Puma Biotechnology Reports Third Quarter 2016 Financial Results

On November 9, 2016 Puma Biotechnology, Inc. (NYSE: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2016 (Press release, Puma Biotechnology, NOV 9, 2016, View Source [SID1234516720]).

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Unless otherwise stated, all comparisons are for the third quarter and nine months ended September 30, 2016, compared to the third quarter and nine months ended September 30, 2015.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $65.8 million, or $2.02 per share, for the third quarter of 2016, compared to a net loss of $60.4 million, or $1.87 per share, for the third quarter of 2015. Net loss applicable to common stock for the nine months ended September 30, 2016 was $203.4 million, or $6.26 per share, compared to $177.6 million, or $5.55 per share, for the nine months ended September 30, 2015.

Non-GAAP adjusted net loss was $36.0 million, or $1.11 per share, for the third quarter of 2016, compared to non-GAAP adjusted net loss of $35.5 million, or $1.10 per share, for the third quarter of 2015. Non-GAAP adjusted net loss for the nine months ended September 30, 2016 was $115.4 million, or $3.55 per share, compared to $104.3 million, or $3.26 per share, for the nine months ended September 30, 2015. Non-GAAP adjusted net loss excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net loss per share, please see the financial tables at the end of this news release.

Net cash used in operating activities for the third quarter of 2016 was $34.9 million. Net cash used in operating activities for the nine months ended September 30, 2016 was $100.7 million. At September 30, 2016, Puma had cash and cash equivalents of $52.5 million and marketable securities of $56.4 million, compared to cash and cash equivalents of $31.6 million and marketable securities of $184.3 million at December 31, 2015. The Company’s balance of cash, cash equivalents and marketable securities at the end of the quarter does not include the net proceeds of approximately $162 million received from the Company’s public offering in October 2016.

"During the third quarter, we achieved several key milestones, including the European Medicines Agency’s (EMA) validation of the Marketing Authorization Application (MAA) for neratinib as an extended adjuvant treatment of HER2-positive early stage breast cancer in Europe, and the U.S. Food and Drug Administration’s (FDA) acceptance of the New Drug Application (NDA) for neratinib as an extended adjuvant treatment for patients with early stage HER2-overexpressed/amplified breast cancer who have received prior adjuvant trastuzumab (Herceptin)-based therapy," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma.

"We anticipate a number of additional milestones through the end of 2016 and first half of 2017," Mr. Auerbach added. "These include: (i) reporting additional data in the fourth quarter of 2016 from the Phase II trial of neratinib as an extended adjuvant treatment in HER2-positive early stage breast cancer using loperamide and budesonide prophylaxis; (ii) reporting additional Phase II data in the fourth quarter of 2016 from the FB-7 neoadjuvant HER2-positive breast cancer trial in the subgroup of patients who are MammaPrint High; (iii) reporting data in the fourth quarter of 2016 from the Phase II trial of neratinib plus fulvestrant in patients with HER2 non-amplified breast cancer that has a HER2 mutation; (iv) reporting data in the first half of 2017 from the Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer patients; and (v) reporting data during the first half of 2017 from the Phase II trial of neratinib in HER2-positive metastatic breast cancer patients with brain metastases."

Operating Expenses

Operating expenses were $66.0 million for the third quarter of 2016, compared to $60.7 million for the third quarter of 2015. Operating expenses for the nine months ended September 30, 2016 were $203.7 million, compared to $178.2 million for the nine months ended September 30, 2015.

General and Administrative Expenses:

General and administrative expenses were $14.0 million for the third quarter of 2016, compared to $8.8 million for the third quarter of 2015. General and administrative expenses for the nine months ended September 30, 2016 were $37.3 million, compared to $22.2 million for the nine months ended September 30, 2015. The increase of approximately $15.1 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.5 million in stock-based compensation, $1.9 million in payroll and related costs, $3.7 million in professional fees and expenses, and $1.6 million in facility and equipment costs. These increases reflect higher legal and compliance expenses, as well as overall corporate growth.

Research and Development Expenses:

Research and development expenses were $52.0 million for the third quarter of 2016, compared to $51.9 million for the third quarter of 2015. Research and development expenses for the nine months ended September 30, 2016 were $166.4 million, compared to $156.0 million for the nine months ended September 30, 2015. The increase of approximately $10.4 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.2 million in stock-based compensation, $3.7 million for internal clinical development, regulatory affairs and quality assurance and internal chemical manufacturing expenses, and $2.7 million in consultants and contractors related expenses, offset by a $3.3 million decrease in clinical trial expenses.

