Galena Biopharma, Inc. (NASDAQ:GALE), a biopharmaceutical company
developing hematology and oncology therapeutics that address unmet
medical needs, today reported its financial results for the quarter
ended June 30, 2017.
“Last week we made a transformative announcement to
merge with SELLAS Life Sciences Group in what we believe is the
best option for our stockholders,” said Stephen F. Ghiglieri,
Interim Chief Executive Officer and Chief Financial Officer. “We
reached out to hundreds of companies through our financial advisor
during our review of strategic alternatives; and, after
considerable effort and evaluation of alternative options, we chose
SELLAS due to our belief that the combination of our two
development pipelines gives our stockholders the best opportunity
for a potential return on their investment in Galena.”
Mr. Ghiglieri continued, “Our assets are
synergistic with the SELLAS pipeline, and their galinpepimut-S
(GPS) program has unique advantages for a cancer vaccine that we
believe will make a significant impact in the cancer immunotherapy
space. GPS is targeting Wilm’s Tumor 1, or WT1, which is ranked as
a leading antigen by the National Cancer Institute and is present
in over 25 different cancer types, giving GPS a potentially broad
therapeutic opportunity. Unlike NeuVax, GPS is not HLA restrictive
which broadens the eligible patient population; and, it has the
ability to activate both CD4+ and CD8+ T cells to expand the immune
response. And, finally, the ongoing and planned combination trials
with the GPS vaccine and checkpoint inhibitors are part of the next
treatment paradigm in cancer immunotherapy. Once the proposed
merger is approved, GPS will be the lead program moving
forward.”
“Additionally, SELLAS is committed to supporting
the three, ongoing NeuVax™ (nelipepimut-S) investigator sponsored
trials through the end of 2019 and will evaluate the GALE-401 and
GALE-301/GALE-302 programs for possible internal development or
partnering to deliver value from those programs to our stockholders
as well. The combined company has a series of near term milestones
which could be significant value creating opportunities, including
the interim efficacy readout from the NeuVax Phase 2b trial in HER2
1+/2+ patients, data readouts from two of the GPS trials, and
planned trial initiations for GPS in several indications,” added
Mr. Ghiglieri.
Mr. Ghiglieri concluded, “The merger with SELLAS
and the steps involved in completing this merger, including a
reverse split of our stock, are necessary to ensure that the
combined entity continues to be listed on the NASDAQ Capital Market
and has sufficient access to capital to realize the value of the
various clinical programs. I understand this has been a long and
challenging road for many Galena stockholders. Our management and
board undertook a diligent effort to reach this point of combining
with SELLAS, and we believe the participation in the combined
company offers multiple opportunities for value creation in the
coming quarters. We firmly believe that the promise of the SELLAS
assets, combined with its strong leadership team, and a new board
of directors, offer the best opportunity to maximize Galena’s
value.”
FINANCIAL REVIEW
Operating loss from Galena’s development programs
and general and administrative expenses, classified as continuing
operations, during the three months ended June 30, 2017 was
$4.9 million, including $0.2 million in non-cash stock-based
compensation, compared to an operating loss from continuing
operations of $9.3 million, including $0.6 million in non-cash
stock-based compensation for the same period in 2016. Operating
loss for the first half of 2017 was $10.0 million, including $0.4
million in non-cash stock-based compensation, compared to an
operating loss from continuing operations of $18.3 million,
including $1.3 million in non-cash stock-based compensation for the
same period in 2016.
Loss from continuing operations for the second
quarter of 2017 was $7.1 million, or $0.19 per basic and diluted
share, including $2.2 million in non-operating expense. Income from
continuing operations for the second quarter of 2016 was $8.3
million, or $0.91 and $0.90 per basic and diluted share,
respectively, including $17.6 million in non-operating income. Loss
from continuing operations for the first half of 2017 was $9.4
million, or $0.29 per basic and diluted share, including $0.6
million in non-operating income. Loss from continuing operations
for the first half of 2016 was $4.8 million, or $0.13 per basic and
diluted share, including a $13.4 million in non-operating
income.
