The waiting game
The tables are clearly stacked against small biotech companies developing cancer drugs. History has shown that few (if any) have successfully had the Food and Drug Administration approve a late-stage cancer drug. While mid-stage trials of Galena Biopharma Inc (NASDAQ:GALE)‘s HER2-targeting breast cancer vaccine have been promising thus far, the chances of an approval seem a long way off.
In phase 1/2 trials the recurrence rate was reduced to just 5.6% in the NeuVax arm compared to a 25.9% recurrence rate in the control arm after a 60-month period. However, the split patient pool for these vaccines was relatively small (187 people) and it will take an additional three years to determine whether NeuVax meets its primary endpoint of disease-free survival once the phase 3 study is full. Including an FDA panel review and FDA PDUFA decision, we could be looking at 2017 before NeuVax even has the slightest chance at hitting the market.
Also, nearly Galena Biopharma Inc (NASDAQ:GALE)’s entire pipeline is made up of some trial involving NeuVax, so a failure here could be a potentially big blow to shareholder confidence. This is a situation where I’d like to believe NeuVax could succeed, but there are viable reasons — and a three-year wait — to believe that this valuation is far from deserved.
This week’s theme is all about keeping investors’ expectations in check. Pinnacle Entertainment, Inc (NYSE:PNK)’s reliance on the domestic gambling industry, Radian Group Inc (NYSE:RDN)’s mounting losses from its legacy mortgage loans, and having history stacked against Galena Biopharma Inc (NASDAQ:GALE) make all three potential underperformers.
The article 3 Stocks Near 52-Week Highs Worth Selling originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Waste Management.
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