SLS - NASDAQ

Mark Schwartz - President & CEO John Burns - VP Finance, Corporate Controller Stephen Ghiglieri - EVP & CFO Bijan Nejadnik - EVP, Chief Medical Officer Remy Bernarda - SVP IR & Corporate Communications

David Stubbs - Raymond James Kumar Raja - Noble Financial Group Susan Lee - Maxim Group

Welcome to Galena Biopharma's Third Quarter 2016 Earnings Call. [Operator Instructions] I would now like to introduce your host for today's conference, Miss Remy Bernarda, Senior Vice President, Investor Relations and Corporate Communications.

Thank you Liz and good afternoon, everyone and thank you for joining our call today. For those of you listening via telephone, I would encourage you to visit our website and log into our webcast presentation. As usual for our quarterly call, we will be using slides to enhance our information flow. The slides can be accessed on our website in the Investors section under Events and Presentations. These slides are posted both as a PDF document and will also be available on the webcast. The slides are viewer controlled, meaning that you, the viewer, will need to advance the slides. Our speakers will alert you to the slide they are addressing. As listed on Slide number 2 on our presentation, during today's discussion, we may make forward-looking statements about our future financial conditions and results of operations and potential for profitability, the sufficiency of our cash resources, our ability to obtain additional equity or debt financing, profitable partnering or other strategic opportunities for the development of our products and our clinical programs. Such statements include, but are not limited to, the development progress of our clinical product candidates, including patient enrollment, interim analysis, trial initiations and collaborations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under Risk Factors in our annual report on Form 10-K and quarterly reports on Form 10-Q and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements. Please now turn to Slide number 3, as I would like to introduce the members of management presenting on today's call. Dr. Mark Schwartz, our President and CEO; Dr. Bijan Nejadnik, Executive Vice President and Chief Medical Officer; Mr. John Burns, our Vice President Finance and Corporate Controller, who will review our financials; and Mr. Stephen Ghiglieri, our newly appointed Executive Vice President and Chief Financial Officer. Please turn to Slide 4 and Dr. Schwartz will begin our discussion.

Thank you Remy and welcome, everyone, to our 2016 third quarter corporate update call. On today's call, we're going to discuss a number of important areas, including the progress on our Phase III GALE-401 trial, the PRESENT interim topline data, along with a review of our immunotherapy programs and provide a corporate and financial update. Over the last quarter, we've had several key developments. On the clinical side, we have produced topline results from the PRESENT interim analysis and we'll discuss our understanding of what happened in the PRESENT trial on this call. We're also on schedule with our initiation plans for the GALE-401 Phase III study and excited to start that trial. On the corporate side, I'm extremely pleased to welcome Stephen Ghiglieri to our management team as CFO. His strong background working for companies in the life-sciences space will provide leadership in developing and executing on financing strategies, helping to ensure the effective and efficient use of our capital resources, helping us execute on the business development activities and joining me in an active dialogue with Wall Street. To effectively move Galena forward, I believe it is important that we take the necessary steps to strengthen our financial structure, starting with the reverse split. Affecting the reverse stock split will allow us to maintain compliance with the NASDAQ capital market minimum bid price requirement and garner additional interest from the investment community which we believe is in the Company's best interest and in the best interest of our stockholders. Stephen will elaborate on this later in the call, but we do believe that this change to our capital structure puts us in a better position to advance our clinical programs and grow the Company. As we mentioned in our press release, we're also going to discuss the topline data for NeuVax Phase III PRESENT trial. Our evaluation of this data leads us to believe that a phenomenon known as pseudo-progression likely had a meaningful impact on the events assessed as NeuVax recurrences in the trial. Bijan will address this in more detail in a few minutes. As a reminder, PRESENT stands for the prevention of recurrence in early-stage node-positive breast cancer, with load intermediate HER2 expression with NeuVax treatment and it was a double-blind randomized placebo controlled trial. Enrolled patients were randomized 1 to 1 to receive their NeuVax plus GM-CSF in the vaccine arm versus GM-CSF alone in the control arm. Patients on the trial had no evidence of disease or randomization, but the fact that so many women with early-stage breast cancer who have recurrent disease tells us that current imaging methods are unable to detect cancer micrometastases still in the body following adjuvant treatment. The purpose of the NeuVax vaccine is to generate a HER2 directed T cell-based immune response targeting those undetected micro metastases and eradicate them before they grow into a clinically detectable tumor. As we announced at the end of June, the trial's independent data monitoring committee or IDMC, performed a prespecified interim analysis and recommended that the PRESENT trial be stopped early due to futility. Now please turn to Slide 5 for a definition of pseudo-progression. Pseudo-progression is a phenomenon that occurs when radiographic scans in patients responding to treatment with immunotherapy gives the appearance of progression due to increased tumor size or swelling from tumor-infiltrating lymphocytes or TILs and other immune cells. In simple terms, the cancer looks like it has progressed on radiographic images, but, in reality, the immunotherapy has done its job to create an immune response via inflammation around a micro metastases. Therefore, a growing tumor or a new tumor detected via imaging isn't always a progressing tumor. Discovery of pseudo-progression in the context of cancer immunotherapy in the last few years has changed the view of imaging as a method for diagnosing tumor progression. The image of a new tumor may simply represent an immune system response to an undetectable micro metastasis that would not otherwise be seen on the scan. In fact, IRRESIST which stands for immune related response evaluation criteria in solid tumors, was recently adapted for clinical trials in patients with active disease to better -- to provide a better assessment on the effect of immunotherapeutic agents. IRRESIST requires later confirmatory scans before calling a tumor a true progression and this new criteria has yet to be used in the adjuvant setting. I would now like to turn the call over to Dr. Bijan Nejadnik to discuss our NeuVax results as well as our other clinical programs. Please turn to Slide 6.

