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On Tuesday afternoon I had the pleasure to discuss a number of investor questions and concerns with the CEO of Galena BioPharma (NASDAQ:GALE) Mark Ahn. The interview consisted of questions derived from Seeking Alpha readers and those created by myself. The goal of this interview was to provide facts over a number of recent opinions regarding the studies, outlook, and the acquisition of the company's lead candidate NeuVax, among other areas of concern.

The transcript of the interview has been edited for length, grammar, clarity, readability and syntax. Initial greeting and closings are not included in the transcript. Some information was provided through email due to an inability to transcribe effectively.

Brian Nichols

Could you please give me a little insight into how NeuVax works with regard to HER2 over-expressed breast cancer cells?

Mark Ahn

HER2/neu is a member of the epidermal growth factor receptor family of transmembrane tyrosine kinases. The HER2/neu gene is amplified and the encoded protein is overexpressed in a variety of malignancies, including up to 30% of breast and ovarian cancers. This overexpression can result in a 100-200-fold increase in concentration of the HER2/neu protein in tumor versus normal tissue. Recognizing this differential expression, Fisk and colleagues proposed that HER2/neu may serve as a TAA since processing of overexpressed HER2/neu protein would theoretically result in an increased peptide supply which could occupy a significant number of MHC molecules in competition with other peptides.

This in turn could activate or reactivate an immune response against a HER2/neu expressing tumor. I an early study investigating this hypothesis, Fisk et al. identiWed common immunogenic epitopes of HER2 that were recognized by CD3+CD4¡CD8+ ovarian-specific CTL lines that were isolated from tumor-associated lymphocytes from HLA-A2+ ovarian cancer patients. All peptides were selected from the HER2/neu sequence based on HLA-A2 anchor motifs.

HLA-A2-presented peptides were chosen because the HLA-A2 allele is expressed in 40-50% of the general population and had been demonstrated to play an important role in tumor antigen presentation from a variety of tumors. The E75 epitope, derived from the protein's extracellular domain, was dominantly recognized by all CTL lines tested. Finding a speciWc peptide derived from the HER2/neu sequence that was recognized by tumor-specific CTLs confirmed this oncogene as a TAA.

Subsequent to the identification of E75, this peptide was studied by other investigators both in vitro and in an in vivo animal model. This additional work confirmed that E75 was capable of inducing a peptide-specific, CTL-mediated immune response (Mittendorf, et al 2008).

Brian Nichols

Why is the focus of the recently initiated PRESENT trial on breast cancer cells with low to moderate levels of expression of HER2 and not the highly expressed?

Mark Ahn

NeuVax has demonstrated preclinical and clinical benefit in all levels of HER2 expression, IHC 1+, 2+, and 3+ both alone and in combination with Herceptin.

Herceptin was approved in adjuvant breast cancer in IHC 3+ patients. Galena is focusing on 1+ and 2+ patients which is a completely unmet medical need, and many studies have shown that HER2 1+ and 2+ patients also have a poor prognosis in terms of recurrence and mortality.

The target patient population is has been carefully targeted in multiple ways to detect the NeuVax clinical signal and demonstrate patient benefit including HLA A2/A3, node positive patients who have a higher recurrence rate, menopausal status, type of surgery, hormonal status.

Brian Nichols

What is wrong with the logic in the following statement "If NeuVax trains T cells to recognize and destroy HER2-expressing breast cancer cells, the vaccine should work best in tumors where HER2 expression is highest."?

Mark Ahn

In a study by Gilcrease entitled, "Even Low-level HER2 Expression May be Associated With Worse Outcome in Node-positive Breast Cancer" noted that:

Although standardized assays are used to help select patients for anti-HER2 therapy, there are no standardized criteria for assessing HER2 as a prognostic marker… These findings support the hypothesis that low-level HER2 expression may have significant clinical implications. Although the assessment of HER2 expression is most important for predicting response to anti-HER2 therapy, detection of low level HER2 expression might also be useful in helping to select a more aggressive treatment regimen for patients ineligible for anti-HER2 [Herceptin] therapy.

Brian Nichols

If you would please comment or briefly describe the Phase II study.

