Galena's Breast Cancer Vaccine Doomed to Fail

Galena cherrypicks a subgroup of patients where it claims NeuVax works but ignores another equally large subgroup of patients where NeuVax actually hurts patients, even though the vaccine should work for better these latter patients.

None of this bodes well for NeuVax. The phase III study is going to fail, all that's necessary is patience since we may not see results for three years. NeuVax isn't going to work -- the phase II data don't lie.

Before wrapping up this dissection of Galena, let's do away with a couple more canards that seem to have retail investors excited and optimistic.

First, Roche/Genentech is not interested in acquiring Galena, nor is the company a partner in a phase II study testing the combination of NeuVax and Herceptin in breast cancer.

Galena has issued many press releases claiming Roche/Genentech's involvement in this small phase II study, but that's misleading because Roche/Genentech's participation is limited to a small amount of funding and the donation of Herceptin supplies to the investigator so he can conduct the study, says company spokesman Ed Lang.

Think about it, if Roche was really interested in NeuVax, it could have bought Apthera, the original owner of the vaccine, for $7 million. That's the price Galena paid to acquire the tiny, private company last year.

For Roche, $7 million is not even a rounding error on a rounding error on a rounding error on the company's balance sheet. Roche's involvement in this phase II combination study is scientific charity, not serious R&D due diligence. I'm sure someone inside Roche performed the same analysis I just did and reached a similar conclusion.

Second, Galena bulls often ask: Why would Galena buy Apthera if NeuVax wasn't legitimate?

Galena bought Apthera for a lousy $7 million because the company was desperate to stay in business following the collapse of its original mission to develop drugs based on RNA interference, or RNAi. Biotech companies don't fold voluntarily and return money to shareholders when their business plans flop, so RXi Pharmaceuticals ditched RNAi, bought Apthera and changed its name to Galena Biopharma.

An RNAi company was now transformed into a cancer immunotherapy company… like magic!

Apthera had been a ghost company for years -- unwanted by anyone in the bio-pharma industry. Some of the initial phase II NeuVax data in breast cancer was first presented and published in 2005. In 2009, Apthera landed the SPA with the FDA for the phase III study (it took 21 months to negotiate) but the company had no money to actually start the study.