Thank you, Mark and good afternoon to everyone. Please turn to Slide 7. On today's call, I am first going to review the results of our Phase III PRESENT interim analysis, followed by a discussion on our ongoing clinical programs. Our PRESENT trial, in addition to the evaluation performed by our internal team, we have consulted with outside experts, including Dr. Beth Middendorf, the trial principal investigator and with Dr. George Peoples, both of whom are expert in the field of immunotherapy and have essential experience with NeuVax. Our initial focus was to confirm that there were no irregularities in the operations of the trial and, as previously reported, we found no deficiencies, including in the area of data management, randomization, drug manufacturing and supply. We've then been focused on data review and analysis of the primary endpoint of disease-free survival or DFS, to understand the unexpected trial results. Of note, there were no major demographic imbalances such as age, tumor size or other based-on characteristics, including past medical history in patients enrolled in the trial. Before I go into the specifics, it is important to note that this data is from the data card prepared for the review by the IDMC at the time of the pre-specified interim analysis. We expect the database spot to occur by the end of the year and do not expect any significant changes in the data. Please turn to Slide 8 for the Kaplan-Meier plot showing our topline interim DFS results. By design, a KM plot is an estimator used to measure the proportion of the patients living free of disease for certain amounts of time after treatment. As you can see, there is a separation of the curves which is more substantial around 12 and 24 months. The median follow-up was 19.7 months. The control group performed better than the treatment group, but this difference was not statistically significant, with a P value of 0.07. At 36 months, although the number of the patients remaining in the trial is limited, the curves appear to be converging. Based on this data, the IDMC recommended the trial be stopped per the prespecified criteria or futility. As expected, the treatment was well tolerated and although the difference between the vaccine and control arm is not statistically significant, the overall recurrence rate in control group, control arm, was lower than expected based on the expected recurrence rate included in the protocol. The study protocol called for a three-year DFS rate of 77% for the control arm and 85% for the vaccine arm. Their assumptions were based on the published data and the results from the Phase I/II NeuVax clinical trial and were incorporated into this special protocol assessment approved by the FDA. Recent data from Sears Database shows that the breast cancer survival rate increased approximately 1.9% per year from 2004 to 2013. Earlier diagnosis and the combined modality of care have resulted in overall treatment improvement in patient care. For example, improved and more widely used hormonal therapies such as aromatase inhibitors have provided significant systemic treatment advances while radiation treatment also enhanced with more targeted therapy. We believe that this overall improvement in the standard of care may explain the unexpected low DFS rate in the control group. In the next few minutes, I'm going to discuss the results of this study in light of two major notions which have generated great attention over the last several years in the immunotherapy field proactive imaging to identify recurrences in the advanced setting and through the progression in the context of cancer immunotherapy. First, proactive imaging to identify recurrence in the adjuvant setting. Please now turn to Slide 9 to discuss the timing of the imaging used in the PRESENT trial. The study design required baseline imaging via CT scan and bone scan showing no evidence of disease before a patient could be enrolled and treatment could begin. Additional prespecified imaging was scheduled to be performed around months 12, 24 and 36, with some flexibility to accommodate personal schedules for patients. This is in contrast with the routine clinical practice where the recurrence of breast cancer after primary treatment is identified on the basis of clinical presentation, such as symptoms or laboratory findings. CT scan and pet scans are used to evaluate these findings farther and potentially confirm the cancer recurrence. In the Phase III trial, the imaging was performed proactively which likely lead to identification of a certain number of micro metastases which otherwise would have only been seen or diagnosed if they had become clinically relevant. Proactive imaging also would identify micro metastases earlier than they might have otherwise been identified clinically. This interval imaging incorporated into the protocol was agreed upon by the FDA to ensure patients were disease-free upon enrollment and to eliminate physician bias in choosing when to evaluate patients who did not have symptoms of recurrence. Therefore, the identification of recurrences clusters around 12 and 24 months and those did not reflect the natural history of the disease, but most likely an identification of a lesion with unknown clinical significance at the time of its discovery. And finally, acknowledging only a small number of patients were followed for 36 months and beyond occurs to appear to converge over time. This may indicate the delayed cancer immunotherapy effect. The last item to note on this slide is the table at the bottom. As we have stated, there were 71 total adjudicated DFS events. Of those, 47 were identified via proactive imaging and only 24 were identified by clinical presentation. This means that 66% of the DFS events were found by proactive imaging. With this preliminary look at the data, up to two-thirds of the events were diagnosed around the time of proactive imaging at 12, 24 and 36 months. This is a strong indication that clinical presentation as it is in the clinical practice was not the driver for identification of recurrent cancers in most patients. A recommendation from the ASCO in 2013 argued against PAD-4 PET CT scans to be used for detection of a cancer recurrence in patients with no symptoms who have finished treatment that was intended to eliminate the cancer, meaning in an adjuvant setting. Moving to Slide 10, I would like to discuss the specific composition of the DFS event at the time of interim analysis. Looking at the table in the PRESENT trial, an event was defined in one of three ways -- as recurrence of the primary breast cancer, the occurrence of another unrelated cancer or death from any cause. As shown on the first row of the table, the imbalance in DFS events is overwhelmingly due to recurrence of the primary cancer with 9.6% in the NeuVax group and 6% in the control group or a median follow-up of 19.7 months. There were no significant differences in the occurrence of another cancer or death as a component of DFS. In the graph at the bottom, we also show overlapping waterfall plot of the DFS rates attributed to the active or NeuVax arm and the placebo or control arm. The red oval circle encapsulates the number of DFS events identified by the proactive imaging scan around 12 months. This shows that 60% of the event in NeuVax arm and 32% of the event in the control arms were identified around the prespecified CT scans. This indicates that the majority of the recurrences in the NeuVax group are identified by proactive imaging with undetermined clinical significance. Those patients where this continued from this study at the time of DFS event per protocol and were not followed clinically. This is in contrast with the recurrence in the control group, where only a minority were identified around the time of the prespecified CT scan. This is an important point in understanding the study outcome. Now let's turn our attention to the second notion, pseudo-progression in the context of the cancer immunotherapy. Please turn to Slide 11 to expand upon Mark's earlier comments on pseudo-progression in terms of clinical outcome and how this is relevant to the Phase III trial. In PRESENT study, the majority of the recurrences seen on imaging were in a distant site, including the bone, lungs and liver, indicating that the micro metastases in this patients existed at the time of the primary treatment but were undetectable at the baseline imaging. Beginning with the first block on this slide, in the period of immuno