SAN RAMON, Calif., May 10, 2017 (GLOBE NEWSWIRE) -- Galena Biopharma, Inc. (NASDAQ:GALE), a biopharmaceutical
company developing hematology and oncology therapeutics that address unmet medical needs, today reported its financial results for
the quarter ended March 31, 2017.
“In the first quarter of 2017, we initiated a strategic assessment of Galena to examine a variety of options for optimizing
value for the Company and our shareholders,” said Stephen F. Ghiglieri, Interim Chief Executive Officer and Chief Financial
Officer. “As announced, we hired Canaccord Genuity to assist us in the process, and we are now actively exploring several potential
opportunities, from monetizing some or all of our clinical development programs through a license or sale of the assets, to a
complete transformation of the Company via a sale, merger, reverse merger, or business combination with another company, as well as
combinations of these strategies.”
“As we pursue potential strategic options for Galena, we are also striving to remove outstanding challenges facing the
organization. We are pleased that we have put two significant legal issues behind us through the announced resolution with the
Securities and Exchange Commission, and we have also reached an oral agreement in principle with the U.S. Attorney’s Office for the
District of New Jersey (USAO NJ) and the Department of Justice (DOJ) for a non-criminal resolution and civil payment. The
resolution of these matters will significantly reduce the associated litigation expenses as we continue to conserve working
capital, and it also removes a significant distraction to the Company, allowing the management team to focus our efforts and
resources on executing a positive outcome to the strategic review process,” added Mr. Ghiglieri.
Mr. Ghiglieri concluded, “Over the last few months, our clinical programs brought additional positive news to the Company. We
obtained positive recommendations from the data safety monitoring board for continuation of both NeuVax™ (nelipepimut-S)
investigator-sponsored breast cancer combination trials with trastuzumab, and we look forward to completion of enrollment in those
trials and the interim efficacy readout from the HER2 1+/2+ trial late this year. We also had two positive data presentations at
major medical conferences: one on the interim safety data for NeuVax in our HER2 3+ trial, and the second on the final results from
the GALE-301 (E39) Phase 1/2a clinical trial. Our clinical team also continues work to prepare our GALE-401 asset for initiation of
a Phase 3 trial in essential thrombocythemia with a current goal of enabling enrollment of the first patient late this year.”
FINANCIAL REVIEW
Operations
During the three months ended March 31, 2017, operating loss was $5.1 million, including $0.2 million in non-cash stock-based
compensation, compared to $9.0 million, including $0.7 million in non-cash stock-based compensation for the same period in 2016.
Galena’s development programs and general and administrative expenses are classified as continuing operations. Loss from
continuing operations was $2.3 million for the first quarter of 2017, or $0.09 per basic and diluted share, including $2.8 million
of non-operating income; compared to $13.1 million for the first quarter of 2016, or $1.46 per basic and diluted share, including
$4.1 million of non-operating expense.
Net non-operating income (expense) is primarily driven by changes in the estimated fair value of warrants accounted for as
liabilities and the contingent purchase price liability that are reflected as non-cash gains and losses in the consolidated
financial statements. Net non-operating income (expense) can be broken down as follows:
- $3.9 million gain for the first quarter of 2017 due to the significant decrease in the estimated fair value of warrants
accounted for as liabilities compared to a $3.9 million loss during the same period in 2016.
- $1.0 million of interest expense for the first quarter of 2017 compared to $0.1 million of interest expense during the same
period in 2016.
- $0.1 million loss in the first quarter of 2017 due to the increase in the contingent purchase price liability related to
NeuVax compared to a $0.2 million loss during the same period in 2016.
Loss from discontinued operations from Galena's former commercial business for the first quarter of 2017 was $9.4 million, or
$0.36 per basic and diluted share, compared to $3.4 million, or $0.38 per basic and diluted share, for the same period of 2016.
Loss from discontinued operations during the first quarter of 2017 includes accrual for a one-time $7.5 million civil payment
settlement, which is accrued as of March 31, 2017 in current liabilities of discontinued operations, related to the oral agreement
in principle with the USAO NJ and the DOJ. The final terms and details of this settlement are subject to change pending the
completion and execution of a definitive settlement agreement among the Company and the USAO NJ and DOJ. The agreement is
anticipated to be a global settlement encompassing any potential claims that might be made by state and federal agencies. There is
no assurance that the Company will be able to complete a definitive settlement agreement on the final terms of the oral agreement
in principle including its financial impact or any future adjustment to the financial statements.