Loss from discontinued operations from Galena's
former commercial business for the second quarter of 2017 was $1.3
million, or $0.03 per basic and diluted share, compared to $2.9
million, or $0.32 per basic and diluted share, for the same period
of 2016. Loss from discontinued operations for the first half of
2017 was $10.7 million, or $0.34 per basic and diluted share,
compared to $6.3 million, or $0.17 per basic and diluted share, for
the same period of 2016. Loss from discontinued operations during
the first half of 2017 includes an accrual for a one-time $7.5
million civil payment settlement, which was recognized in the first
quarter of 2017 in current liabilities of discontinued operations,
related to the oral agreement in principle with the U.S. Attorney’s
Office for the District of New Jersey (USAO NJ) and the Department
of Justice (DOJ). The final terms and details of this settlement
are subject to change pending the completion and execution of a
definitive settlement agreement among Galena and the USAO NJ and
DOJ. The agreement is anticipated to be a global settlement
encompassing any potential claims that might be made by state and
federal agencies. There is no assurance that the Galena will be
able to complete a definitive settlement agreement on the final
terms of the oral agreement in principle including its financial
impact or any future adjustment to the financial statements.
Net loss for the second quarter of 2017 was $8.4
million, or $0.22 per basic and diluted share, compared to net
income of $5.4 million, or $0.59 and $0.58 per basic and diluted
share, respectively, for the same period of 2016. Net loss for the
first half of 2017 was $20.1 million, or $0.63 per basic and
diluted share, compared to $11.1 million, or $0.30 per basic and
diluted share, for the same period of 2016.
Galena had cash and cash equivalents of
approximately $18.1 million as of June 30, 2017, compared with
$18.1 million as of December 31, 2016. During the first half
of 2017 Galena used $20.0 million in operating activities offset by
$15.5 million in net proceeds from issuance of common stock and
warrants to purchase common stock in February 2017 and $4.5 million
in redemptions of the debenture paid by Galena in shares of common
stock which facilitated the release of restricted cash in the same
amount.
SECOND QUARTER AND RECENT
HIGHLIGHTS
Operational Highlights
Positive Interim Safety Data on the NeuVax™
(nelipepimut-S) Clinical Trial in Combination with Trastuzumab in
High-Risk HER2 3+ PatientsIn April 2017, a poster was
presented on the NeuVax investigator-sponsored Phase 2 clinical
trial in high-risk, HER2 3+ patients at the American
Association for Cancer Research (AACR) Annual Meeting 2017
in Washington, DC. The Phase 2 is a multi-center, prospective,
randomized, single-blinded, placebo-controlled trial combining
NeuVax and trastuzumab in the adjuvant setting to prevent
recurrence in HER2-positive (HER2 3+) breast cancer patients. The
poster, entitled, “Pre-specified interim analysis in a prospective,
randomized phase II trial of trastuzumab vs trastuzumab + NeuVax to
prevent breast cancer recurrence in HER2+ breast cancer patients,”
presented the interim safety analysis that was initiated after
enrollment of the 50th patient in the trial (vaccine group
(VG) n=22, control group (CG) n=28). The analysis demonstrated that
the agent is well tolerated with no increased cardiotoxicity
associated with giving NeuVax in combination with trastuzumab.
Corporate Highlights
Entry into Merger Agreement with SELLAS
Life Sciences GroupOn August 8, 2017, Galena and SELLAS
Life Sciences Group Ltd, a privately-held, oncology-focused,
clinical stage biopharmaceutical company, jointly announced they
entered into an all stock definitive merger agreement under which
SELLAS will merge into and become an indirect, wholly-owned
subsidiary of Galena. The combined company will be
renamed SELLAS Life Science Group, Inc. The proposed
merger, if completed, will result in a combined company focused on
the development of novel treatments for cancer. The proposed
merger is expected to close in the fourth quarter of 2017, subject
to the approval of Galena stockholders and other customary closing
conditions.
Reached Binding Term Sheet in In Re Galena
Biopharma, Inc.As reported on its Current Report of Form
8-K filed on July 28, 2017, Galena entered into a binding
settlement term sheet to settle the litigation currently pending in
the Court of Chancery of the State of Delaware, captioned In re
Galena Biopharma, Inc., C . A . No. 2017 - 0423
- JTL. The settlement resolves the putative stockholder class
action claims against the defendants, Galena and/or certain of its
current and former officers and directors, as well as Galena’s
petition to validate certain corporate actions. The settlement will
not become effective until approved by the court. Under the terms
of the settlement, the class will receive a settlement payment of
$1.3 million, in addition to attorney fees in an amount to be
approved. The settlement payment of $1.3 million consists of
$50,000 in cash to be paid by the defendants or their insurers and
$1,250,000 in unrestricted shares of the Galena’s common stock
pursuant to the terms and conditions of the settlement. Any amounts
awarded by the Court for attorneys’ fees will be paid in part by
the settlement fund and in part by the Company’s insurance
carriers.