Puma Biotechnology Reports Third Quarter 2016 Financial Results

On November 9, 2016 Puma Biotechnology, Inc. (NYSE: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2016 (Press release, Puma Biotechnology, NOV 9, 2016, View Source [SID1234516704]).

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Unless otherwise stated, all comparisons are for the third quarter and nine months ended September 30, 2016, compared to the third quarter and nine months ended September 30, 2015.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $65.8 million, or $2.02 per share, for the third quarter of 2016, compared to a net loss of $60.4 million, or $1.87 per share, for the third quarter of 2015. Net loss applicable to common stock for the nine months ended September 30, 2016 was $203.4 million, or $6.26 per share, compared to $177.6 million, or $5.55 per share, for the nine months ended September 30, 2015.

Non-GAAP adjusted net loss was $36.0 million, or $1.11 per share, for the third quarter of 2016, compared to non-GAAP adjusted net loss of $35.5 million, or $1.10 per share, for the third quarter of 2015. Non-GAAP adjusted net loss for the nine months ended September 30, 2016 was $115.4 million, or $3.55 per share, compared to $104.3 million, or $3.26 per share, for the nine months ended September 30, 2015. Non-GAAP adjusted net loss excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net loss per share, please see the financial tables at the end of this news release.

Net cash used in operating activities for the third quarter of 2016 was $34.9 million. Net cash used in operating activities for the nine months ended September 30, 2016 was $100.7 million. At September 30, 2016, Puma had cash and cash equivalents of $52.5 million and marketable securities of $56.4 million, compared to cash and cash equivalents of $31.6 million and marketable securities of $184.3 million at December 31, 2015. The Company’s balance of cash, cash equivalents and marketable securities at the end of the quarter does not include the net proceeds of approximately $162 million received from the Company’s public offering in October 2016.

"During the third quarter, we achieved several key milestones, including the European Medicines Agency’s (EMA) validation of the Marketing Authorization Application (MAA) for neratinib as an extended adjuvant treatment of HER2-positive early stage breast cancer in Europe, and the U.S. Food and Drug Administration’s (FDA) acceptance of the New Drug Application (NDA) for neratinib as an extended adjuvant treatment for patients with early stage HER2-overexpressed/amplified breast cancer who have received prior adjuvant trastuzumab (Herceptin)-based therapy," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma.

"We anticipate a number of additional milestones through the end of 2016 and first half of 2017," Mr. Auerbach added. "These include: (i) reporting additional data in the fourth quarter of 2016 from the Phase II trial of neratinib as an extended adjuvant treatment in HER2-positive early stage breast cancer using loperamide and budesonide prophylaxis; (ii) reporting additional Phase II data in the fourth quarter of 2016 from the FB-7 neoadjuvant HER2-positive breast cancer trial in the subgroup of patients who are MammaPrint High; (iii) reporting data in the fourth quarter of 2016 from the Phase II trial of neratinib plus fulvestrant in patients with HER2 non-amplified breast cancer that has a HER2 mutation; (iv) reporting data in the first half of 2017 from the Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer patients; and (v) reporting data during the first half of 2017 from the Phase II trial of neratinib in HER2-positive metastatic breast cancer patients with brain metastases."

Operating Expenses

Operating expenses were $66.0 million for the third quarter of 2016, compared to $60.7 million for the third quarter of 2015. Operating expenses for the nine months ended September 30, 2016 were $203.7 million, compared to $178.2 million for the nine months ended September 30, 2015.

General and Administrative Expenses:

General and administrative expenses were $14.0 million for the third quarter of 2016, compared to $8.8 million for the third quarter of 2015. General and administrative expenses for the nine months ended September 30, 2016 were $37.3 million, compared to $22.2 million for the nine months ended September 30, 2015. The increase of approximately $15.1 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.5 million in stock-based compensation, $1.9 million in payroll and related costs, $3.7 million in professional fees and expenses, and $1.6 million in facility and equipment costs. These increases reflect higher legal and compliance expenses, as well as overall corporate growth.

