Share price of Galena Biopharma Inc. (NASDAQ:GALE) has risen over 120 percent since the start of the year. Two things have been major contributory factors to this surge. First is the launching of Abstral, the company's first commercial product for the treatment of breakthrough cancer pain. Second are the positive results from the NeuVax clinical trials, a drug that's being develop for the treatment of breast cancer. As shown in its type of products, Galena is a growth biopharmaceutical company that's focused on developing drugs for treating various types of cancers.
When talking about cancer, the first type that comes to mind is breast cancer. Statistics show that it's the most diagnosed cancer in the U.S., with an estimated 232,340 new cases and 40,000 deaths in 2013. An Oppenheimer analyst projects that NeuVax could generate up to $5 billion in annual global sales if approved. If NeuVax, on approval, is really able to generate that much, then the company has a bright future ahead. Such sales would improve the company's cash reserve, which it can then use in developing other drugs that the world needs desperately.
At present, Herceptin is the leading treatment for breast cancer, generating about $6 billion in global sales in 2012. NeuVax is being compared with Herceptin, with many people believing that NueVax is just as effective. However, clinical trials indicate that higher treatment success could be attained when both drugs are combined. If that happens, then the potential of NeuVax is even greater as it could lead to a future partnership with Roche (VTX: ROG). Such a partnership will make people trust in NeuVax faster than usual considering that Herceptin is already trusted. In this case, NeuVax could amass global sales that are higher than estimates.
Enough Cash to Push Forward?
I'd say yes. Here is why. First, the company's cash reserve has grown by 56.5 percent since the start of the year. At present, it has a $51.5 million cash reserve. That's not much, but when you consider that it has just about $7 million as of the end of 2010, you'll appreciate the growth of this company.
The second reason I say yes is that the institutional investor community believes in the prospects of this biopharmaceutical company. In recent months, at least six investment firms have upped their holdings in this company. With such a large number of institutional investors interested in the company, it will be easy for Galena raise funds through secondary offerings.