Galena Biopharma Reports Third Quarter 2012 Financial Results

Galena Biopharma Reports Third Quarter 2012 Financial Results

LAKE OSWEGO, Ore., Nov. 13, 2012 (GLOBE NEWSWIRE) -- Galena Biopharma, Inc.
(Nasdaq:GALE), a biotechnology company focused on developing innovative,
targeted oncology treatments addressing major unmet medical needs to advance
cancer care, today reported its financial results for the quarter ended
September 30, 2012 and provided a business update.

"We have made significant progress in accelerating patient enrollment in the
NeuVax™ Phase 3 PRESENT trial," said Mark J. Ahn, Ph.D., President and Chief
Executive Officer. "We have strengthened our team and intellectual property,
and have opened 40 sites in North America and started opening an additional 40
sites in Western and Eastern Europe, Russia, Ukraine and Israel as planned.
2013 will be a significant year of operational and business development
milestones for the company."

Recent Business Highlights

  * Presented positive NeuVax (nelipepimut-S or E75) data at the 27^th Annual
    Meeting of the Society for Immunotherapy of Cancer (SITC) indicating that
    vaccine treated patients were more likely to show a decrease in
    Circulating Tumor Cells (CTCs) than control patients. CTCs are cells that
    have detached from the primary breast tumor and circulate in the
    bloodstream, and may then cause the growth of additional tumors
    (metastases) in different tissues. Results showed a total of 26 patients
    receiving NeuVax had at least two CTC measurements made during the vaccine
    treatment. In 16/26 NeuVax treated patients, the CTCs decreased during the
    time of treatment, corresponding with an increase in the patients'
    E75-specific CD8+ cytotoxic T-lymphocytes (killer T-cells) and an increase
    in their delayed type hypersensitivity (DTH) reactions. DTH is the
    measurable signal on the skin that the patient is immunologically
    responding to treatment. None of these patients had a recurrence of their
    cancer during the five year follow-up period.
  * Received approval from the United States Adopted Names (USAN) Council for
    nonproprietary name, "nelipepimut-S" (pronounced nel" i pep' i mut) for
    Galena's cancer immunotherapy drug, NeuVax™. The USAN Council serves
    health professions of the United States by selecting simple, informative
    and unique nonproprietary names for drugs by establishing logical
    nomenclature classifications based on pharmacological and/or chemical
    relationships.
  * Issued two key patents in the 3^rd Quarter:

    * The U.S. Patent and Trademark Office (USPTO) issued a patent for NeuVax™
      (nelipepimut-S or E75). The patent covers the use of NeuVax, a HER2/neu
      peptide vaccine, for inducing immunity to breast cancer recurrence in
      HER2 negative patients (low-to-intermediate IHC levels of 1+ or 2+ and a
      FISH rating of less than 2.0). This is the patient population targeted
      for Galena's ongoing Phase 3 PRESENT trial. The patent provides NeuVax
      exclusivity for this indication until 2028, not including any patent
      term extensions.
    * The Japan Patent Office (JPO) issued a Folate Binding Protein (FBP)
      cancer vaccine patent in Japan. This Composition of Matter and Treatment
      patent covers FBP peptide variants for individual or expanded use in
      combination with the novel FBP vaccine, E39. The patent provides
      exclusivity in Japan until 2022.

  * Strengthened the clinical management team by appointing Lynn Sutton, RN,
    MN, NP as Vice President, Clinical Operations in September 2012.  Ms.
    Sutton has over 20 years of clinical development and project management
    experience in the pharmaceutical industry.  Most recently, Ms. Sutton was
    the Vice President of Clinical Services at Allos Therapeutics until the
    company was purchased by Spectrum Pharmaceuticals.  Throughout her career,
    Ms. Sutton has been responsible for overseeing global programs across all
    phases of development, focusing primarily in oncology and orphan
    indications.
  * Presenting final Phase 2 trial data at the 35^th Annual CTRC-AACR San
    Antonio Breast Cancer Symposium (SABCS), which will be held December 4-8,
    2012.