stimulation, immune inflammatory cells such as NeuVax induced T cells enter in tumor or micro metastases and create inflammation which includes edema and attracts inflammatory cells. This inflammation changes the consistency of the macro metastases and renders them more opaque and therefore visible on x-ray. It also increases the volume of the tumor with edema and infiltrating cells. Both of these factors make the tumor look larger on the CT scan and, in the case of micro metastases, make it visible that otherwise would not have been detected. This information can be potentially beneficial as it is the main process by which immunotherapy treatment for cancer produces results. Paradoxically, when the proactive imaging is performed, the micro metastases become visible earlier and more often and appear as a progression of the disease which could inaccurately be assessed as a recurrence. Now, to put both notions together, it appears that the combination of the proactive imaging in the context of adjuvant setting and additional -- through the progression in the context of immunotherapy can explain the data. Additionally, in the adjuvant study where PRESENT took place, immunological therapies may require extended monitoring over time to evaluate their effectiveness in preventing recurrence with clinical significance. Although the rate of recurrence is highest in the first 24 months, the recurrence can occur years later, indicating that, in these late recurring patients, a number of micro metastases stay dormant and don't become clinically significant for many years. Although this has not been known previously to the field, I would like to introduce the notion of pseudo-recurrence to explain this phenomenon in the adjuvant setting. Turning to Slide 12, we released our summary of PRESENT interim analysis. First, we believe that the low rate of recurrences in the control group arm resulted from an overall improvement in the standard of care. In addition, proactive imaging led to the discovery of lesions, some of which may not have had any clinical significance at the time of identification. Finally, the inflammation caused by tumor infiltrating lymphocytes, TILs, within the micro metastases and more specifically the NeuVax-induced cytotoxic cells, made them visible on scans in the NeuVax group and not in the control group. We now believe that causing this inflammation which is a mechanism through which the immunotherapy can eradicate the micro metastases in a group of patients, may have identified lesions that may have never progressed to clinical tumor. Because patients were discontinued from this study at the time were identified as having DFS event, we don't know if some of these patients who were diagnosed with a recurrence on the CT scan would have progressed cancer. In summary, we have learned a great deal from PRESENT trial and we're applying this knowledge moving forward for our other immunotherapy programs. We plan to lock the database and we'll continue to study the data with the plan to ultimately present our findings in a future medical conference and potentially in a publication to enhance the body of medical knowledge around immuno therapy. Moving to our ongoing program on Slide 13, we still have numerous trials ongoing with both NeuVax targeting HER2 and the GALE-301/302 targeting fully funding protein. On Slide 14 is our pipeline of clinical programs. Importantly, our combination trials for NeuVax are continuing with full support from the investigators and partners and I believe they will provide additional clinical benefits. It is important to note that these trials are not proactively scanning patients but instead are evaluating recurrences by additive clinical care. The most advanced of our NeuVax trials is the Phase IIb combination study with trastuzumab. Last month, the interim safety data from this trial was presented at the European Society for Medical Oncology demonstrating that this novel combination of trastuzumab and NeuVax in HER2 low to intermediate expressing patients is well tolerated and, most importantly, that the cardiac effect of trastuzumab are not impacted by the addition of NeuVax. We now expect enrollment for this trial to be completed in the first quarter of 2017 and the interim efficacy results 12 months after the last patient is enrolled. In addition, our other ongoing NeuVax combination trial and other planned trials are proceeding as planned. During the quarter, positive data was presented at two medical conferences on our GALE-301 GALE-302 programs targeting fully finding protein for the prevention of the recurrence in ovarian, endometrial and breast cancer. Additional booster and immunology data from those programs will be presented this weekend at the Society for the Immunotherapy of Cancer Conference and the breast cancer data will be presented next month at the San Antonio Breast Cancer Conference. In conclusion, I would like to confirm my belief in immunotherapy for cancer. This is an area that is still evolving and as any other evolving area in medicine, we may encounter unexpected results. This has been a common scenario with many great discoveries that have ultimately led to a better quality of life for human beings. These situations are very valuable learning opportunities. In science and research, we need to seriously consider methodologies used to assess our results and how they can show unexpected outcomes. Those may be more related to the methodology than to the underlying disease itself. Now please turn to Slide 15 for a discussion around our Phase III program with GALE-401, our controlled-release version of Anagrelide used to lower the elevated platelet count in patients with essential thrombocythemia or ET. Moving to Slide 16, I wanted to provide more information on ET and the challenges faced by patients suffering from this hematologic condition. ET is a chronic hematologic malignancy with no known cause. It is not an inherited disease, although there are -- there may be a familial disposition and recent research has discovered genetic mutations that may be a factor. Common symptoms include headache, vision disturbances or migraines, dizziness or lightheadedness, coldness or blueness of the fingers and toes, burning, redness and pain in the hands and feet. Some of the more severe complications for the patients with ET are thrombotic in nature, such as a stroke, heart attack, TIA DVT or blood clotting in other locations. On this slide, I've also listed risk factors associated with ET. Moving to Slide 17, I have included the treatment currently prescribed for ET patients. As with other NPNs, there is no single treatment option that is appropriate or effective for all ET suffers. While some ET patients may be asymptomatic and require no treatment, others may require various treatments and therapies based on the symptoms, their risk factors and potential complications. The treatment options are limited and include hydroxyurea generally prescribed as a first-line, followed by other treatments, including Anagrelide Immediate Release, interferon, aspirin or other agents, depending on the patient's condition. Of these, only Anagrelide Immediate Release is approved for treatment of ET patients. We believe these limited treatment options that are often accompanied by severe side effects present a great opportunity for GALE-401. On Slide 18, I have offered a development summary providing the strong clinical and development rationale to advance GALE-401 into late stage development. In our Phase II trial, GALE-401 demonstrated consistent efficacy and potential for faster onset of action and improved tolerability compared to Anagrelide IR and has advantages to twice-a-day dosing. We believe we will be able to utilize the 505(b)(2) regulatory pathway for approval and have a strong patent protection for the asset. Slide 19 is a snapshot of our development opportunity for GALE-401. Over the past several weeks, we have collaborated with regulatory experts and world leaders in the treatment of myeloproliferative neoplasms on the trial design and patient population for our Phase III trial. We have made significant progress on all fronts and we plan to meet with FDA by the end of the year and receive their agreement on our clinical plan in the first quarter of 2017. This would then allow us to initiate the Phase III trial in the second quarter. With that, I would now like to hand the call over to John Burns to discuss our financials. Please turn to Slide 20.

