Galena Biopharma, Inc. (NASDAQ:GALE), a biopharmaceutical company
committed to the development and commercialization of targeted
oncology therapeutics that address major unmet medical needs, today
reported its financial results for the quarter and year ended
December 31, 2015.
“2016 is poised to be a critical year for Galena as we look
forward to reaching two significant milestones in our NeuVax Phase
3, PRESENT clinical trial targeting the prevention of breast cancer
recurrence,” said Mark W. Schwartz, Ph.D., President and CEO.
“As anticipated, we expect to reach the 70th event in the PRESENT
trial, defined as a recurrence of the primary cancer, occurrence of
another cancer, or death from any cause, within the next few
weeks. Once we reach this event, we will prepare the data for
review by our Independent Data Monitoring Committee (IDMC), and the
IDMC will then conduct an interim safety and futility
analysis. We expect this analysis to be completed and
announced at the end of the second quarter.”
Dr. Schwartz continued, “NeuVax is our most advanced program and
represents the greatest commercial potential for Galena. In
addition to the PRESENT trial, we are excited to have several
additional partner and investigator-sponsored trials with NeuVax in
both breast and gastric cancers. This year, we expect
preliminary safety data from our NeuVax breast cancer combination
trial with trastuzumab, and we look forward to initiating Phase 2
studies with our partners in women diagnosed with Ductal Carcinoma
in Situ (DCIS) and in patients with gastric cancer. Our goal
for 2016 is to continue the development of the NeuVax franchise by
investigating a host of cancer indications, patient populations,
and treatment regimens both as a stand-alone therapy and in
combination with other technologies where NeuVax can be beneficial
to cancer patients.”
Dr. Schwartz added, “On the corporate side, I have implemented
several major strategic initiatives since I took over as President
and CEO. Over the last eighteen months, we have taken
positive steps to restructure the Company by divesting our
commercial business and sharpening our focus on NeuVax and our
additional clinical development programs. In December, we also
announced the proposed settlement of both the derivative and
securities class action litigation and expect those settlements to
be approved by the end of the second quarter of this year.
Furthermore, led by our Nominating and Governance Committee, we
have begun to expand our Board of Directors with the replacement of
one retiring director, and the planned addition of another new
director. On the financial side, we successfully raised capital at
the beginning of the year to strengthen our balance sheet, and we
expect our 2016 quarterly cash burn to be between $9 to $11 million
dollars based on our current programs with several non-recurring
expenses increasing that burn in the first half of the year, as
detailed below. As a result, and given the volatile and
unpredictable financial markets, we believe a conservative approach
to our clinical spend and maintaining our primary focus on NeuVax,
is warranted. Therefore, and in concert with this
mission-oriented approach, we are reviewing our non-NeuVax programs
and calibrating those programs’ new trial initiation dates in order
to optimize the allocation of our resources.”
Dr. Schwartz concluded, “Looking ahead, we are taking the
necessary steps to move Galena forward with advancing clinical
programs and a strong management team who is focused on two main
goals: providing therapeutic modalities to prevent or significantly
delay cancer recurrence, and maximizing value for our dedicated
shareholders.”
Galena will host a webcast and conference call today at 2:00
p.m. P.T./5:00 p.m. E.T. to discuss its financial and business
results. The live webcast will include slides that can be accessed
on the Company's website under the Investors section/Events and
Presentations: http://investors.galenabiopharma.com/events.cfm. The
conference call can be accessed by dialing (844) 825-4413 toll-free
in the U.S., or (973) 638-3403 for participants outside the U.S.
The Conference ID number is: 50939696. The archived webcast replay
will be available on the Company's website for 90 days.