Reached Agreement in Principle with the
U.S. Attorney’s Office for the District of New Jersey (USAO NJ) and
the Department of Justice (DOJ)In its Annual Report on
Form 10-K filed on May 10, 2017, Galena previously announced it had
reached an oral agreement in principle with USAO NJ and DOJ
regarding the material terms of a settlement related to the USAO NJ
and DOJ's investigation. The final terms and details of this
settlement are subject to change pending the completion and
execution of a definitive civil settlement agreement among Galena
and the USAO NJ and DOJ as well as the settlement of any claims
that might be made by state agencies and federal agencies such as
U.S. Department of Defense, the Office of Personnel Management, the
Office of Inspector General for the U.S. Department of Health and
Human Services. The agreement in principle involves a non-criminal
resolution and a civil payment, the terms of which are being
negotiated with the USAO NJ and DOJ, of approximately $7.5 million,
plus interest accrued since the date of reaching an agreement in
principle, in return for a release of government claims in
connection with the investigation.
Settlement with the Securities and Exchange
CommissionIn December 2016, Galena and its former
CEO, Mark Ahn, reached an agreement in principle to a proposed
settlement that would resolve an investigation by the staff of the
Securities and Exchange Commission (SEC) involving conduct in the
period 2012-2014 regarding the commissioning of internet
publications by outside promotional firms. On April 10, 2017, the
SEC made an announcement that marks a formal conclusion to the SEC
investigation of Galena.
GALENA BIOPHARMA, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
(Amounts in thousands, except share and per
share data) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
$ |
2,044 |
|
|
$ |
6,175 |
|
|
$ |
4,406 |
|
|
$ |
11,618 |
|
General
and administrative |
2,867 |
|
|
3,117 |
|
|
5,593 |
|
|
6,642 |
|
Total
operating expenses |
4,911 |
|
|
9,292 |
|
|
9,999 |
|
|
18,260 |
|
Operating loss |
(4,911 |
) |
|
(9,292 |
) |
|
(9,999 |
) |
|
(18,260 |
) |
Non-operating income
(expense): |
|
|
|
|
|
|
|
Litigation settlements |
(1,300 |
) |
|
(1,800 |
) |
|
(1,300 |
) |
|
(1,800 |
) |
Change in
fair value of warrants potentially settleable in cash |
(185 |
) |
|
14,392 |
|
|
3,707 |
|
|
10,520 |
|
Interest
expense, net |
(687 |
) |
|
(519 |
) |
|
(1,660 |
) |
|
(611 |
) |
Change in
fair value of the contingent purchase price liability |
(19 |
) |
|
5,497 |
|
|
(132 |
) |
|
5,327 |
|
Total
non-operating income (expense), net |
(2,191 |
) |
|
17,570 |
|
|
615 |
|
|
13,436 |
|
Income (loss) from
continuing operations |
$ |
(7,102 |
) |
|
$ |
8,278 |
|
|
$ |
(9,384 |
) |
|
$ |
(4,824 |
) |
Discontinued
operations |
|
|
|
|
|
|
|
Loss from
discontinued operations |
(1,302 |
) |
|
(2,889 |
) |
|
(10,738 |
) |
|
(6,280 |
) |
Net loss |
$ |
(8,404 |
) |
|
$ |
5,389 |
|
|
$ |
(20,122 |
) |
|
$ |
(11,104 |
) |
Net income (loss) per
common share, basic: |
|
|
|
|
|
|
|
Basic net
income (loss) per share, continuing operations |
$ |
(0.19 |
) |
|
$ |
0.91 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.13 |
) |
Basic net
loss per share, discontinued operations |
$ |
(0.03 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.17 |
) |
Basic net income (loss)
per share |
$ |
(0.22 |
) |
|
$ |
0.59 |
|
|
$ |
(0.63 |
) |
|
$ |
(0.30 |
) |
Weighted-average common
shares outstanding, basic |
37,421,273 |
|
|
9,101,730 |
|
|
31,944,243 |
|
|
9,035,173 |
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share, diluted: |
|
|
|
|
|
|
|
Diluted
net income (loss) per share, continuing operations |
$ |
