Barbara Lindheim – IR, BioCom Partners Steve King – President and CEO Paul Lytle – CFO Joe Shan – VP, Clinical and Regulatory Affairs Chris Eso – VP, Business Operations at Avid Bioservices

George Zavoico – MLV Steven Dunn – LifeTech Capital Joe Pantginis – Roth Capital Partners Sheldon Trob [ph] – W. Master Fund [ph] Bill Dawson – LifeTech Capital

Good morning and thank you for joining us on today's call with the management of Peregrine Pharmaceuticals. We are here to discuss the company's results for the third quarter of fiscal year 2010 reported this morning.

With me today are Steven King, President and Chief Executive Office; Paul Lytle, Chief Financial Officer; Joe Shan, Vice President, Clinical and Regulatory Affairs and Chris Eso, Vice President of Business Operations at Avid Bioservices. Before I turn the call over to Steve, 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 Pharmaceutical's current views about future events and financial performance.

These forward-looking statements are identified by the use of terms and phrases such as beliefs, 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 Pharmaceutical's filings with the Securities and Exchange Commission, including but not limited to the Annual Report on Form 10-K for the year ended April 30th 2009 and the quarterly report on Form 10-Q for the quarter ended January 31, 2010.

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. And 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 now to turn the call over to Steven King. Steve, you may begin.

Thanks, Barbara. And thank you to our investors for joining us on today's call.

During the past quarter, we made important progress in advancing our bavituximab and Cotara clinical programs and reported solid operating and financial results. We have now completed the planned combination treatment period in our three bavituximab Phase II oncology trials and are planning to report additional data from all three trials in the first half of this year.

We also expanded and began patient treatment at new U.S. sites in our ongoing Cotara Phase II GBM brain cancer clinical trial and we have been diligently preparing to initiate two new Phase II clinical trials for bavituximab in non-small cell lung cancer, targeted to begin by mid-year.

Our clinical progress was matched by an impressive quarter of financial results, reporting record revenues, lower net loss and a higher cash position. And this was another solid operating quarter for Avid Bioservices, our wholly-owned manufacturing subsidiary, which has an important strategic role for Peregrine.

On today's call, we will provide forward-looking outlook for our future plans for the company. An important part of this will be the flagship Phase II registrational lung cancer trial and a second lung cancer trial, both of which are expected to begin by mid-year.

Joe Shan will describe the potential registration trial in further detail on the call. The teams at Peregrine and Avid have been working diligently to begin these trials, which will be our largest and most important bavituximab trials to date.

The Avid team has been simultaneously building bavituximab inventory for these two Phase II trials, while continuing to provide services under our TMTI government contract and to Avid's valuable third-party clients. Additionally, we are working to identify biosimilar product candidates, which can be developed both quickly and cost effectively to help us reach our corporate goal of product commercialization.

We are excited about pursuing this revenue-generating opportunity and Chris Eso will provide you additional details on Avid's progress and initiatives later during the call. As we focus on executing our clinical trials and expanding Avid's commercial business and new initiatives, we believe we have multiple opportunities to reach our product commercialization goals.

Now, I will turn the call over to Paul Lytle, our CFO for financial review of the quarter. Paul.

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

This morning we released our financial results for the third quarter of fiscal year 2010. I encourage everyone to read the entire release as it outlines our financial results in greater detail and includes financial tables.

During the next few minutes, I would like to discuss a few financial highlights for the quarter. I will then discuss our current financial position and I will conclude with a discussion covering our various sources of capital and our plans moving forward.

Let me first say that we are very pleased with the quarter. The team has been able to increase revenue to record highs, decrease our net loss by 54% while at the same time we have increased our investments in research and development.

Now, let me provide a few more highlights on revenue. Total revenue for the quarter came in at close to $10 million and this in turn has increased total revenue for the current nine-month period to over $23 million.

Last July, we projected total revenue for fiscal year 2010 to be at least $20 million and we are pleased to report that we have achieved that goal as of this third quarter. Let me provide a few more details on revenue.

The company has two sources of revenue, government contract revenue and contract manufacturing revenue. This quarter, we saw government contract revenue increase significantly to $6.9 million.

