On November 9, 2017 Galena Biopharma, Inc. (NASDAQ: GALE), a biopharmaceutical company developing hematology and oncology therapeutics that address unmet medical needs, reported its financial results for the quarter ended September 30, 2017 (Press release, Galena Biopharma, NOV 9, 2017, View Source [SID1234521868]).
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"The merger process with SELLAS Life Sciences Group, Ltd. remains on track as our registration statement on Form S-4 went effective on November 6, 2017, which includes the proxy statement/prospectus relating to Galena’s special meeting of stockholders to be held on December 15, 2017. The proxy statement/prospectus includes the proposals we are asking stockholders to approve in connection with the merger," said Stephen F. Ghiglieri, Interim Chief Executive Officer and Chief Financial Officer. "In the proxy statement/prospectus, we also introduce the leadership team and new board of directors for the combined company, and we are confident in their ability to advance the assets through multiple ongoing and planned clinical trials. The completion of the merger will create a new chapter for Galena shareholders with opportunities for more near-term value creation."
Mr. Ghiglieri continued, "During the third quarter, we reached two important clinical milestones with the completion of enrollment in both of our NeuVax (nelipepimut-S) combination trials. For the HER2 1+/2+ trial, we look forward to the interim efficacy analysis that is scheduled to be performed by the Data Safety Monitoring Board (DSMB) in the first quarter of 2018. The primary endpoint for the 1+/2+ and the 3+ studies is disease-free survival after 24 months, and we expect these results in the fourth quarter of
FINANCIAL REVIEW
Operating loss from Galena’s development programs and general and administrative expenses, classified as continuing operations, during the third quarter of 2017 was $4.5 million, including $0.2 million in non-cash stock-based compensation, compared to an operating loss of $6.5 million, including $0.5 million in non-cash stock-based compensation for the third quarter of 2016. Operating loss for the nine months ended September 30, 2017 was $14.5 million, including $0.6 million in non-cash stock-based compensation, compared to an operating loss of $24.7 million, including $1.8 million in non-cash stock-based compensation for the same period in 2016.
Loss from continuing operations for the third quarter of 2017 was $6.2 million, or $0.15 per basic and diluted share, including $1.7 million in non-operating expense. Loss from continuing operations for the third quarter of 2016 was $4.3 million, or $0.41 per basic and diluted share, including $2.1 million in non-operating income. Loss from continuing operations for the nine months ended September 30, 2017 was $15.6 million, or $0.45 per basic and diluted share, including $1.1 million in non-operating expense. Loss from continuing operations for the nine months ended September 30, 2016 was $9.2 million, or $0.97 per basic and diluted share, including $15.6 million in non-operating income. Non-operating expense during the three and nine months ended September 30, 2017 includes a one-time impairment loss on goodwill and intangible assets of $5.2 million. The impairment loss recognized during the third quarter of 2017 is a non-cash expense and adjusts the carrying value of our intangible assets to approximate fair value based on an interim impairment analysis performed in connection with the preparation of our condensed consolidated financial statements for the three and nine months ended September 30, 2017. Non-operating expense during the three months and nine months ended September 30, 2017 also includes $0.6 million and $2.2 million, respectively, of interest expense related to our debenture and a litigation settlement of $1.3 million for the nine months ended September 30, 2017. The goodwill and impairment loss, interest expense, and litigation settlement included in non-operating expense during the three
months and nine months ended September 30, 2017 is partially offset by non-cash gains from the reduction in Galena’s warrant liability of $4.1 million and $7.8 million respectively.
Income from discontinued operations from Galena’s former commercial business for the third quarter of 2017 was $0.1 million, or $0.00 per basic and diluted share, compared to loss from discontinued operations of $2.6 million, or $0.25 per basic and diluted share, for the same period of 2016. Income from discontinued operations during the third quarter of 2017 was driven by an insurance recovery of $0.7 million for legal fees previously paid that was partially offset by a settlement for product returns reached with a former customer for one of our former commercial products. Loss from discontinued operations for the nine months ended September 30, 2017 was $10.6 million, or $0.31 per basic and diluted share, compared to $8.9 million, or $0.93 per basic and diluted share, for the same period of 2016. Loss from discontinued operations during the nine months ended September 30, 2017 includes an accrual for a one-time civil payment settlement of approximately $7.6 million, which was recognized in the first quarter of 2017 in current liabilities of discontinued operations, related to the oral agreement in principle with the U.S. Attorney’s Office for the District of New Jersey (USAO NJ) and the Department of Justice (DOJ). The civil payment will be paid by Galena in four equal, quarterly installments; the first payment was made in the third quarter of 2017.
Net loss for the third quarter of 2017 was $6.1 million, or $0.15 per basic and diluted share, compared to net loss of $6.9 million, or $0.66 per basic and diluted share for the third quarter of 2016. Net loss for the nine months ended September 30, 2017 was $26.2 million, or $0.76 per basic and diluted share, compared to $18.0 million, or $1.90 per basic and diluted share, for the same period of 2016.
Galena had cash and cash equivalents of approximately $12.9 million as of September 30, 2017, compared with $18.1 million as of December 31, 2016. During the nine months ended September 30, 2017, Galena used $26.2 million in operating activities offset by $15.5 million in net proceeds from issuance of common stock and warrants to purchase common stock in February 2017, and $5.7 million in redemptions of the debenture principally paid by Galena in shares of common stock which facilitated the release of $5.5 million of restricted cash.