Why Galena Biopharma Inc. Stock Tumbled
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Galena Biopharma , a biopharmaceutical company focused on developing immunotherapies to treat cancer, tumbled by as much as 16% after the company reported its second-quarter earnings results.
So what: For the quarter, Galena reported $2.3 million in revenue from Abstral, its cancer pain medication acquired from Orexo last year, compared to no revenue recorded in the year-ago period. Operating loss, however, ballooned to $15.8 million, including stock-based compensation charges, from $11.8 million in the year-ago quarter. On a per share basis this worked out to a loss of $0.17 when Wall Street was looking for a much narrower loss of $0.09 per share. Galena ended the quarter with $39.2 million in cash, which is down from $47.8 million as of the end of December.
Source: Galena Biopharma.
Now what: Usually earnings reports for predominantly clinical-stage biopharmaceutical companies tend to not move a company's stock as much as we've witnessed Galena move today. However, the results of Galena's phase 3 study of lead drug NeuVax, its adjuvant breast cancer vaccine aimed at preventing or delaying the rate of recurrence, is still a ways out, so Galena's cash burn continues to come into play.
In addition, the quick start to Abstral -- $2.2 million in revenue in Q1 -- gave hope to investors that Galena could see meaningful revenue recognition sooner rather than later which it might use to offset the high costs associated with running a phase 3 study. However, Abstral's minimal quarter-over-quarter sales improvement (just $0.1 million) pretty much took that thesis off the table for the time being.
Overall, I still believe Galena represents an intriguing story stock considering the success of NeuVax in phase 2 studies and the potential behind immunotherapies , which retrain a person's immune system to locate and attack cancer. However, I'm also not blind to the fact that Galena is burning cash and is expected to lose money for the foreseeable future. Long story short, I'm staying firmly perched on the sidelines.
NeuVax may offer plenty of potential, but this revolutionary new technology could end up leaving it in the dust!
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW .
The article Why Galena Biopharma Inc. Stock Tumbled originally appeared on Fool.com.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong , track every pick he makes under the screen name TrackUltraLong , 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 services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .