Cancer Immunotherapy Developer Galena Biopharma Can't Win for Trying

Source: National Cancer Institute.

Shareholders of small-cap cancer immunotherapy developer Galena Biopharma have suffered through a rough year. After witnessing their stock give back all of its 2014 romp higher, shareholders have had salt rubbed in their wounds, with the stock dropping an additional 30% year-to-date.

Galena's trio of woe

A lot of factors have been pressing on Galena's share price. To begin with, Galena's FDA-approved products haven't been selling as well as expected. Galena went out and acquired Abstral as a treatment for breakthrough cancer pain from Orexo , and it acquired the rights to market Zuplenz as a treatment for chemotherapy-induced nausea and vomiting, but neither appears poised to make much of a dent into the company's cash outflow. In fact, Abstral sales missed the forecast set forth by management early in the year in 2014, and this year the combination of Zuplenz and Abstral isn't on track to meet the midpoint of the expectations management laid out at the beginning of the year.

Cash is another concern for Galena, which continues to burn through its remaining cash on hand. Although Galena has arranged a purchase agreement with Lincoln Park Capital Fund that could supply it with up to $55 million in capital, Galena's primary source of capital has been issuing shares, which ultimately winds up diluting existing shareholders.

And, of course, we've got the stock market correction and the firestorm created by presidential hopeful Hillary Clinton, who last week proposed a radical plan to cut prescription drug costs if elected president. Clinton's plan entails using the government's full force to help negotiate better drug prices, as well as to cap the out-of-pocket payments of eligible drugs for individuals at $250 per month. Galena, which is developing specialized immunotherapy products to reduce or eliminate the chance of specific cancer types from recurring, will likely place a hefty price tag on its therapies if approved. Thus, Clinton's plan puts Galena, among dozens of other biotech stocks, squarely in the spotlight.

Source: National Cancer Institute.

Galena can't win for trying

However, it recently looked as if the stage was set for Galena's fortunes to make a turn for the better. In mid-September the company announced that it would be presenting phase 2a data on GALE-301, its peptide immunotherapy derived from folate binding protein that's designed to prevent the recurrence of ovarian and endometrial cancers, at the European Cancer Congress.

Initial reported data on GALE-301, presented at the American Society of Clinical Oncology's annual event at the end of May, was extremely positive, and suggested that more encouraging data was likely on the way. In its ASCO announcement, the complete response for GALE-301 was just 38% -- but for the 1,000 mcg cohort only one of 15 patients had a recurrence, compared to half of the control group cohort.

The phase 2a data released on patients that had been treated for at least 12 months, which Galena released on Sept. 28, continued to show a demonstrable outperformance for the 1,000 mcg cohort (the optimal dose). The poster abstract presented at the European Cancer Congress showed that the recurrence rate for the placebo cohort rose to 55%, while the recurrence rate for the GALE-301 1,000 mcg dose cohort also rose, but to just 13.3%. The estimated two-year disease-free survival of GALE-301 was nearly 86%, compared to just 34% for the control group.

Yet when Galena presented this news its stock scampered lower by more than 12% on the day. Again, Clinton's commentary and overall sentiment toward biotech stocks likely played some role in its underperformance. However, the rise in recurrence from one in 15 to two in 15 patients appears to not be sitting well with shareholders. The data still suggests a strong outperformance, but sometimes predominantly clinical-stage biotech companies simply can't win for trying.

Source: Galena Biopharma.

NeuVax is still the game-changer

Wall Street and investors may not be enamored with the GALE-301 data (which otherwise appeared solid), but it's ultimately the success or failure of NeuVax that holds the majority of Galena's roughly $225 million market value.

NeuVax is the company's lead immunotherapy vaccine, which is being studied as an adjuvant treatment to prevent the recurrence of breast cancer. In midstage studies NeuVax certainly hit the mark, with a mere 5.6% of NeuVax-treated patients experiencing a recurrence over a five-year period compared to a 25.9% recurrence rate in the control group. Overall, this represented a 78% risk of recurrence reduction for the NeuVax arm, and it gives the company ample momentum heading into the first of its interim analysis results for its phase 3 PRESENT trial, which is expected in the fourth quarter of this year, or perhaps in the first quarter of 2016. Final data for the study won't be available until 2018, but over the next 12-15 months we should get a pretty good idea of the general safety and efficacy of NeuVax in a much larger patient pool.

Assuming NeuVax hits its primary endpoint (and is approved by the FDA), Galena can either choose to seek out a licensing partner to alleviate some of its near-term cash concerns, or it could plan on marketing the adjuvant immunotherapy vaccine itself and potentially fund its operations with a loan or share offering until NeuVax hits the market.

If anything, shareholders will soon have an answer as to whether or not Galena's immunotherapy development platform has merit. The groundwork is certainly laid out for a possible success, but as we witnessed this past week, even a victory won't necessarily guarantee that the stock will head higher.

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The article Cancer Immunotherapy Developer Galena Biopharma Can't Win for Trying originally appeared on

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy .

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