Third Quarter 2012 Financial Highlights

Net loss for the three months ended September 30, 2012 was $6.3 million, or
$0.09 per basic and diluted share, versus a net loss of $5.5 million, or $0.13
per basic and diluted share for the three months ended September 30, 2011.
 Net loss for the nine months ended September 30, 2012 was $31.2 million, or
$0.52 per basic and diluted share, versus a net loss of $13.0 million, or
$0.39 per basic and diluted share, for the nine months ended September 30,
2011.

Operating loss from continuing operations for the three months ended September
30, 2012 was $5.5 million, including $0.4 million in non-cash stock based
compensations charges,  compared with $3.4 million for the three months ended
September 30, 2011, including $0.7 million in non-cash stock based
compensation charges. For the nine months ended September 30, 2012, operating
loss from continuing operations was $15.6 million, including $1.3 million in
non-cash stock based compensation charges, compared with $8.9 million,
including $2.1 million in non-cash stock based compensation charges, for the
nine months ended September 30, 2011. There was no loss from discontinued
operations for the three months ended September 30, 2012, as compared to $1.6
million for the three months ended September 30, 2011. Loss from discontinued
operations was $1.6 million for the nine months ended September 30, 2012 as
compared to $5.9 million for the nine months ended September 30, 2011. The
period to period changes in net loss, loss from continued operations and loss
from discontinued operations are primarily driven by Galena's ongoing,
late-stage trial for its NeuVax product candidate and the spin-off of the
former RXi Pharmaceuticals subsidiary on April 27, 2012.

Galena Biopharma also incurs income or expense due to non-cash charges related
to changes in the fair value estimates of the Company's warrant liabilities
and contingent purchase price liability, referred to as "other income or
expense." Other expense for the three months ended September 30, 2012 was $0.7
million versus other expense of $0.4 million for the three months ended
September 30, 2011. Other expense for the nine months ended September 30, 2012
was $13.9 million versus other income of $1.7 million for the nine months
ended September 30, 2011. 

As of September 30, 2012, Galena had cash and cash equivalents of $15.4
million, compared with cash and cash equivalents of $11.4 million as of
December 31, 2011. Galena also retains approximately 32.7 million shares of
common stock of its former subsidiary, RXi Pharmaceuticals (OTCBB:RXII). The
market value of the RXi shares held by Galena at September 30, 2012 was
approximately $3.6 million.

About NeuVax™ (nelipepimut-S or E75)

NeuVax™ (nelipepimut-S) is the immmunodominant nonapeptide derived from the
extracellular domain of the HER2 protein, a well-established target for
therapeutic intervention in breast carcinoma. The nelipepimut-S sequence
stimulates specific CD8+ cytotoxic T lymphocytes (CTL) following binding to
HLA-A2/A3 molecules on antigen presenting cells (APC). These activated
specific CTLs recognize, neutralize and destroy through cell lysis HER2
expressing cancer cells, including occult cancer cells and micrometastatic
foci. The nelipepimut-S  immune response can also generate CTLs to other
immunogenic peptides through inter- and intra-antigenic epitope
spreading. Based on a successful Phase 2 trial, which achieved its primary
endpoint of disease free survival (DFS), the Food and Drug Administration
(FDA) granted NeuVax a Special Protocol Assessment (SPA) for its Phase 3
PRESENT (Prevention of Recurrence in Early-Stage, Node-Positive Breast Cancer
with Low to Intermediate HER2 Expression with NeuVax Treatment) study. The
Phase 3 trial is ongoing and additional information on the study can be found
at www.neuvax.com.

According to the National Cancer Institute, over 230,000 women in the U.S. are
diagnosed with breast cancer annually. Of these women, about 75% test positive
for HER2 (IHC 1+, 2+ or 3+). NeuVax targets approximately 50-60% of
HER2-positive patients (IHC 1+/2+ or FISH <2.2) who achieve remission with
current standard of care, but have no available HER2-targeted adjuvant
treatment options to maintain their disease-free status.

