Maxim Reaffirms 'Buy' Rating on Galena (GALE); NeuVax Receives Patent Allowance in Japan

Maxim reiterates its Buy rating and $7 price target on Galena Biopharma (Nasdaq: GALE) following news the the company received a notice of allowance from the Japanese Patent Office for NeuVax (nelipepimut-S) covering the use of NeuVax alone or in combination with other agents to prevent recurrence of any HER2/neu expressing breast cancer tumor having an immunohistochemistry (IHC) level of 1+ or 2+, or a fluorescence in situ hybridization (FISH) rating of less than about 2.0.

Analyst Joson Kolbert offered the following details:

New Patent In Japan Extends The Protected Territory. The new patent allowance in Japan adds protection to the existing patents covering the U.S. and Europe. The patent covers the use of NeuVax in patients who meet the diagnostic criteria for HER2/neu, encompassing use in those patients who would be eligible for the therapy.

NeuVax is an immunotherapy to prevent recurrence of breast cancer in patients who test positive for over-expression of the HER2/neu receptor. The vaccine is a peptide derived from the HER2 receptor and stimulates the immune system to kill remaining or metastatic HER2/neu-positive breast cancer cells that could grow and lead to relapse.

Preventing breast cancer recurrence is a large unmet medical need that could have blockbuster potential. Enrollment is expected to be completed in January 2015, with an interim data analysis expected in mid to late 2015.

PRESENT Trial Enrollment Continues. NeuVax is currently in a phase III trial (PRESENT), under an SPA (special protocol agreement) as an adjuvant therapy to prevent breast cancer recurrence in HER2 1+/2+ patients. The company has enrolled over 533 patients and expects to complete the enrollment of 700+ patients (over-enroll) by January 2015. We estimate that a interim data analysis could be announced by 2H15. NeuVax is also in two ISTs (investigator-sponsored trials), one in combination with Herceptin to prevent breast cancer recurrence in nodepositive and high-risk node-negative HER2 1+/2+ patients; another in combination with Herceptin in HER2 3+ patients who failed to achieve complete response after neo-adjuvant therapy. The IST trials could enforce NeuVax's efficacy or expand NeuVax's indication. The endpoint is time to recurrence, and the assumptions are 25% in control group and a 30% improvement to that in the active arm (Hazard ratio 0.62).

Galena's commercial business should become accretive and begin to offset the burn rate as the Astral franchise builds traction (Astral-Fentyl sublingual tablet; oncology and pain), with Zuplanz (ondansetron-nausea lingual strip) as a follower in 2015. Valuation. We currently model the company out to 2023 using a combination of FCFF, discounted EPS, and sum-of-the-parts models to derive an equally weighted, average target price of $7.00 per share. Now that the company is executing on its products, we expect shareholder enthusiasm to build as investors focus on the fundamentals.

Valuation. We currently model the company out to 2023 using a combination of FCFF, discounted EPS, and sum-of-the-parts models to derive an equally weighted, average target price of $7.00 per share. Now that the company is executing on its products, we expect shareholder enthusiasm to build as investors focus on the fundamentals.

For an analyst ratings summary and ratings history on Galena Biopharma click here. For more ratings news on Galena Biopharma click here.

Galena Biopharma closed at $1.66 yesterday.

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