3 Reasons to Watch Galena Biopharma Inc.'s Next Catalyst

This has already been a busy and eventful year for Galena Biopharma (NASDAQ: GALE  ) . The company has caught the eye of many health-care investors in the three weeks since the Champagne corks popped to welcome in the New Year. Shares have risen from under $5 each on Dec. 31 to their current price of $7 -- more than a 40% gain in just three weeks!

Three significant pieces of news flow seem to have been responsible:

1. Galena announced on Jan. 7 that the first patient had been enrolled in the Phase 2 trial for GALE-301, which is a folate binding protein with potential use in conjunction with an adjuvant to prevent recurrences in high-risk, endometrial and ovarian cancer patients. The market seemed to be positive about this development, as it showed that Galena's drug pipeline is making some advances.

2. On Jan. 13, Galena announced the acquisition of Mills Pharmaceuticals, a biopharmaceutical company that specializes in the development and commercialization of targeted oncology treatments. The main take-home feature of the acquisition is the addition of GALE-401, which is a patented, controlled-release formulation of anagrelide to be used for the treatment of essential thrombocythemia. Total sales from the drug are estimated to be worth up to $200 million per annum.

3. A strategic partnership between Galena and Dr. Reddy's Laboratories was announced on Jan. 14, which is focused on a commercialization partnership on NeuVax in India. The deal means that Galena has licensed commercial rights to Dr. Reddy's for NeuVax in breast and gastric cancers in India, with Galena receiving development and sales milestones as well as double-digit royalties on net sales.

Of course, the progress made with clinical trials is extremely difficult to ascertain. However, the reaction of the share price (up more than 40% in less than three weeks) indicates that market sentiment is strong and that further catalysts could be worth keeping a close eye out for during the rest of 2014.

Indeed, the positive impact of catalysts in other health care stocks has also been witnessed in 2014. An example is the strong support shown to Chelsea Therapeutics International's (NASDAQ: CHTP  ) Northera drug, which received a vote of 16-1 in favor by an FDA advisory committee.

Although the committee is there to do as its name suggests (i.e., to advise the FDA), its recommendations do tend to be followed by the FDA, and that's why shares in Chelsea Therapeutics pushed through $5 on the back of the news.

Similarly, Intercept Pharmaceuticals' (NASDAQ: ICPT  ) share price quadrupled after a clinical trial was halted early when patients taking a liver-disease drug had shown a "highly statistically significant improvement" in measures of the health of their liver versus a placebo.

Such catalysts, although unpredictable, inevitably have a major impact upon the share price of the company in question. Health-care investors may wish to keep an eye out for the next catalyst on Galena's horizon, which could be further developments surrounding the aforementioned GALE-301 Phase 2 trial, in which the first patient was enrolled just a couple of weeks ago.

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  • Report this Comment On January 21, 2014, at 8:23 PM, dotcom55 wrote:

    Next catalyst, in my opinion, will be the exceptional data on Abstral sales

  • Report this Comment On January 21, 2014, at 10:41 PM, joeysuncle wrote:

    Someone explain to me why an agreement with some lab in India is good if the drug hasnt been approved? If the drug is approved the sales wont be a problem, if not the lab in India wont mean anything as they wont sell it. It seems like a meaningless agreement. What am I missing here?

  • Report this Comment On January 22, 2014, at 12:45 PM, JMHEIN wrote:

    joeysuncle - it isn't meaningless for a number of reasons. One, it raises awareness for the Company and their prospective new drug which is hugely important for a small-cap development stage pharma. Second, those agreements need to be in place by the time the drug is approved so they can capture as much market share as quickly as possible once it is approved (assuming it will be). If they didn't have those in place there would be a large gap between when the drug is approved and when they would actually penetrate those markets. That would be like quitting your job before you have something else in place... doesn't work that way (at least it shouldn't). You can also speculate on Galena being a potential acquisition target with all of their commercial partnerships, etc. if you'd like.... the list goes on and on as to why those partnerships are important and positive for the Company.

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