Research and Development Expenses:

Research and development expenses were $52.0 million for the third quarter of 2016, compared to $51.9 million for the third quarter of 2015. Research and development expenses for the nine months ended September 30, 2016 were $166.4 million, compared to $156.0 million for the nine months ended September 30, 2015. The increase of approximately $10.4 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.2 million in stock-based compensation, $3.7 million for internal clinical development, regulatory affairs and quality assurance and internal chemical manufacturing expenses, and $2.7 million in consultants and contractors related expenses, offset by a $3.3 million decrease in clinical trial expenses

La Jolla Pharmaceutical Company Announces Financial Results for the
Three and Nine Months Ended September 30, 2016 and Recent Corporate Progress

On November 3, 2016 La Jolla Pharmaceutical Company (NASDAQ: LJPC) (the Company or La Jolla), a leader in the development of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases, reported financial results for the three and nine months ended September 30, 2016 and recent corporate progress (Filing, Q3, La Jolla Pharmaceutical, 2016, NOV 9, 2016, View Source [SID1234516680]).

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Recent Corporate Progress

In September 2016, La Jolla reported positive results from a multicenter, open-label, dose-escalation Phase 1 trial of LJPC-401, the Company’s novel formulation of synthetic human hepcidin, in patients at risk for iron overload due to conditions such as hereditary hemochromatosis (HH), beta thalassemia, sickle cell disease (SCD) and myelodysplastic syndrome (MDS). Fifteen patients were dosed at escalating dose levels ranging from 1 to 20 mg. LJPC-401 was well tolerated, and there were no dose-limiting toxicities observed. A dose-dependent, statistically significant reduction in serum iron was observed (p=0.008 for dose response; not adjusted for multiple comparisons). At the 20 mg dose level, LJPC-401 reduced serum iron by an average of 58.1% from baseline to hour 8 (p=0.001; not adjusted for potential regression to the mean effect), and serum iron had not returned to baseline through day 7 (21.2% reduction from baseline to the end of day 7).

In September 2016, La Jolla reached agreement with the European Medicines Agency (EMA) on the design of a pivotal trial of LJPC-401, the Company’s novel formulation of synthetic human hepcidin. The pivotal trial will be a randomized, controlled, multicenter trial in beta thalassemia patients suffering from iron overload, a major unmet need in an orphan patient population. The primary endpoint will be a clinically relevant measurement directly related to iron overload. La Jolla plans to initiate this pivotal trial in mid-2017.

In October 2016, the EMA Committee for Orphan Medicinal Products (COMP) issued a positive opinion recommending LJPC-401, synthetic human hepcidin, for designation as an orphan medicinal product for the treatment of SCD.

"The first nine months of 2016 have been productive for La Jolla, highlighted by continued enrollment of our ATHOS 3 Phase 3 trial of LJPC-501 and encouraging results from our Phase 1 trial of LJPC-401, which demonstrated a clear dose-dependent effect of LJPC-401 on serum iron, a clinically important measure," said George Tidmarsh, M.D., Ph.D., La Jolla’s President and Chief Executive Officer. "We look forward to building on this positive momentum, with the anticipation of reporting results from our ATHOS 3 Phase 3 trial of LJPC-501 in the first quarter of 2017 and initiation of our pivotal trial for LJPC-401 in mid-2017."

Results of Operations

As of September 30, 2016, La Jolla had $85.0 million in cash and cash equivalents, compared to $126.5 million as of December 31, 2015. The decrease in cash and cash equivalents was primarily due to net cash used for operating activities. Based on current operating plans and projections, La Jolla believes that its current cash and cash equivalents are sufficient to fund operations into 2018.

La Jolla’s net cash used for operating activities for the nine months ended September 30, 2016 was $40.1 million, compared to net cash used for operating activities of $16.7 million for the same period in 2015. La Jolla’s net loss for the three and nine months ended September 30, 2016 was $21.3 million and $53.3 million, or $1.23 per share and $3.10 per share, respectively, compared to a net loss of $10.5 million and $30.1 million, or $0.70 per share and $1.99 per share, respectively, for the same periods in 2015. During the three and nine months ended September 30, 2016, La Jolla recognized contract revenue of approximately $44,000 and $531,000, respectively. The net loss includes non-cash, share-based compensation expense of $3.9 million and $11.0 million for the three and nine months ended September 30, 2016, respectively, compared to $3.1 million and $10.3 million, respectively, for the same periods in 2015.

The increases in net cash used for operating activities and net loss in the 2016 periods as compared to the 2015 periods were primarily due to increased development costs associated with our ATHOS 3 Phase 3 trial of LJPC-501 in patients with catecholamine-resistant hypotension and our Phase 1 trial of LJPC-401 in patients with iron overload.

