Investment Funds Are Taking a Big Stake in Galena Biopharma
One of the best ways that investors can research stocks that could make good investments is to look at what the professionals are doing. This can be done by examining a few official filings such as 13F, 13D, and 13G reports. 13F filings are done quarterly and show which positions hedge funds have taken. 13D and 13G reports are done more often, but only when a fund has taken a position of at least 5%. One company that has seen heavy institutional buying during the past quarter is Galena Biopharma .
Over the past few months, Galena Biopharma has gotten a lot of attention as it is developing several promising cancer treatments. Since the end of September, shares of the company have soared by more than 120%. This has increased the value of the company by more than $230 million. After looking at the recent investment fund filings, it looks like one of the big reasons for the move has been increased institutional investment. A few of the funds that have recently added shares are Barclays Global, Blackrock, Highland Capital Management, Bridgeway Capital Management, Dafna Capital Management, and UBS O'Connor.
- Barclays Global added 867,535 shares, bringing its ownership stake to 3.66 million shares.
- Blackrock added 747,821 shares, bringing its ownership stake to 2.83 million shares.
- Highland Capital Management initiated a new position of 800,000 shares.
- Bridgeway Capital Management initiated a new position of 539,150 shares.
- Dafna Capital Management initiated a new position of 375,000 shares.
- UBS O'Connor initiated a new position of 349,400 shares.
This is an impressive list of investors that have upped their holdings. Additionally, the overall trend by institutions is impressive. During the most recent quarter, 18 new positions were initiated compared to just five closings. A total of 52 institutions added 6.2 million shares, compared to just 17 institutions that reduced their positions by 1.5 million shares. Overall, institutions added 6.8 million shares of Galena Biopharma during the quarter. This is likely due to both the company's recent progress and the potential that it has demonstrated.
The treatment that almost all investors are focused on is NeuVax, currently in a phase 3 PRESENT trial. NeuVax is targeting node-positive HER2-negative breast cancer IHC 1+/2+ patients. Current estimates are that an FDA-approved NeuVax could treat between 80,000 and 120,000 newly diagnosed breast cancer patients around the world each year. Galena Biopharma is also evaluating NeuVax in combination with Herceptin in ap 2b clinical trial.
Herceptin, owned by Roche , is currently the standard of care for HER2 IHC3+ tumors. In 2012, Herceptin generated worldwide sales of 5.9 billion CHF (valued at $6.61 billion) for Roche. That is a massive revenue number and demonstrates the potential that NeuVax could have either by itself or in combination with Herceptin for a subset of breast cancer patients that really need an effective treatment. One future scenario could be a potential partnership deal with Roche if Galena can produce strong results in the phase 2b combination trial. It wouldn't be the first partnership deal that Galena struck.
One of the leading pharmaceutical companies in the world is standing firmly behind NeuVax. On Dec. 4, 2012, Galena Biopharma and Teva Pharmaceutical reached a partnership deal for commercialization rights in Israel. Under the terms of the deal, Teva Pharmaceuticals will be responsible for regulatory registration in Israel, provide financial support for local development, and commercialize the product in the region. Galena Biopharma will generate royalties on any revenue generated because of the partnership.
It certainly appears that Galena Biopharma has a lot going for it. Investors should also understand the risks, however, given that the company still needs to complete trials and get through the FDA approval process which can be extremely difficult.
The major risk is the need for additional funding. So far in 2013, Galena has lost $21.5 million, an average of $2.39 million per month. The company also ended the third quarter with more than $51 million in available cash. I expect the company's available cash to take it through 2014 at the very least. Investors who get in now likely won't have to worry about dilution for at least another year. That being said, the risk should still be considered.
A second risk of course has to do with any trials that fail. Right now, investor attention is squarely focused on the NeuVax phase 3 PRESENT trial. A failure would likely result in a significant sell-off.
Despite the risks, the future certainly looks bright. With a rising share price, an increase in institutional holdings, and several upcoming catalysts, investors should give this company a closer look at current levels.
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The article Investment Funds Are Taking a Big Stake in Galena Biopharma originally appeared on Fool.com.Ted Mayer has no position in any stocks mentioned. The Motley Fool recommends Teva Pharmaceutical Industries. 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.