Why Galena Biopharma Inc. Shares Surged Higher

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 (NASDAQ: GALE  ) , a biopharmaceutical company primarily focused on developing therapies to treat cancer and cancer-associated pain, surged as much as 10% after reporting better-than-expected earnings results after the closing bell last night.

So what: For the quarter, Galena delivered $2.2 million in sales of breakthrough cancer pain medication Abstral, which was up from $1.3 million in the sequential fourth-quarter. Galena recorded no revenue in the year-ago quarter. Operating expenses, given Galena's push into later stage trials, jumped by 33% on the R&D front and nearly 350% from the perspective of selling, general and administrative expenses. However, a favorable change in warrant value resulted in a profit of $9.8 million compared to a loss of $5 million last year. The end result was a net loss of $2.5 million, or $0.02 per share, from $9.3 million, or $0.11 per share in the prior year period. Comparatively speaking, Wall Street was looking for a loss of $0.10 per share. Galena also issued Abstral revenue guidance of $11 million-$15 million for the year.

Now what: Overall this was a fairly positive report for Galena, although investors should take its earnings beat on the back of warrant revaluing with a grain of salt. Its phase 3 PRESENT trial for immunotherapy vaccine NeuVax is on pace to be fully enrolled by year's end, and Abstral is helping to partially counteract the company's negative cash flow. Make no mistake about it; Galena's future looks as if it'll live and die by the hands of NeuVax, so that's what shareholders should really be watching. However, today is all about higher Abstral sales and a favorable move in the valuation of its warrants.

Galena shares may have soared today, but they'll likely be hard-pressed to keep pace with this top stock over the long run
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Comments from our Foolish Readers

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  • Report this Comment On May 07, 2014, at 4:16 PM, gene4346 wrote:

    Pretty worthless article with a subtle (negative) bias tone to it. Why didn't you just come right out and say that you don't like GALE?

  • Report this Comment On May 07, 2014, at 5:53 PM, smurfffool wrote:

    He posted the article because he had to write something to shill for TMF's "Top Stocks of 2014"!!!

  • Report this Comment On May 09, 2014, at 10:45 AM, jeflieb wrote:

    lives could be saved with quick approval of nevax

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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