FINANCIAL HIGHLIGHTS
Continuing Operations
Operating loss from Galena’s ongoing development programs,
classified as continuing operations, for the fourth quarter of 2015
was $7.6 million, including $0.6 million in stock-based
compensation, compared to an operating loss from continuing
operations of $9.7 million, including $0.8 million in stock-based
compensation for the same period in 2014. Operating loss from
continuing operations in 2015 was $34.2 million, including $1.9
million in stock-based compensation, compared to an operating loss
from continuing operations of $43.9 million, including $5.4 million
in stock-based compensation in 2014. The decrease in net
operating loss in the quarter and year ended December 31, 2015
compared to the quarter and year ended December 31, 2014 was
primarily the result of the completion of enrollment in the
Company’s Phase 3 PRESENT trial for NeuVax, the decrease in
stock-based compensation, and a reduction in non-insurance
reimbursed legal expenses associated with ongoing litigation and
regulatory proceedings.
Non-operating income or expenses include charges related to
securities and derivative litigation settlement expense, non-cash
changes in the fair value estimates of the Company’s warrant
liabilities, non-cash change in the contingent purchase price
liability, and interest expense. Because the settlement of
the securities and derivative litigation was reached in the fourth
quarter of 2015, the settlement amount and related costs were
expensed in the fourth quarter of 2015. Non-operating expense for
the fourth quarter and year ended December 31, 2015 was primarily
attributable to the $5.3 million expense incurred for the
securities and derivative settlement. Of the $5.3 million
charge, $3.3 million is accrued as of year-end, which Galena
expects to pay out upon final court approval of the settlement in
the second quarter of 2016 comprising $2.3 million in cash and $1
million in Galena common stock. This expense was partially
offset by a non-cash gain of $2.1 million during the fourth quarter
of 2015 and $1.2 million during the year ended 2015, related to the
change in the value of the Company’s warrant liability during both
periods. The fourth quarter and year ended 2014 non-operating
income was primarily attributable to the non-cash gains of $3.4
million during the fourth quarter of 2014 and $16.6 million during
the year ended 2014, respectively, related to the change in the
value of the warrant liability.
Loss from continuing operations for the fourth quarter of 2015
was $10.8 million, including a $2.1 million non-cash gain on
warrant liability, or $0.07 per basic and diluted share. Loss
from continuing operations for the fourth quarter of 2014 was $6.3
million, including a $3.4 million non-cash gain on warrant
liability, or $0.05 per basic and diluted share. Loss from
continuing operations in 2015 was $39.0 million, including $5.3
million for the securities and litigation settlement and a $1.2
million non-cash gain on warrant liability, or $0.25 per basic and
diluted share. Loss from continuing operations in 2014 was $28.3
million, including a $16.6 million non-cash gain on warrant
liability, or $0.24 per basic and diluted share.
Non-recurring Charges
During the second half of 2015, Galena had several one-time,
non-recurring charges that materially affected its earnings per
share for the fourth quarter and full year 2015. These
one-time charges were the result of the divestiture of the
commercial operations, which was classified as discontinued
operations beginning in the third quarter of 2015, and the
securities and derivate litigation settlement expense in the fourth
quarter of 2015.
|
Quarter Ended Dec 31, 2015 |
|
Year ended 2015 |
Non-recurring charges
included in loss from discontinued operations: |
|
|
|
Impairment charge form
classification as held for sale (non-cash) |
$ |
— |
|
|
$ |
8,071 |
|
Loss on sale of commercial business
assets (non-cash) |
$ |
4,549 |
|
|
$ |
4,549 |
|
Severance and exit costs |
$ |
1,349 |
|
|
$ |
1,349 |
|
|
|
|
|
Non-recurring charges
included in loss from continuing operations: |
|
|
|
Litigation settlement |
$ |
5,282 |
|
|
$ |
5,282 |
|
Discontinued Operations
Loss from discontinued operations for the fourth quarter of 2015
was $8.9 million, or $0.05 per basic and diluted share, compared to
$1.7 million, or $0.01 per basic and diluted share, for the same
period of 2014. Of note, the Company has retrospectively recast its
previously issued 2014 annual financial statements to present the
commercial business as discontinued operations. The loss from
discontinued operations for the fourth quarter of 2015 includes a
non-cash charge of $4.5 million on the loss on sale of the
commercial business assets and $1.3 million of severance and exit
costs. Loss from discontinued operations in 2015 was $24.9 million,
or $0.16 per basic and diluted share, compared to $8.3 million, or
$0.07 per basic and diluted share, for the same period of 2014.
