Tim Brons – IR, Vida Strategic Partners Steven W. King - President and CEO Paul J.

Lytle - CFO Joseph S. Shan - VP, Clinical and Regulatory Affairs Stephen T.

Worsley - VP, Business Development

Joseph Pantginis - ROTH Capital Partners Charles Duncan - Piper Jaffray George Zavoico - JonesTrading Institutional Services LLC Rahul Jasuja - Noble Life Science Partners Thomas Yip - MLV & Co.

Thank you. Good afternoon 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, preclinical, 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, September 9, 2015 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.

Thanks, Tim, and thanks to all of you who have dialed in, and to all of you who are participating via webcast today. Fiscal year 2016 is off to a great and busy start for Peregrine.

In May we announced a research collaboration with leading immuno-oncology researchers at the Memorial Sloan Kettering Cancer Center. In June we presented important translational data at ASCO, showing the potential of bavi to enhance immune responses in PD-L1 negative tumors.

In July we reported that our Phase III SUNRISE trial in non-small cell lung cancer remained on track for normal completion by year end and as we draw closer to December we are increasingly confident that we will hit this milestone. And most recently we announced a collaboration with AstraZeneca to expand our immuno-oncology combination clinical research program.

The Memorial Sloan Kettering and AstraZeneca collaborations are an important part of our announced plan to expand our bavituximab clinical program. The initial efforts is to initiative new lung and breast cancer clinical trials by year end and then to expand to new additional indications by early 2016.

Taken together, these clinical efforts are meant to expand bavituximab's eventual market opportunity in non-small cell lung cancer by providing important data supporting the combination of bavituximab with both chemotherapy and PD-1 or PD-L1 inhibitors, while simultaneously pursuing equally large market opportunities in breast cancer and eventually other indications. Fueling these efforts, our research group remains busy generating clinical, translational and preclinical study results that consistently demonstrate bavituximab's activity in a range of tumor types.

In recent weeks we've received very positive responses to findings presented at the International Association for the Study of Lung Cancer or IASLC World's Congress and at the Immunotherapy and Vaccine Summit. At these meetings we presented results from multiple studies demonstrating bavituximab's ability to promote anti-tumor T-Cell mediated activity and its potential mechanistic synergies with chemotherapy and checkpoint inhibitors targeting the PD-1 and PD-L1 pathway.

Finally our contract manufacturing business, Avid Bioservices hit a record high for revenues for any quarter during the first quarter 2016, putting us on track for another record revenue year. I'll continue my comments later, but first the other members for our team will give a detailed overview of our clinical, business development and operational achievement.

We will begin with Joe Shan, Vice President of Clinical and Regulatory Joe?

Thanks Steve. I'd like to start with an update on the company's ongoing Phase III SUNRISE trial, which is evaluating the use of bavituximab and docetaxel in patients with previously treated locally advanced or metastatic non-squamous, non-small cell lung cancer.

This global study remains our top clinical priority and I'm happy to say this trial is proceeding according to plan and we continue to stay on target to complete accrual by the end of the calendar year. As a reminder SUNRISE is designed as a blinded registration trial with two planned interim analyses.

The first interim analysis will be conducted when 33% of the targeted survival events are reached, and the second will be conducted at 50% of events. As these events are patient death we are at this time unable to accurately predict when the interim analysis will occur, but we plan to provide updates as soon as possible.

Meanwhile as SUNRISE nears the completion of enrollment and we await the trial results we have begun to expand the bavituximab clinical program and are planning to initiate several new trials in the coming months to identify other clinical settings where the addition of bavituximab might help improved patient outcomes. Our strategy behind this decision is to continue building on our significant clinical experience, combining Bavituximab with chemotherapy, while simultaneously exploring new opportunities with immunotherapy combinations.