This increase was mostly due to the manufacturing services provided by our wholly-owned subsidiary, Avid Bioservices, which is ultimately reported as government contract revenue, in accordance with Generally Accepted Accounting Principals. And as Avid shifted its efforts towards our government contract this quarter, we saw an expected decrease in contract manufacturing revenues during the same period.

But overall, we expect contract manufacturing revenue for the entire fiscal year 2010 to be in-line with last fiscal year. Chris Eso will provide you with some additional insight into Avid's strategic contributions in just a few minutes.

Moving down the statement of operations, it is important to note that our R&D spending has increased 64% for the current quarter and 37% for the nine months ended January 31, 2010. As we mentioned on previous calls, advancing our clinical pipeline is our top priority.

We also saw an expected increase in R&D spending for work performed under our government contracts that was in-line with the funding we received. Now, let me turn to the bottom line.

For the third quarter, we reported a decline in our net loss of 54% to $1.5 million or $0.03 per share. This compares to a net loss of $3.3 million or $0.07 per share, reported in the same prior year period.

This decrease in our net loss is a direct result of the revenue growth we have achieved during the current period. Now, let me shift your attention to the balance sheet.

As of January 31, we reported $16.8 million in cash and $19.6 million in liquid assets, which represents cash and receivables. With two sources of revenue, liquid asset is an important measure of our capital resources.

Now, looking ahead, let me discuss our various potential sources of capital, as we prepare to initiate two Phase II clinical studies in front line and refractory, non-small cell lung cancer patients by mid-year. First, our preferred source of capital has always been non-dilutive capital.

And unlike most biotech companies, we are fortunate to have two key sources of non-dilutive capital, which has helped us reduce our overall reliance on the capital markets. In fiscal year 2009, we generated $18 million in total revenue and we have already reported $23-point million in total revenue during the first nine months of fiscal year 2010.

We are also experiencing continued interest in our clinical programs from potential partners. We will continue to pursue these opportunities and the potential sources of capital they represent.

Along with the potential sources of capital, our goal is to use a combination of our revenues from third parties and financing strategies to support our clinical programs. Over the past three quarters, we have been able to closely match our capital needs with our capital resources through a mixture of increasing revenue and by raising additional capital through the equity markets.

We have successfully increased our cash position during each of the past three quarters by raising additional capital when market opportunities arise through a financing vehicle called an after-market issuance program. Under this vehicle, we are able to sale sell shares at market prices and without issuing a single warrant again as market conditions permit.

During the current quarter, we were able to raise $6.1 million in net proceeds using this vehicle. In conclusion, let me say that we are continuing our Investor Outreach campaign.

So far we presented at a neighboring conference to the J.P. Morgan event in January.

We presented at the BIO CEO conference and held institutional Investor meetings in New York and Boston in February and we presented at a – and held investor meetings at Cowen's 30th Annual Healthcare Conference just a few days ago. Next Wednesday, we will be presenting at the Roth 22nd Annual Growth Stock Conference.

We hope you can listen to our corporate presentation that will be available through a link on our website. Our goal is to continue to increase the overall awareness of Peregrine within the investment community as well as to increase the institutional ownership of our stock.

We are very enthusiastic about the clinical and commercial potential of bavituximab and Cotara to treat both cancer and serious viral diseases. We want to share this enthusiasm with the investment community.

Thank you everyone for your time today and for your continued support of Peregrine. I will now turn the call over to Joe Shan, our VP of Clinical and Regulatory Affairs to discuss the important progress we are making in our clinical programs.

Joe?

Thanks, Paul. During this quarter, we continued to make significant progress in our clinical development programs for both bavituximab, our lead oncology and anti-viral product and Cotara, an innovative approach to treating brain cancer.

We continue to collect valuable follow-up data in the ongoing Phase II bavituximab trials, so we can report additional results at upcoming medical conferences. At the same time, we have been collaborating with the team at Avid to prepare for initiating two new bavi trials by mid-year and meanwhile, we have successfully expanded our Cotara Phase II trials.

