We are now into a new year in the biotechnology space but there are a couple of key inputs that need addressing before we tie up and put 2017 to rest. With this in mind, and before most of the major markets open for 2018 business, let’s look at these inputs against a backdrop of what we expect for the companies to which they relate.
The two companies in focus are Galena Biopharma, Inc. (NASDAQ:GALE) and Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).
So, let’s kick things off with Galena. This first one is relatively straightforward. Well, to a degree, that is, anyway. The company announced at the start of play on December 29 that it was set to effect a reverse stock split of the issued shares of the Galena common stock, at a ratio of not less than 1-for-10 and not greater than 1-for-30, with the exact ratio and effective time of the reverse stock split to be determined by the Galena board of directors. The announcement comes subsequent to a special shareholders meeting at which shareholders were asked to vote on a number of different proposals.
Generally, the announcing of a reverse split will translate to some weakness in the company set to conduct it but, in this instance, Galena ran up close to 20% on the announcement and, while it didn’t manage to hold onto much of this appreciation heading into the close, the company is heading into this fresh year in a relatively strong position.
So why the divergence from standard response?
Well, because the reverse split was one part of a plan to merge with a company called SELLAS. SELLAS wants to merge with Galena but required that the company conduct a reverse split before the deal closed.
Let’s ask the obvious question, then, why would SELLAS want a reverse split before it commits to the merger? Again, this one’s pretty simple. SELLAS is only really merging with Galena because the former wants the latter’s NASDAQ ticker.
At current prices (i.e., pre-reverse merger), Galena is at risk of losing the ticker by way of delisting on the back of it not meeting NASDAQ minimum bid requirements of trading above one dollar per share.
With the reverse merger in place, the delisting threat will lift and SELLAS should have no problem pushing through with the merger.
Galena shareholders are set to pick up a portion of the newly formed company on the back of the deal’s closing so, with the merger now looking like to go through, there’s an incentive to gain exposure to Galena pre-reverse split.
Next up, Progenics.
This one is a different story altogether.
At the end of December, Progenics announced that the Food and Drug Administration (FDA) in the US had granted a PDUFA date under priority review for the New Drug Application (NDA) of a drug called AZEDRA. AZEDRA is Progenics’ lead development asset and it’s currently under investigation as a potential treatment for patients with malignant, recurrent and/or unresectable pheochromocytoma and paraganglioma, which are rare neuroendocrine tumors. This is a patient population with a severe unmet need as things stand and there’s basically no effective cure outside of what remains a relatively ineffective selection of standard of care (SOC) treatments available on the market today.
If Progenics can get AZEDRA on shelves in the US, it would be a very much needed additional option (especially in the late stages of the disease for these patients) and the priority review submission goes a long way towards speeding up this possibility.
It’s important to note here that just because the FDA has accepted the application and, further, that the agency has decided it wants priority review, there’s no guarantee that the drug will be approved in its current registration iteration.
With that said, however, the priority review brings the PDUFA date forward from the usual 10 months to six months’ post submission acceptance, meaning markets are now looking at a PDUFA date of of April 30, 2018, as compares to what would’ve been an end of summer review at the earliest under the standard review designation system.
As far as what happens going forward is concerned, chances are we will see Progenics gain some strength heading into the start of this year as markets pick up shares in anticipation of a regulatory green light.