Let me first address the expansion of our non-small cell lung cancer program beyond the combination with docetaxel, which we believe will remain a key treatment option in a number of cancers, including lung cancer. The decision to initiate another lung cancer trial is supported by the considerable amount of preclinical data demonstrating that treatment effects of CTLA-4 or PD-1 inhibitors is greatly enhanced when combined with Bavituximab.

This is very timely as anti-PD-1 agents such as nivolumab and pembrolizumab are starting to enter the market as single agent therapies. Thus we're planning to initiate around the end of this year an open-label randomized Phase II trial of nivolumab versus nivolumab plus bavituximab in patients with previously treated metastatic non-small cell lung cancer who have not received a prior PD-1 or PD-L1 inhibitor.

The primary endpoint of this trial is expected to be overall response rates with secondary endpoints to include duration of response, progression-free survival, overall survival and safety. Importantly as translational studies have demonstrated that bavituximab enhances multiple markers of immune activation, even in tumors that express low level of PD-L1 we plan to look at patient outcome by pre-treatment PD-L1 expression level to better understand which patients benefit most from bavituximab's effects.

Now beyond lung cancer we are also compelled to initiate additional clinical trials in breast cancer based on the totality of our clinical experience in advanced breast cancer to-date. Data from our Phase I IST of bavituximab plus paclitaxel in patients with HER2 negative metastatic breast cancer published in Cancer Medicine earlier this year demonstrated an impressive 85% response rate.

Data from this IST, together with two prior Peregrine sponsored trials of bavituximab with taxane-based chemotherapy which yielded between 61% to 74% overall response rate and a median overall survival of over 20 months in advanced or metastatic breast cancer patients provides strong rationale to advance this indication. Additionally taxanes continue to be a key standard treatment option for many stages of breast cancer.

Accordingly we plan to initiate a seamless Phase II/III trial in patients with HER2 negative metastatic breast cancer with all patients receiving physician's choice of paclitaxel or docetaxel, either alone or in combination with bavituximab. The primary end point for Phase II is overall response rate while the Phase III part of the trial has a primary end point of progression-free survival.

Furthermore we are planning a trial evaluating neoadjuvant paclitaxel with or without bavituximab, in the hopes of further elucidating bavituximab's immune modulating mechanism and look for clinical signal in early stage HER2 negative breast cancer. As with the Phase II lung cancer trial described earlier we plan to initiate the Phase II/III breast trial before the end of this year.

The open-label nature of these trials may provide us the opportunities for data updates and our goal is to generate as much clinical data as possible prior to SUNRISE unblinding. Now last but not least, I'd like to finish up with a few words about our recent collaboration announcement with AstraZeneca.

Under this clinical collaboration agreement we will combining bavituximab with chemotherapy and AZ's durvalumab or MEDI4736 and a Phase I/Ib trial in multiple solid tumors. The Phase I part of the trial will confirm the tolerability of the two IO agents and establish a recommended dose regiment for the Phase Ib part of the trial, which will assess the safety and activity of the triple investigational combination, which includes standard chemotherapy.

We are particularly excited about the collaboration because we believe that these three drugs have different and potentially complementary mechanisms. Chemotherapy is known to kill tumor cells, increase phosphatidylserine exposure and generate tumor antigens.

Bavituximab, by targeting exposed PS, a highly immune-suppressive molecule exposed on the surface of cells in the tumor micro environment has been shown to trigger macrophages re-polarization and tumor specific T-Cell activation. Durvalumab is a monoclonal antibody directed against programmed cell death ligand 1 PD-1 and signals from PD-1 help tumors avoid detection by the immune system.

We believe that by combining these three approaches the potential exists for a more complete and lasting anti-tumor immune response and look forward to testing this hypothesis in the clinic. And to provide more context regarding the AZ collaboration and Peregrine’s ongoing business development efforts I'll turn the call over to Steve Worsley.

Steve?

Thanks, Joe. All of our foundational of science and positive clinical results consistently pointed to bavituximab's potential as a high value, next generation anti-cancer agent and in the last three months these achievements have compelled others to align with us as we continue to develop bavituximab.

