Peregrine Pharmaceuticals (PPHM): 50% Upside on this Biotechnology Stock

Buy or Sell

At these levels the two questions on any investors mind is whether to buy the stock or take advantage of this recovery and get out. I believe at these levels Peregrine is one of the most attractive biotech stocks on the market. The market reacted pretty quickly to the bad news on the discrepancies in Phase II trial of Bavituximab but has still not accounted for the recent positive announcement. The stock is giving more than a 100 percent return on its lowest sell side price target and its pre-September valuations. Keeping in view the large potential in lung cancer drug market and positive Phase II data, I believe Peregrine is a strong buy.

Acquisition Potential

A number of major drug candidates have faced patent expirations in the last couple of years. This has left Big Pharmaceutical players looking for potential acquisition targets to replenish their patent portfolio. I believe Teva and Pfizer are the most likely candidates for acquiring small cap pharmaceutical stocks.

Teva recently announced at its investors meeting that it plans to focus on expanding its drug portfolio rather than returning shareholder wealth. The company has one of the lowest dividend yields in the market and the new management is justifying this dividend yield with a shot at expansion. Teva already has a rich oncology product line with Treanda, Trisenox, Tevagrastim, and Eporatio. Peregrine’s Bavituximab is its leading candidate and would fit in nicely with Teva’s oncology product line.

Pfizer is another major drug company actively looking to replenish its diminishing drug portfolio. The company has almost $22 billion in cash and equivalents and can easily afford Peregrine, valued at $280 million. Pfizer already has a very strong oncology portfolio which will make Peregrine an ideal investment. There will also be a lot of synergy because Pfizer already has one of the best sales and distribution channels for Oncology products.

The article 50% Upside on this Biotechnology Stock originally appeared on Fool.com and is written by Mohsin Saeed.

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