MEI Pharma Reports First Quarter Fiscal Year 2017 Results

On November 9, 2016 MEI Pharma, Inc. (Nasdaq: MEIP), an oncology company focused on the clinical development of novel therapies for cancer, reported results for its first quarter ended September 30, 2016 (Press release, MEI Pharma, NOV 9, 2016, View Source [SID1234516663]). The Company also highlighted recent progress with its pipeline of drug candidates and previewed upcoming data presentations.

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"The past quarter was one of unprecedented achievement for the company, highlighted by the receipt of Breakthrough Therapy Designation and a global strategic partnership for Pracinostat," said Daniel P. Gold, Ph.D., President and Chief Executive Officer of MEI Pharma. "Now we approach the end of the calendar year in a position of significant strength, armed with a fully funded Phase III program, a pipeline of drug candidates advancing in the clinic and a healthy cash position that affords us the ability to not only execute our clinical development plan, but also to enhance our pipeline with the right opportunity."

Pipeline Update

Strategic partnership for development and commercialization of Pracinostat. In August 2016, the Company entered into an exclusive licensing, development and commercialization agreement with Helsinn Healthcare, SA, a Swiss pharmaceutical corporation, for Pracinostat, an investigational agent currently being evaluated in clinical studies for acute myeloid leukemia (AML) and other potential indications. Under the terms of the agreement, Helsinn is granted a worldwide exclusive license to Pracinostat and is responsible for funding its global development and commercialization. As compensation, MEI Pharma will receive near-term payments of $20 million, including a $15 million upfront payment and a $5 million payment upon the earlier of (i) dosing of the first patient in the upcoming Phase III study of Pracinostat in newly diagnosed AML patients unfit to receive induction therapy, or (ii) March 1, 2017. In addition, MEI Pharma will be eligible to receive up to $444 million in potential regulatory and sales-based milestones, along with royalty payments on the net sales of Pracinostat. In a related transaction, Helsinn made a $5 million equity investment in MEI Pharma.
Dose-optimization study of Pracinostat plus azacitidine in high-risk MDS. As part of the license, development and commercialization agreement, the Company will work with Helsinn to determine an optimal dosing regimen of Pracinostat in combination with azacitidine for the treatment of high and very high risk myelodysplastic syndrome (MDS). Based on its clinical experience with the combination, the Company believes that an optimized dose may improve tolerability in this population, which in turn could result in increased efficacy of the combination vs. azacitidine alone. MEI Pharma will be responsible for the conduct of the study and Helsinn will share the cost. The study is anticipated to commence in the first half of calendar year 2017.
Breakthrough Therapy Designation from U.S. Food and Drug Administration (FDA). In August 2016, the Company announced that the FDA granted Breakthrough Therapy Designation for Pracinostat in combination with azacitidine for the treatment of patients with newly diagnosed AML who are ≥75 years of age or unfit for intensive chemotherapy. According to the FDA, Breakthrough Therapy Designation is intended to expedite the development and review of drugs for serious or life-threatening conditions. The criteria for Breakthrough Therapy Designation require preliminary clinical evidence that demonstrates the drug may have substantial improvement on at least one clinically significant endpoint over available therapy. In addition, the Company announced that agreement has been reached with the FDA on the proposed Phase III AML study design.
Phase Ib study of PI3K delta inhibitor ME-401 open for enrollment. In September 2016, the Company’s Phase 1b clinical study of ME-401 in patients with relapsed refractory chronic lymphocytic leukemia/small lymphocytic lymphoma or follicular lymphoma was opened for enrollment. ME-401 is a potent and highly selective oral PI3K delta inhibitor with the potential for a wide therapeutic window that may lead to safer treatment options, including combination treatment options, for patients with lymphomas. This study will allow the Company to study the safety and tolerability of ME-401 over time as it seeks to identify an optimal dose for future Phase 2 studies. Interim data from the study is expected by the middle of calendar year 2017.
Investigator-sponsored study of mitochondrial inhibitor ME-344 open for enrollment. In August 2016, an investigator-sponsored study of ME-344 in combination with the vascular endothelial growth factor (VEGF) inhibitor bevacizumab (marketed as Avastin) in patients with HER2-negative breast cancer was opened for enrollment. The study is being conducted in collaboration with the Spanish National Cancer Research Centre in Madrid. Pre-clinical data from the collaboration showed substantially enhanced anti-tumor activity of ME-344 in cancer cells when combined with VEGF inhibitors due to a disruption of both mitochondrial and glycolytic metabolism. Data from the investigator-sponsored study are expected by the end of calendar year 2017.
Upcoming Data Presentations

