Galena Biopharma Just Surged 14% -- Here's Why
What: Shares of Galena Biopharma , a small-cap biotech company focused on developing cancer immunotherapy vaccines primarily designed to prevent the recurrence of various types of cancer, surged higher by 14% during Wednesday's trading after announcing an exciting new collaboration with the National Cancer Institute involving its lead therapy, NeuVax.
So what: According to the early morning press release, the National Cancer Institute and Galena will be collaborating on a phase 2 study known as VADIS that'll examine the ability of NeuVax to suppress the growth of ductal carcinoma in situ of the breast after surgical treatment. The Division of Cancer Prevention is funding a significant portion of the trial, with Galena providing NeuVax and other financial and administration support. The study is expected to begin in the fourth quarter of this year.
If you recall, NeuVax is currently being studied as a cancer prevention adjuvant vaccine in breast cancer patients with low-to-moderate HER2 expression. In midstage studies, NeuVax led to a 78% risk of cancer recurrence reduction compared with the placebo, and is currently being studied in the phase 3 PRESENT trial, with interim data expected sometime in the next couple of months.
Source: National Cancer Institute.
Now what: The question investors need to ask here is whether or not Galena's 14% rally is a one-time event or the start of a change in the tide for the company.
As it stands now, I don't believe that question can be answered with any certainty. It's great to see NCI selecting NeuVax for its collaborative study in DCIS, and it fits with Galena's long-term goal of expanding NeuVax into new indications. Additionally, its success in midstage studies with its lead drug lends to promise for the PRESENT trial.
However, there are other issues that are difficult to overlook. The company's cash concerns and propensity to issues shares can be a major challenge to existing shareholders. Galena's common stock offerings do help keep the lights on, but they also dilute the value of the existing shares in investors' portfolios. Even with an existing purchase agreement with Lincoln Park Capital Fund, Galena will likely need plenty of cash raises between now and 2018, when its PRESENT trial will officially yield primary endpoint data.
Small-cap biotech stocks are also notorious for failing to succeed in late-stage cancer trials, or to get their products approved by the Food and Drug Administration.
Long story short, I'd continue to suggest remaining on the sidelines with Galena until we have the concrete data to support a long-term investment.
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The article Galena Biopharma Just Surged 14% -- Here's Why originally appeared on Fool.com.
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