Snell
& Wilmer L.L.P.
600 Anton
Boulevard
Suite
1400
Costa
Mesa, California 92626-7689
TELEPHONE:
(714) 427-7000
FACSIMILE:
(714) 427-7799
April 14, 2010
Via Federal
Express
Division
of Corporation Finance
Securities
and Exchange Commission
100 F.
Street, N.E.
Washington,
D.C. 20549-7010
Mail Stop
4720
Attn.: Jim
B. Rosenberg, Senior Assistant Chief Accountant
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RE:
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Peregrine
Pharmaceuticals, Inc.
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Form
10-K for the Year Ended April 30,
2009
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Filed
on July 14, 2009
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File
No.: 001-32839
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Dear Mr.
Rosenberg:
On behalf of our client, Peregrine
Pharmaceuticals, Inc. (the “Company”), we are responding to the comments of the
Staff of the Securities and Exchange Commission (the “Commission”) as set forth
in your letter dated March 29, 2010 to Paul J. Lytle, Chief Financial Officer of
the Company, with respect to the Company’s Form 10-K for the year ended April
30, 2009 (the "Form 10-K") which was filed with the Commission on July 14,
2009. For your convenience, the Commission’s comments have been
repeated herein in bold, with the Company’s response immediately following each
of the Commission’s comments. All page numbers refer to the Edgar
version of the Form 10-K.
Form 10-K for the fiscal
year ended April 30, 2009
Item 1. Business,
page 1
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1.
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We
note your response to our prior comment 1. Please further revise your
draft disclosure to include a discussion of the term and termination
provisions of the October 2004 Lonza Biologics agreement related to your
TNT technology. Also, although we note your intention to file confidential
treatment applications with respect to each of the discussed material
agreements, we still ask that you include in your proposed disclosure a
more detailed description of the royalty rates under each; either a range
within ten percent or a statement that the percentage is in the single
digits, teens, etc. will be sufficient. Finally, please note
that we will not be in a position to clear our review of this filing until
each of the material agreements has been
filed.
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April 14, 2010
Page 2 of 4
The
Company notes the Commission’s comments and advises the Commission as
follows. First, with respect to the Company’s draft disclosure, the
disclosure has been revised to include a discussion of the term and termination
provisions of the October 2004 Lonza Biologics agreement related to the
Company’s TNT technology and to provide the requested disclosure regarding
royalty rates. The revised disclosure is set forth below, with the
new revisions underlined to facilitate the Commission’s review.
With
regard to the material agreements that the Company is filing, the Company has
today filed those agreements (in redacted form) as exhibits to a Form 8-K and
submitted to the Commission the required requests for confidential treatment of
the redacted information.
With
regard to the Company’s disclosure of its in-licensing and out-licensing
collaborations, the Company plans to include the following revised disclosure in
its FY2010 Form 10-K:
“In-Licensing
Collaborations
The
following discussions cover our collaborations and in-licensing obligations
related to our products in clinical trials:
Anti-Phosphatidylserine
(“Anti-PS”) Program - In August 2001 and August 2005, we exclusively
in-licensed the worldwide rights to this technology platform from the University
of Texas Southwestern Medical Center at Dallas (“UTSWMC”). During
November 2003, we entered into a non-exclusive license agreement with Genentech,
Inc. to license certain intellectual property rights covering methods and
processes for producing antibodies used in connection with the development of
our Anti-PS program. During December 2003, we entered into an
exclusive commercial license agreement with Avanir Pharmaceuticals, Inc,
(“Avanir”) covering the generation of the chimeric monoclonal antibody,
bavituximab. In March 2005, we entered into a worldwide non-exclusive
license agreement with Lonza Biologics (“Lonza”) for intellectual property and
materials relating to the expression of recombinant monoclonal antibodies for
use in the manufacture of bavituximab.
Under our
in-licensing agreements relating to the Anti-PS program, including the
development of bavituximab, we typically pay an up-front license fee, annual
maintenance fees, and are obligated to pay future milestone payments based on
development progress, plus a royalty on net sales and/or a percentage of
sublicense income. The applicable royalty rate
under each of the foregoing in-licensing agreements is in the low single
digits. The following table provides certain information with respect to
each of the Company’s in-licensing agreements relating to its Anti-PS
program.