In May Peregrine announced an exciting collaboration with Memorial Sloan Kettering Cancer Center 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. Only three months later we announced a new collaboration with AstraZeneca to evaluate bavituximab in combination with AstraZeneca's investigational anti-PD-L1 immune checkpoint inhibitor, durvalumab also known as MEDI4736 in multiple solid tumors.

By aligning with these world leaders to develop novel immuno-oncology combination therapies we are positioning ourselves to maximize the potential role that bavituximab can play in this new era of innovative immuno-oncology treatment. We believe these collaborations validate the promise of bavituximab and are indicative of the well validated science we are conducting at Peregrine.

We are in the fortunate position to have full rights to this valuable Phase III asset. We believe with the substantial scientific support and compelling data, bavituximab will continue to bring world leading organizations to the partnering table.

I will now turn the call over to Paul Lytle, Chief Financial Officer, who will discuss the company’s financial performance and our Avid Bioservices business. Paul?

Thanks, Steve. Let me shift gears now and give you a brief overview of our financials.

Peregrine continues to carefully weigh its opportunities and expenditures with its current cash and financing options. Our strategic investment in the Avid Bioservices business is already starting to pay dividends.

Our clients are reserving manufacturing slots in the new facility which has increased our revenue backlog to approximately $42 million. In addition to our backlog current quarter revenue hit an all-time high at $9.4 million, representing a 71% increase in revenue compared to the same prior year quarter, and for the full fiscal year 2016 we expect manufacturing revenue to increase to a range of $30 million to $35 million.

We also believe this business has more opportunity to grow as our second manufacturing facility has the capacity to generate approximately $40 million in new revenue. The new manufacturing suite is fully built and the first internal pilot run is currently underway to verify all systems and equipments are properly functioning.

We plan to announce the official launch of the facility in the near-term which meets both our internal manufacturing timelines and those of our clients. As mentioned on previous calls the non-dilutive income generated from our manufacturing operations continues to offset the amount of capital we need to raise by other means.

Plus it’s important to note that preparing bavituximab for commercial production is a significant financial endeavor and this strategic asset saves us millions of dollars each year in manufacturing cost. Now turning to expenses, R&D expenses for the quarter increased as we continue to invest in our Phase III SUNRISE trial while SG&A expenses remained flat quarter-over-quarter.

A more detailed analysis of our statement of operations is included in our Form 10-Q that was filed today. This concludes my financial overview.

Now I’ll turn the call back over to Steve to discuss some important upcoming milestones. Steve?

Thanks, Paul. It is only been eight weeks since we last reported our financial results and development progress, yet in the short time much has been done.

We remain on track to complete enrollment in our cornerstone SUNRISE trial, and based on the compelling data we’ve seen to-date from other clinical, translational and pre-clinical research we are deep into planning for our next set of trials in non-small cell lung and breast cancers. Our pre-clinical work continues to provide an ever expanding understanding about the expense mechanism of action and importantly it is leading us to identify the most promising therapeutic combinations with other immune stimulatory agents, ensuring that bavituximab will play a critical role in the treatment of cancer regardless of which protocols are in use.

These study results particularly as they relate to the potential synergies between bavituximab and checkpoint inhibitors create great excitement for us as we begin and continue work with our new collaborators at Memorial Sloan Kettering Cancer Center and AstraZeneca, while we continue our long standing relationship with the University of Texas Southwestern Medical Center where this technology was originally developed. We look forward to initiating new collaborations, completing enrollment in our SUNRISE trial, beginning dosing in our new non-small cell lung cancer and breast cancer studies and announcing the opening of Avid's new manufacturing sites, all in the next few months.

These are exciting times for Peregrine and we will continue to keep you posted on all these projects as we make progress. This concludes our prepared remarks.

And we would now like to open the line for questions.