Long-term survival and response data from Phase II study of Pracinostat in AML. Data from a multi-center Phase II clinical study of Pracinostat and azacitidine in older patients with AML who are not eligible for induction chemotherapy have been selected for oral presentation at the upcoming ASH (Free ASH Whitepaper) Annual Meeting in San Diego on December 3, 2016. The presentation by principal investigator Dr. Guillermo Garcia-Manero, MD Anderson Cancer Center, is expected to highlight the durable responses and long-term survival benefit achieved in this investigational study, which appeared to compare favorably to azacitidine alone in a recent international Phase III study (AZA-AML-001). Pracinostat is an investigational agent and is not approved for use in the U.S.
Exposure data from clinical study of ME-401 supporting wide therapeutic window. Additional data from a first-in-human clinical study of ME-401 in healthy volunteers will be presented at the American Association of Pharmaceutical Scientists (AAPS) Annual Meeting in Denver on November 15, 2016. The presentation will highlight formulation selection and development for ME-401, including exposure margins based on clinical data and preclinical toxicity supporting the potential for an improved therapeutic window from repeated dosing compared to the approved PI3K delta inhibitor idelalisib (marketed as Zydelig).
Financial Highlights

As of September 30, 2016, MEI Pharma had $58.9 million in cash, cash equivalents and short-term investments, which the Company believes will be sufficient to fund operations through at least calendar year 2017.
Net loss was $4.3 million, or $0.12 per share, for the three months ended September 30, 2016, compared to $5.7 million, or $0.17 per share, for the previous quarter, and $4.6 million, or $0.13 per share for the same period in 2015.
Research and development expenses were $1.6 million for the three months ended September 30, 2016, compared to $2.8 million for the same period in 2015. The decrease was primarily due to a reduction in clinical trial expenses for Pracinostat and ME-344.
General and administrative expenses were $2.7 million for the three months ended September 30, 2016, compared to $1.8 million for the same period in 2015. The increase was primarily due to professional service costs associated with the Helsinn license agreement.

Galena Biopharma Reports Third Quarter 2016 Financial Results and Provides a Corporate Update

On November 9, 2016 Galena Biopharma, Inc. (NASDAQ: GALE), a biopharmaceutical company committed to the development and commercialization of hematology and oncology therapeutics that address unmet medical needs, reported its financial results and provided a corporate update for the quarter ended September 30, 2016 (Filing, Q3, Galena Biopharma, 2016, NOV 9, 2016, View Source [SID1234516646]).

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"Over the past several weeks we have collaborated with regulatory experts and world leaders in the treatment of myeloproliferative neoplasms on key elements of the trial design for our pivotal, Phase 3 trial that we expect to initiate in the second quarter of 2017," said Mark W. Schwartz, Ph.D., President and Chief Executive Officer. "Essential thrombocythemia is a chronic condition in patients presenting with elevated platelets and the limited available treatment options often include challenging side effects. We believe that GALE-401, our controlled release version of anagrelide, could be both effective at lowering platelets and improve the side effect profile from the immediate release version currently available."

As previously announced, Galena discontinued its NeuVax (nelipepimut-S) Phase 3 PRESENT (Prevention of Recurrence in Early-Stage, Node-Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment) clinical trial due to futility in accordance with the recommendation from the Independent Data Monitoring Committee (IDMC). On today’s call, management will present the top-line data from the trial and its assessment of the results.

Dr. Schwartz continued, "With a better understanding of the interim data in the PRESENT trial, we have the knowledge and experience to guide our immunotherapy programs through clinical development, reinforcing my belief and confidence in our pipeline. As the cancer immunotherapy field focuses on combination treatments, we continue to advance our NeuVax plus trastuzumab clinical trials and evaluate additional indications where NeuVax may benefit patients in combination with other agents. Similarly, our GALE-301 and GALE-302 trials remain ongoing with two additional data presentations this year."

Galena will host a webcast and conference call today at 2:00 p.m. P.T./5:00 p.m. E.T. to discuss its financial and business results. The live webcast will include slides that can be accessed on the Company’s website under the Investors section/Events and Presentations: View Source The conference call can be accessed by dialing (844) 825-4413 toll-free in the U.S., or (973) 638-3403 for participants outside the U.S. The Conference ID number is: 7629100. The archived webcast replay will be available on the Company’s website for one year.