Thank you and good afternoon everyone. In today's press release and slides, our financials are PRESENTED in a manner such that you can distinguish between our continuing and discontinued operations and all of our figures are in U.S. dollars. Our statement of operations can be seen on Slide 21 as filed in our press release. First, I would like to focus on our operating loss which includes our general and administrative and clinical development expenses. As reported, our operating loss of $6.5 million in the third quarter of 2016 compared to $8.6 million in the third quarter of 2015. The reduction in our operating loss was driven by a $2.1 million decrease in research and development expense quarter-over quarter primarily due to the closing of our Phase III PRESENT clinical trial in Q3 2016. G&A expense was consistent quarter over quarter at about $2.8 million which includes $0.5 million of non-cash stock-based compensation in both periods. Loss from continuing operations includes operating losses just described as well as nonoperating income and expense. Nonoperating income of $2.1 million during Q3 2016 was primarily due to a $3.7 million decrease in fair value of warrants accounted for as liabilities, partially offset by $1.4 million of interest expense. Interest expense increased during the quarter due to interest charges on our debt debenture. Of our total interest expense, $0.4 million was paid in cash and the remaining $1 million was due to non-cash interest and amortization of debt issuance costs and discounting. Our operating loss and nonoperating income and expense together results in our loss from continuing operations which was $4.3 million in Q3 2016 compared to a loss of $6.4 million in Q3 2015. We continue to experience residual costs from our former commercial business accounted for in discontinued operations. These ongoing expenses primarily consist of legal expenses associated with ongoing investigations and additional government rebates as fully described in our 10-Q. Loss from discontinued operations in Q3 2016 was $2.6 million as compared to $11.7 million for Q3 2015. The loss in Q3 2015 included an $8.1 million non-cash impairment charge from the classification of our former commercial business as held for sale. Secondly, as noted on the slide, I have highlighted the quarterly breakdowns of our earnings per share calculation. Our earnings and EPS are significantly impacted by the non-cash gains and losses from the changes in our warrant liability and contingent purchase pipe liability and are presented in accordance with GAAP. However, we believe the most relevant measure of our performance is our earning loss, as previously described. Please now turn to Slide 22 for our Q3 2016 cash flow summary. As of September 30, 2016, our cash balance is $24.5 million. During the quarter, we amended our debenture to reduce the amount of restricted cash called for under the debenture and, by doing so, freed up about $5.5 million of cash to use for operations. As we move forward, currently restricted cash related to the venture of $18.5 million will be reduced as we pay down our debt below the level of restricted cash. And to the extent we're able to pay the debentures through use of our common stock, the restricted cash would be furthered released to support operations. In the third quarter, we were within our cash burn guidance of $12 million to $13 million with a total cash burn of $12.4 million. This burn included $2.5 million in cash payments for litigation settlements or $2.3 million for the settlement of our class action derivative litigation and an additional $0.2 million for opt-out cases. Our cash burn used in operating activities was $9.8 million which includes a cash burn of $7.7 million used in continuing operations and $2.1 million used in discontinued operations. Please now turn to Slide 23 for our current financial overview. As previously mentioned, we ended the quarter with $24.5 million in cash and an additional $18.9 million in restricted cash with $18.5 million related to the debenture. Going forward, we expect our future cash burn used in operating activities to be between $7 million and $9 million for the fourth quarter of 2016. I would now like to welcome Stephen Ghiglieri, who was appointed last week as our Chief Financial Officer. Please turn to Slide 24.

