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Bay Area Galena Biopharma  (GALE) Merges With Oncology-Focused Biopharma in All-Stock Deal

8/8/2017 6:36:18 AM

Bay Area Galena Merges With Oncology-Focused Biopharma in All-Stock Deal August 8, 2017
By Alex Keown, Breaking News Staff

SAN RAMON, Calif. – Six months after losing its chief executive officer, Bay Area’s Galena Biopharma, Inc. (GALE) has been absorbed in a reverse merger with Sellas Life Sciences to form a new company, Sellas Life Science Group, Inc. The newly merged companies will focus on the development of novel treatments for cancer.

Under terms of the deal, Sellas investors will receive shares of Galena stock. When the deal is complete, original Galena shareholders will own approximately 32.5 percent of the company and Sellas shareholders will own 67.5 percent of the new company.

The reverse merger with Sellas could breathe new life into Galena, which has had a disappointing year. In March, the company announced it was looking for a company to acquire its holdings, two months after its CEO Mark W. Schwartz quit amid a federal investigation into the company’s marketing strategy for its opioid Abstral (fentanyl). In July, the company announced it had “significantly reduced the staffing levels and certain operational expenses to preserve cash.” The company said it has been trying to advance its two lead products, GALE-401, Phase III-ready program for essential thrombocythemia, and NeuVax, a breast cancer treatment. NeuVax has been problematic for Galena. In 2016, a Phase III trial was halted because the drug was not performing as well as placebo. The company said the trial was not progressing due to a flaw in trial design and not efficacy issues surrounding the drug.

With Stellas stepping in, the new business entity will be able to lead with galinpepimut-S, (GPS), a novel WT1 antigen-targeting immunotherapy. GPS is being development for the treatment of patients with acute myeloid leukemia and is Phase III ready. Sellas also completed a Phase II trial with GPS for the treatment of patients with malignant pleural mesothelioma. The company has been in end-of-phase meetings with the U.S. Food and Drug Administration for both indications.

In addition, Sellas is conducting two Phase II trials of GPS in multiple myeloma, as well as a combination trial in ovarian cancer with nivolumab, Bristol-Myers Squibb (BMY)’s Opdivo. The company said it is also prepping an additional trial combining GPS with an unnamed checkpoint inhibitor.
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Angelos Stergiou, Sellas’ CEO, said the reverse merger with Galena is an important step for the company.

“We believe GPS has the potential to benefit a wide range of cancer patients and become an important piece of the cancer immunotherapy treatment landscape as both a monotherapy and in combination with other agents, particularly checkpoint inhibitors. NeuVax strengthens our platform and may provide important value inflections as the clinical trials progress. The combined pipeline, with significant near term milestones, creates multiple development and partnering opportunities to create value as these programs evolve,” Stergiou said in a statement.

When the reverse merger is complete, Stergiou is expected to helm the new business. Sellas’ management team will manage the combined company. Upon completion of the merger, Galena’s board of directors will resign, and a new board of directors will be constituted consisting of seven members that will include five representatives appointed by Sellas, two of whom will be independent directors, and two representatives designated by Galena subject to Sellas’ approval.

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