1-Star Stocks Poised to Plunge: Peregrine Pharmaceuticals?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotechnology company Peregrine Pharmaceuticals (NAS: PPHM) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Peregrine's business and see what CAPS investors are saying about the stock right now.

Peregrine facts

Headquarters (founded) Tustin, Calif. (1981)
Market Cap $298.0 million
Industry Biotechnology
Trailing-12-Month Revenue $15.2 million
Management CEO Steven King (since 2003)
CFO Paul Lytle (since 2002)
Return on Equity (average, past 3 years) (259.3%)
Cash/Debt $18 million / $124 thousand
Competitors Amgen
Merck
Roche Holding

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 74% of the 35 All-Star members who have rated Peregrine believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, zzlangerhans, succinctly summed up the Peregrine bear case for our community:

They're now a four-bagger and counting from the June low of [$0.43]. ... Now, of course, the upward momentum is pure speculation in the usual game of baby biotech chicken.

Red flag one is that [bavituximab] has been around for like, forever. Longer than I've been following biotech. That's a long time for a miracle drug to reveal its miraculous nature.

Red flag two is that [progression free survival] was only 4.5 months vs 3 months for standard of care. Better than nothing, but not necessarily predictive of prolonged survival. ...


Red flag three is that the company released very little of the data from the trial. Statistical significance?

Red flag four is that the share price didn't start taking off until a month after the data release in May. ... The delayed reaction reeks of manipulation and speculation.

Red flag five is courtesy of Adam Feuerstein, who points out that Peregrine has made a business model out of selling stock through unannounced ATM financings for years. ...

If you don't want to miss that kind of dilution and you can't bring yourself to pore through the quarterly SEC filings, just remember to click that cash flow link under Financials on Yahoo Finance. They can dilute without telling you in PR, but they can't hide their Sale Purchase of Stock.

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Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article 1-Star Stocks Poised to Plunge: Peregrine Pharmaceuticals? originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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