Loss from discontinued operations in 2015 also includes an $8.1
million non-cash impairment charge from classification of assets
held for sale in addition to the loss on sale of commercial
business assets and severance and exit costs described above.
Cash and Cash Equivalents
As of December 31, 2015, Galena had cash and cash equivalents of
$29.7 million, compared with $23.7 million as of December 31,
2014. The $6.1 million increase in cash through the fourth
quarter of 2015 represents $47.4 raised from issuance of common
stock and $11.3 net proceeds from the sale of commercial assets,
partially offset by $38.8 million used in continuing operating
activities, $9.4 million used in discontinued operating activities,
and $3.9 million in debt service payments.
|
For the Year Ended December 31, |
|
2015 |
|
2014 |
Cash flows from
continuing operations: |
|
|
|
Cash flows used in continuing
operating activities |
$ |
(38,802 |
) |
|
$ |
(37,037 |
) |
Cash flows used in continuing
investing activities |
(354 |
) |
|
(2,472 |
) |
Cash flows provided by continuing
financing activities |
43,845 |
|
|
24,260 |
|
Total cash flows
provided by (used in) continuing operating activities |
4,689 |
|
|
(15,249 |
) |
|
|
|
|
Cash flows from
discontinued operations: |
|
|
|
Cash flows used in discontinued
operating activities |
(9,358 |
) |
|
(5,832 |
) |
Cash flows used in discontinued
investing activities |
10,749 |
|
|
|
(3,056 |
) |
Total cash flows
provided by (used in) discontinued operating activities |
1,391 |
|
|
(8,888 |
) |
|
|
|
|
Total cash flows: |
|
|
|
Cash flows used in operating
activities |
(48,160 |
) |
|
(42,869 |
) |
Cash flows used in investing
activities |
10,395 |
|
|
(5,528 |
) |
Cash flows provided by financing
activities |
43,845 |
|
|
24,260 |
|
Total increase
(decrease) in cash and cash equivalents |
6,080 |
|
|
(24,137 |
) |
Beginning cash |
$ |
23,650 |
|
|
$ |
47,787 |
|
Ending cash |
$ |
29,730 |
|
|
$ |
23,650 |
|
Net Loss and Net Loss Per Share
Net loss for the fourth quarter of 2015 was $19.7 million, or
$0.12 per basic and diluted share, compared to $8.0 million, or
$0.06 per basic and diluted share, for the same period of 2014. Net
loss in 2015 was $63.9 million, or $0.41 per basic and diluted
share, compared to $36.6 million, or $0.31 per basic and diluted
share, for the same period of 2014.
FOURTH QUARTER AND RECENT HIGHLIGHTS
Clinical Development Highlights
Received a Notice of Allowance of a
U.S. Patent for NeuVax™ (nelipepimut-S).
Galena announced the United States Patent Office issued a Notice of
Allowance for an additional U.S. patent application covering
multiple uses of NeuVax™ (nelipepimut-S): inducing and
maintaining an immune response to HER2 expressing tumor cells in
patients in clinical remission with a tumor having a fluorescence
in situ hybridization (FISH) rating of less than about 2.0 (FISH
<2.0); inducing and sustaining a cytotoxic T-lymphocyte (CTL)
response to HER2 in patients in clinical remission from a tumor
with a FISH rating of less than about 2.0 (FISH < 2.0); reducing
risk of cancer recurrence in patients in clinical remission from a
tumor with a FISH rating of less than about 2.0 (FISH < 2.0);
and preventing bone only recurrence of a HER2 expressing
cancer. This patent will expand both the protection and the
potential population of cancer patients NeuVax may address.