As we look at the year ahead, we have plans for a robust flow of clinical news and progress updates on our new clinical trials. We announced in today's press release our Phase I bavituximab solid tumor abstract was accepted for presentation at AACR next month and we are planning to attend and present data at other prominent medical conferences throughout the year.

For our three ongoing bavi Phase II trials, we are pleased to report that we have now completed the planned combination treatment period for all patients in these trials. You may recall that two of these trials are in advanced breast cancer, one combining bavituximab with docetaxel and the other combining bavituximab with carboplatin and paclitaxel.

Interim data reported last year demonstrated promising overall tumor response rates and we look forward to reporting additional data from the full 46-patient cohorts in each of these trials in the first half of this year. The third ongoing trial is evaluating bavituximab in combination with paclitaxel and carboplatin in patients with advanced non-small cell lung cancer.

We were encouraged by the interim results we reported previously from this study and expect to report top-line results from the full 49-patient cohort during the first half of this year. Lung cancer is the leading cause of cancer deaths for both men and women and the promising data we have already observed in the ongoing lung cancer trial is paving the way for two new trials in this indication.

The first new trial will treat lung cancer patients who have progressed after standard first-line treatment. This will be one of the largest and most important trials for Peregrine to-date and has required extensive planning, manufacturing and regulatory preparations in anticipation of this critical milestone.

This Phase II trial will be a randomized, double-blinded study comparing docetaxel plus bavituximab versus docetaxel plus a placebo. This is a very rigorous study designed with many features typically reserved for Phase III trials and results will be reported when the data are unblinded at the end of the study.

As you may recall, following our successful meeting with the FDA last November, we decided to pursue this segment of refractory lung cancer patients, who have an unmet medical need and believe this indication could provide an expedited path to regulatory approval. While the trial design I described could position us to take advantage of very strong clinical trial data and results and seek accelerated approval, we expect this trial will be part of a registrational package that will include Phase III development.

Now, to build further on our lung cancer program, we are planning to initiate another randomized Phase II trial. This one in front-line lung cancer.

This trial would be similar to the ongoing signal-seeking trial using bavi with carboplatin and paclitaxel are designed to confirm the prior results in a randomized setting. Our clinical team and colleagues at Avid have been working diligently to operationalize these trials by mid-year.

While lung cancer is our current focus, we believe bavituximab has broad spectrum potential. So we are also planning to expand the bavi oncology program into new clinical indications, based on supportive preclinical data or outside clinical interest.

Areas under consideration include pancreatic, prostrate, brain and liver cancers, just to name a few. To assist in these efforts, we recently announced the addition of Dr.

Marvin Garovoy as Head of Clinical Science and we expect the combination of both company and investigator sponsored trials to be initiated throughout the rest of this year. Turning to Cotara, we recently expanded our ongoing Phase II trial in patients with glioblastoma at first relapse to include sites in the U.S.

that have already begun patient enrollment and we are planning to complete enrollment of this 40-patient trial later this year. Now, we believe that potential Cotara exists to treat deadly brain cancer and that belief was affirmed in a manuscript published in a Current Cancer Therapy Review last month.

The article reported our long-term follow-up data from a prior Cotara trial in which 7 of 28 or 25% of the patients with recurrent GBM survived more than one year after Cotara treatment with two of these patients now having survived more than nine years. In that same study 10.7% of recurrent GBM patients survived more than five years, which is superior to the 5-year survival rate of 3.4% reported by the U.S.

Brain Tumor Registry. This low historical rate of survival highlights the limitations of current therapies for treating GBM and the urgent unmet medical need which still exists.

To recap, I want to emphasize the exciting year of clinical data and clinical trial milestones ahead. Among other activities, we are planning to report data from up to five trials, initiate two bavi Phase II randomized trials and complete enrollment in the Cotara Phase II study.

We look forward to communicating our clinical progress over the coming year and invite investors and analysts to stop by and meet our team at ASCO this year, where we will have a dedicated booth. Thank you for your attention, I will now turn the call over the Chris Eso, Avid's VP of Business Operations.

Thank you, Joe and thank you everyone for joining us today and providing me the opportunity to update you on some of Avid's achievements. This quarter, Avid continued its solid performance and continues to play a critical and ever-increasing important role, both strategically and operationally for Peregrine.