Hey guys good afternoon, thanks for taking the question. I guess I would like to focus first on the lung cancer area.

So first with SUNRISE, I know I've asked this question previously several calls ago but have you seen any impact with regard to the recent approval of Opdivo for enrollment in this study?

Yeah, I think I can take a first stab at that and then Joe can jump in. But yeah basically we haven't really seen any impact of it in the enrollment itself.

Obviously these drugs are either just now coming on the market or even aren't yet available for reimbursement. So I mean at this point it has not been a much of an issue.

Of course on the other side of it, it opens up is in our new study the combination potential in those indications where now insurance can help pay for those drugs as a standard of care. So I think based on the timing of when we anticipate completing the study, the fact that this is the worldwide study including not just sites in the US but actually the majority of our sites are in Europe and in Asia Pacific region.

So we don't anticipate this will be a hindrance for us completing enrollment on the scheduled timeframe by the end of the year.

Okay, no, that's helpful, thanks. And this is the second part of the lung question is obviously the treatment landscape with the Opdivo approval, lung cancer treatment landscape is evolving pretty quickly.

So how do you see bavi fitting into that landscape?

Yeah, it's a great question. We really view that chemotherapy is still going to be a major part of the way cancer patients are treated and that's in non-small cell lung cancer, as well as other indications.

So I think while the order in which drugs are used may change over time eventually the immuno-oncology agents may end up in a frontline setting. We really feel like bavituximab is in an excellent position because we will have the data coming from the SUNRISE study, supporting the effectiveness with docetaxel, which again is one of the standard treatment paradigms in second line non-small cell lung cancer.

But also the new study we're initiating by year end in which we're combining with Opdivo will then give us really, we think a nice set of data coming in the immuno-oncology combination. So I think as everything sorts itself out and new agents come into the marketplace then we'll be in a good position for combining with either one of those treatment modalities.

And Joe maybe you want to expand on this.

Yes, I think, much like in the melanoma space, the initial approvals of immuno-oncology agents are as single agent therapies. But you can see there is obviously a lot of combination work being done.

And I think that's where bavituximab is really, I think uniquely positioned in our mechanism can really complement a host of different other mechanisms. And the tolerability of the compound in our trials to-date lends itself to be combined with different therapies.

So I think it's going to be – there is going to be a lot of opportunities for making other products work better.

Right, okay, cool thanks. And then the second question that I have is in addition to AstraZeneca, what additional types of partnerships or collaborations are you targeting at this point?

Sure, this is Steve Worsley. Again what we're looking to do is to do fundamentally more of the collaborations that we formed with AstraZeneca, partnering which we cannot speculate on right now due to forward projection, is certainly within the wheelhouse of the organization.

We will and have seen quite an uptick with regards to the activities in companies looking at us because of these initial collaborations that we set up this year. So we anticipate more of the same.

Yeah, and I think just to expand on that a little bit so obviously our stated goal have been ex-U.S. partnering, primarily keep as much of the U.S.

rights as we can. And that remains intact.

I think really the reason obviously at this point of partnering is to allow us to expand what we are doing with bavituximab program. We’ve obviously got a number of new clinical studies we’ve identified as being important to start over the coming months, in order so that we can have the data from those studies by the time we unblind the SUNRISE study but also to be able to run additional studies in other combinations and other indications, because clearly that’s where the value of the program can be driven upward is just through additional indications and utilization of bavituximab across many different treatment paradigms.

Okay, great. Thanks a lot guys.

Yeah, thanks Jeff.

Hi guys. First of all congratulations on some of the recent research collaborations, and secondly thanks for taking my questions.

My first question is regarding SUNRISE, perhaps for Joe. Thanks for the update on being on track for enrollment by year-end.

Any chance that you could give us now or plan to in the future, give us any sense of kind of blinded patient characteristics and geographic backdrop in terms of where those patients came from, any sense of previous -- how the enrollments going with regard to previous lines of therapy et cetera?