Once issued, the patent will expire in 2028, not including any
patent term extensions.
Presented Observational Study Data in Gastric Cancer
Patients at the American Society of Clinical Oncology (ASCO) 2016
Gastrointestinal Cancers Symposium. The Company presented
data from an observational study in gastric cancer patients at the
ASCO 2016 Gastrointestinal Cancers Symposium. The study was
conducted by Galena’s partner, Dr. Reddy’s Laboratories Ltd, who
will conduct a Phase 2 clinical trial of NeuVax in gastric
cancer patients in India. The poster, entitled, “An observational
study evaluating the expression of HER2 (1+, 2+, and 3+) with HLA
A2+/A3+ in gastric adenocarcinoma patients,” showed that
approximately 25% of the patients met the projected clinical
protocol population of all levels of expression of HER2 and HLA A2+
and/or A3+ as defined for the planned NeuVax Phase 2 clinical
trial. Results indicate an acceptable potential for
enrollment rate, given the high incidence of gastric cancer in this
population, and will inform the screen failure rate in the planned
Phase 2 clinical study.
Presented GALE-302 Preliminary Immunological Data
Optimizing GALE-301 at the Society for Immunotherapy of Cancer
(SITC) 30th Anniversary Annual Meeting. The poster,
entitled, "Preliminary report of a clinical trial supporting the
sequential use of an attenuated E39 peptide (E39’) to optimize the
immunologic response to the FBP (E39+GM-CSF) vaccine,” compared
three primary vaccine series (PVS) sequences of GALE-301 (E39) and
GALE-302 (E39’) in ovarian and breast cancer patients to optimize
the ex vivo immune responses, local reactions (LR), and delayed
type hypersensitivity (DTH) reactions. The data demonstrated
that the in vivo immune response is enhanced with the use of the
attenuated E39’ (GALE-302) after E39 (GALE-301). The optimal
vaccination sequence utilizing three inoculations of GALE-301
followed by three inoculations of GALE-302 produced the most
prominent and statistically significant LR and DTH responses.
Announced a collaboration with the National Cancer
Institute (NCI) to initiate a new, Phase 2 Clinical Trial With
NeuVax in Ductal Carcinoma in Situ (DCIS) Patients.
The trial will be entitled, “VADIS: Phase 2 trial of the
Nelipepimut-S Peptide VAccine in Women with
DCIS of the Breast,” and The
University of Texas M.D. Anderson Cancer Center (MDACC) Phase I and
II Chemoprevention Consortium is the lead for this multi-center
trial. The Consortium is funded through the Division of
Cancer Prevention at the NCI, which will provide financial and
administrative support for the trial. Galena will provide NeuVax,
as well as additional financial and administrative support.
Corporate Highlights
Announced Proposed Settlement of Derivative and
Securities Class Action Lawsuits. On February 4,
2016, the United States District Court for the District of Oregon
(the "Court") issued an order preliminarily approving the proposed
settlement by and among the Company, the Court-appointed co-lead
plaintiffs, and all named defendants in the shareholder derivative
action entitled In Re Galena Biopharma, Inc. Derivative Litigation,
Case No. 3:10cv00382SI. A hearing to determine whether the
Court should issue an order of final approval of the settlement has
been scheduled for April 21, 2016. On February 16,
2016, the Court also issued an order preliminarily approving the
proposed settlement by and among the Company and the current and
former officers and directors in the consolidated putative federal
class action, In Re Galena Biopharma, Inc. Securities Litigation,
pending in the United States District Court for the District of
Oregon. A hearing to determine whether the Court should issue an
order of final approval of the Settlement has been scheduled for
June 23, 2016.