(0.19 |
) |
|
$ |
0.90 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.13 |
) |
Diluted
net loss per share, discontinued operations |
$ |
(0.03 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.17 |
) |
Diluted net income
(loss) per share |
$ |
(0.22 |
) |
|
$ |
0.58 |
|
|
$ |
(0.63 |
) |
|
$ |
(0.30 |
) |
Weighted-average common
shares outstanding, diluted |
37,421,273 |
|
|
9,273,867 |
|
|
31,944,243 |
|
|
9,035,173 |
|
GALENA BIOPHARMA, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(unaudited) |
(Amounts in thousands) |
|
|
June 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
18,073 |
|
|
$ |
18,083 |
|
Restricted cash |
13,597 |
|
|
18,022 |
|
Prepaid
expenses and other current assets |
434 |
|
|
581 |
|
Current
assets of discontinued operations |
189 |
|
|
813 |
|
Total
current assets |
32,293 |
|
|
37,499 |
|
Equipment and
furnishings, net |
148 |
|
|
199 |
|
In-process research and
development |
12,864 |
|
|
12,864 |
|
GALE-401 rights |
9,255 |
|
|
9,255 |
|
Goodwill |
5,898 |
|
|
5,898 |
|
Deposits |
96 |
|
|
96 |
|
Total
assets |
$ |
60,554 |
|
|
$ |
65,811 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
385 |
|
|
$ |
840 |
|
Accrued
expense and other current liabilities |
2,634 |
|
|
4,292 |
|
Litigation settlement payable |
1,300 |
|
|
950 |
|
Fair
value of warrants potentially settleable in cash |
8,510 |
|
|
1,860 |
|
Current
portion of long-term debt |
13,025 |
|
|
16,397 |
|
Current
liabilities of discontinued operations |
8,685 |
|
|
6,059 |
|
Total
current liabilities |
34,539 |
|
|
30,398 |
|
Deferred tax liability,
non-current |
5,661 |
|
|
5,661 |
|
Contingent purchase
price consideration, net of current portion |
1,227 |
|
|
1,095 |
|
Total
liabilities |
41,427 |
|
|
37,154 |
|
Stockholders’ equity |
19,127 |
|
|
28,657 |
|
Total liabilities and
stockholders’ equity |
$ |
60,554 |
|
|
$ |
65,811 |
|
|
|
|
|
|
|
|
|
About Galena Biopharma
Galena Biopharma, Inc. is a biopharmaceutical
company developing hematology and oncology therapeutics that
address unmet medical needs. Galena’s pipeline consists of multiple
mid-to-late-stage clinical assets led by its hematology asset,
GALE-401, and its novel cancer immunotherapy programs including
NeuVax™ (nelipepimut-S) and GALE-301/GALE-302. For more
information, visit www.galenabiopharma.com.
Additional Information about the Proposed
Merger between Galena Biopharma, Inc. and SELLAS Life Sciences
Group Ltd and Where to Find It
In connection with the proposed merger, Galena
Biopharma, Inc. and SELLAS Life Sciences Group Ltd intend to file
relevant materials with the Securities and Exchange Commission, or
the SEC, including a registration statement on Form S-4 that will
contain a proxy statement / prospectus / information
statement. Galena and SELLAS will mail the final
proxy statement / prospectus / information statement to their
respective stockholders. Investors and
stockholders of Galena and SELLAS are urged to read these materials
when they become available because they will contain important
information about Galena, SELLAS and the proposed merger.
The proxy statement / prospectus / information statement and other
relevant materials (when they become available), and any other
documents filed by Galena with the SEC, may be obtained free of
charge at the SEC web site at www.sec.gov. In addition, copies of
the documents filed with the SEC by Galena will be available free
of charge on the Company’s website at
www.galenabiopharma.com (under “Investors” – “Financials”) or
by directing a written request to: Galena Biopharma, Inc., 2000
Crow Canyon Place, Suite 380, San Ramon, CA 94583, Attention:
Investor Relations or by email to: ir@galenabiopharma.com.