Yes, I think we’re going to probably wait till at least after the first interim analysis and completion of our enrollment before announcing any kind of demographics on the trial.

And then, Joe I know that it’s an event driven trial but could you -- can you gauge at all when your sense is that you might get to that first interim of 33% of the event?

No, we can’t really guess right now.

Yeah, I think Charles what we’ve been projecting is probably first half of next year for the first interim data look and then probably mid-year on for the second interim data look, and for the final unblinding. Of course that’s based on sort of just general projections of how we expect the patients to do in the study overall.

So I think as we get further along we’ll be able to get a little bit better guidance as we see more events take place and feel like we’re getting closer to those actual unblinding with interim data looks.

Okay, that make sense to me and I appreciate the added color. Good execution thus far.

I wanted to ask perhaps a little bit about AstraZeneca deal recently, that level or types of diligence that they conducted and the motivation was the publication that came out roughly mid-year or earlier this year as key driver to that deal, to that collaboration?

Yeah, I mean I think just and I'll let Steve and Joe talk bit more about it but I think in general there is -- I think it’s great to have a partner like AstraZeneca, who is essentially associating with us and wants to see how bavituximab may be able to impact the treatment paradigm with their particular PD-L1 inhibitor. And so I think that of course before any big company enters into those sort of collaborations, there is a significant amount of work that they do on their side to pick the right partners also, because there is lots and lots of opportunities for these big companies to collaborate with people, and so they want to make sure that they utilize their resources wisely as well.

So I think it was a great process. I think that it was really driven by a I think a combination of some of the publications as you mentioned that have come out but also some of the data we’ve been presenting since last fall showing the real potential of bavituximab to enhance the potential number of patients that will respond to PD-1 or PD-L1 inhibitor.

So I think it’s really been a combination of the constant news flow we’ve had that really driven that interest. So Joe I don’t know if you or Steve want to add to that.

No, again I think the thing with regard to due diligence is they take these types of collaborations very seriously. There is a serious significant investment that they make in terms of investigating combination therapies out there, and again don’t think that there is anything that’s out of the ordinary but it was definitely a very exhaustive process they have conducted.

Okay. And then with regard to that current interaction, does that in anyway put them in a pole position for further interactions with you or is it simply let's do this experiment?

No, I think it positions them as an organization that is going to get used to working with our compound. By no means are they in a pole position for future partnering activities.

But certainly they know you folks, they know what bavituximab could do and its mechanism and then how it interacts with their compound.

Yeah, I think that's the main advantage from their standpoint is we'll work very closely with them in this clinical trial as well as also discussing other potential types of collaborations and other trials and what have you, so clear that proximity creates something of an advantage, but it's a wide open race.

Last question is for Paul, regarding the Avid Biosciences division you spoke about increasing capacity substantially here soon. Could you project any new I guess collaborations partnerships, customer signings in the next 12 months or so?

I think right now what we've said publicly is that our current guidance is $30 million to $35 million for this fiscal year and obviously Halozyme is one of our key anchor customers that represent a good portion of our revenue and that supports both their Baxter collaboration and their Roche collaboration. So it has opportunity to grow as they're successful too.

With the new facility Avid will support the Bavituximab commercial launch in addition to providing growth for Avid's business. So we're excited about having that business there.

We have had number of customers come through and inspect the operations and inspect the facility. And everybody believes it's a world-class facility.

So we're excited to launch that here shortly.

Yes, [indiscernible].

Yes, just a little more color on that. Yeah I mean I think really in the new facility a lot of the interest come from the existing client base, even as much as we've had new potential customers coming through.

So we were very happy with the response to the new facility. And I think really opens the door even for future additional expansion if that's the direction we want to move.

So I think it's exciting, it's a real nice showpiece and it's really showing in the interest that it's generated from again the existing client base.

Thanks Steve.

Hi everyone. Good afternoon.

