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Abstral Was A Homerun For Galena, But Get Ready For Their Next At Bat

|Includes: SELLAS Life Sciences Group, Inc. (SLS)

On March 18th 2013, Galena Biopharma, Inc. (GALE) announced it had acquired the rights for the marketing of Abstral® (fentanyl) Sublingual Tablets for sale and distribution in the United States. For investors, this meant the company would have a revenue stream to support the research and development the company conducts.

Since then, the company conducted a stock offering to help fund the initial marketing of the drug, and then on October 3rd, launched the sales of the drug. During the 3rd Quarter report, the company reported net revenue of $1.2 million for the three months ended September 30, 2013, the first quarter of Abstral® (fentanyl) sublingual tablet sales. Cost of revenue and gross profit for the three months ended September 30, 2013 were $0.3 and $0.9 million, respectively.

Abstral

Abstral is a sublingual fast acting breakthrough cancer pain (BTcP) reliever designed to be used in conjunction with normal pain therapy consisting of one of the following:

  • Oral morphine ≥60 mg daily
  • Transdermal fentanyl ≥25 mcg per hour
  • Oral oxycodone ≥30 mg daily
  • Oral hydromorphone ≥8 mg daily
  • Oral oxymorphone ≥25 mg daily
  • Equianalgesic dose of another opioid medication daily for a week or longer

BTcP can come on quickly and last about 30 minutes, severely impacting quality of life and daily activities. In order to help patients with the management of the pain, the company has developed different titrations of the medications.

Investors

As part of the launch, the company developed a website to assist doctors and patients with the marketing of the drug.

In 2012, Abstral had sales of $54 million in Europe. The current market for fentanyl products in the US is $400 million. There have been numerous articles over the past six months highlighting this, and possibility of the company catching 10-15% of the market share, representing about $60 million. In the first three months of the launch of Abstral, the company did almost $1 million in revenue off $1.2 million in sales.

The 10-15% might be a conservative estimate based off surveys of patients.

In the study, patients preferred sublingual tablets over buccal tablets and nasal spray because of easy to access and administer, it dissolves rapidly, and there was no bad taste. With an overall preference rate of around 85%, the biggest challenge the company will have is the introduction of the medication into the repertoire of Doctors.

If the company can truly generate more than the 15% estimated market share, the next challenge will be scaling production to meet the demand.

Coming up to bat again…

The success of Abstral wld be enough for the company to be hugely successful, but there are still more catalysts and products in development. The following picture has been used in many articles, but it helps to outline the coming products:

While NeuVax has been steadily progressing, in all its forms, the recent results of the Phase 1 portion of the trial for the Folate Binding Protein vaccine helped to send the stock higher. Folate Binding Protein-E39 (NYSE:FBP) is a targeted vaccine aimed at preventing the recurrence of ovarian, endometrial, and breast cancers.

Conclusion

The acquisition of Abstral was a homerun for GALE, in terms of seeing the need for the drug and marketing it. It will provide needed revenue for a company that has a strong pipeline of future medications, and help to prevent future dilution to pay for research and development costs. As NeuVax comes on line, expect to see additional institutional investors coming on board, as well as potential partnerships with larger pharmaceutical companies.

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.