1

FINANCIAL REVIEW

Operations

Operating loss from Galena’s development programs and general and administrative expenses, classified as continuing operations, during the three months ended September 30, 2016 was $6.5 million, including $0.5 million in non-cash stock-based compensation, compared to an operating loss from continuing operations of $8.6 million, including $0.6 million in non-cash stock-based compensation for the same period in 2015. Operating loss for the first nine months of 2016 was $24.7 million, including $1.8 million in non-cash stock-based compensation, compared to an operating loss from continuing operations of $26.6 million, including $1.3 million in non-cash stock-based compensation for the same period in 2015.

Loss from continuing operations for Q3 2016 was $4.3 million, or $0.02 per basic and diluted share, including $2.1 million in non-operating income. Loss from continuing operations for Q3 2015 was $6.4 million, or $0.04 per basic and diluted share, including $2.3 million non-operating income. Loss from continuing operations for the first nine months of 2016 was $9.2 million, or $0.05 per basic and diluted share, including $15.6 million in non-operating income. Loss from continuing operations for the first nine months of 2015 was $28.2 million, or $0.18 per basic and diluted share, including $1.5 million in non-operating expense.

The net non-operating income for the three months ended September 30, 2016 was largely due to a $3.7 million gain from the significant decrease in the estimated fair value of warrants accounted for as liabilities driven by the decline in Galena’s common stock price. The net non-operating income for the nine months ended September 30, 2016 was largely due to $14.2 million and $5.2 million gains from the significant decreases in the estimated fair value of warrants accounting for as liabilities and the contingent purchase price liability related to NeuVax given the decision to close the PRESENT study, respectively. The gain realized from the decrease in these two liabilities was partially offset by $1.4 million and $2.0 million of interest expense for the three and nine months ended September 30, 2016. The changes in the estimated fair value of warrants accounted for as liabilities and the contingent purchase price liability are reflected as non-cash gains and losses in the consolidated financial statements. Management believes the most relevant measure of our performance is operating loss.

Loss from discontinued operations from Galena’s former commercial business for Q3 2016 was $2.6 million, or $0.01 per basic and diluted share, compared to $11.7 million, or $0.07 per basic and diluted share, for the same period of 2015. Loss from discontinued operations for the first nine months of 2016 was $8.9 million, or $0.05 per basic and diluted share, compared to $16.1 million, or $0.11 per basic and diluted share, for the same period of 2015. The three and nine months ended September 30, 2015 include a one-time non-cash impairment charge of $8.1 million from the former commercial business being classified as held for sale.

Net loss for Q3 2016 was $6.9 million, or $0.03 per basic and diluted share, compared to net loss of $18.0 million, or $0.11 per basic and diluted share, for the same period of 2015. Net loss for the first nine months of 2016 was $18.0 million, or $0.10 per basic and diluted share, compared to $44.2 million, or $0.29 per basic and diluted share, for the same period of 2015.

2

Cash and Cash Equivalents

Galena had cash and cash equivalents of approximately $24.5 million as of September 30, 2016, compared with $29.7 million as of December 31, 2015. The decrease of approximately $5.2 million in cash and cash equivalents from December 31, 2015 to September 30, 2016 was attributable primarily to $36.9 million used in operating activities, $1.1 million in selling expenses related to the sale of the Company’s commercial products, and $4.8 million in payments on long-term debt. The decrease was partially offset by $31.8 million in net proceeds from issuance of common stock and warrants to purchase common stock in offerings, and $5.1 million becoming immediately available to the Company from amending our long-term debt to reduce restricted cash. As of September 30, 2016, Galena had $18.9 million of restricted cash including $18.5 million restricted as a minimum cash covenant for our Debenture, the minimum cash covenant being the lesser of $18.5 million or the outstanding balance of the Debenture.