Overall, net loss for the first quarter of 2017 was $11.7 million, or $0.45 per basic and diluted share, compared to net loss of
$16.5 million, or $1.84 per basic and diluted share, for the same period of 2016.
Cash and Cash Equivalents
Galena had cash and cash equivalents of approximately $27.6 million as of March 31, 2017, compared with $18.1 million as of
December 31, 2016. The increase of approximately $9.6 million in cash and cash equivalents from December 31, 2016 to
March 31, 2017 was attributable primarily to $15.5 million in net proceeds from the issuance of common stock and warrants to
purchase common stock from the Company’s equity financing completed in February 2017, and $4.5 million in redemptions of the
debenture paid by the Company in shares of common stock which facilitated the release of restricted cash in the same amount. The
increase was partially offset by $10.4 million used in operating activities. As of March 31, 2017, Galena had $13.2 million of
restricted cash under the terms of the debenture.
FIRST QUARTER AND RECENT HIGHLIGHTS
Operational Highlights
Positive Interim Safety Data on the NeuVax™ (nelipepimut-S) Clinical Trial in Combination with Trastuzumab in High-Risk
HER2 3+ Patients
A poster was presented on the NeuVax investigator-sponsored Phase 2 clinical trial in high-risk, HER2 3+ patients at
the American Association for Cancer Research (AACR) Annual Meeting 2017 in Washington, DC. The Phase 2 is a
multi-center, prospective, randomized, single-blinded, placebo-controlled trial combining NeuVax and trastuzumab in the adjuvant
setting to prevent recurrence in HER2-positive (HER2 3+) breast cancer patients. The poster, entitled, “Pre-specified interim
analysis in a prospective, randomized phase II trial of trastuzumab vs trastuzumab + NeuVax to prevent breast cancer recurrence in
HER2+ breast cancer patients,” presented the interim safety analysis that was initiated after enrollment of the
50th patient in the trial (vaccine group (VG) n=22, control group (CG) n=28). The analysis demonstrated that the
agent is well tolerated with no increased cardiotoxicity associated with giving NeuVax in combination with trastuzumab.
Positive Final GALE-301 (E39) Phase 1/2a Clinical Trial Data
An oral presentation entitled, “Analysis of a Phase I/IIa Trial Assessing E39+GM-CSF, a Folate Binding Protein Vaccine, to
Prevent Recurrence in Ovarian and Endometrial Cancer Patients” was given in March 2017 by Dr. Larry Maxwell at the
Annual Meeting on Women’s Cancer 2017 hosted by the Society of Gynecologic Oncology. GALE-301 is a cancer immunotherapy
consisting of a peptide derived from Folate Binding Protein (FBP) combined with the immune adjuvant, granulocyte macrophage-colony
stimulating factor (GM-CSF) for the prevention of cancer recurrence in ovarian and endometrial cancer patients in the adjuvant
setting. This final data from the early stage clinical trial demonstrated that GALE-301 is well tolerated and a statistically
significant disease free survival was obtained in a small number of patients treated with the optimal dose.
Positive Outcome from the Data Safety Monitoring Board on the Two NeuVax Clinical Trials in Combination with
Trastuzumab
In February 2017, Galena reported the results from a meeting of the DSMB for the two investigator-sponsored combination clinical
trials with NeuVax plus trastuzumab. The DSMB reported that there are no safety concerns with either trial and neither
was found to be futile. For the Phase 2b trial in patients with low-to-intermediate HER2 expression (HER2 1+/2+), n=242 patients
were evaluated, and the recommendation from the DSMB is to continue the trial with one revision to the statistical analysis plan
regarding the timing of the pre-specified interim analysis. Given the lengthy duration of enrollment for the trial, the DSMB
determined that the pre-specified interim efficacy analysis be moved up from 12 months to 6 months after the last patient is
enrolled. Completion of enrollment is expected in the second quarter of 2017; therefore, the DSMB expects to perform the interim
efficacy analysis near the end of 2017. For the Phase 2 trial in high-risk, HER2 3+ patients, and per the trial protocol, the
pre-specified interim safety analysis was also completed on n=50 patients and demonstrated that NeuVax is well tolerated with
no increased cardiotoxicity associated with giving NeuVax in combination with trastuzumab. The recommendation from the DSMB is
to continue the HER2 3+ trial unmodified.
