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 September 30, 2017.
“The merger process with SELLAS Life Sciences Group, Ltd.
remains on track as our registration statement on Form S-4 went
effective on November 6, 2017, which includes the proxy
statement/prospectus relating to Galena’s special meeting of
stockholders to be held on December 15, 2017. The proxy
statement/prospectus includes the proposals we are asking
stockholders to approve in connection with the merger,” said
Stephen F. Ghiglieri, Interim Chief Executive Officer and Chief
Financial Officer. “In the proxy statement/prospectus, we also
introduce the leadership team and new board of directors for the
combined company, and we are confident in their ability to advance
the assets through multiple ongoing and planned clinical trials.
The completion of the merger will create a new chapter for Galena
shareholders with opportunities for more near-term value
creation.”
Mr. Ghiglieri continued, “During the third quarter, we reached
two important clinical milestones with the completion of enrollment
in both of our NeuVax™ (nelipepimut-S) combination trials. For the
HER2 1+/2+ trial, we look forward to the interim efficacy analysis
that is scheduled to be performed by the Data Safety Monitoring
Board (DSMB) in the first quarter of 2018. The primary endpoint for
the 1+/2+ and the 3+ studies is disease-free survival after 24
months, and we expect these results in the fourth quarter of
2019.”
FINANCIAL REVIEW
Operating loss from Galena’s development programs and general
and administrative expenses, classified as continuing operations,
during the third quarter of 2017 was $4.5 million, including $0.2
million in non-cash stock-based compensation, compared to an
operating loss of $6.5 million, including $0.5 million in non-cash
stock-based compensation for the third quarter of 2016. Operating
loss for the nine months ended September 30, 2017 was $14.5
million, including $0.6 million in non-cash stock-based
compensation, compared to an operating loss of $24.7 million,
including $1.8 million in non-cash stock-based compensation for the
same period in 2016.
Loss from continuing operations for the third quarter of 2017
was $6.2 million, or $0.15 per basic and diluted share, including
$1.7 million in non-operating expense. Loss from continuing
operations for the third quarter of 2016 was $4.3 million, or $0.41
per basic and diluted share, including $2.1 million in
non-operating income. Loss from continuing operations for the nine
months ended September 30, 2017 was $15.6 million, or $0.45 per
basic and diluted share, including $1.1 million in non-operating
expense. Loss from continuing operations for the nine months ended
September 30, 2016 was $9.2 million, or $0.97 per basic and diluted
share, including $15.6 million in non-operating income.
Non-operating expense during the three and nine months ended
September 30, 2017 includes a one-time impairment loss on goodwill
and intangible assets of $5.2 million. The impairment loss
recognized during the third quarter of 2017 is a non-cash expense
and adjusts the carrying value of our intangible assets to
approximate fair value based on an interim impairment analysis
performed in connection with the preparation of our condensed
consolidated financial statements for the three and nine months
ended September 30, 2017. Non-operating expense during the three
months and nine months ended September 30, 2017 also includes $0.6
million and $2.2 million, respectively, of interest expense related
to our debenture and a litigation settlement of $1.3 million for
the nine months ended September 30, 2017. The goodwill and
impairment loss, interest expense, and litigation settlement
included in non-operating expense during the three months and nine
months ended September 30, 2017 is partially offset by non-cash
gains from the reduction in Galena’s warrant liability of $4.1
million and $7.8 million respectively.
Income from discontinued operations from Galena's former
commercial business for the third quarter of 2017 was $0.1 million,
or $0.00 per basic and diluted share, compared to loss from
discontinued operations of $2.6 million, or $0.25 per basic and
diluted share, for the same period of 2016. Income from
discontinued operations during the third quarter of 2017 was driven
by an insurance recovery of $0.7 million for legal fees previously
paid that was partially offset by a settlement for product returns
reached with a former customer for one of our former commercial
products. Loss from discontinued operations for the nine months
ended September 30, 2017 was $10.6 million, or $0.31 per basic and
diluted share, compared to $8.9 million, or $0.93 per basic and
diluted share, for the same period of 2016. Loss from discontinued
operations during the nine months ended September 30, 2017 includes
an accrual for a one-time civil payment settlement of approximately
$7.6 million, 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 civil payment will be paid by Galena in four equal,
quarterly installments; the first payment was made in the third
quarter of 2017.
Net loss for the third quarter of 2017 was $6.1 million, or
$0.15 per basic and diluted share, compared to net loss of $6.9
million, or $0.66 per basic and diluted share for the third quarter
of 2016. Net loss for the nine months ended September 30, 2017 was
$26.2 million, or $0.76 per basic and diluted share, compared to
$18.0 million, or $1.90 per basic and diluted share, for the same
period of 2016.
