GALENA BIOPHARMA, INC. (NASDAQ:GALE) Files An 8-K Termination of a Material Definitive Agreement

Termination of a Material Definitive Agreement

As previously reported, on April 27, 2017, Galena Biopharma, Inc. (the “Galena” or “we”) received a notice (the “April 27th Notice”) from BioVascular, Inc.(“BVI”), the licensor of GALE-401, that alleged that we were in material breach of the Exclusive License Agreement, dated December 20, 2013, between our wholly owned subsidiary, Mills Pharmaceuticals, LLC, and BVI with respect to GALE-401 (the “BVI License Agreement”). GALE-401 is a controlled release version of the approved drug anagrelide for the treatment of elevated platelets in patients with myeloproliferative neoplasms. GALE-401 has completed a Phase 2 clinical trial.

BVI maintains that we are in breach of Section 4.5 of the BVI License Agreement. Section 4.5 of the BVI License Agreement generally requires that we use “Commercially Reasonable Efforts” to pursue development and commercialization of a product. BVI claims we have not used “Commercially Reasonable Efforts” to commence a Phase 3 clinical trial of GALE-401. The BVI License Agreement defines “Commercially Reasonable Efforts” to mean “the carrying out of obligations or tasks in a manner consistent with the efforts a similarly situated bio-pharmaceutical company with sufficient resources devotes to research, development, and/or marketing of a pharmaceutical product or products of similar market potential, profit potential or strategic value resulting from its own research efforts or for its own benefit, taking into account technical, regulatory and intellectual property factors, target product profiles, product labeling, costs, economic return, the regulatory environment and competitive market conditions in the therapeutic or market niche, all based on conditions then prevailing.” While the April 27th Notice stated that it was 30-day notice of termination, under the terms of the BVI License Agreement, to the extent we have materially breached our obligations thereunder, we have 90 days to cure such material breach (other than undisputed payment defaults) or such longer period of time as required to cure such breach if we have commenced reasonable actions to cure such breach and continue to diligently cure such breach.

On May 31, 2017, we received a notice of termination of the BVI License Agreement from BVI to which BVI purports to terminate the BVI License Agreement.

As previously disclosed, we believe we have used “Commercially Reasonable Efforts” in respect of GALE-401. However, we are not able to predict the manner in which the dispute with BVI will be resolved. If we are unable to maintain our rights to GALE-401, the development of the products associated with those rights would be delayed or terminated altogether, which could have a material adverse effect on our business. There would be no early termination penalties incurred by Galena in connection with a termination of the BVI License Agreement by BVI.

About GALENA BIOPHARMA, INC. (NASDAQ:GALE)
Galena Biopharma, Inc. is a biopharmaceutical company. The Company focuses on developing and commercializing targeted oncology therapeutics that address unmet medical needs. The Company’s development portfolio ranges from mid- to late-stage clinical assets, including cancer immunotherapy program led by NeuVax (nelipepimut-S), GALE-301 and GALE-302. The Company’s NeuVax is in Phase III breast cancer clinical trial with several concurrent Phase II trials ongoing both as a single agent and in combination with other therapies. GALE-301 is in a Phase IIa clinical trial in ovarian and endometrial cancers and in a Phase Ib clinical trial given sequentially with GALE-302. The Company’s therapies utilize an immunodominant peptide combined with the immune adjuvant, recombinant human granulocyte macrophage-colony stimulating factor (rhGM-CSF, Leukine), and work by harnessing the patient’s own immune system to seek out and attack any residual cancer cells.