Through our commercial manufacturing facility, we efficiently produced supplies for Peregrine's trials with greater flexibility than an outside CMO could provide. Beyond helping – beyond helping Peregrine build clinical inventory for its upcoming trials, as Joe mentioned, we have been working hand-in-hand with our colleagues at Peregrine to prepare multiple regulatory submissions as we advance towards our ultimate goal of product commercialization out of our existing facility.

Additionally, Avid generates revenue from the services we provide third-party clients, providing a stable base that we can grow strategically over the longer term. These activities help offset the demand on the company's financial resources and will position Peregrine and Avid for future success.

Avid also has the unique ability to shift its services to support the needs of multiple clients, including our valuable existing third-party clients, representing a critical component of our business, potential future growth and long-term strategy as well as Peregrine, both as a subcontractor on its government contract but also in supporting the growing need of clinical and potentially commercial material for the upcoming Phase II trials and beyond. To put that into perspective, Avid has recently produced approximately 15,000 vials of clinical-grade material in anticipation of these trials.

As you can see, although third-party revenue was down this quarter, our overall manufacturing activities have increased and are expected to remain at elevated levels, but the mix of revenue quarter-to-quarter, can change depending on the level of services provided to Peregrine and/or our third-party clients. As a result, we measure Avid's total output internally which includes all sources of revenue.

For the first nine months of the fiscal year, Avid's total output was $24 million as compared to $14.5 million for the same period last year. This is quite an accomplishment for the entire team at Avid.

Looking forward, our near-term focus is to support Peregrine's clinical and eventually commercial needs, service our existing third-party clients and grow strategically through expanding these relationships and adding new clients as well as biosimilar products into the mix. To support Peregrine, we will continue to produce clinical materials for upcoming trials and are beginning to plan for the potential launch and commercialization out of our existing facility.

As you recall, we already produced commercial material in our existing cGMP facility for one of our key third-party clients. And based upon the infrastructure we currently have in place, we plan to launch and initially commercialize bavituximab out of our existing facility.

That being said, we are evaluating several options to increase our overall capacity without a large investment. Truc Le, our Head of Operations and the entire team at Avid have been doing a great job implementing operational efficiencies and evaluating facility improvements to increase our capacity.

For example, adjusting our shifts or reducing our changeover time would increase our capacity with limited capital investments. We believe the planned improvements will provide the required capacity to meet the initial launch and commercialization needs for bavituximab as well as other products and help us reach our commercialization goals.

Shifting to our third-party clients, our goal is to strengthen and expand our relationships with key third-party clients, as we look to grow the business strategically over time to support their needs. This is a top priority for the team at Avid which will not only benefit Peregrine and Avid, but also our third-party clients.

We also intend to broaden our existing client base with new third-party clients to position Avid for future growth. Lastly, I would like to end the call by talking – end by part about the progress we are making with ongoing biosimilar initiatives, which also support our corporate focus of commercializing products in the shortest amount of time possible.

We continue to evaluate biosimilar product opportunities and are mapping out a strategy to combine both Peregrine's and Avid's expertise to develop biosimilars. Not only for ourselves, but also with potential partners, both domestically and internationally, since the regulatory pathway remains unclear in the U.S.

at this time. We have narrowed the list of product candidates internally and are set to begin initial development in the coming months.

We look forward to updating you throughout the year on our progress. And with that, I will turn the call back to Steve.

Steve?

Thanks, Chris. Before turning the call over to the operator for your questions, I would like to emphasize the great progress we are making with our clinical programs for bavituximab and Cotara, which we believe are key drivers of Peregrine's future value and success.

By the time we have our next quarterly conference call, we will have reported data from at least three clinical trials and possibly up to five. We will have initiated at least one of our two planned randomized Phase II clinical trials for bavituximab in lung cancer and Avid will have continued to perform and will have enabled us to achieve these important clinical milestones.

Through the execution of our clinical trials and the expansion of Avid's commercial business and new initiatives, we believe we have multiple opportunities to reach our product commercialization goals. We hope you will continue to follow our progress as we implement our clinical and operating plans.

