According to an article in The Lancet Oncology, dated May 31, 2012, cancer incidences are predicted to rise 75% by 2030. Mark Ahn, President and CEO of Galena Biopharma, Inc (GALE) stated at the June 20, 2012 Marcum Microcap Conference, "Sadly, as early as you diagnose (breast cancer) and as aggressively as you treat (breast cancer), one in four (patients) will have a recurrence of that same breast cancer. It might happen locally or (as a) visceral disease in other organs like liver cancer, but it will be basically the same breast cancer tumor that will re-grow in 3 years time." The statement is alarming, but there is hope on the horizon. Vaccines, drugs and new forms of treatments are being developed, tested, and manufactured from large healthcare conglomerates like Roche (RHHBY.PK) to small micro companies such as Galena Biopharma, Inc. or Syntax Pharmaceuticals (SNTA). With these new drugs and positive clinical results, it might be a good time for the investor to take a closer look at some of these companies.
Genentech, a division of the Swiss healthcare giant Roche Group, announced on June 8th that the U.S. Food and drug Administration (FDA) approved Perjeta TM (pertuzumab), used in combination with Herceptin for treatment for women with HER2-positive metastatic breast cancer who have not received any prior anti-HER2 therapy or chemotherapy. The Phase III study showed that patients treated with Perjeta™, along with Herceptin and chemotherapy, lived a median 6.1 months longer than the patients receiving a placebo with Herceptin and chemotherapy. Perjeta works differently than Herceptin in that it is a personalized medicine that targets the HER2 receptor and works in a way that is complementary to Herceptin, as the two medicines target different regions on the HER2 receptor. Roche, the world's largest biotech company, has had a few setbacks with the FDA revoking the breast cancer indication for it blockbuster drug, Avastin, back in November 2011 due to its lack of benefit in delaying the growth of tumors and that there was no evidence that the drug was helping women with breast cancer live longer or have an increase in quality of life. The stock has since bounced and is trading at about $43, just shy of its 52 week high. Herceptin already generates $6 billion in yearly revenue for Roche, treating positive cancer patients, and considering that HER2-positive patents accounts for 25% of all breast cancer patients, there is plenty of revenue growth with Herceptin alone. With a solid dividend of $1.556 per share, it appears over the last year that the company, though having some peaks and valleys, has traded in the low to mid forties, to be a safe hold or buy investment.
Galena Biopharma, Inc., a microcap biopharmaceutical company based in Portland OR, has been making waves lately with two promising targeted peptide vaccines in its pipeline, NeuVax, a breast cancer vaccine that targets both HER2-positive and HER2-negative cancer patients, and FBP, an ovarian and endometrial cancer vaccine. Though FBP has shown great promise and is starting Phase 1/2 trials, it is NeuVax that should be of higher interest to investors. Galena's vaccine, NeuVax, a synthetic E75 peptide vaccine candidate designed to prevent recurrence of breast cancer (that they acquired from their purchase of Apthera Inc. in April 2011), is showing great promise. Why should an investor take note? One, Herceptin is designed to treat only HER2-positive cancers with high HER2 expressions, which accounts for 25% of all breast cancers, while NeuVax is addressing not only that 25%, but the other 75% that have low and medium HER2 expressions that Herceptin doesn't treat. Secondly, Galena is also in a synergistic clinical collaboration with Genentech, testing the NeuVax vaccine along with Herceptin with positive results.
NeuVax's two phase II trials, with 187 node-positive patients and node-negative patients, at 24 months landmark analysis, have found 94.3% of the NeuVax patients were disease-free versus 86.8% in the controlled group. Even more encouraging at the 60 months analysis, 89.7% of the NeuVax patients remained disease free versus 79.6% in the controlled group. Low and medium expression HER2 results were even more encouraging with a 0% recurrence rate at 36 months. The 36 month point is important because it is the end point for their Phase III clinical trial. That is excellent news for both cancer patients and investors. The FDA required a reduction of recurrence rate at a minimum of 30% benefit from the placebo, NeuVax clearly exceeded those numbers. New trials for NeuVax have already started in the first quarter of this year with 700 node-positive patients being treated at 38 different hospitals, with a total of 100 sites in 12 different countries by the end of summer.
