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It is not often that I find a stock that offers as much upside potential as Galena Biopharma, Inc. (NASDAQ:GALE) while at the same time has a very personal meaning for me. As some of you might know, my wife was diagnosed with stage 3 invasive breast cancer back in June of this year. She is almost finished with her chemo treatments and her radical surgery is scheduled for December 16th. After that she will go through 3 months of radiation.

She has some amazing doctors and her prognosis is extremely good and we are confident that she will be fine.

I am not sure if it was a coincidence or not to have begun researching Galena just prior to my wife's diagnosis, but I do believe it has led me to look into this company's product pipeline and to keep close tabs on the development of what I hope becomes a legacy drug, NeuVax.

NeuVax Is Different Than Herceptin

I would like to give everyone a different perspective on a few of the drugs Galena is working on, as it could not only help investors see the potential, but it might also help a wide array of women who have been diagnosed with breast cancer and are fighting this disease right now.

NeuVax, which is now in phase 3 trials has been progressing very well in all categories. The drug is an adjunct therapy for breast cancer patients who have been through all of the therapeutic procedures, including surgery, and are now officially in remission. This drug differs from Herceptin in that it works for patients who have a negative HER 1,2, and 3 results. HER stands for Human Epidermal Receptor. Only 25% of all breast cancer patients, those with HER2 positive test results are eligible for Herceptin, which had revenues of over $5 billion in 2010. NeuVax targets the remaining 50% of patients who achieve remission but have no available HER2 targeted adjuvant treatment options to maintain their disease free status.

NeuVax fills an unmet need, and if the drug is approved by the FDA, thousands upon thousands of women will have another drug therapy to help keep them from having any recurrence of breast cancer aside from post operation radiation and other drug treatments.

I see the market being close to $2 billion just based on the revenues of Herceptin and the percentage of patients who are not eligible for that drug right now. This one drug alone could generate enormous revenues and profits for the company.

Nobody truly knows how high the share price could go. That being said, the inherent risks of a tiny biopharma drug company is well known. Basically anything can happen at any time, to send the stock spiraling downward and even into bankruptcy.

Now Galena Has Success In Another Adjuvant Drug Treatment

One of the many things I have learned over the summer is that genetics play a large role in determining risks for many women to actually get breast cancer. The highly publicized decision by Angelina Jolie was a case in point.

Jolie decided to have a double mastectomy even though she did not have breast cancer. The decision was based on a genetic test that showed that she could have a significantly increased risk of developing breast cancer. The genetic test was the BRCA1 and BRCA2 test.

As noted in the report from the National Cancer Institute, one of the prophylactic procedures when a positive test result is received is to have both breasts surgically removed, as well as the ovaries.

Prophylactic surgery involves removing as much of the "at-risk" tissue as possible. Women may choose to have both breasts removed (bilateral prophylactic mastectomy) to reduce their risk of breast cancer. Surgery to remove a woman's ovaries and fallopian tubes (bilateral prophylactic salpingo-oophorectomy) can help reduce her risk of ovarian cancer. Removing the ovaries also reduces the risk of breast cancer in premenopausal women by eliminating a source of hormones that can fuel the growth of some types of breast cancer.

As of now, there are few drugs that can be used to treat women who have had their ovaries removed due to the diagnosis (or much higher risk) of ovarian cancer. Galena has been working on a drug in which the drug being tested could be used as an adjuvant treatment for ovarian cancer patients.

The connection of the BRCA1 and BRCA2 test, and the new drugs Galena is working on, cannot be overlooked. As more women have this genetic test done, more women will either be diagnosed with ovarian cancer (or breast cancer of course) or will show a significant increase in their chances of developing the disease.

Some women who test positive for BRCA1 and BRCA2 mutations may choose to start screening at younger ages than the general population or have more frequent screening. For example, some experts recommend that women who carry a harmful BRCA1 or BRCA2 mutation undergo clinical breast examinations beginning at age 25 to 35 years (17). And some expert groups recommend that women who carry such a mutation have a mammogram every year, beginning at age 25 to 35 years.