Thanks for taking my questions. Good quarter certainly in Avid and the partnership and the collaboration.

This question kind of follows up on what Joe said in the beginning, the rapidly changing landscape with Opdivo and Keytruda in lung cancer. Certainly probably multiplies the possibilities for combinations.

But that also begs the question of the patients that are enrolled in SUNRISE, will you know what the effect really -- the perspective [ph] perhaps on patients that are still being enrolled. What their PD-1 PD-L1 status, maybe that's part of plan, that's completely now starting to do now that those assays becoming available?

Yes, that's something we're looking at in progression [ph] George. So we are not requiring pretreatment biopsy specimens to get onto the study.

It's on a volunteer basis and we are collecting a significant proportion of patients' samples. So but we'll see at the end of the day if it is enough to give us a hint that how predictive the primary assessments are at predicting outcomes.

How about in terms of going forward by, like for example when the patients begin these progressions and the subsequent therapies that the patients will then undergo after they quit Bavi and they go on to paclitaxel. Some of the patients might be tested for PD-L1 and go onto the immuno-oncology drug, Opdivo especially and they may end up skewing or perhaps biasing somehow those sets of patients in survival post-SUNRISE.

How do you look at that potential possibility?

Yeah so we definitely collect what patients what treatment [ph] patient go on and that standard for a survival, primary end point trial and you plan a multivariate analysis based on daily work like that.

Yeah, I think -- let me answer this, a lot of this bias should be handled by the fact that it is a placebo-controlled study. So you would think those patients equally fall into either of the arms of the study post being on the treatment in the SUNRISE study.

I think it is, as we go forward I think there is lot of interesting things that we want to do, I think with regard to the PD-L1 status because from this translation data we were able to show at ASCO and around that time period this year really highlighted the fact it may be actually PDL1 negative tumor. So we can have a significant impact and so I think as we continue to go forward with the plan studies as well as other studies that are sort of more in the development phase, the ability to look at PD-L1 negative tumors and actually select for those patients, take a look at how they do on treatment with bavituximab or again we think we can enhance the effectiveness of a PD-1 or PD-L1 inhibitor is one trial design that's, I know got a lot of interest.

In addition there is potential of kind of the other way around of eventually taking maybe PD-L1 or PD-1 refractory patients and actually then adding bavituximab to treatment regimen and seeing if we could convert those into responding patients. So we will certainly be doing as much analysis as we can in the SUNRISE trial sort of retrospectively and looking for imbalances in the -- from what we can tell in the PD-1 and PD-L1 status.

Okay. And a question regarding the collaboration, I mean you are planning to increase the number of programs and trials you have going.

This adds cost -- do any of these collaborations like -- what is AstraZeneca contributing in terms of cash, is that -- and Memorial Sloan Kettering, MS50C [ph] are they providing any funds or is it going to be mainly funded by Peregrine, how much of non-dilutive cash might come in to help you with the AZ and the other trials that you are starting?

Yes, so I think in general as part of the AZ collaboration of course they are providing the drug itself, which is a huge cost benefit in this sort of trial because it allows us number one full flexibility to start study as quickly as we can, but also that it takes the need to purchase any of the PD-1, PD-L1 inhibitors off the table. So that's a significant benefit for their participation in the current collaboration.

And again I think for us one of the key drivers was the ability to get these studies started as soon as we can because our bigger goal here is to be able to generate data again by the time that we unblind the SUNRISE study. And the reason for that is planning for success, is with good SUNRISE data and with additional combination immunotherapy data in hand it gives our regulatory group a lot more of work with when it comes to totally working with the FDA toward eventual label claims and what have you as we look toward approval.

So I think for us right now time is of the essence. I think as we go forward we will be wanting to find probably more partners that can bring additional funding to the table and help us to run studies, either from an operational standpoint because again we have a relatively small internal group.