As a reminder, we will be presenting at the Roth Investor Conference next Wednesday, March 17 at 12:30 Pacific Time and a live webcast will be available on our website. We appreciate your interest in Peregrine and we will now open up the call for your questions.

Operator?

Hi. Thank you for taking the question and congratulations on reporting the best earnings you have reported in several quarters.

Very nice. Very impressive.

Thank you. I have a couple of questions.

First one is in regard to Cotara. You said you have expanded the cohort to 40 patients.

You first guided to completing the enrollment in about mid-year and if that is the case, when do we have a read out, about six months? I believe is what the Phase II trial, the read out was a six-month survival?

Yes. That’s correct.

So the six-month survival is a historical median survival time for a similar patient population. So essentially, yes.

We have expanded the trial into the sites in the U.S. that were previously involved in our dosimetry trial, so as we completed that earlier in the year or later last year, that allowed us to really transition those sites to the Phase II study.

So we’re still – our goal is to complete the trial toward the middle of this year, where the newest sites in this trial are up and running and actually have already put patients on. So we are very happy with the way it’s tracking up to this point.

So yes, once we complete patient enrollments, this is an open label study, of course. So we will be able to report results probably again toward the end of this year or early next year, as we generate the data.

And the protocol used, the treatment regimen. How does it compare with the prior treatment where you had the great longevity in some of the patients?

It’s essentially the same, as I recall, isn't it?

Yes. It’s actually in that same dose range.

It was in this trial it's 2.5 millicuries per cubic centimeter, so we feel that is a dose of radiation which will allow us to really deliver a very strong dose to the tumor and we know from our previous experience, that the better job you do of getting the radiation to the tumor, the better the clinical outcome. So yes, that tracks along with that.

And in fact, if you look at the experience so far in our lead enrolling sites in the Phase II study that they have presented, I think it was last September. Basically, the results will be tracking very nicely with the previous study.

Seeing between a 38 to 40 week median survival time. Of course, we will have to see how the final results of the trial come out.

But so far very happy with the way it is tracking.

And what would be the next step? What would be the next trial?

Yeah. After this the goal is to really take these results.

We have basically accomplished two of the primary goals we had from our prior FDA meeting a few years ago. And the goal is to really be able to go back, enter into discussions with the FDA for a product registration trial.

So the next step after we complete this study and get more data, would be an SPA meeting with the FDA for a registrational Phase III study.

Okay. Thanks.

With regard to bavi now. The two trials that you are going to be initiating mid-year, how many patients do you expect to enroll in each and when and what is the duration?

The Phase II trials lasted about two years. Since these will be larger trials, do you expect them to run like two to three years something like that?

Yeah. I think the size of the trials for the double-blinded placebo controlled second-line combination with docetaxel, we are anticipating a 120-patient clinical trial.

We haven't publicly disclosed anything on the front-line study yet. We are still finalizing the protocol and some of the particulars on that.

Our goal is to enroll the study in approximately a year. Obviously, the key for meeting that enrollment criteria is to have an adequate number of sites, so we have done some feasibility studies, looked at the average of number of patients.

They think they can put on per month. And then we have – we are kind of powering the number of sites to achieve that enrollment goal.

So once we get started, we will be able to really look at how it is tracking, determine if we need to add more sites on, but our goal is to get it done within a year, which should put us in a good position for data from the trial in late 2011 or early 2012, but ideally late 2011.

Okay. Thanks.

And if you permit me a couple of quick questions regarding the cost of manufacturing, in the line-item contract manufacturing revenue and the cost of contract manufacturing, that only relates to the third party, is that correct?

That is correct, George.

Okay. So the government contract revenue that you reported –

All of those costs are included in research and development.

Right. Exactly.

Okay.

To move forward the studies in viral hemorrhagic fever.

Yeah. And I see that you are trending, your cost of manufacturing over your contract revenue is trending downward.

So your efficiencies seem to be working, the efficiencies you are putting in place.

Yeah.

Regarding the government contracts, the first two-year period ends in June. And you have already collected about $18 million in the first part, supposed to collect about $22 million.

So you have got like $5 million or $6 million, until left to collect until the end of June, is that fair to model it that way?

