Galena: Improving Cancer Vaccines for the Future

Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There are some vaccine companies that have game changing technologies to target different types of cancer. One such company looking to improve upon cancer vaccines, is a small cap biotech company known as Galena Biopharma (NASDAQ: GALE). The company has many types of vaccine candidates in its pipeline, and is currently in one phase 3 study for breast cancer. The vaccine candidate to treat breast cancer is called NeuVax. 

The company's market cap is at $205.4 million and for a company that has its Neuvax Vaccine currently in a phase 3 trial I think it is still pretty cheap. The stock price is currently around $2.81 per share, and like many small cap biotech stocks it is still very risky. Although I believe that Galena has a huge vaccine on its hands, and if it plays out the stock will pop up big. 

Market Opportunity

The breast cancer market will be a huge opportunity if Galena Biopharma can perfect its vaccine. The breast cancer market is expected to reach $10.2 billion dollars worldwide by the year 2019. There is a drawback however, GALE only targets the patients who are classified as HER2-Negative. Meaning patients who can achieve remission on standard of care, but have no vaccine therapy to keep them disease free afterwards. 

Still if Gale is successful the company will be valued in the billions. There are about 232,340 breast cancer cases each year, and from that around 39,620 people die from it each year.  So for a vaccine company like Gale to be able to treat the other portion of the population that can't be treated with Herceptin, would be huge opportunity. Another alarming statistic going forward is that 1 in 8 U.S. women, or 12% will develop breast cancer over their lifetimes.

Results that Count

In the Neuvax phase 2 trial, 187 patients were enrolled in the vaccine study. The 108 patients in the trial received the Neuvax vaccine from Galena, and the control group received standard of care only.  Upon a 60 month median follow up, it was shown that the patients who took Neuvax experienced a 10.6% recurrence rate. This compares better to the control group only having a recurrence rate of 20.3%. 

The fact is that Neuvax has shown promising results in that phase 2 study follow up, and is now currently in its phase three trial. The company has also recently acquired an FDA approved drug named "Abstral" from Orexo AB pharma in Sweden. Abstral is used for patients that have severe pain with cancer. The good part about Galena acquiring this drug is that it will minimize its risk of having to dilute the stock in the future for cash. Which is why I maintain that the stock value should be higher than its current price. The company now has enough cash to run its trials until 2014, so it may be awhile until it burns through its current cash. 

Vical's Allovectin

It seems that there are many other competitors in the cancer vaccine space. Vical (NASDAQ: VICL) is another small cap biotech stock looking to conquer cancer with its vaccine pipeline. Vical is currently in phase 3 testing for a skin cancer known as Melanoma. Allovectin has been indicated to treat stage 3, and stage 4 Melanoma. The company is looking for Allovectin to be first-line treatment for melanoma patients. The company thinks that Allovectin can become more efficacious than all other current first line treatments for this indication. 

The company trades at a Market cap of $317.6 million, and the results may come out by late 2013. Vical trades currently at $3.46 per share, which is off of its 52 week high of $4.74. I still consider this stock as a risk like all other small cap biotech stocks, but like Galena this is also in a phase 3 study. If all goes well the company will make a lot of profit for investors. The reason being, is that the Melanoma cancer market will reach $1.15 billion by 2015. 

Dendreon's Provenge

There is another biotech company that uses vaccines to treat cancer. This other company is known as Dendreon (NASDAQ: DNDN), which was the first immunotherapy vaccine to be approved by the FDA. The FDA approved Dendreon's vaccine Provenge on April 29, 2010. The reason for the huge buzz back then was that the vaccine was able to extend a prostate cancer patients' life by 4 months. 

Dendreon since then has been struggling to sell provenge, mainly due to the high cost of treatment. The company's quarterly revenue fell to $85.5 million this quarter, compared to $202.1 million the same quarter last year. Still it is crucial for vaccine companies to advance into later stage trials, and combat cancer which has been difficult to treat. Vaccine treatments would be better for prostate cancer patients, than having to go through toxic chemotherapy causing all sorts of other problems. 

Final Thought

I feel that Galena biopharma is taking what it has learned from previous cancer vaccine failures, and using Neuvax to generate good results. Gale currently trades at around $2.81 per share, but if phase 3 goes well the stock could see a huge boost into the double digits. Neuvax could be a game changer in the field of vaccines fighting cancer. Its first target indication is targeting breast cancer, which has a market opportunity seen to be in the billions.

The company doesn't just stop on breast cancer alone. It is also in early stage testing of Prostate cancer like Dendreon. The downside is that Gale's prostate cancer vaccine is only in phase 1, and it has many years before it will even get to market. Another trial they are working on is on Endometrial, and Ovarian cancer. If you have a spot in your portfolio for a speculative biotech stock Gale would be a wise choice for those investors who are seeking long term profit. 

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Terry Chrisomalis owns shares of Galena Biopharma. The Motley Fool owns shares of Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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