THIRD QUARTER AND RECENT ACTIVITIES

Clinical Development

Presented GALE-301/GALE-302 Phase 1b Data
On October 20, 2016, a podium presentation was delivered on Galena’s GALE-301 and GALE-302 clinical program at the American College of Surgeons Clinical Congress 2016. The Phase 1b is a single-center, randomized, single-blinded, three-arm study in patients with breast or ovarian cancer diagnosis who were treated with standard of care and were without evidence of disease. This trial augments the Phase 1/2a trial with single-agent GALE-301 in ovarian and endometrial cancers. The presentation was entitled, "A Phase Ib Trial Comparing Different Doses/Schedules of a Folate Binding Protein (FBP)-derived Peptide Vaccine, E39, and its Attenuated Version, E39’, to Induce Long-term FBP-specific Immunity in Disease-free Cancer Patients." In this trial, which enrolled mostly breast cancer patients, who have lower FBP exposure than ovarian patients, the 500mcg dose appears to provide a more optimal immunological response. This differs from the results in ovarian cancer patients, who have much higher FBP expression, with potential secondary immune tolerance, where 1000mcg was the optimal dose. However, E39’ (GALE-302) given after E39 (GALE-301) was able to induce long-term immunity in both dosing cohorts, underscoring the potential importance of attenuated peptides in relatively antigen-naïve patients.

Presented NeuVax plus Trastuzumab Interim Safety Data
On October 10, 2016, Galena presented interim safety data from the NeuVax Phase 2b combination study with trastuzumab at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016. The clinical trial is a randomized, multicenter, investigator-sponsored, 300 patient Phase 2b study enrolling HER2 1+ and 2+ node positive, and high-risk node negative patients. The poster, entitled, "Interim safety analysis of a phase II trial combining trastuzumab and NeuVax, a HER2-targeted peptide vaccine, to prevent breast cancer recurrence in HER2 low expression," demonstrated that this novel combination of trastuzumab and NeuVax in HER2 low-expressing (LE) patients is well-tolerated and the cardiac effects of trastuzumab are not impacted by the addition of NeuVax.

Presented GALE-301 FBP Expression Data
On September 27, 2016, data was presented on the association between clinical outcomes and folate binding protein (FBP) expression from our GALE-301 Phase 1/2a clinical trial at the CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference (CIMT) (Free CIMT Whitepaper). The poster, entitled, "Improved disease-free survival in endometrial and ovarian cancer patients with low folate binding protein expression after treatment with the E39 peptide vaccine in a phase I/IIa trial," reported clinical outcomes based on FBP expression level. The data revealed a disease free survival (DFS) benefit in patients with low FBP expression (FBPlo), but not in patients with high FBP expression (FBPhi).

3

Presented Preclinical NeuVax data in Ovarian and Pancreatic Cancer
On September 13, 2016, preclinical NeuVax data was presented at the Progress in Vaccination Against Cancer (PIVAC) Conference. NeuVax contains the immunodominant peptide derived from the extracellular region of the HER2 protein, which is expressed in ovarian and pancreatic cancers as well as in breast cancer. The poster, entitled, "Preclinical study on the efficacy of NeuVax peptide vaccine against human Her2+/ HLA-A2.1+ ovarian and pancreatic cancer," demonstrated the results of HLA-A2 transgenic mice that were immunized with NeuVax (E75) mixed with recombinant mouse GM-CSF (NeuVax mice). Administration of the NeuVax vaccination resulted in a specific, delayed-type hypersensitivity (DTH) reaction and in the induction of E75 specific CD8+ T cells that express PD-1 (programmed T-cell death protein). Both ovarian and pancreatic tumor growth rate was significantly reduced in NSG mice that received the CD8+ T cells from NeuVax-immunized mice compared to those receiving CD8+ T cells from control mice. Additionally, the expression of PD-1 on activated CD8+ T cells suggests an opportunity to investigate the efficacy of NeuVax in combination with PD-1 inhibitors.

Expanded GALE-401 Intellectual Property Protection with Patent Issuance in Japan
On September 12, 2016, GALE-401 was issued a second Japanese Patent (JP Patent #5985719) containing composition and method of use claims for GALE-401, anagrelide controlled release. The patent covers the treatment of patients suffering from myeloproliferative diseases, including myeloproliferative neoplasms (MPNs) such as essential thrombocythemia (ET) and polycythemia vera. The patent provides GALE-401 exclusivity until 2029, not including any patent term extensions.