So relatively somewhat limited in the number of studies we can run simultaneously. But also some of the funding to take care of patient cost and what have you, but at this early stage the most important thing for us was to really have control of the study be able to get it up and running because we feel the real value is getting this data in a timely fashion because of the value it can a add on the back end.

And in regards to the AZ study, have you guided at all when the first AZ study might start or…?

Not yet, we are working with the teams very closely to finalize the protocols, internal design right now. And so whenf we have, I think a better handle on the operational timelines we will provide that.

Okay and then the Memorial Sloan Kettering, that's mainly frequently the translation studies, correct.

Correct. Yeah, that's the recent collaboration that was announced.

Of course they are very active in the clinical space and they have got lots of good ideas for clinical studies. And they've also got good relationships with a lot of the key players in the immuno-oncology space, within the PD-1 PD-L1 space specifically.

So we think that down the road they will be very active in both our clinical and preclinical research programs.

Okay, great. Look forward to the start of those trials and some of the data in upcoming conferences.

Thank you very much.

Yeah thanks, George.

Hey guys. Thanks for taking my question and glad to hear that, glad to know rather that PS is now being recognized by big pharma and the immunology mafia so to say.

So couple of questions maybe pertaining to how PS with checkpoint inhibitors is differentiated from the conventional checkpoints inhibitors, I guess CTLA-4 and PD-1, PD-L1 pathways. So obviously from the data that's been represented at ImVacS, and also discussions they have had with you guys, besides blocking just PS binding to its receptors on immune cells, There is an FC -- FC gamma based effector function leading to ADCC and so on and so forth.

So there is an immune effector function that other checkpoint inhibitors do not have blocking PD-1 or blocking CTLA-4 do not have. So you got a component here that is beyond other checkpoint inhibitors, that brings in an effector function that others do not.

So looking at that aspect or looking at some of the translational data, do you think that beyond the PD-1, PD-L-1 non-immunogenic tumors, there is a possibility that PS blockade will have far more effect potentially driving de novo antigen [ph] presentation, any comments on that.

Yeah, I think it's a -- I mean I think it's a very important point you're bringing up is because we're blocking inhibitor you still need an activating function to get an immune response started. And it's a little bit different with PD-L1 PD-1 inhibitors because they are basically brought up a marker to stop an active immune response.

So taking away the stopping of that immune response actually allows that continuing immune response to take place. But for the more upstream checkpoints it's important to have that activating event and in fact it's taking away the negative PS signal within activating this T-Cell response which we think is such a great fit with PD-1 and PD-L1 inhibitors.

You're right it is absolutely, you need that activating events when you're taking off sort of the breaks if you will upstream because you still now need that trigger point for getting the immune response started. And so we're providing that with the -- as you said the FC gamma receptor interaction.

And also the other question sort of stems from the fact that there is much said about connecting adapt -- innate immunity and there is a bunch of NK cell [ph] strategies in play as well. From the cytokine profile and looking at the translation work that you guys presented at ImVacS in the lung cancer.

So you're seeing interferon [indiscernible] and other cytokines that -- and also converting M1 to -- M2 to M1 macrophages. How significant do you think your approach that [indiscernible] does that, but no other checkpoint inhibitor does that.

Any color on that aspect when you could be connecting both the arms of the immune system have and deciding which tumors you're going to attack and how the combination approaches may pan out?

Yeah I mean I think you've made a great point because what we're doing to this activating events in starting this immune response is basically taking away that natural defense the tumor has for stopping all immune responses, so that's both a native and adaptive killing of the tumor. And so we're really basically reversing that probably equally on both sides of the equation and we have good data that supports that.

And I think as you're pointing out it really brings up a lot of new different types of combinations that we can pursue and it's one of the reasons over the long run, our goal is outside of course PD-1, PD-L1 to combine with other immune-modulating technologies. And that could even include dendritic cell vaccines, other types of vaccine approaches as well as the again the litany of different checkpoints that play a role downstream of our target.

