Atlanta 2/7/2014 4:00:00 AM
News / Stocks

Seeking Alpha Contributor Explains His Long Stance on Galena Biopharma (GALE)

MissionIR would like to highlight Galena Biopharma (NASDAQ: GALE), focused on developing and commercializing targeted oncology treatments to address major unmet medical needs and advance cancer care. The company’s peptide vaccine immunotherapies harness the patient’s own immune system to identify and destroy cancer cells. Utilizing peptide immunogens has many clinical advantages, including an excellent safety profile and long-lasting protection through immune system activation and convenient delivery.

In the company’s news,

Galena Biopharma has received positive press in a recent Seeking Alpha article. In a Seeking Alpha article discussing the “pipeline potential” of Galena Biopharma, writer and trading coach John Mylant begins with noting recent analyst actions stemming from the company’s recent acquisition of Mills Pharmaceuticals, as well as notes Galena’s transition into a revenue-producing firm.

“Galena Biopharma (GALE) is presently trading at $4.22 a share after a favorable reactionary move in the market when it announced a recent acquisition that has a potential for generating good revenue in the years ahead. I will write more about that later, but here is a company that is highly favored by investors and analysts alike.”

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Looking into Galena’s balance sheet over the last four quarters, Mylant surmises that the company should have enough working capital through 2015 and potentially longer, if the company’s expectations for revenue growth are achieved. Also notable is Galena’s lack of debt.

“In this type of industry, the financial position is important, but so is the debt load. I believe one thing analysts like about the company is its long-term debt is negligible compared to its cash position. This is what gives it such a small debt-equity ratio. According to MSN Money, it also has a very healthy “current ratio” of 1.55,” writes Mylant.

Galena’s pipeline currently has one product on the market and two in research stage, each of which have strong revenue generating potential.

“The one already brought to market, I would conservatively say has a revenue potential of at least $40 million while the other two could conservatively top $120 million or more when they come to the market. (combined),” pens Mylant before detailing each product and relative markets.

Regarding Galena’s recent acquisition of Mills Pharmaceuticals, which owned worldwide rights to GALE401 for the treatment of essential thrombocythemia (ET), Mylant writes:

“Presently the drug is still in the trial phase, and Galena believes it will eventually be eligible for orphan status which enhances its regulatory process. A Phase 2 study is expected to be initiated in mid-2014 and the FDA indicated that only a single Phase 3 trial will be required for approval. In a $200 million industry where many physicians are unhappy with the current treatment for ET, there is great potential here for Galena. … This is only in the Phase 2 study so it’s a long-term vision. If the clinical trials continue to go well, physicians should embrace this therapy quickly. It is not out of the question to conservatively see the company capture 15% of this market which could translate into $30 million a year in revenue.

Every investment carries with it a certain level of risk and patience, and as Mylant notes, Galena is not the exception. However, the company has positioned itself with a high-potential pipeline and several other factors that many will find outweigh the risks.

As part of his conclusion, Mylant writes, “The company appears to be managed well, has minimal debt compared to the industry as a whole and a strong asset to liability ratio which is important for small companies like this. This would make a good long-term growth investment for those who enjoy this industry. Its present drug, Abstral, could potentially bring the company into profitability by itself before the other two drugs are introduced to the market in the coming years ahead.”

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