Thank you, John and good afternoon. It's a pleasure to join you in my new role of Executive Vice President and Chief Financial Officer. As some of you may know, I have been working with the Company for the last few months in a consulting capacity and, through that experience, I got a front row seat to evaluate the opportunity that exists within Galena. I believe the Company has a pipeline that will allow the development of meaningful therapeutic alternatives for patients while significantly building shareholder value through a combination of execution of our development programs and seeking to expand our portfolio through collaborations and potential product acquisitions. I won't take you through my background, as we included it in our 8-K filing, except to say that my experience in varied forms of financing, working with managements and boards of directors to develop and execute on strategic direction and working on the front lines implementing corporate development initiatives, are all key elements where I feel I can add significant value to Galena. And I'm happy to add that I have found this management team to be very high quality. In order to succeed in our development programs and in any product acquisition strategies we might explore, we need to ensure that our common stock is well valued and liquid. A key element in creating those dynamics is access which is why maintaining our NASDAQ listing is so important. This was the primary motivator in our recently announced reverse stock split. While I know reverse stock splits are unpopular with shareholders, the alternative of moving to the bulletin board or to pink sheets could severely impact our corporate progress. The reverse stock split has now been approved by our board, will be effective on Friday and will trade on a post-split adjusted basis on Monday. This should put our share price into a realm where I believe we can begin to once again have meaningful conversations with larger institutional investors who, by all rights, should be very interested in Galena, given the gap between our very low market valuation and the intrinsic value of our development programs. We will of course need to continue to finance our development programs and we will seek to do so in the most capital efficient manner possible. We have a number of vehicles available that allow us to access capital markets in a minimally disruptive fashion, including our ability to repay our debenture through issuance of common stock and to make use of our facilities with Lincoln Park capital and our ATMs. Additionally, we intend to file a Universal Shelf in the very near term to further enhance our ability to fund our operating and business development objectives. As I'm sure you all appreciate, a shelf filing is a very standard instrument in the corporate finance toolkit, no one company should be without. With these facilities and our existing cash balances, I believe that we have sufficient cash -- we have sufficient access to cash for the near term and allows us the flexibility to execute operationally and refocus our efforts in expanding investor interest in Galena. I look forward to meeting many of you in the coming quarters. Now I'll turn it back to Mark to wrap up and to open the call for questions. Please turn to Slide 25.

