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Teva Pharmaceutical Industries Ltd (ADR) (TEVA), Amgen, Inc. (AMGN): Is Galena Biopharma Inc (GALE)’s Big Break Just Around the Corner?

Judging by the numbers, Galena Biopharma Inc (NASDAQ:GALE) isn’t exactly a stock many would call great. Sure, shares are up more than 45% year-to-date. Galena Biopharma Inc (NASDAQ:GALE) still has a long way to go, though, just to claw its way back to levels that the stock reached in 2010. The company has no revenue and continues to bleed millions of dollars every month.

Smart investors know, however, that the key to winning hinges on having a good take on where things are headed rather than where they are now. Could Galena Biopharma Inc (NASDAQ:GALE) actually be poised for its big break in the not-too-distant future? The answer depends primarily on the prospects for two products.

Galena Biopharma Inc

Gain with pain
Galena purchased the rights to cancer pain medication Abstral in March. Abstral was developed by Swedish drugmaker Orexo AB, which sold U.S. rights for the drug to Galena Biopharma Inc (NASDAQ:GALE) for $15 million plus royalties and potential milestone payments.

Orexo already secured U.S. regulatory approval for Abstral in 2011 but hasn’t launched the drug in the American market yet. Galena expects to move forward with commercialization in the U.S. beginning in the fourth quarter of 2013.

Abstral reduces pain suffered by cancer patients by dissolving under the tongue and entering the bloodstream quickly. This pain — known as breakthrough cancer pain, or BTcP — affects 40% to 80% of all cancer patients.

Unfortunately, a successful launch of Abstral alone isn’t likely to enable Galena to attain greatness. The drug racked up sales of $54 million last year in Europe. That’s much better than generating no revenue, as is the case currently for Galena, but it’s still not that much money.

However, the U.S. market for drugs similar to Abstral totaled around $400 million in 2012. Abstral should be competitive in that market. Even if sales figures aren’t overly impressive right out of the gate, Galena Biopharma Inc (NASDAQ:GALE) should be able to leverage the cash it receives from Abstral to help further develop its pipeline. And it’s that pipeline where the biggest potential exists.

A minimal approach
Galena’s niche is in focusing on “minimal residual disease” that remains in cancer patients. The company’s lead product, Neuvax, stimulates specific cytotoxic T lymphocytes, or CTLs, which then hone in on and destroy cancer cells that express a protein called HER2.

Neuvax is currently in a late-stage clinical study targeting treatment of breast cancer. If this study proves as effective as earlier studies, Galena could have a winner. In the phase 1/2 trials, breast cancer patients taking Neuvax experienced a recurrence rate of 5.6% compared with a 25.9% recurrence rate in the control arm — an improvement of more than 78%.

Galena Biopharma Inc (NASDAQ:GALE)’s results managed to attract the attention of a much larger firm. In December, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) acquired the rights to market Neuvax in Israel pending regulatory approval. Based on Galena’s SEC filings, no upfront payment has been made so far. However, the company said that the agreement with Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) “allows for significant royalty payments” on future sales.

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