Galena Biopharma, Inc.
Nov 6, 2013

Galena Biopharma Reports Third Quarter 2013 Results

PORTLAND, Ore., Nov. 6, 2013 (GLOBE NEWSWIRE) -- Galena Biopharma (Nasdaq:GALE), a biopharmaceutical company commercializing and developing innovative, targeted oncology treatments that address major unmet medical needs to advance cancer care, today reported its financial results for the three and nine months ended September 30, 2013 and provided a business update.

"Our commercial success to date with Abstral® has been very encouraging and we are excited to report initial revenues ahead of schedule. With our sales force and commercial organization fully deployed, we continue to make significant strides with physicians, payors and patients—and expect continuing strength with the launch," said Mark J. Ahn, Ph.D., President and Chief Executive Officer. "We are also making steady progress in advancing our NeuVax™ and FBP cancer immunotherapy pipeline."

Third Quarter 2013 Financial Highlights

Net revenue was $1.2 million for the three months ended September 30, 2013, the first quarter of Abstral® (fentanyl) sublingual tablet sales, ahead of our official launch and commencement of promotional efforts in the fourth quarter. Cost of revenue and gross profit for the three months ended September 30, 2013 were $0.3 and $0.9 million, respectively.

Operating loss for the three months ended September 30, 2013 was $6.9 million, including $0.5 million in stock-based compensation charges, compared with an operating loss of $5.5 million for the three months ended September 30, 2012, which includes $0.4 million in stock-based compensation charges. For the nine months ended September 30, 2013, operating loss from continuing operations was $21.5 million compared with $15.6 million for the nine months ended September 30, 2012.

Galena Biopharma also incurred income or expense due to non-cash charges related to changes in the fair value estimates of the Company's warrant liabilities and contingent purchase price liability, as well as the realized gain from the sale of marketable securities, which is included in other income and expense. The non-cash expenses related to the changes in values of our warrant and contingent purchase price liabilities for the three months ended September 30, 2013 were $1.8 million versus $0.7 million for the three months ended September 30, 2012. These expenses for the nine months ended September 30, 2013 were $7.7 million versus $13.9 million for the nine months ended September 30, 2012. Other income from the realized gain on the sale of marketable securities was $0.8 million and $1.4 million for the three and nine months ended September 30, 2013, respectively.

Net loss for the three months ended September 30, 2013 was $9.3 million, or $0.11 per basic and diluted share, versus a net loss of $6.3 million, or $0.09 per basic and diluted share, for the three months ended September 30, 2012. Net loss for the nine months ended September 30, 2013 was $28.2 million, or $0.34 per basic and diluted share, versus a net loss (including both continued operations and discontinued operations) of $31.2 million, or $0.52 per basic and diluted share, for the nine months ended September 30, 2012.

As of September 30, 2013, Galena had cash, cash equivalents, marketable securities and net accounts receivable of $55.8 million, compared with $35.6 million as of December 31, 2012. Our marketable securities consisted of approximately 0.8 million shares of common stock in RXi Pharmaceuticals (OTCQX:RXII) with a market value of approximately $2.8 million as of September 30, 2013 and 33.5 million (1.1 million post reverse-stock split) shares of common stock of RXi with a market value of approximately $2.7 million as of December 31, 2012.

On May 8, 2013 Galena completed a debt financing of $15 million to fund the purchase and launch of Abstral, of which $10 million was drawn immediately and $5 million remains available.

Third Quarter and Recent Highlights

About NeuVax™ (nelipepimut-S)

NeuVax™ (nelipepimut-S) is the immunodominant nonapeptide derived from the extracellular domain of the HER2 protein, a well-established target for therapeutic intervention in breast carcinoma. The nelipepimut sequence stimulates specific CD8+ cytotoxic T lymphocytes (CTLs) following binding to HLA-A2/A3 molecules on antigen presenting cells (APC). These activated specific CTLs recognize, neutralize and destroy, through cell lysis, HER2 expressing cancer cells, including occult cancer cells and micrometastatic foci. The nelipepimut immune response can also generate CTLs to other immunogenic peptides through inter- and intra-antigenic epitope spreading. Based on a successful Phase 2 trial, which achieved its primary endpoint of disease-free survival (DFS), the U.S. Food and Drug Administration (FDA) granted NeuVax a Special Protocol Assessment (SPA) for its Phase 3 PRESENT (P revention of Recurrence in Early-Stage, Node-Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment) study. The PRESENT trial is ongoing and additional information on the study can be found at www.neuvax.com. A randomized, multicenter investigator sponsored, 300 patient Phase 2b clinical trial is also enrolling patients to study NeuVax in combination with Herceptin® (trastuzumab; Genentech/Roche).