Thank you Stephen. It's been a challenging few months as the Company worked to analyze the results of the PRESENT trial, develop financial footing for growth and structure our pipeline for the future. While we still face a number of challenges, I am very pleased with the progress the Company is making in the spirit and commitment of the team. As Bijan mentioned, we're preparing GALE-401 for a Phase III pivotal trial and have developed close collaborations with key leaders in the MPN field to both understand and to optimize our trial design for the compound. In parallel, our continued analysis of the PRESENT data, both NeuVax and GALE-301/302, continue to progress with support from our collaborators. We believe that basic activity of both compounds can play a key role in the prevention and treatment of cancer and we're continuing to look for opportunities to demonstrate the best setting for continued development and possible commercialization. I'm excited to have Stephen's financial and strategic experience as we work to conservatively manage our financial resources and seek collaborations and partnerships that will leverage our resources and our pipeline. As he indicated, we have taken a number of steps to position the Company for long term growth. As well, Galena has built its pipeline on in-licensing acquisitions and we will continue to look for pipeline expansion opportunities which will complement our clinical and financial profile and lead to increased shareholder value. For reference, our 2016 milestones are shown on Slide 26. We have hit a number of key operational milestones this year and in spite of the PRESENT outcome, the team remains focused on developing drugs in the pipeline in key clinical areas with no or limited other therapeutic options. As we move into 2017, we will continue to communicate our goals for all of the programs for next year. Thank you again for joining us. Have a wonderful afternoon. And I now open the call for questions.