Mark Ahn

The NeuVax Phase 2 trials enrolled 187 patients, including node positive and node negative patients. All patients received standard of care (SoC) therapy and were confirmed to be disease-free prior to enrollment. Following enrollment, eligible patients were administered the NeuVax vaccine once a month for six months, followed by booster shots one every 6 months thereafter. The efficacy endpoint for the trial was disease free survival (NYSE:DFS), the same endpoint in the FDA approved SPA (Special Protocol Assessment) for the Phase 3 PRESENT study.

There is a statistically significant increase in disease free survival at 36 months in the NeuVax treated group vs the control group for the planned Phase 3 patient population (p=0.035). The vaccine treated group showed no recurrences of cancer (0% recurrence rate), while the control group demonstrated a 22% recurrence rate which is consistent with historical norms. The planned Phase 3 patient population as defined in the FDA approved Special Protocol Assessment (NYSE:SPA) includes breast cancer patients who are node positive, have low to intermediate HER2 expression (HER2 1+ and 2+ by IHC), are HLA A2+ & A3+ and who are disease free following standard of care therapy.

Brian Nichols:

Could you give us a little insight into your relationship with Roche (OTCQX:RHHBY) as pertaining to the PRESENT trial? Have you considered other ventures together?

Mark Ahn:

Galena is exploring NeuVax in combination with Herceptin (trastuzumab; Genentech/Roche) in a 300 patient, randomized Phase 2 study starting in 2012. This trial is being co-sponsored by Genentech/Roche and administered by The Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. A previously reported pilot Phase 2 trial investigated early stage breast cancer patients who had completed their standard of care primary treatment, and were not eligible for Herceptin treatment due to having less than 3+ HER2 expression. A total of 62 patients enrolled, and all received trastuzumab. Of the 32 who received trastuzumab alone, 12.5% (4/32) recurred, comparable with reported rates of similarly staged and treated patients.

Brian Nichols:

When do you expect interim data from the PRESENT trial to be released?

Mark Ahn:

The interim analysis, conducted by an independent data safety monitoring board of distinguished oncologists, will review the data at 70 events or recurrences. We estimate that the interim will occur in around 18 months, but the actually data will be event driven. The review will include a futility and safety analysis, and provide a preliminary indication of progress of the trial.

Brian Nichols:

Why was a small subset of patients given the booster dose of NeuVax and not the others?

Mark Ahn:

The first step in any clinical program is to establish safety in Phase 1. The second step was to optimize the dose and schedule, which was determined to be 6 monthly doses which optimized the number of HER-directed cytotoxic t-cells to seek out and destroy tumor cells. The third step was to determine if further boosters would enhance the number of HER-directed cytotoxic t-cells. Each of these steps outlined demonstrated additional clinical benefit to patients and, as such, was included into the Phase 3.

Brian Nichols:

What do you intend to present at ASCO?

Mark Ahn:

Galena will present Ph 2 data at 48 months, as well as the booster data, to further evaluate the long-term durability of NeuVax.

Brian Nichols:

Do you care to comment on Adam Feuerstein's bold prediction of a NeuVax failure in the end?

Mark Ahn:

Everyone is entitled to their opinion and agenda, but just as it's irresponsible to yell "fire" in a crowded theater it's the height irresponsibility to be cavalier about the facts in a clinical trial, particularly for cancer survivors fighting to stay free of disease recurrence.

NeuVax (E75) was discovered at The MD Anderson Cancer Center, one of the largest and most respected oncology centers. Moreover, NeuVax has been awarded millions of dollars in competitive research grants. Galena has completed the Phase 2 presented at ASCO, finalized commercial manufacturing, obtained an amended and US FDA approved SPA reflecting the current standards of care, and initiated a Ph 3 trial. In addition, the company has agreed to a clinical collaboration for a Ph 2 in combination with Herceptin.

While we can never guarantee the outcome of a double-blinded, randomized multicenter trial, many outstanding researchers, physicians, regulators and company employees are working tirelessly to appropriately evaluate the safety and efficacy of NeuVax.

Disclosure: I am long GALE.

Additional disclosure: The transcript is intended for educational purposes only and should not determine any investment decisions. Due diligence is required to determine if GALE fits into your financial goals. The information in this transcript was provided by Mark Ahn and has been edited by Brian Nichols. Parenthesis were added to simplify and for understanding of certain medical terminology and for abbreviations used in the transcript.

Source: Mark Ahn Interview: NeuVax Demonstrated Preclinical And Clinical Benefit In All Levels Of HER2 Expression