According to the National Cancer Institute, over 230,000 women in the U.S. are diagnosed with breast cancer annually. Of these women, only about 25% are HER2 positive (IHC 3+). NeuVax targets the approximately 50%-60% of these women who are HER2 low to intermediate (IHC 1+/2+ or FISH < 2.0) and achieve remission with current standard of care, but have no available HER2-targeted adjuvant treatment options to maintain their disease-free status.

About Folate Binding Protein (FBP)

Folate Binding Protein (FBP) is highly over-expressed in breast, ovarian and endometrial cancers and is a well-validated therapeutic target. FBP is the source of immunogenic peptides like E39 that can stimulate cytotoxic T lymphocytes (CTL) to recognize and destroy preclinical FBP-expressing cancer cells. The FBP vaccine consists of the FBP peptide(s) combined with the immune adjuvant, granulocyte macrophage-colony stimulating factor (GM-CSF). Galena's FBP vaccine, E39, is currently in Phase 1/2 trial in two gynecological cancers; ovarian and endometrial adenocarinomas.

About Abstral® (fentanyl) Sublingual Tablets

Abstral® (fentanyl) Sublingual Tablets are an important treatment option for inadequately controlled breakthrough cancer pain which impacts 40%-80% of cancer patients. Abstral is approved by the U.S. Food and Drug Administration, and is a sublingual (under the tongue) fentanyl tablet indicated only for the management of breakthrough pain in patients with cancer, 18 years of age and older, who are already receiving, and who are tolerant to, opioid therapy for their persistent baseline cancer pain. The innovative Abstral formulation delivers the analgesic power and increased bioavailability of micronized fentanyl in a more convenient sublingual tablet which rapidly dissolves under the tongue in seconds, provides rapid relief of breakthrough pain in minutes, and matches the duration of the entire pain episode. See full prescribing information at www.abstral.com.

About Galena Biopharma

Galena Biopharma, Inc. (Nasdaq:GALE) is a Portland, Oregon-based biopharmaceutical company developing and commercializing innovative, targeted oncology treatments that address major unmet medical needs to advance cancer care. For more information, visit www.galenabiopharma.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the progress of the commercialization of Abstral and development of Galena's product candidates, including patient enrollment in our clinical trials, as well as statements about our expectations, plans and prospects. 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, 2012 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 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.

 
Galena Biopharma, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per share data)
 
 Three Months EndedThree Months EndedNine Months EndedNine Months Ended
 September 30, 2013September 30, 2012September 30, 2013September 30, 2012
Net revenue $ 1,170 $ — $ 1,170 $ —
Cost of revenue 301 301
Gross profit 869 869
Operating expenses:        
Research and development expense 3,633 4,169 13,990 10,553
General and administrative expense 4,129 1,359 8,369 5,068
Operating loss 6,893 5,528 21,490 15,621
Other income (expense), net (1,235) (733) (6,749) (13,953)
Income (loss) from continuing operations before income taxes (8,128) (6,261) (28,239) (29,574)
Income tax expense (benefit) 1,159 (62)
Net loss from continuing operations (9,287) (6,261) (28,177) (29,574)
Discontinued operations (1,644)
Net loss $ (9,287) $ (6,261) $ (28,177) $ (31,218)
Net loss per common share:        
Basic and diluted per share, continuing operations $ (0.11) $ (0.09) $ (0.33) $ (0.49)
Basic and diluted loss per share, discontinued operations $ — $ — $ — $ (0.03)
Basic and diluted net loss per share $ (0.11) $ (0.09) $ (0.33) $ (0.52)
Weighted-average common shares outstanding: basic and diluted 87,319,450 67,265,470 84,678,612 60,150,658
 
Galena Biopharma, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
 September 30, 2013  
 (Unaudited)December 31, 2012
ASSETS    
Current assets:    
Cash and cash equivalents $ 51,396 $ 32,807
Restricted cash 100 101
Marketable securities 2,837 2,678
Accounts receivable 1,543
Inventory 425
Prepaid expenses and other current assets 485 535
Total current assets 56,786 36,121
Equipment and furnishings, net 545 29
In-process research and development 12,864 12,864
Abstral rights, net 15,032
Goodwill 5,898 5,898
Deposits 129 74
Total assets $ 91,254 $ 54,986
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 1,890 $ 1,976
Accrued expense and other current liabilities 8,889 2,038
Current maturities of capital lease obligations 6 6
Fair value of warrants potentially settleable in cash 24,267 10,964
Current portion of contingent purchase price consideration 247 935
Current portion of long-term debt 1,215
Total current liabilities 36,514 15,919
Capital lease obligations, net of current maturities 30 51
Deferred tax liability, non-current 5,053 5,053
Contingent purchase price consideration, net of current portion 6,454 6,207
Long-term debt, net of current portion 8,583
Total liabilities 56,634 27,230
Stockholders' equity 34,620 27,756
Total liabilities and stockholders' equity $ 91,254 $ 54,986
CONTACT: Remy Bernarda

         Senior Director, Communications

         +1 (503) 405-8258

         rbernarda@galenabiopharma.com