Galena Biopharma (GALE) Announces Closing of Midatech Deal; Updates on Divestiture Costs

Galena Biopharma (NASDAQ: GALE) disclosed the following on Tuesday:

On December 18, 2015, Galena Biopharma, Inc. (the “Company”) filed with the Securities and Exchange Commission a Current Report on Form 8-K (the “Prior Report”) announcing that the Company and Midatech Pharma PLC, a public limited company organized under the laws of England and Wales (“Midatech”), entered into an Asset Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company agreed to sell to Midatech and Midatech agreed to purchase from the Company, certain assets of the Company related to and including its Zuplenz® (ondansetron) Oral Soluble Film (“Zuplenz”).

On December 24, 2015, the Company and Midatech closed upon the Purchase Agreement. In connection with the closing of the transactions contemplated by the Purchase Agreement, the Company assigned to Midatech all of its rights to and interests in the Company’s License and Supply Agreement, dated July 17, 2014 (the “MonoSol License”). As a result of such assignment, Midatech assumed all of the Company’s obligations under the MonoSol License.

Costs Associated with Exit or Disposal Activities

On November 9, 2015, the Company announced the plan of divestiture of its commercial operations including the marketed products, Abstral® (fentanyl) Sublingual Tablets and Zuplenz® (ondansetron) Oral Soluble Film. Such divestiture will result in the closure of its commercial operations by the end of the fourth quarter of 2015 and expects a total headcount reduction of approximately 29 employees. The Company will now focus its resources and efforts on the continued development of its high value oncology pipeline.

The Company estimates that it will incur total charges related to the divestiture of approximately $11 million to $12 million including an $8.1 million asset impairment recorded in the third quarter of 2015, approximately $1.5 million in one time separation costs, and approximately $1.5 million to $2.5 million in channel liability and contract termination costs. The Company expects to record all of the non-cash impairment charges in the third and fourth quarters of 2015 and the rest of the charges recorded in the fourth quarter of 2015 and paid in the first quarter of 2016.

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