Announced Changes to Board of Directors and Management
Team. Galena announced that Steven A. Kriegsman will
be retiring as a director of the Company when his current term
expires the day prior to the June 2016 Annual Meeting of
Stockholders. The Company plans to replace Mr. Kriegsman’s
position on the Board of Directors and add one new director.
The Company also announced the departure of Chief Financial Officer
(CFO), Mr. Ryan Dunlap, due to his inability to relocate to the
Company’s headquarters in California. Galena has instituted a
search for the two new members to its Board of Directors and for a
new CFO.
Galena appointed Bijan Nejadnik, M.D., as its Executive Vice
President and Chief Medical Officer. Dr. Nejadnik is
responsible for managing all of Galena's clinical development
programs. Dr. Nejadnik has more than twenty two years of
academic and industry experience, including twelve years with
pharmaceutical and biotech companies including Jazz
Pharmaceuticals, Johnson & Johnson, and Purdue Pharma. During
his career, Dr. Nejadnik has successfully developed numerous
biologics and small molecules, advancing these agents towards
Biologics License Application (BLA) and New Drug Application (NDA)
submissions.
Closed a Public Offering. On January 12,
2016, Galena closed the previously announced underwritten public
offering of common stock and warrants. The net proceeds to
the Company were approximately $20.1 million.
GALENA
BIOPHARMA, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited) |
(Amounts in
thousands, except share and per share data) |
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
$ |
4,849 |
|
|
$ |
6,211 |
|
|
$ |
23,611 |
|
|
$ |
27,674 |
|
General and administrative |
2,740 |
|
|
3,482 |
|
|
10,609 |
|
|
16,226 |
|
Total operating expenses |
7,589 |
|
|
9,693 |
|
|
34,220 |
|
|
43,900 |
|
Operating loss |
(7,589 |
) |
|
(9,693 |
) |
|
(34,220 |
) |
|
(43,900 |
) |
Non-operating income
(expense): |
|
|
|
|
|
|
|
Litigation settlement |
(5,282 |
) |
|
— |
|
|
(5,282 |
) |
|
— |
|
Change in fair value of warrants
potentially settleable in cash |
2,143 |
|
|
3,382 |
|
|
1,162 |
|
|
16,556 |
|
Interest expense, net |
(153 |
) |
|
(185 |
) |
|
(760 |
) |
|
(1,110 |
) |
Other income |
440 |
|
|
229 |
|
|
509 |
|
|
170 |
|
Total non-operating income
(expense), net |
(2,852 |
) |
|
3,426 |
|
|
(4,371 |
) |
|
15,616 |
|
Loss before income
taxes |
(10,441 |
) |
|
(6,267 |
) |
|
(38,591 |
) |
|
(28,284 |
) |
Income tax expense |
365 |
|
|
— |
|
|
365 |
|
|
— |
|
Loss from continuing
operations |
$ |
(10,806 |
) |
|
$ |
(6,267 |
) |
|
$ |
(38,956 |
) |
|
$ |
(28,284 |
) |
Discontinued
operations |
|
|
|
|
|
|
|
Loss from discontinued
operations |
(8,872 |
) |
|
(1,689 |
) |
|
(24,946 |
) |
|
(8,322 |
) |
Net loss |
$ |
(19,678 |
) |
|
$ |
(7,956 |
) |
|
$ |
(63,902 |
) |
|
$ |
(36,606 |
) |
|
|
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
|
|
|
Basic and diluted net loss per
share, continuing operations |
$ |
(0.07 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.24 |
) |
Basic and diluted net loss per
share, discontinued operations |
$ |
(0.05 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.07 |
) |
Basic net loss per
share |
$ |
(0.12 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.31 |
) |
Weighted-average common
shares outstanding: basic and diluted |
161,905,422 |
|
|
122,917,163 |
|
|
155,264,729 |
|
|
119,388,366 |
|
GALENA
BIOPHARMA, INC. |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Amounts in
thousands) |
|
|
|
|
|
December 31, 2015 |
|
|
December 31,
