Obviously, if Galena’s strategy of launching Astral works, the company would not have to raise more capital to fund its Phase 3 trial with NeuVax. However, Galena has raised just $15 million to fund the launch of Abstral.
My issue is that it doesn’t make sense that a small biopharmaceutical company could take $15 million, launch a pain management drug in a crowded market, and succeed despite the fact that other companies spend 100’s of millions when launching their products.
I suppose investors believe that Galena Biopharma Inc (NASDAQ:GALE) will be able to hire a handful of sales reps to visit hospitals and will succeed with just the cost of hotel stays and general expenses. But keep in mind, this is a company with absolutely zero product launch experience and is trying to enter one of the most widely penetrated markets in medicine.
Amarin Corporation, Vivus, and ARIAD Pharmaceuticals have all developed drugs that treat patient populations where there isn’t a wide variety of medical options available. For example, Vivus’ Qsymia was the first launched prescription weight loss product. Amarin Corporation’s drug was the first prescription grade fish oil to treat high triglycerides, a condition that affects millions in the U.S. Lastly; ARIAD’s leukemia drug faces no real competition as the only product for its specific indication.
Galena Biopharma Inc (NASDAQ:GALE) faces the most prescribed drug in the U.S., hydrocodone, and then other forms of pain medication such as oxycodone and morphine among many others. So, the idea that Galena can take a drug that no other pharma company chose to sell in the U.S., and make $50 million in short-term sales ($400 million peak), without a massive marketing campaign, is absurd.
Conclusion
If Galena Biopharma Inc (NASDAQ:GALE) was to succeed with Abstral, it would be the greatest product launch story in history. The company would be succeeding with no launch experience, very little money, and in a congested market. As of right now, I have no reason to believe that the story will end this favorably for this company. Moreover, I think the company may have just wasted $15 million that could have been used to support the development of its controversial drug NeuVax, which means more dilution.
In my opinion, the result is that Galena will see what I am presenting. I think the company will find that $15 million is not enough capital to launch Abstral, and that there may not be enough resources to launch a drug in a market where most physicians have a preferred choice of treatment. As a result, Galena will most likely try to continue raising money in the initial months of its launch, and that its stock will suffer the same fate that ARIAD, Vivus, and Amarin have experienced into their product launches.
In biotechnology, product launches are extremely difficult, and I just don’t think that Galena Biopharma Inc (NASDAQ:GALE) has the resources, man power, or knowledge to succeed, and that its stock will suffer the consequences.
Sherrie Stone has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Should You Buy the Hype Surrounding This Product Launch? originally appeared on Fool.com.
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