Yesterday, Galena Biopharma Inc (NASDAQ:GALE) and SELLAS Life Sciences announced they have entered into an all stock definitive merger agreement under which SELLAS will merge into and become an indirect, wholly-owned subsidiary of Galena. The merger will result in a combined company focused on the development of novel treatments for cancer. The merger is expected to close in 4Q17 with Galena shareholders owning 32.5% of NewCo and SELLAS shareholders 67.5%.

Maxim analyst Jason McCarthy met with management from both Galena and SELLAS and believes this is a synergistic story. The analyst rates GALE a Hold, without suggesting a price target. (To watch McCarthy’s track record, click here)

McCarthy noted, “RSELLAS brings a peptide-based cancer vaccine targeting the WT-1 antigen (GALINPEPIMUT-S) and is ready to move into two P3 trials in acute myeloid leukemia (AML) and mesothelioma. In addition two P2 studies targeting multiple myeloma and ovarian (+ Opdivo) are ongoing and more studies are in planning.”

“We still cover Galena and see the merger as the right strategic fit. We are currently on the learning curve for NewCo and as such remain Hold rated. Given the synergies between the two companies we are excited to learn more about the clinical pipeline and the path forward,” the analyst added.

Out of the 4 analysts polled in the past 12 months, 3 rate Galena Biopharma stock a Hold, while 1 rates the stock a Buy. With a return potential of 945.8%, the stock’s consensus target price stands at $4.00.