All of that is rather encouraging, but what really should get attention was a single sentence Dr. Ahn made at the end of his Marcum Microcap Conference webcast, and that was that they were looking for a partner. The reason that should get investors' attention is that Galena is a micro company swimming in the pool with large cap corporations such as Roche, Ely Lilly (LLY), and Merck (MRK), along with numerous small biopharmaceutical companies. Galena, being a small company, does not appear to be in the position to mass market their vaccine. They would need to either farm out the manufacturing or, as Dr. Ahn alluded to, "partner up with another company." Given the positive results so far with the NeuVax vaccine, it would seem that it would only be a matter of time before one of the bigger companies which has the ability, both financially and physically, to manufacture NeuVax, might make a play for Galena. Granted, the odds of NeuVax taking up the rest of the 75% that Herceptin was not effective in treating is a dream, but if NeuVax could garner a piece of that pie, there would undoubtedly be a financial boon for the company's revenue and the investors.
Galena Biopharma, Inc. is up significantly from its 52 week low of $0.36 cents, it is also well off its 52 week high of $3.54. And though the company reports that there is no revenue, one must remember that this is a company in its developmental stage. At the time of this writing, they have $25 million in cash, and a burn rate of about $4 million a quarter, with the bulk of that money going to the Phase III clinical trial. With the positive phase II results of NeuVax behind them, and their developing relationship with Genentech possibly raising eyebrows as the trials progress, Galena Biopharma stock appears to be a good bet to continue to rise in the near future.
Taking a different approach to the treatment of cancer, Synta Pharmaceuticals, another small biopharmaceutical company, is developing molecular drugs that are designed to extend and enhance the lives of cancer patients, along with treating chronic inflammatory diseases. Earlier last month, the company announced positive results of its Phase I clinical study on its leading drug, Ganetespib, a potent second-generation Hsp90 inhibitor, at the annual meeting of the American Society for Clinical Oncology. According to Dr. Vojo Vukovic, Chief Medical Officer for Synta, "Existing cancer therapies are generally either non-specific or target one particular signaling protein involved in one or a small number of cancer signaling pathways. Chemotherapies are an example of the former while kinase inhibitors, such as Gleevec®, and monoclonal antibodies such as Herceptin®, are examples of the latter. Ganetespib, on the other hand, targets one chaperone protein, Hsp90, which is required for proper functioning of multiple oncoproteins. Consequently, Ganetespib inhibits many different tumor growth and signaling pathways simultaneously. This characteristic is best demonstrated by the clinical results observed in a diverse range of tumor types. Ganetespib has demonstrated single-agent activity in patients with mutated ALK, KRAS, and BRAF non-small cell lung cancer (NSCLC) as well as HER2+ and triple-negative breast cancer (TNBC). Ganetespib is the first Hsp90 inhibitor to demonstrate this broad range of activity with a favorable safety profile."
Synta's stock seems to have bounced back nicely the past few trading sessions, jumping over 9.5% to $6.32 on Tuesday July 3rd, after falling 30% on June 28th following the announcement of encouraging yet mixed results from its GALAXY Phase II study on advanced non-small cell lung cancer using both Ganetespib and Docetaxel. The reason for the current rise in their stock, 32% as of the close on July 3rd, seems to be driven by company insiders who have gobbled up 1,063,000 shares, which equates to $5,788,155, and is now $2.18 from its 52 week high.
RHHBY, GALE and SNTA are three diverse companies with one ultimate goal in mind, profitability. The management and employees know that to maximize their company's and their own profits they must develop products through clinicals that will meet the customers' (patients') unmet needs. The cancer drug sector is a very visible and profitable sector to develop a drug in, and each of these companies has had varied levels of success in doing such. These levels of success are reflected, at least in part, by their market capitalizations. RHHBY is a large and profitable company with products being marketed already with many more in their pipeline. SNTA has a diverse pipeline with many candidates in phase II trials and a phase III trial set to initiate in 2H 2012 for non-small cell lung cancer. GALE has the smallest market cap of the three at about $100 million and, like SNTA, has no marketed product. However, the upside here could become more obvious as the phase III NeuVax trial progresses and interim data become available. Although a little while away from regulatory approval, the huge market it is targeting in breast cancer is simply too large for Big Pharma and individual investors to ignore, and both groups will be watching this company closely. Any early indication of success in its phase III trial could be a huge share price mover for this maturing biotech company.
Disclosure: I am long GALE.