The shares of Galena Biopharma, Inc. (NASDAQ:GALE) shot up $0.40, or 26%, after the biotechnology developer of innovative oncology treatments announced yesterday that its product candidate NeuVax(TM) had just been granted a Notice of Allowance by the U.S. Patent and Trademark Office (USPTO). Sixty minutes into the current session, GALE has already edged up 20% after the company appointed an esteemed breast cancer expert to its Scientific Advisory Board (SAB).
Yesterday, GALE came in at $1.95 per share, its highest close since January 2011. Moreover, traders worked themselves into a real frenzy as more than 10.2 million shares of common GALE stock changed hands by the end of the session setting a new six-month record, as well as a six-fold improvement over the average daily volume. What lies at the root of their excitement is by all means the latest development of the company’s product candidate NeuVax(TM). In brief, the latter is expected to serve as a vaccine for inducing immunity to breast cancer recurrence in patients who do not qualify for the conventional Herceptin(R) therapy.
GALE also got off to a flying start when trade resumed today. As it seems, the company’s surge for the last hour or so must have been fueled by the latest corporate news about the appointment of Hope S. Rugo, M.D., a highly experienced clinical professor on breast oncology, as a member of the company’s sab.
Although GALE is currently taking the chart by storm, several indicators suggest that investors should not rule out the possibility of a trend reversal. On the one hand, the RSI has now definitely entered the overbought area, thus yielding a bearish signal. The MACD index, on the other hand, suggests a similar signal implied by the great momentum GALE stock has gathered. That is why, GALE could change course, at least in the short term.
As far as GALE’s long-term run is concerned, it is dependent upon the potential success of the company’s NeuVax(TM), as well as its financial state. For the last four quarters on record, the company’s:
- cash reserves increased from $6.9M (a/o Dec. 31 2010) to 15.7M (a/o Sept. 30, 2011);
- liquidity ratio went down from 1.40 (in Q4 ’10) to 0.75 (in Q3 ’11), or 46%;
- leverage surged from 2.1 to 5.4 making it much more dependent on external financing;
- average R & D investment amounted to $2.6 million per quarter compared to an average of $2.1 million per quarter used to cover administrative expenses.