Yeah. The initial contract was a 24-month base period for $22 million.

And you are correct. We have recognized about $18 million under that contract to date through this quarter-end.

And at the end of June, which is the end of the base period, we are already in discussions with the Defense Threat Reduction Agency, or the TMTI group, to look at extending that contract into the first option period. And then every year thereafter, it gets continuation from there to the second and third option periods, based on the results that we see and the data that we generate.

Okay. And then finally, one last question, regarding the biosimilar program.

You are taking this on completely on your own initiative. Is that correct?

And number two, what proportion of your R&D is allocated to that?

Yeah. This is a new initiative.

So obviously up to this point none of the R&D expenditures would have been related to those development programs. I think as we go forward, we see that number of opportunities here.

One would be to work with outside third parties who have an interest. And we are already in some of those discussions.

Our goal here is to take advantage of the fact that we have an FDA-approved cGMP manufacturing facility, so we have a good regulatory track record. We also have capacity.

And this is just another way to take advantage of that. And we think it could be a potential advantage of being a U.S.

manufacturing site as well. So really I think as we go forward again we are going to be careful, clearly our primary goal is to move forward the bavituximab oncology program.

And the biosimilars, we think represent another great opportunity that again we will add on as resources are available, both on the Avid side and financially.

Yeah. I think it is a great opportunity.

Once the regulatory paths by the FDA becomes clear, it would be great to be prepared to jump into that right away. All right.

That is all I have. Thank you very much.

Sorry, I took so long.

No. No.

Thanks very much. And just to follow that up, I agree in the U.S, clearly some of the regulations still need to work themselves out.

But there are already regulations in Europe. And there are expected regulations coming out in Canada, I think in the April timeframe of this year.

So there are other opportunities ex-US, even while the U.S. system gets worked out.

Also one additional follow-up on the clinical trials, while the goal for the randomized placebo control study is to complete that again toward the middle part of next year with data coming out at the end of the year, probably most of the other studies we are going to be running will be likely open label studies. So that will give us a good opportunity to report probably a combination of corporate and investigator-sponsored studies, to generate a good solid flow of clinical data coming out in the interim period.

So I think it will be a nice mix, give us a chance to explore additional indications that might be of interest. And really again with that trial being sort of the flagship of the whole series of trials we want to run.

Okay. Great.

I am looking forward to seeing the data at ACAR [ph] and ASCO and later. Thank you.

Excellent. Thank you.

Hey, guys. I will ask this question without taking a breath.

So I will fit them all in. Some housekeeping questions, on the confirmatory first line, I assume that is going to be a U.S-based trial, rather than in addition to the India trial that is ongoing, is that a fair guess?

Yeah. I think our goal for all of these upcoming studies, to have them as primarily U.S.

studies. We are and probably will incorporate ex-US sites, because obviously it is a tradeoff between wanting to get the trials enrolled in a reasonable time period and trying to generate most of the data in the U.S.

So I think the trials will be a mixture. And again our primary goal is to get the studies done.

Obviously treat as many patients in the U.S. as we can.

But not turn them into sort of multi-year clinical experiences. But these all will be run under our U.S IND.

And it is the regulatory pathway we are talking.

Okay. So for refractory, if I can read into that it is mostly U.S, but could be some India as well?

Yeah. I think we are definitely looking at ex-US sites.

And again trying to mix and match that to get the trial done in a reasonable time.

Okay. I guess we have a lot of data coming up on breast cancer.

I guess I really haven't heard, I know it is on your lead indication. But I mean from a strategic point, are you committed to continuing on with breast cancer?

Should the data be, okay at ASCO, or was it just more of a trial run, if you will?

Yeah. I think that we obviously have an interest in breast cancer, because the data up to this point would support some additional clinical studies.

I think the challenge is that generally in the breast cancer indication, it is a much larger undertaking and probably the timelines are going to be much more extended for those clinical studies. We are looking at how to move the breast cancer program forward.

We do think the drug has some good potential. This may be something we want to explore in some ISTs where we can look at some specific patient populations, where there might be more expedited development pathways.

And be able to take advantage of that, so we are looking at a lot of different angles on that. But clearly it is interesting.