Enhanced screening may increase the chance of detecting breast cancer at an early stage, when it may have a better chance of being treated successfully.

The recent positive phase 1 clinical trial of FBP-E39 has now given hope to thousands of women who have been diagnosed with ovarian cancer (or have taken prophylactic measures based on the BRCA1 and BRCA2 tests), to have an after treatment drug that could reduce or eliminate a recurrence of THAT form of cancer.

From the Galena website:

Ovarian cancer occurs in over 22,000 patients per year in the U.S. and is the most lethal gynecologic cancer. Despite the incidence of ovarian cancer being only approximately 20% that of breast cancer, the number of patients that die from ovarian cancer is nearly 50% that of breast cancer. Due to the lack of specific symptoms, the majority of ovarian cancer patients are diagnosed at later stages of the disease. These patients are routinely surgically debulked to minimal residual disease, and then treated with platinum- and/or taxane-based chemotherapy. While most patients respond to this treatment regime and become clinically free of disease, the majority of these patients will relapse, and once the disease recurs, the treatment options and successes drop dramatically.

Several days ago, Seeking Alpha published this press release, in which GALE announced positive results in the development of FBP-E39.

"New approaches are needed for ovarian and endometrial cancer patients who face a high risk of disease recurrence. The initial results from the Phase 1 trial show that the FBP vaccine may be a potential cancer immunotherapy treatment to prevent recurrence in these high risk patient populations," concluded Dr. Erika J. Schneble, San Antonio Military Medical Center, San Antonio, TX who presented the results at the SITC conference........"We are encouraged by the initial results of our Phase 1 trial with the FBP vaccine, showing that it is well-tolerated and demonstrated promising immune responses in high risk gynecological cancers," said Mark J. Ahn, President and Chief Executive Officer of Galena Biopharma. "As a result, we are moving forward with the Phase 2a component which will be initiated by year end and will include the enrollment of additional patients at the optimal dose as well implementing a booster regimen."

Keep in mind that when patients who are diagnosed with ovarian cancer have their ovaries removed, the recurrence tends to show up in the brain, bone, or liver, and by reducing or eliminating the risk of recurrence, people will have a much greater survival rate over the long term.

ovarian survival ctca 5yr vertical

A five year survival rate of 36% right now could be dramatically increased if this drug succeeds in its goal. So far, it looks pretty promising and time will tell.

The Strong Potential Of Galena

It is my opinion that if this drug continues to show efficacy in the various phases of clinical trial (and NeuVax gets an FDA approval), Galena Biopharma will no longer be a tiny little drug company.

The drug that has just been released to the market, Abstral, a pain breakthrough drug that works well for opiate resistant patients, can potentially give Galena all the money it might need to continue all clinical phases of all the drugs currently in the pipeline. The $400 million market here in the US gives GALE very fertile ground to grow revenues and profits to fund almost everything as of now.

The size of the ovarian cancer market can only be estimated at this point. If there are 22,000 new cases in the US diagnosed each year, perhaps worldwide the number is ten-fold. I do not know, but I do know that if this drug is successful, along with NeuVax, Galena might just be a winner for shareholders at the current share price.

The Bottom Line

These stocks are high risk investments and I would only invest money that I can afford to lose. Of course if my thesis turns out to be correct, we could see even stronger returns.

We have the stock in two of our portfolios; The Young And Restless Portfolio and our new Team Alpha Growth And Income Portfolio.

In more ways than just money, I am hoping that these drugs fulfill their promise.

Disclaimer: The opinions of the author are not recommendations to either buy or sell any security. The author is NOT an expert in the drug industry or in the biotech industry, so please do your own research prior to making any investment decision.

Disclosure: I am long GALE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Galena: Positive Results Continue To Give This Stock Growth Potential