About Folate Binding Protein (FBP)

Folate Binding Protein (FBP) is highly over-expressed in breast, ovarian and
endometrial cancers and is a well-validated therapeutic target. FBP is the
source of immunogenic peptides like E39 that can stimulate cytotoxic T
lymphocytes (CTL) to recognize and destroy preclinical FBP-expressing cancer
cells. The FBP vaccine consists of the FBP peptide(s) combined with the immune
adjuvant, granulocyte macrophage-colony stimulating factor (GM-CSF). Galena's
FBP vaccine, E39, is currently in a Phase 1/2 trial in two gynecological
cancers: ovarian and endometrial adenocarcinomas.

About Galena Biopharma

Galena Biopharma, Inc. (Nasdaq:GALE) is a Portland, Oregon-based
biopharmaceutical company that develops innovative, targeted oncology
treatments that address major unmet medical needs to advance cancer care. For
more information please visit us at www.galenabiopharma.com.

The Galena Biopharma, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=10647

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, statements about the preliminary results of the trends
in CTS in patients treated with NeuVax, as well as statements about
expectations, plans and prospects for the development of Galena's product
candidates. 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 ended December 31, 2011
filed with the SEC. 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.

 
Galena Biopharma
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF EXPENSES
(Amounts in thousands, except share and per share data)
 
                       Three         Three          Nine Months  Nine
                       Months Ended  Months Ended  Months Ended  Months Ended
                       September 30, September 30, September 30, September 30,
                       2012          2011          2012          2011
Expenses:                                                         
Research and           $ 4,169       $ 1,367       $ 10,553      $ 1,757
development
General and            1,359         2,068         5,068          7,136
administrative
                                                                  
Operating loss          (5,528)       (3,435)       (15,621)      (8,893)
                                                                  
Other income           (733)         (399)         (13,953)      1,717
(expense), net
                                                                  
Net loss - continuing  (6,261)       (3,834)       (29,574)      (7,176)
operations
Net loss -
discontinued            --           (1,641)       (1,644)        (5,898)
operations
                                                                  
Net loss               $ (6,261)     $ (5,475)     $ (31,218)    $ (13,074)
                                                                  
Earnings per common
share - basic and                                                 
diluted
Continuing operations                                             
                       $ (0.09)      $ (0.09)      $ (0.49)      $ (0.21)
                                                                  
Discontinued           $ --          $ (0.04)      $ (0.03)      $ (0.18)
operations
                                                                  
Net loss               $ (0.09)      $ (0.13)      $ (0.52)      $ (0.39)
                                                                  
Weighted average
shares outstanding –    67,265,470    41,970,481    60,150,658    33,697,704
basic and diluted

 
 
Galena Biopharma
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
                                                    September 30, December 31,
                                                    2012          2011
ASSETS                                                             
Current assets:                                                    
Cash and cash equivalents                           $ 15,423      $ 11,433
Restricted cash                                     101            101
Prepaid expenses                                    801            276
                                                                   
Total current assets                                 16,325        11,810
                                                                   
Equipment and furnishings, net                       31            393
In-process research and development                  12,864        12,864
Goodwill                                             5,898         5,898
Deposits                                             74            3
                                                                   
Total assets                                        $ 35,192      $ 30,968
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                               
Current liabilities:                                               
Accounts payable and accrued expenses               $ 4,222       $ 5,139
Current maturities of capital lease obligations      6             35
Convertible notes payable, current                   --            500
Fair value of warrants potentially settleable in     4,904         3,746
cash
Current contingent purchase price consideration      925           1,782
                                                                   
Total current liabilities                            10,057        11,202
Capital lease obligations, net of current            51            32
maturities
Deferred tax liability, non-current                  5,053         5,053
Contingent purchase price consideration, long term   5,866         4,569
                                                                   
Total liabilities                                   21,027         20,856
Stockholders' equity                                14,165         10,112
                                                                   
Total liabilities and stockholders' equity          $ 35,192      $ 30,968

CONTACT: Madeline Hatton
         Toll free: +1 (855) 855-GALE (4253), ext. 109
         info@galenabiopharma.com
         or
         Remy Bernarda
         IR Sense, LLC
         +1 (503) 400-6995
         remy@irsense.com

Galena Biopharma, Inc.