But really think some of the other indications, obviously lung cancer, pancreatic, some of the other ones we have been approached about and have an internal interest in may take the lead. And then we may move that forward cautiously.

Okay. Two questions left on Cotara, in the past it was felt that you would probably continue on with that program, utilizing a partnership.

Is that still your view, or are you thinking now maybe, Peregrine, will take it on themselves?

Yeah. I think we will have a much better viewpoint once we are through this Phase II study and have the results.

And can have that meeting with the FDA to design the Phase III study. I think depending on the size of that study, it could be an internal undertaking versus a partnered undertaking.

But I think the key is just by getting through this Phase II study and defining what that typical trial would look like adds a tremendous amount of value from a partnering standpoint. Because then the partner really understands what they are getting into, what the timelines can look like and what the timeline to market could potentially look like.

So I think that is just something where we have to get the rest of the results. I think, obviously, very happy so far.

Have that discussion if we can get into a smallish trial, then it could be something we could handle ourselves. But otherwise I think really partnerable at that point.

Okay. Great.

Last one. This one is for Paul.

Paul, I guess how much is left on the after-market with Wm Smiths? My calculations you should have about $13 million left on that.

That's correct. Yeah.

We have raised about $11.7 million in gross proceeds under that instrument, so it's about $13.3 remaining.

All right. Great.

I will see you guys at ASCO.

Great, Stephen. Thanks for the questions.

Hi, guys. Thanks for taking the question.

Maybe could you give a little more color on your business development strategy for bavi? Specifically, what would you be looking for in a partner types of geographies or worldwide co-development.

And also would anyone that you are talking to currently be interested in sort of a joint type of deal for both cancer and infectious diseases? Thanks a lot.

Yes. It's a great question.

And clearly there is a lot of interest in the bavituximab program, novel monoclonal antibody therapies with an interesting target that has broad spectrum capabilities and multiple indications – clearly there are not a lot of those out there. I think our partnering strategy at this point is, obviously we have a lot of interested in parties.

We have – we will continue to keep those central partners updated on the clinical trial progress. Clearly, we have made a lot of progress over the last six months with the regulatory and clinical trial planning.

And I think we want to evaluate as we go forward the value we really think we are going to add in these next set of studies. I mean clearly, these are going to be very important studies for validating the efficacy of the drug and really hopefully setting us up for a very clear pathway to our product approval.

And obviously that adds a tremendous amount of value. So we don't necessarily want to partner in a program at a point where we may be adding tremendous value in the future.

Having said that, obviously regional partnerships could be attractive in areas where we won't be able to immediately move the program forward and that could allow us to expedite approval in those markets. Clearly, longer term something like a marketing partner would be of interest as we are thinking about the future of the program.

In addition, something like large-scale manufacturing. Obviously, as Chris pointed out in his discussion, we do believe we could do the market launch of our existing facility.

We do have the capability to do some expansion within our facility to meet additional market demands. But longer term if this drug is as successful as we think it can be.

We need to have a very large facility and there are partners out there that have that capacity. So really the marketing and the manufacturing are the most intriguing.

Again regional partnerships could be of interest over the kind of shorter immediate term. But again, we talked we are going to add a lot of value to the program.

On your question about the partner taking the viral as well as the cancer indications, clearly we are evaluating ways to really split those markets up. There are a number of ways to do that.

There are not a lot of partners who really are heavily invested in both the virus and well as the cancer settings. So we do think it's important to be able to have some flexibility.

But again, we are evaluating that and really planning on taking some steps to allow us to really split those indications and have potentially two partners, each with tremendous opportunity.

Great. Thanks a lot.

That was helpful.

Okay. Thanks, Joe.

Congratulations on a nice quarter. First question relates to, you have announced that you are commencing the bavi cancer drug Phase II trials.

Question regarding the duration and expected course of these trials and would you discuss the market opportunity? And I have a couple of other questions.

Sheldon, can you repeat that part again about the clinical, the clinical type questions that you had. I'm sorry.

The duration of the Phase II cancer trials and the anticipated cost and also what you see as the market potential?

Yeah. I will take the first part of the question about the duration of the trials.