[Operator Instructions]. Our first question comes from the line of Kumar Raja with Noble Financial. Your line is now open.

So, on the pseudo progression, what do we know from [indiscernible] with regard to the timeline of the like how long it takes before you see this progression and how long it lasts? And also in the trial, obviously, after all of the patients who were imaged, only some seem to have this progression. What are the reasons for those?

I'm just trying to understand your questions. So, the first one was what is the timing for through the progression, how long does it last and when do you expect it to be over? The second question, however, I was -- would you like to tell me again what was that?

Yes, yes. So basically some of the patients, they were proactively imaged. And it seems like not all of the patients seem to have obviously the unknown clinical significance, right? So you are saying that they are seeing something which is of unknown clinical significance. Obviously, they are thinking it's a progression. But is it seen in all the patients? If not, why is it only seen in some patients than in other patients? Is it a difference in the immune response in these patients and what are the causes for that?

Yes, these are absolutely great questions. So let me answer the first one. Pseudo-progression really depends on, first of all, the disease you are treating. The underlying disease and the time of the division of the cells is a very important one, because not everything is pseudo-progression, but then also how immunologically active the underlying disease is. For example, you could see that relatively quickly in metastases of melanoma, because it's already an underlying immunological disposition to melanoma or renal cell carcinoma. However, in some other cancers such as breast cancer, that level of immunologic predominance or tendency is much lower because they are neurologically cold. Therefore, the attraction of the tumor infiltrating cells is -- happens much slower over time. The other variable there is the kind of treatment you are administering. In the case of active immunotherapy such as -- let me just talk about the passive first. The passive immunotherapies such as with immunoglobulins, the examples is the checkpoint inhibitors, you expect that to happen much faster because of the fact that you are giving the immunoglobulins to the patient right there and then. And probably that effect on the tumor starts immediately, so you could more or less see that within the weeks or a few months. In the case of vaccination which is active immunotherapy, the story is a little different because what you are doing there, you are gradually giving the vaccine on the multiple occasions and you give boosters and you're inducing the T cells. And there are several steps between administering the drug and the active immunologic effect at the tumor level. Those timings have not been exactly measured. This is something that would be very interesting for science to do that, but I am not aware of having the exact time. I'm just imagining that, as you give the boosters, you're predisposing the patients more into having the pseudo-progressions. And a great question too is why it happens only in some people? Well, it happens in some -- we saw it in some people because those people had the micro metastases a the -- right after the adjuvant therapy and surgery. A lot of people don't have those micro metastases or those micro metastases or the immune system is not induced or activated. It really depends on the host whose immuno stimulation is more active, more predominant or some people who do not react to vaccine to begin with. So you can find the variability there that's expected.

And in terms of the timing of the end of the Phase II meeting with regard to Anagrelide and what is the expectation of -- what are you expecting from this meeting? Any thoughts on the trial design for the Phase III trial?

Trial design for Anagrelide. Sure. Well, we're very actively -- I mean very closely working on a Phase III trial. We have had several advisory boards talking to the experts in the world. As you can imagine, this is a disease which is treated with a limited number of physicians and we have gotten, we believe, that great insight into the disease and how to proceed with the design of the trial. We have the design in prepared protocol. We have already discussed, communicated with the FDA in that regard and they have given us a timing for meeting face-to-face to discuss that with us. So we're very excited about this and we're hoping that we can push that forward. As you can imagine, within those discussions, things can come up, but the overall view is that we would be able to get that Phase III trial going. And the main reason is that there is not a whole lot of options there for those patients. And in that regard, I think that this is a trial in which the investigators, the patients, the regulatory others, have all the reasons to look at it favorably.