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Licensor
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Agreement
Date
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Expiration
Date
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Total
Payments
To
Date
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Potential
Future Milestone
Obligations
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UTSWMC
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August
2001
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(1) | $ | 97,500 | $ | 375,000 | ||||||
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UTSWMC
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August
2005
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(1) | $ | 35,000 | $ | 425,000 | ||||||
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Lonza
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March
2005
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(2) | - | (3) | ||||||||
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Avanir
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December
2003
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(4) | - | $ | 1,050,000 | |||||||
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Genentech,
Inc.
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November
2003
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December
2018
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$ | 400,000 | $ | 5,000,000 | ||||||
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Total
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$ | 532,500 | $ | 6,850,000 | ||||||||
______________
April 14, 2010
Page 3 of 4
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(1)
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Expiration
date of the license agreement occurs upon expiry of underlying
patents. These patents, and certain related patent applications
that may issue as patents, are currently set to expire between 2023 and
2025.
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(2)
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Expiration
date of the license agreement is 15 years from first commercial sale or
upon expiry of underlying patents, whichever, occurs last. To
date, we have no commercial sales under the license agreement nor do we
expect any commercial sales in the near future. The last patent
covered under this license agreement expires in November
2016.
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(3)
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We
are required to pay future milestone payments upon the completion of Phase
II clinical trial enrollment in the amount of 75,000 pounds sterling, the
amount of which will continue as an annual license fee
thereafter. In the event we utilize an outside contract
manufacturer other than Lonza to manufacture bavituximab for commercial
purposes, we would owe Lonza 300,000 pounds sterling per
year. We expect to complete Phase II clinical trial enrollment
in 2011.
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(4)
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Expiration
date of license agreement is 10 years from first commercial sale in each
respective country. To date we have no commercial sales under
the license agreement nor do we expect any commercial sales in the near
future.
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Of the
total potential future milestone obligations of $6,850,000, $6,400,000 would be
due upon the first commercial approval of a drug candidate developed under our
Anti-PS program, including bavituximab, with the technologies licensed pursuant
to such license agreements.
During
fiscal year 2008, we expensed $50,000 under in-licensing agreements covering our
Anti-PS program, which is included in research and development expense in the
accompanying consolidated statements of operations. We did not incur
any milestone related expenses during fiscal years 2010 and 2009.
Tumor Necrosis Therapy
(“TNT”) - We acquired the rights to the TNT technology in July 1994 after
the merger between Peregrine and Cancer Biologics, Inc. was approved by our
stockholders. The assets acquired from Cancer Biologics, Inc.
primarily consisted of patent rights to the TNT technology, including
Cotara®. To date, no product revenues have been generated from our
TNT technology.
In
October 2004, we entered into a worldwide non-exclusive license agreement with
Lonza for intellectual property and materials relating to the expression of
recombinant monoclonal antibodies for use in the manufacture of
Cotara®. Under the terms of the agreement, we will pay a royalty
(in the low single
digits) on net sales of any products we market that utilize the
underlying technology. In the event a product is approved and we or
Lonza do not manufacture Cotara®, we would owe Lonza 300,000 pounds sterling per
year in addition to an increased royalty (in the low single
digits) on net sales. Unless sooner terminated due
to a party’s breach of the license agreement, the license agreement with Lonza
will terminate upon the last to occur of the expiration of a period of fifteen
(15) years following our first commercial sale of a product or the expiration of
the last valid claim within the patents that are the subject of the license
agreement; provided that if after the expiration of the last claim but prior to
the expiration of the fifteen (15) year period, Lonza has publicly made
available certain materials and know how, then the agreement will terminate at
such time as the materials and know how are made public.
Out-Licensing
Collaborations
In
October 2000, we entered into a licensing agreement with Merck KGaA to
out-license a segment of our TNT technology for use in the application of
cytokine fusion proteins. During January 2003, we entered into an
amendment to the license agreement, whereby we received an extension to the
royalty period from six years to ten years from the date of the first commercial
sale. Under the terms of the agreement, we would receive a royalty on
net sales if a product is approved under the agreement. Merck KGaA
has not publicly disclosed the development status of its program.”
April 14, 2010
Page 4 of 4
The
Company hereby acknowledges that:
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the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
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staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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If you
have any questions, please do not hesitate to give me a call at (714)
427-7402.
Very
truly yours,
Snell
& Wilmer
/s/
Mark R.
Ziebell
Mark R.
Ziebell
cc: Paul
J. Lytle