Galena Biopharma (GALE) PT Cut to $1 at Maxim Group, Focus on GALE-401
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Maxim Group analyst Jason McCarthy cut his price target on Galena Biopharma (NASDAQ: GALE) to $1.00 (from $2.00) but maintained a Buy rating as the company works its way out of the penalty box.
Galena reported 2Q16 with net income of $5.4M, resulting from a combination of decreased warrant liabilities (due to a decline in stock price), as well as purchase price liability for NeuVax (due to PRESENT termination), offset by $9.3M in operating expenses. The company began 3Q with $19.6M in cash. Combined with $11.7M from an equity financing in July, it now has ~$29M in cash on the balance sheet.
GALE-401 going pivotal. With PRESENT over (for now), focus has shifted towards driving GALE-401 (a controlled release form of anagrelide) to a pivotal study for the treatment of "essential thrombocythemia." Galena is targeting a 505B2 pathway and would likely only need to demonstrate non-inferiority to standard anagrelide in a relatively small (~N=100 to 120) study. A meeting is planned with the FDA; if approved, the study could initiate in 1H17 (data ~2019).
NeuVax window still remains open. Both combination studies (P2 and P2b) of NeuVax + Herceptin will continue following review of the PRESENT data by investigators. In addition, it's important to note that the immunotherapy space as a whole is moving towards "combination" approaches, even CAR-T. Herceptin has been shown to make breast cancer more immunogenic. In a small study with NeuVax, patients treated with the combination did better (anecdotal, but suggestive, in our view).
Conclusion. PRESENT is now the past. While investigator-sponsored studies will continue and Galena will evaluate a path forward post-PRESENT, focus has turned to a pipeline of assets with unlocked value, including a potential phase III-ready asset in GALE-401.
Valuation. We adjust our metrics for the shift in pipeline focus. The result of these changes is our 12-month price target dropping to $1 from $2 per share. This still supports our Buy rating given the current stock price.
Shares of Galena Biopharma closed at $0.46 yesterday.
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