Our next question comes from the line of Jason Kolbert with Maxim Group. Your line is open.

This is Susan Lee calling on behalf of Jason McCarthy. Actually I said the wrong name. But my question is for GALE-301/302. Can you guys walk us through the next steps in clinical development? And more specifically, how do you plan to use the variable FBP expression level data you presented in October to design the next clinical trial?

We're still -- there are still -- the two phases -- this is Mark Schwartz. The two Phase II, Phase I, Phase I/II trials, are wrapping up now. And we're still collecting the final data. We have several publications, as Bijan mentioned, abstracts being presented. Actually it's SITC this week and at the San Antonio Breast in December. And we're still aggregating the data, talking to a number of experts in the field, put together exactly what the best path forward is. Fully binding protein is expressed in different cancers differently and what we've learned is that something like the optimal dose may not be the same from cancer to cancer and setting to setting. So I think our first steps which we're doing now, is looking to try to identify what would be the best path forward and how to structure it. And I think, as we move through into early next year, we will have a better sense of that.

And also, what are your next catalysts for the ongoing investigator sponsored NeuVax studies? Can you give us a sense of if and when Dr. Reddy's may move forward in gastric cancer?

So, we should complete enrollment in the HNN HER2 1+/2+ combination trial in Q1. The first efficacy interim analysis will be one year from the last patient in, so that would put that sometime in Q1 of 2018. That's probably the most approximate and I think the most important milestones that we have. Let me just remind you it's a 300 patient study and as Bijan had indicated in his prepared remarks, that we're not doing proactive scans. So we hopefully would expect to see a more straightforward and robust immunological readout on that one. And I'm sorry, the second part of your question was -- gastric. We're talking to Dr. Reddy's now. The work on that slowed down over the summer as the interim analysis came out and we paused to do a deep dive into the data there, but our discussions with them continue to try to get that up and running.

This is Remy. I'll just add one thing. On the DCIS trial, we still estimate that to initiate by the end of the year.

[Operator Instructions]. Our next question comes from the line of Reni Benjamin with Raymond James. Your line is open.

This is David on for Ren. Thanks for taking the questions. My first question is for Mark. So for Anagrelide, what might the trial look like for 401 in terms of the enrollment target and the timing, as well as if you can give any additional color as to what the endpoint would be?

So let me start that, but I'll ask Bijan to jump in if I don't adequately cover your questions. So as Bijan had indicated, there is a dearth our lack of really good treatments. In fact, there is only one compound that's formally indicated for treatment of central thrombocythemia. And so right now, our thoughts are looking at patients that fail the first-line therapy that really have a variety of other not so great treatment options that physicians tend to choose from, so we can provide patients a path to go from hydroxyurea which was the first commonly accepted first-line treatment, although it's not indicated for that and if they fail hydroxyurea and that failure rate is pretty high, somewhere in the 20% to 30%, 25% or so range. And they could move to Anagrelide CR or GALE-401. And I think that would provide a significant opportunity for physicians to have a more defined path for treatment of those patients. We're -- as we said, we're meeting with the FDA to look for a 5(2)(b) pathway which would be an accelerated pathway over an NME-type of approval cycle. We hope to start in Q2. And it's a little bit early to pontificate on exact timings, but certainly we would look to initiate enrollment in Q2 and get that done as fast as possible. So, I think we're a couple of years out from there.

And I think maybe just another question for John and maybe Steve. So how should we be thinking about the cash burn rate from 4Q onwards? Should we be thinking about that range as sort of the baseline going forward or do you have anything else to maybe add?

This is John. I think I'll touch on it. So, we did give guidance for Q4, but as we finalize the 401 trial, we're going to provide you updated guidance with our Q4 earnings. But we do expect to go down from that range as we get through some of these related discontinued operations [indiscernible] we still have to pay out. So as we get into 2017, we do expect the burn to go down, but we're not ready to give a specific range just quite yet.

I'm not showing any further questions in queue at this time. I'd like to turn the call back to Mr. Schwartz for closing remarks.

Thank you very much everybody, appreciate your attendance on the call and look forward to talking to you next quarter.