Each year, breast cancer takes around 40,000 lives in the United States. Research shows that every year there are approximately 240,000 new cases of invasive breast cancer and around 58,000 of non-invasive breast cancer. A number of companies are working toward eradication of this horrible ailment and over the years there has been considerable advancement in treatments.
Galena Biopharma (GALE) is one of the companies working toward eradication of cancer. The company is developing a breakthrough cancer vaccine, NeuVax, which has already completed Phase II trials and will be up for approval by 2017. The company is also commercializing the cancer pain drug Abstral in the United States.
NeuVax is a breast cancer vaccine being developed by Galena Biopharma. The drug works by activating the patient's own immune system to attack and destroy recurring cancer cells. Patients who receive remission after standard of care treatment are its primary target market. NeuVax targets HER2/neu protein that is associated with tumors in colon, breast, ovarian, pancreatic and bladder cancers.
NeuVax is currently under 2 different clinical trials. The drug is in a 700 patient Phase III trial for breast cancer. The induction of candidates, in this trial, will be complete by the end of 2013. The company expects this trial to end by 2016 and to apply for approval in 2017. The combination of NeuVax and Roche's (RHHBY.OB) Herceptin is also in a 300 patient Phase II trial for breast cancer. Herceptin is a proven treatment for HER2 blocking and is effective in treating 20% breast cancers which are dependent on HER2 receptors for survival. Roche's Herceptin patents will expire in 2014, and the company is looking for more innovative formulations with lengthier protection.
NeuVax has already proven itself in Phase II trials of 187 subjects. All patients who received a "full course" (one dose per six months and one dose every six months) witnessed 0% recurrence of breast cancer as compared to 23% recurrence in the control group.
The trial results were impressive for subjects who received the full dose of NeuVax but much less impressive statistically. There was a 50% reduction in recurrence and a 78.5% reduction in the node-positive arm. This is because approximately only 1 in every 3 subjects was optimally dosed during the Phase II trial.
NeuVax critics use these stats to justify the bearish arguments on Galena. However, during the Phase III trials, all patients will be optimally dosed. This optimal dosage will lead to statistically superior Phase III trial results and set the case for NeuVax's FDA approval.
Galena Biopharma has recently acquired the U.S. commercialization rights for Abstral from Orexo AB. The drug received FDA approval in 2011 for the treatment of breakthrough cancer pain (BTcP). This pain affects approximately 40%-80% of all cancer patients and thus presents a vast target market. Abstral is already the market leader TRIF (Transmucosal immediate-release fentanyl) in Europe and generates annual sales of approximately $54 million. The U.S. TRIF market is above $400 million and Abstral can achieve a peak sales potential between $60-$100 million (based on market penetration between 15% and 25%). The drug will have a competitive advantage because it is the only approved drug for opioid tolerant patients.
In the last 3 months, Galena shares have come down 21% due to heavy selling by institutional investors. After increasing their holdings by 18% previously, in the recent quarter institutions have sold almost 1.1 million shares of Galena. This is merely short-term profit taking after the company hit its 52-week high of $2.8 in May. Therefore, the institutional selling and 28% decline in valuations is not due to any long term issues but only short-term profit taking.
Abstral alone has enough sales promise to justify the $150-$160 million valuations of Galena. NeuVax will just be a bonus to the Galena Story. The company is planning to apply for NeuVax's FDA approval by 2017 and Phase II trial results indicate a strong possibility of a positive outcome.