Galena had cash and cash equivalents of approximately $12.9
million as of September 30, 2017, compared with $18.1 million
as of December 31, 2016. During the nine months ended
September 30, 2017, Galena used $26.2 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 $5.7 million in redemptions of the debenture principally
paid by Galena in shares of common stock which facilitated the
release of $5.5 million of restricted cash.
|
GALENA BIOPHARMA, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
(Amounts in thousands, except share and per
share data) |
|
|
Three Months Ended September, |
|
Nine months Ended September, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
$ |
951 |
|
|
$ |
3,624 |
|
|
$ |
5,357 |
|
|
$ |
15,242 |
|
General
and administrative |
3,511 |
|
|
2,848 |
|
|
9,104 |
|
|
9,490 |
|
Total
operating expenses |
4,462 |
|
|
6,472 |
|
|
14,461 |
|
|
24,732 |
|
Operating loss |
(4,462 |
) |
|
(6,472 |
) |
|
(14,461 |
) |
|
(24,732 |
) |
Non-operating income
(expense): |
|
|
|
|
|
|
|
Litigation settlements |
— |
|
|
— |
|
|
(1,300 |
) |
|
(1,800 |
) |
Change in
fair value of warrants potentially settleable in cash |
4,115 |
|
|
3,652 |
|
|
7,822 |
|
|
14,172 |
|
Goodwill
and intangible assets impairment loss |
(5,231 |
) |
|
— |
|
|
(5,231 |
) |
|
— |
|
Interest
expense, net |
(565 |
) |
|
(1,377 |
) |
|
(2,225 |
) |
|
(1,988 |
) |
Change in
fair value of the contingent purchase price liability |
(50 |
) |
|
(145 |
) |
|
(182 |
) |
|
5,182 |
|
Total
non-operating income (expense), net |
(1,731 |
) |
|
2,130 |
|
|
(1,116 |
) |
|
15,566 |
|
Loss from continuing
operations |
$ |
(6,193 |
) |
|
$ |
(4,342 |
) |
|
$ |
(15,577 |
) |
|
$ |
(9,166 |
) |
Discontinued
operations |
|
|
|
|
|
|
|
Income
(loss) from discontinued operations |
118 |
|
|
(2,587 |
) |
|
(10,620 |
) |
|
(8,867 |
) |
Net loss |
$ |
(6,075 |
) |
|
$ |
(6,929 |
) |
|
$ |
(26,197 |
) |
|
$ |
(18,033 |
) |
Net loss per common
share, basic and diluted: |
|
|
|
|
|
|
|
Basic and
diluted net loss per share, continuing operations |
$ |
(0.15 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.97 |
) |
Basic and
diluted net income (loss) per share, discontinued operations |
$ |
— |
|
|
$ |
(0.25 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.93 |
) |
Basic and diluted net
loss per share |
$ |
(0.15 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.90 |
) |
Weighted-average common
shares outstanding, basic and diluted |
39,250,419 |
|
|
10,465,164 |
|
|
34,406,397 |
|
|
9,515,316 |
|
GALENA BIOPHARMA, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(unaudited) |
(Amounts in thousands) |
|
|
September, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
12,914 |
|
|
$ |
18,083 |
|
Restricted cash |
12,372 |
|
|
18,022 |
|
Prepaid
expenses and other current assets |
520 |
|
|
581 |
|
Current
assets of discontinued operations |
830 |
|
|
813 |
|
Total
current assets |
26,636 |
|
|
37,499 |
|
Equipment and
furnishings, net |
123 |
|
|
199 |
|
In-process research and
development |
9,300 |
|
|
12,864 |
|
GALE-401 rights |
8,100 |
|
|
9,255 |
|
Goodwill |
5,386 |
|
|
5,898 |
|
Deposits |
50 |
|
|
96 |
|
Total
assets |
$ |
49,595 |
|
|
$ |
65,811 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
211 |
|
|
$ |
840 |
|
Accrued
expense and other current liabilities |
3,186 |
|
|
4,292 |
|
Litigation settlement payable |
1,300 |
|
|
950 |
|
Fair
value of warrants potentially settleable in cash |
4,395 |
|
|
1,860 |
|
Current
portion of long-term debt |
12,170 |
|
|
16,397 |
|
Current
liabilities of discontinued operations |
6,759 |
|
|
6,059 |
|
Total
current liabilities |
28,021 |
|
|
30,398 |
|
Deferred tax liability,
non-current |
5,661 |
|
|
5,661 |
|
Contingent purchase
price consideration, net of current portion |
1,277 |
|
|
1,095 |
|
Total
liabilities |
34,959 |
|
|
37,154 |
|
Stockholders’ equity |
14,636 |
|
|
28,657 |
|
Total liabilities and
stockholders’ equity |
$ |
49,595 |
|
|
$ |
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 have filed relevant materials
with the Securities and Exchange Commission, or the SEC, including
a final proxy statement/prospectus/consent solicitation statement
filed with the SEC pursuant to Rule 424(b)(3) on November 8, 2017
(the “final proxy statement/prospectus/consent solicitation
statement”). Galena and SELLAS will mail the final
proxy statement/prospectus/consent solicitation
statement to their respective stockholders.
Investors and stockholders of Galena and SELLAS are urged
to read the final proxy statement/prospectus/consent solicitation
statement because it contains important information about Galena,
SELLAS and the proposed merger. The final proxy
statement/prospectus/consent solicitation statement, other relevant
materials and any other documents filed by Galena with the SEC
(when they become available), may be obtained free of charge at the
SEC’s 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 final proxy statement/prospectus/consent
solicitation 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 are included in the final proxy
statement/prospectus/consent solicitation statement referred to
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 timing of the Galena special meeting of
stockholders and of completion of the proposed merger; expectations
regarding the resources of the combined company; the combined
company’s ability to successfully initiate and complete clinical
trials; and anticipated milestones of Galena’s clinical trials,
including the timing of the results of Galena’s clinical trials.
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. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions,
including those identified under “Risk Factors” in Galena’s final
proxy statement/prospectus/consent solicitation statement 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,
except as required by law.
NeuVax is a trademark of Galena Biopharma, Inc.
Contact:
Remy BernardaSVP, Investor Relations & Corporate
Communications(925) 498-7709ir@galenabiopharma.com
Source: Galena Biopharma, Inc.
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