Corporate

Appointed a new Chief Financial Officer
On November 3, 2016, Stephen F. Ghiglieri was appointed as the Company’s Executive Vice President and Chief Financial Officer. Mr. Ghiglieri has more than 30 years in senior level finance and operations roles at both biotechnology and technology companies. Prior to Galena Biopharma, Mr. Ghiglieri served as CFO of MedData Inc., a private equity backed healthcare services company that was sold to Mednax, a publicly traded national medical group. Previously, he spent nearly 10 years at NeurogesX, ending his tenure as the Company’s Executive Vice President, Chief Operating Officer, and CFO. Prior to that he served as the CFO of Hansen Medical, Inc., a medical device company. He also held senior level finance positions at two other healthcare companies: Oacis Healthcare Systems, Inc., and Oclassen Pharmaceuticals, Inc. Additionally, he was also the CFO and Corporate Secretary for two technology software companies: Avolent, Inc., and Andromedia, Inc. Mr. Ghiglieri began his career as an audit manager of PricewaterhouseCoopers, LLP. He received a Bachelor of Science in Business Administration from California State University, Hayward where he graduated Magna Cum Laude. Mr. Ghiglieri is also a Certified Public Accountant (inactive).

Announced a Reverse Stock Split
On October 31, 2016, the Company announced a Reverse Stock Split of its shares of common stock at a ratio of 1-for-20 following the approval by the Company’s Board of Directors. The reverse stock split was authorized by the Company’s stockholders at the Special Meeting of Stockholders held on October 21, 2016. The reverse stock split will become effective on November 11, 2016 and the Company’s common stock will commence trading on a split-adjusted basis when the market opens on Monday, November 14, 2016. The Company’s common stock will continue to trade on the NASDAQ Capital Market under the symbol "GALE" but will trade under the new CUSIP number 363256504.

Closed a Registered Direct Equity Offering
On July 13, 2016, Galena closed a registered direct equity offering of common stock and warrants. The net proceeds to the Company were approximately $11.7 million.

4

GALENA BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Amounts in thousands, except share and per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015
Operating expenses:

Research and development
$
3,624

$
5,740

$
15,242

$
18,762

General and administrative
2,848

2,895

9,490

7,869

Total operating expenses
6,472

8,635

24,732

26,631

Operating loss
(6,472
)

(8,635
)

(24,732
)

(26,631
)
Non-operating income (expense):

Litigation settlements

(1,800
)

Change in fair value of warrants potentially settleable in cash
3,652

2,134

14,172

(981
)
Interest expense, net
(1,377
)

(158
)

(1,988
)

(607
)
Change in fair value of the contingent purchase price liability
(145
)

307

5,182

69

Total non-operating income (expense), net
2,130

2,283

15,566

(1,519
)
Loss from continuing operations
$
(4,342
)

$
(6,352
)

$
(9,166
)

$
(28,150
)
Discontinued operations

Loss from discontinued operations

(2,587
)

(11,674
)

(8,867
)

(16,074
)
Net loss
$
(6,929
)

$
(18,026
)

$
(18,033
)

$
(44,224
)
Net loss per common share:

Basic and diluted net loss per share, continuing operations
$
(0.02
)

$
(0.04
)

$
(0.05
)

$
(0.18
)
Basic and diluted net loss per share, discontinued operations
$
(0.01
)

$
(0.07
)

$
(0.05
)

$
(0.11
)
Basic and diluted net loss per share
$
(0.03
)

$
(0.11
)

$
(0.10
)

$
(0.29
)
Weighted-average common shares outstanding: basic and diluted
209,303,286

161,857,522

190,306,319

153,000,857

5

GALENA BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Amounts in thousands)

September 30, 2016

December 31, 2015
ASSETS

Current assets:

Cash and cash equivalents
$
24,514

$
29,730

Restricted cash
18,901

401

Litigation settlement insurance recovery

21,700

Prepaid expenses and other current assets
1,043

1,398

Current assets of discontinued operations

392

Total current assets
44,458

53,621

Equipment and furnishings, net
226

335

In-process research and development
12,864

12,864

GALE-401 rights
9,255

9,255

Goodwill
5,898

5,898

Deposits
145

171

Total assets
$
72,846

$
82,144

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
$
894

$
1,597

Accrued expense and other current liabilities
3,819

5,292

Litigation settlement payable

25,000

Fair value of warrants potentially settleable in cash
9,908

14,518

Current portion of long-term debt
23,722

4,739

Current liabilities of discontinued operations
4,195

5,925

Total current liabilities
42,538

57,071

Deferred tax liability, non-current
5,418

5,418

Contingent purchase price consideration, net of current portion
960

6,142

Total liabilities
48,916

68,631

Stockholders’ equity
23,930

13,513

Total liabilities and stockholders’ equity
$
72,846

$
82,144