2014 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
29,730 |
|
|
$ |
23,650 |
|
Restricted cash |
|
401 |
|
|
|
200 |
|
Litigation settlement insurance
recovery |
|
21,700 |
|
|
— |
|
Prepaid expenses and other current
assets |
|
1,398 |
|
|
|
1,237 |
|
Current assets of discontinued
operations |
|
392 |
|
|
|
27,013 |
|
Total current assets |
|
53,621 |
|
|
|
52,100 |
|
Equipment and furnishings,
net |
|
335 |
|
|
|
285 |
|
In-process research and
development |
|
12,864 |
|
|
|
12,864 |
|
GALE-401 rights |
|
9,255 |
|
|
|
9,255 |
|
Goodwill |
|
5,898 |
|
|
|
5,897 |
|
Deposits |
|
171 |
|
|
|
87 |
|
Total assets |
$ |
82,144 |
|
|
$ |
80,488 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,597 |
|
|
$ |
1,886 |
|
Accrued expense and other current
liabilities |
|
5,292 |
|
|
|
8,885 |
|
Litigation settlement payable |
|
25,000 |
|
|
— |
|
Fair value of warrants potentially
settleable in cash |
|
14,518 |
|
|
|
5,383 |
|
Current portion of long-term
debt |
|
4,739 |
|
|
|
3,910 |
|
Current liabilities of discontinued
operations |
|
5,925 |
|
|
|
7,169 |
|
Total current liabilities |
|
57,071 |
|
|
|
27,233 |
|
Deferred tax liability,
non-current |
|
5,418 |
|
|
|
5,053 |
|
Contingent purchase price
consideration, net of current portion |
|
6,142 |
|
|
|
6,651 |
|
Long-term debt, net of
current portion |
— |
|
|
|
4,492 |
|
Total liabilities |
|
68,631 |
|
|
|
43,429 |
|
Stockholders’ equity |
|
13,513 |
|
|
|
37,059 |
|
Total liabilities and
stockholders’ equity |
$ |
82,144 |
|
|
$ |
80,488 |
|
About Galena Biopharma
Galena Biopharma, Inc. is a biopharmaceutical company committed
to the development and commercialization of targeted oncology
therapeutics that address major unmet medical needs. Galena’s
development portfolio is focused primarily on addressing the
rapidly growing patient populations of cancer survivors by
harnessing the power of the immune system to prevent cancer
recurrence. The Company’s pipeline consists of multiple mid- to
late-stage clinical assets, including novel cancer immunotherapy
programs led by NeuVax™ (nelipepimut-S) and GALE-301. NeuVax
is currently in a pivotal, Phase 3 breast cancer clinical trial
with several concurrent Phase 2 trials ongoing both as a single
agent and in combination with other therapies. GALE-301 is in a
Phase 2a clinical trial in ovarian and endometrial cancers and in a
Phase 1b given sequentially with GALE-302. For more
information, visit www.galenabiopharma.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to,
statements about our 2015 revenue from the sale of Abstral®, our
launch of Zuplenz®, the divestiture of the commercial operations
including the two commercial products, the issuance and exclusivity
of patents, and the progress of development of Galena’s product
candidates, including patient enrollment in our clinical trials.
These forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those identified under
“Risk Factors” in Galena’s Annual Report on Form 10-K for the year
ended December 31, 2014 and most recent Quarterly Reports on Form
10-Q filed with the SEC. Actual results may differ materially
from those contemplated by these forward-looking statements. Galena
does not undertake to update any of these forward-looking
statements to reflect a change in its views or events or
circumstances that occur after the date of this press release.
NeuVax is a trademark of Galena Biopharma, Inc.
Contact:
Remy Bernarda
SVP, Investor Relations & Corporate Communications
(925) 498-7709
ir@galenabiopharma.com
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