Again, our goal is any of these studies that will be initiating would be ideally to complete enrollment within a years' timeframe. Particularly, on the randomized study which again puts us in a position for clinical data towards the end of 2011.

The other trials I think as we roll them out, some of them can roll faster. There are obviously a lot more patients in the front line setting versus a second line setting, which can really allow us to move forward a lot more quickly.

So I think it is each trial is going to have its own life. In addition, as I mentioned earlier, a lot of these studies will end up being open-label studies, which allows us the opportunity to really look at interim results from the study, report that at important clinical conferences.

So they generated their own news flow in the meantime. So our goal is to mix and match those again corporate sponsored, ISTs.

But we think through that combination we can really generate a consistent news flow, as we move toward the end of the second line docetaxel study. And I will let, Paul, address the question about the kind of the market potential or the way to look at the potential of bavituximab in any of these given indications.

Sure. Thanks, Steve.

Thanks, Sheldon for the question. We really historically have not looked at the market potential of these drugs.

But now since we are looking at lead indications like lung cancer, in first line, second line lung cancer. We can kind of define where these drugs and what the potential of these drugs could be.

And if you look at second line lung cancer in combination with docetaxel, which is the indication we are looking at right now. When you look at the G7 countries, which are all of the major industrialized countries like obviously the U.S., France and Germany and Japan and Canada and a few others, there are about 124,000 patients within that region that actually get treated.

I believe that was based on decision resource data and that was 2008 data from patients that were actually treated or expected to be treated within that region. And then if you look at kind of the potential of what are the selling prices of some of these monoclonal antibodies and the special broad spectrum ones, such as Avastin.

They are really looking at an annual cost of drug of about $50,000 to treat these patients over a course of a year. And when you combine those two numbers, it's really if you look at 20,000 patient population that would equate to just a $1 billion drug.

Obviously, that is the potential we believe in bavituximab and if you look at even Avastin's broad spectrum potential and you go out to some of the analysts expectations out there for their 2014 sales. It's in the $9 plus billion range of anticipated sales.

So we believe bavituximab with its raw potential is in that same category and same class. But we will learn more as we continue through our clinical development strategy.

But obviously in breast cancer or lung cancer I think the potential is great.

Thank you. Now regarding Avid, you mentioned that your commercial production – your commercial revenues declined and your government revenues of course increased substantially.

What is the differential in margins between the two?

We don't separately report margins on the government business versus the commercial business. It is the same exact time of operations that we run, whether we are manufacturing for Peregrine or manufacturing third-party customers.

So you could assume that the margins would be very similar. But under our government contract Avid is an approved subcontractor under that contract.

And in addition to the costs that Avid bills just because they do bill Peregrine at commercial rates, in which the government reimburses us. We also get a fee on top of that.

It is approximately 10%. So overall the margins are better with the additional fee that is on top of that.

Thank you.

Hey, guys. Congratulations on a very productive Q3.

And thank you for taking my questions.

Thanks, Bill.

First one is on the ongoing Cotara Phase II program. You did report that you expanded it in the U.S.

I am just wondering which centers did you expand to in addition to the Barrow Neurological Center in Phoenix?

Basically the same sites that we participated in the prior dissymmetry study. So we were looking at U Penn and the University of South Carolina.

Okay. So those were all from the Phase I and you have just expanded that?

Correct.

Okay. Second one, this question might be for you, Chris, about Avid.

While your overall manufacturing revenue increased quarter-to-quarter, year-over-year, you did have a decrease in the third-party manufacturing revenues due to the demand in the DTRA contract. I am just wondering are we starting to see manufacturing capacity constraints here or is there still room for third-party manufacturing growth while still servicing that contract as well as the planned bavi trials that are coming up?

Thanks for the question. No, we are actually not seeing capacity constraints at this point.

We do have some challenges from a scheduling standpoint, but from a capacity overall. We are not at constraint period.

It comes down to the actual scale that the products are being run at and which reactor and the timing of the purification process.

Okay. Thanks a bunch, guys.

Appreciate it.

Thanks, Bill.

I would just like to end by thanking everyone for listening to today's quarterly conference call. Please feel free to reach us with any further questions.

Thank you, again.