A problem with a drug trial related to lung cancer
treatment has Peregrine Pharmaceuticals (NASDAQ:PPHM) in trouble, leading it to
default on a $30 million loan agreement.
The loan agreement, which it entered into on August 30,
was tied to the success of the trial.
The company has been working on its experimental drug
bavituximab which would have been used in the treatment of lung cancer. A study
to assess the success of the trail midway showed that there were significant
discrepancies between some patient sample test results and treatment code
assignments.
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Peregrine said in a statement that the issue arose due
to an independent third party which was contracted to code and distribute the
product.
The company said in a filing to the Securities and
Exchange Commission that it was informed of the default on Monday.
It said that it had repaid the $15 million it had
drawn on the loan, which was underwritten by Oxford Finance LLC, Silicon Valley
Bank and MidCap Financial SBIC. The loan agreement is now terminated.
Shares in the drug firm fell after this news and ended
down 55 cents to $1.11 on Thursday and now down another 7%.
The company had earlier said that preliminary clinical
trials had shown that patients who had been treated with the drug lived twice
as long as those who had been treated with chemotherapy.
The shares had reached a three-year high on Monday.
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