So I think it really opens lot of doors for us and again I think as Joe Shan alluded to earlier one of the great things about bavituximab has been that it seems really very combinable so far with other agents. And so by having this good safety profile really allows us lot of opportunity on the combination front.

Great. And then one final question on the SUNRISE trial, and I guess the answer maybe is yes but I am not sure on SUNRISE trial are you guys actually measuring all the cytokines that were measured in the translation work, but with the microspheres like IL-12, interferon gamma, IL-10 or all those not being measured for each patient?

Yeah that’s part of our exploratory endpoint. So we have a number of immune correlate testing and blood based, most of those are blood based of course.

And so yeah we do plan to look at cytokine, change in the cytokine levels. We've been working with labs to develop ultra-sensitive assays.

And it will also be a major part of lot of the new studies we are starting as well, because again as we have learned more even since we started the SUNRISE trial we’ve now got the ability to have the new translational data in hand to really design some of these new studies with some of these additional endpoints sort of in mind, we are looking at cytokine profiles, changes in macrophage profile, MDSE levels all other things.

Great, thank you. That’s all I had guys.

Sure.

Hey good afternoon guys. Thank you so much for taking my question and congrats on a nice quarter.

Good to see Avid continues to grow. So I just have two quick questions, so I am just wondering what would be considered a successful outcome for the Phase I/Ib trial that is in partnership with AstraZeneca?

Well I mean I think first we will need to establish the tolerability of two investigational agents for success. This would mean we can move into the triple combo setting and then there just continue to meet kind of basket design where we are going to look at several different tumor types, combining with the standard chemotherapy as well and so there -- Phase 1 so they are uncontrolled studies but these likely will be pretreated, heavily pretreated patients.

So I think if we see some good responses then that would be a requisite [ph] signal and then we can always expand each cohort or other trial to other additional tumor types.

As in any of the basket studies one of the nice things here is that we’ll have the ability to take a look at the PD-L1 status of the tumors as they go into treatment, do we see differences between PD-L1 negative, PD-L1 positive. So lot of exploratory work can be done in this sort of trial design that we are looking at, and I think particularly for me it’s exciting because obviously we’ve gotten a lot of good clinical data combining bavituximab with chemotherapy and this is a great opportunity to now expand that into that nice combination with now some of the with a really a nice novel PD-L1 inhibitor to take a look at what a triple combination can do.

So I think that’s another huge benefit here because particularly as we think about how the treatment landscape is going to change in various indications, still the majority of patients in most indications were not getting cured. And so the more we can figure out how to fit bavituximab in the different treatment regiments we think the more value it will have overall in the program.

Right yeah okay that sounds good. Want to shift gear a little bit and talk about Avid.

I see that the backlog is now increased -- ballooned to $42 million. Just wondering -- this is maybe accounting specific but what is the accounting treatment of that backlog increase, does it go to customer deposits or does it increase deferred revenue?

Our typical contract require an upfront deposit to secure that manufacturing slot that would actually go into customer deposits and then once we kick off that manufacturing run it gets booked into deferred revenue until that run is shipped and that moves into revenue. So that's the overall and that's $42 million in backlog right now covers work to be completed during this fiscal year also into fiscal year '17.

So it's a combination of both years in terms of timing.

Yeah, okay, sounds good. Like I said again great to see Avid continue to grow and also while expanding bavituximab's clinical footprint at the same time.

So thank you.

I'd like to thank all of you again for participating in today's phone call. In closing, I would like to again express our enthusiasm around the bavituximab program and our growing biomanufacturing business.

We are already helping other companies treat patients worldwide through our manufacturing services, and we look forward to the potential that our own product, bavituximab can play in helping the countless patients battling cancer worldwide by helping them to overcome the immune suppression so commonly found in the tumor environment. In closing, as always I want to thank our stockholders for their continued support.

And now I would like to especially thank our patients and their families that are participating in our Bavituximab clinical trials. With that we will conclude the call.