As previously disclosed, on December 16, 2015, Galena Biopharma Inc (NASDAQ:GALE) received a subpoena issued by the U.S. Attorney’s Office for the District of New Jersey requesting the production of a broad range of documents pertaining to the company’s marketing and promotional practices for Abstral, the commercial product the company sold in the fourth quarter of 2015. Galena have been in contact with the U.S. Attorney’s Office for the District of New Jersey and Department of Justice, and the company has come understand that the investigation being undertaken by the U.S. Attorney’s Office for the District of New Jersey and Department of Justice is a criminal investigation in addition to a civil investigation that could ultimately involve the Company as well as one or more current and/or former employees. Pursuant to the Company’s charter, Galena is currently reimbursing any former and current employees’ attorney’s fees with respect to the investigation. Galena is cooperating with the civil and criminal investigation, and through the company’s outside counsel Galena has recently begun preliminary discussions with the government aimed at the ultimate resolution of the investigation regarding the Company.
Update of Risk Factor
In light of the disclosure above regarding the Abstral Investigation, the Company is updating the risk factor that appear under the heading “Risks Relating to Our Former Commercial Operations” in all quarterly and annual reports filed under the Securities Exchange Act of 1934, as amended, subsequent to the Company’s Annual Report on Form 10-K for the Annual Period Ended December 31, 2015. The following risk factor shall be incorporated by reference into all of the Company’s registration statements under the Securities Act of 1933, as amended. Investors in the company’s common stock should carefully consider this risk factor below as well as all other risk factors disclosed in our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and the other information disclosed by us before making an investment decision.
Risks Relating to Our Former Commercial Operations
We are subject to U.S. federal and state health care fraud and abuse and false claims laws and regulations, and we recently have been subpoenaed in connection with marketing and promotional practices related to Abstral. Prosecutions under such laws have increased in recent years and we may become subject to such prosecutions or related litigation under these laws. If we have not fully complied with such laws, we could face substantial penalties.
Our former commercial operations and development programs are subject to various U.S. federal and state fraud and abuse laws, including, without limitation, the federal False Claims Act, federal Anti-Kickback Statute, and the federal Sunshine Act.
A federal investigation of two of the high-prescribing physicians for Abstral has resulted in the criminal prosecution of the two physicians for alleged violations of the federal False Claims Act and other federal statutes. The criminal trial began on January 4, 2017. We have received a trial subpoena for documents in connection with that investigation and we have been in contact with the U.S. Attorney’s Office for the Southern District of Alabama, which is handling the criminal trial, and are cooperating in the production of documents. On April 28, 2016, a second superseding indictment was filed in the criminal case, which added additional information about the defendant physicians and provided information regarding the facts and circumstances involving a rebate agreement between the Company and the defendant physicians’ pharmacy as well as their ownership of our stock. Certain former employees have received trial subpoenas to appear at the trial and provide oral testimony. We have agreed to reimburse those former employees’ attorney’s fees. To our knowledge, we are not a target or subject of that investigation. (Original Source)
Shares of Galena are falling nearly 19% to $1.68 in pre-market trading Monday. GALE has a 1-year high of $49.80 and a 1-year low of $1.84. The stock’s 50-day moving average is $2.49 and its 200-day moving average is $1.03.
On the ratings front, Galena has been the subject of a number of recent research reports. In a report issued on January 3, FBR analyst Vernon Bernardino reiterated a Buy rating on GALE, with a price target of $11.00, which represents a potential upside of 431% from where the stock is currently trading. Separately, on December 30, Maxim Group’s Jason McCarthy reiterated a Buy rating on the stock and has a price target of $4.00.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vernon Bernardino and Jason McCarthy have a yearly average loss of 18% and 17.5% respectively. Bernardino has a success rate of 22% and is ranked #4282 out of 4350 analysts, while McCarthy has a success rate of 27% and is ranked #4274.
Galena Biopharma, Inc. engages as a biopharmaceutical company committed to the development and commercialization of targeted oncology therapeutics that address major unmet medical needs. It focuses on identifying and advancing therapeutic opportunities to improve cancer care from direct treatment of the disease to the reduction of its debilitating side effects. Its products include Abstral (fentanyl) sublingual tablets and Zuplenz (ondansetron) oral soluble film.