Investors and stockholders are urged to read the proxy statement /
prospectus / information statement and the other relevant materials
when they become available before making any voting or investment
decision with respect to the proposed merger.
Non-Solicitation
This communication shall not constitute an offer to
sell or the solicitation of an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offering of
securities in connection with the proposed merger shall be made
except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended.
Participants in the
Solicitation
Galena and its directors and executive officers and
SELLAS and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders
of Galena in connection with the proposed transaction. Information
regarding the special interests of these directors and executive
officers in the proposed merger will be included in the proxy
statement /prospectus /information statement referred to above.
Additional information regarding the directors and executive
officers of Galena is also included in Galena’s proxy statement for
its 2017 Annual Meeting of Stockholders, which was filed with the
SEC on April 20, 2017. These documents are available free of charge
at the SEC’s web site (www.sec.gov) and from Investor Relations at
Galena at the addresses provided above.
Forward-Looking Statements
This press release contains statements that include
the words “expect,” “intend,” “plan,” “believe,” “project,”
“estimate,” “may,” “should,” “anticipate,” “will” and similar
statements of a future or forward looking nature identify
forward-looking statements for purposes of the federal securities
laws and otherwise. Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on our current beliefs, expectations and
assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict
and many of which are outside of our control. There are or will be
important factors that could cause actual results to differ
materially from those indicated in these statements. These
forward-looking statements include, but are not limited to,
statements regarding strategy, future operations, future financial
position, prospects, plans and objectives of management are
forward-looking statements. Examples of such statements include,
but are not limited to, statements relating to the structure,
timing and completion of the proposed merger; the combined
company’s listing on the NASDAQ Capital Market after closing of the
proposed merger; expectations regarding the resources of the
combined company; the combined company’s ability to successfully
initiate and complete clinical trials; anticipated milestones; the
nature, strategy and focus of the combined company; and the
development potential of any product candidates of the combined
company. The combined company may not actually achieve the plans,
carry out the intentions or meet the expectations or projections
disclosed in the forward-looking statements and you should not
place undue reliance on these forward-looking statements. Such
statements are based on management’s current expectations and
involve risks and uncertainties. Actual results and performance
could differ materially from those projected in the forward-looking
statements as a result of many factors, including, without
limitation, risks and uncertainties associated with stockholder
approval of and the ability to consummate the proposed merger
through the process being conducted by Galena and SELLAS, the
ability to project future cash utilization and reserves needed for
contingent future liabilities and business operations, the
availability of sufficient resources of the combined company to
meet its business objectives and operational requirements, the fact
that the results of earlier studies and trials may not be
predictive of future clinical trial results, the protection and
market exclusivity provided by SELLAS’ intellectual property, risks
related to the drug discovery and the regulatory approval process
and the impact of competitive products and technological changes.
Further, such statements included, but are not limited to,
statements about the evaluation of strategic alternatives, the
timetable for completing the evaluation of strategic alternatives,
the progress of the development of Galena’s product candidates,
patient enrollment in our clinical trials, the progress and timing
of our development activities, Galena’s current and prospective
financial condition, liquidity and access to capital, present or
future licensing, collaborative or financing arrangements, expected
outcomes with regulatory agencies, projected market opportunities
for product candidates, future expectations, plans and prospects
for the final agreements among the U.S. Attorney’s Office for the
District of New Jersey (“USAO NJ”) and the Department of Justice
(“DOJ”) and the Company, the settlement terms among USAO NJ, DOJ
and the Company, the settlement of any claims that might be made by
state agencies in the future, the settlement terms with federal
agencies such as U.S. Department of Defense, the Office of
Personnel Management, the Office of Inspector General for the U.S.
Department of Health and Human Services, and other future events or
that otherwise relate to future periods. 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 filed with the SEC
on March 15, 2017, and the Quarterly Report on Form 10-Q, filed
with the SEC on May 10, 2017 and in subsequently filed Form 10-Qs.
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.
Source: Galena Biopharma, Inc.
Contact:
Remy Bernarda
SVP, Investor Relations & Corporate Communications
(925) 498-7709
ir@galenabiopharma.com
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