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.