemotherapy. Again, we were very encouraged by the results in the Phase Ib study and are really intrigued by the potential of carboplatin and paclitaxel plus bavituximab. So, I think, as we move into some of the other Phase II studies, you are going to see a variety of different tumor types in combination with a number of different chemotherapies. So, don't assume that this is the only thing we may do, even with carboplatin/paclitaxel. This is simply the first trial.

Then just to clear it up, it says -- you said in the release that patients will receive up to six cycles of chemotherapy with weekly administration of bavituximab until their cancer progresses. Is this a six-week trial? What is six cycles of chemo? Is that six weeks?

Six cycles of chemo does depend on the chemotherapy regimen, of course. I believe, in the case of carboplatin and paclitaxel, it is given every third week. So again, even on the weeks where they are not getting carboplatin/paclitaxel, they will be receiving bavituximab.

I see, okay.

The six cycles is a kind of a standard chemotherapy (multiple speakers).

So that's 18 weeks then roughly?

Right.

These patients, Dick, will stay on study until they progress. So we can continuously treat these patients until they progress.

Progress meaning -- that's another thing that confuses me -- meaning the cancer gets worse?

Yes, so typically, tumor progression -- we're using the [recist] criteria but essentially there's a couple of components of that. One is you have target lesions which you measure and it those grow by more than 30%, that is considered tumor progression. Secondly, if you have new lesions that show up, then that's considered tumor progression.

Then they are off the trial?

That's correct.

Okay, so within 18 weeks, we would probably know something about that?

Yes, they typically monitor these patients around the eight week time point of treatment, obviously for good reason that the doctor wants to look and see if the drug seems to be having some effect as early as is practical. The eight week time point is kind of a general guideline, not necessarily set in stone. But that way, if the patient is progressing, they want to be able to switch them to another chemotherapy or another treatment regimen.

[Jason Napadano], [Zack's] Investment Research.

You talked a little bit about Avid in your prepared remarks. I'm just wondering if there is -- if you could talk a little bit about your capacity to sign additional contract manufacturing deals and if that is a potential opportunity in the next several quarters for generating some additional revenue or some additional cash doing contract manufacturing work or clinical trial manufacturing work for some potential partners.

Yes sure. Thanks for the question. Yes, we definitely have additional capacity at Avid Bioservices but what we like to emphasize with Avid -- that its strategic importance is really to drive Peregrine's products. I think that is where the true value was going to come from Avid driving these products of Peregrine in Phase II studies is of the utmost importance. But in addition, we do generate revenues from Avid. We will see -- we do believe we will see an uptick in revenues over the upcoming year and we're making commercial product for a company down in San Diego and we have a number of other clients that are in the pipeline for clinical manufacturing. We do believe that these revenues will be in excess of what we were reported last year. We're definitely moving forward on generating as much revenues as possible at Avid to offset our overall burn rate to minimize the amount of capital we have to raise at the end of the day.

Mr. King, that was our final question.

Okay, thank you. In conclusion, we believe the Company is in the strongest position it has ever been in, both from a clinical and preclinical pipeline side and from the standpoint of having the financial resources to be aggressive. We look forward to turning these assets into tangible value for the stockholders of Peregrine. Thank you very much. That concludes today's conference call.