Corporate Highlights
Settlement with the Securities and Exchange Commission
In December 2016, Galena and its former CEO, Mark Ahn, reached an agreement in principle to a proposed settlement that would
resolve an investigation by the staff of the Securities and Exchange Commission (SEC) involving conduct in the period 2012-2014
regarding the commissioning of internet publications by outside promotional firms. On April 10, 2017, the SEC made an announcement
that marks a formal conclusion to the SEC investigation for the Company.
Evaluation of Strategic Alternatives and Resignation of President and Chief Executive Officer
On January 31, 2017, Galena’s Board of Directors announced that it is in the process of engaging an outside advisor to
evaluate strategic alternatives for the company focused on maximizing stockholder value. On March 9, 2017, it was announced that
Canaccord Genuity, Inc. was engaged as the Company’s financial advisor to assist in the review process. Potential strategic
alternatives that may be explored or evaluated as part of this review include continuing to advance the clinical programs as a
stand-alone entity, a sale of the company, a business combination, a merger or reverse merger, and a license or other disposition
of corporate assets of the company. There is no set timetable for this process and there can be no assurance that this process will
result in a transaction. On January 31, 2017, the Company also announced the resignation of Mark W. Schwartz, Ph.D. as President
and Chief Executive Officer and as a member of the board of directors of each of Galena Biopharma, Inc., Apthera, Inc. and Mills
Pharmaceutical, LLC.
Appointed Interim Chief Executive Officer
Stephen F. Ghiglieri was appointed by the Board of Directors as Interim Chief Executive Officer, effective February 21, 2017. Mr.
Ghiglieri will also continue to serve as the Company’s Chief Financial Officer, a position to which he was appointed in November
2016.
Closed a Public Offering of Common Stock and Warrants
On February 12, 2017, the Company closed the previously announced underwritten public offering of common stock and warrants. The
net proceeds to Galena were approximately $15.5 million.
| GALENA BIOPHARMA, INC. |
| |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
(unaudited)
|
| (Amounts in thousands, except share and per
share data) |
| |
| |
Quarter Ended March 31, |
| |
2017 |
|
2016 |
| Operating expenses: |
|
|
|
| Research and development |
$ |
2,362 |
|
|
$ |
5,443 |
|
| General and administrative |
2,726 |
|
|
3,525 |
|
| Total operating expenses |
5,088 |
|
|
8,968 |
|
| Operating loss |
(5,088 |
) |
|
(8,968 |
) |
| Non-operating income (expense): |
|
|
|
| Change in fair value of warrants potentially settleable in cash |
3,892 |
|
|
(3,873 |
) |
| Interest expense, net |
(973 |
) |
|
(91 |
) |
| Change in fair value of the contingent purchase price liability |
(113 |
) |
|
(170 |
) |
| Total non-operating income (expense), net |
2,806 |
|
|
(4,134 |
) |
| Loss from continuing operations |
$ |
(2,282 |
) |
|
$ |
(13,102 |
) |
| Discontinued operations |
|
|
|
| Loss from discontinued operations |
(9,436 |
) |
|
(3,391 |
) |
| Net loss |
$ |
(11,718 |
) |
|
$ |
(16,493 |
) |
| Net loss per common share: |
|
|
|
| Basic and diluted net loss per share, continuing operations |
$ |
(0.09 |
) |
|
$ |
(1.46 |
) |
| Basic and diluted net loss per share, discontinued operations |
$ |
(0.36 |
) |
|
$ |
(0.38 |
) |
| Basic and diluted net loss per share |
$ |
(0.45 |
) |
|
$ |
(1.84 |
) |
| Weighted-average common shares outstanding: basic and diluted |
26,406,356 |
|
|
8,968,616 |
|
| GALENA BIOPHARMA, INC. |
| |
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| (unaudited) |
| (Amounts in thousands) |
| |
| |
March 31, 2017
|
|
December 31, 2016 |
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
27,640 |
|
|
$ |
18,083 |
|
| Restricted cash |
13,590 |
|
|
18,022 |
|
| Prepaid expenses and other current assets |
449 |
|
|
581 |
|
| Current assets of discontinued operations |
367 |
|
|
813 |
|
| Total current assets |
42,046 |
|
|
37,499 |
|
| Equipment and furnishings, net |
173 |
|
|
199 |
|
| In-process research and development |
12,864 |
|
|
12,864 |
|
| GALE-401 rights |
9,255 |
|
|
9,255 |
|
| Goodwill |
5,898 |
|
|
5,898 |
|
| Deposits |
96 |
|
|
96 |
|
| Total assets |
$ |
70,332 |
|
|
$ |
65,811 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable |
$ |
1,163 |
|
|
$ |
840 |
|
| Accrued expense and other current liabilities |
3,189 |
|
|
4,292 |
|
| Litigation settlement payable |
950 |
|
|
950 |
|
| Fair value of warrants potentially settleable in cash |
8,325 |
|
|
1,860 |
|
| Current portion of long-term debt |
12,597 |
|
|
16,397 |
|
| Current liabilities of discontinued operations |
10,045 |
|
|
6,059 |
|
| Total current liabilities |
36,269 |
|
|
30,398 |
|
| Deferred tax liability, non-current |
5,661 |
|
|
5,661 |
|
| Contingent purchase price consideration, net of current portion |
1,208 |
|
|
1,095 |
|
| Total liabilities |
43,138 |
|
|
37,154 |
|
| Stockholders’ equity |
27,194 |
|
|
28,657 |
|
| Total liabilities and stockholders’ equity |
$ |
70,332 |
|
|
$ |
65,811 |
|
About Galena Biopharma
Galena Biopharma, Inc. is a biopharmaceutical company developing hematology and oncology therapeutics that address unmet medical
needs. Galena’s pipeline consists of multiple mid-to-late-stage clinical assets led by its hematology asset, GALE-401, and its
novel cancer immunotherapy programs including NeuVax™ (nelipepimut-S) and GALE-301/GALE-302. For more information, visit www.galenabiopharma.com.
Forward-Looking Statements
This press release contains statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “estimate,”
“may,” “should,” “anticipate,” “will” and similar statements of a future or forward looking nature identify forward-looking
statements for purposes of the federal securities laws and otherwise. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes
in circumstances that are difficult to predict and many of which are outside of our control. There are or will be important factors
that could cause actual results to differ materially from those indicated in these statements. These forward-looking statements
include, but are not limited to, statements about the evaluation of strategic alternatives, the timetable for completing the
evaluation of strategic alternatives, the progress of the development of Galena’s product candidates, patient enrollment in our
clinical trials, the progress and timing of our development activities, Galena’s current and prospective financial condition,
liquidity and access to capital, present or future licensing, collaborative or financing arrangements, expected outcomes with
regulatory agencies, projected market opportunities for product candidates, future expectations, plans and prospects for the final
agreements among the U.S. Attorney’s Office for the District of New Jersey (“USAO NJ”) and the Department of Justice (“DOJ”) and
the Company, the settlement terms among USAO NJ, DOJ and the Company, the settlement of any claims that might be made by state
agencies in the future, the settlement terms with federal agencies such as U.S. Department of Defense, the Office of Personnel
Management, the Office of Inspector General for the U.S. Department of Health and Human Services, and other future events or that
otherwise relate to future periods. These forward-looking statements are subject to a number of risks, uncertainties and
assumptions, including those identified under “Risk Factors” in Galena’s Annual Report on Form 10-K for the year ended December 31,
2016, most recent Quarterly Reports on Form 10-Q, current reports on Form 8-K, and the prospectus supplement filed with the SEC.
Actual results may differ materially from those contemplated by these forward-looking statements. Galena does not undertake to
update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the
date of this press release.
NeuVax is a trademark of Galena Biopharma, Inc.
Source: Galena Biopharma, Inc.
Contact: Remy Bernarda SVP, Investor Relations & Corporate Communications (925) 498-7709 ir@galenabiopharma.com
