Remy Bernarda - SVP, Corporate Communications, IR Mark Schwartz - President and CEO Chris Lento - SVP of Commercial Gavin Choy - SVP, Clinical Sciences and Operations Ryan Dunlap - VP and CFO.

Mara Goldstein - Cantor Fitzgerald Robert LeBoyer - Maxim.

Good day, ladies and gentlemen, and welcome to the Galena Biopharma First Quarter 2015 Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference to your host, Ms. Remy Bernarda, Senior Vice President, Investor Relations and Corporate Communications. Ma'am, you may begin..

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. For this 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 Presentation. 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 slides they are addressing.

As listed on Slide Number 2 on our presentation, during today's discussion, we may make forward-looking statements about our programs.

Such statements include, but are not limited to, statements about our commercialization plans and the development progress of our clinical product candidates, including patient enrollment, 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 which we have filed 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 turn to Slide Number 3 as I would now like to introduce the members of Management on the call. Dr. Mark Schwartz, our President and CEO; Dr.

Gavin Choy, Senior Vice President, Clinical Sciences and Operations, who will discuss our Clinical Programs; Christopher Lento, Senior Vice President of Commercial, who will discuss our Commercial Business; and Ryan Dunlap, our Vice President and Chief Financial Officer. Dr. Schwartz will now begin our discussion..

Thank you, Remy. And welcome everyone to our first quarter earnings conference call. Today our team will walk you through our programs and our current financial status and provide a pathway forward for the remainder of the year. Before they get started I just want to address a couple of key topics.

First on the operations side, we've made the decision to relocate our headquarters from Portland Oregon to the San Francisco Bay Area over the course of 2015.

The Bay Area is home to numerous biotechnology and pharmaceutical companies and is one of the largest life science clusters in the country with a rich and experienced pool of talented employees.

I believe that as we mature, we need increased access to other companies, investors and personnel on the life science space and a location in the Bay Area will provide this. As many of you have seen last week we issued our proxy statement and our annual report will be mailed out this week and both are available on our website.

As shareholders, we encourage you to read these documents and vote your shares ahead of our June 19 Annual Shareholder Meeting that will be held in the San Francisco Bay Area. In my Shareholder Letter in the Annual Report, I focused heavily on the immunotherapy space where NeuVax fits into this dynamic field.

As Gavin will elaborate on, we reached a major milestone with the completion of enrolment in our pivotal Phase 3 Present Trial last month. I've personally been involved in development in NeuVax for the last six years and achieving this goal is a tremendous accomplishment by our clinical team and our investigators around the world.

I am also sincerely grateful for the hundreds of women who volunteered to participate in our trial. Our primary development products are focused on harnessing the power of the immune system to fight cancer.

We're a pioneer in this space and are excited to be a leader in novel cancer vaccine research that could one day revolutionize how cancer is treated and how cancer is prevented. Galena immunotherapy asset, NeuVax and GALE-301, are focused on preventing a patient's cancer from returning following treatment.

Just yesterday, a close friend of one of our colleagues who was diagnosed with a recurrence of her breast cancer, this is a stock reminder that we all are affected by this disease in various ways and it fuels our passion towards this prevention modality with a goal of preventing patients from the devastating consequences of cancer recurrence and ultimately saving their lives.

In addition to the development teams accomplishments, our commercial team recorded its second best quarter of net revenue in the best to back months since Abstral's product launch.

Most importantly we continued our increased penetration within the oncology space as we head in the launch of our second commercial oncology support of care product Zuplenz. I'll now ask our head of Clinical Operations Gavin Choy, discuss our clinical programs in more detail..

Thank you, Mark. As I discussed last quarter, our primary focus in clinical development remains on our immunotherapy programs and I am very pleased to report that last month we completed enrollment in our Phase 3 present clinical trial and made advancements in our other clinical programs.

PRESENT is a multi center, multinational prospective double blind study enrolling lymph node positive breast cancer patients with HER2, 1+, 2+, tumors in the adjuvant setting. The steady schema is depicted on Slide 4.

And reaching this significant milestone was critical for our company and the overall clinical development of NeuVax for the prevention of breast cancer recurrence. We can now officially quote unquote "start the clock so to speak" on reaching the primary endpoint which is the latter of the last patient reaching her third year on study for 141 events.

Based on our current event rate, we expect to reach our interim analysis at 70 events by the end of this year or the first quarter of 2016 and we project to arrive at the primary endpoint in 2018.

To reiterate NeuVax is a treating HER2 1+, 2+ patients in the adjuvant setting, where there are currently no approved therapies available after standard of care treatment. This is a critical unmet medical need for these women. By its nature, NeuVax is a targeted therapy focusing on a very specific patient population.

NeuVax is a peptide derived from the HER2 protein that binds to the human leukocyte antigen or HLA. Our Phase 3 trial enrolled a specific patient population to no positive HLA A2 A3 and HER2 1+, 2+ and to better illustrate this, I have delineate the numbers for our PRESENT trial on Slide 5.

Reaching enrollment completion undertook a tremendous amount of diligence from our staff and our investigators. On Slide 6, I've outlined the numbers in the U.S. and Europe for our potential market size if NeuVax garners approval.

In this PRESENT trial patient population, once again, no positive HER2 1+ and 2+ patients HLA A2 A3 positive, NeuVax could potentially treat up to treat up to 80,000 new patients annually.

Because NeuVax is administered over several years with booster injections, patients on treatment would increase exponentially each year conceivably leading to a potentially multibillion dollar product. With the PRESENT trial fully enrolled, our team is now focused on the ongoing treatment and maintenance phase of the trial.

Similar to the screening and enrollment process, this next phase of the trial takes in equal amount of diligence to ensure we have a robust quality data, accurate analysis of the emerging data, minimized dropouts and finally identifying the recurrences efficiently such that the primary endpoint can be facilitated into projected timeline in 2018.

You will recall that each patient will receive a primary vaccination series consisting of an inoculations once a month for six months followed by a booster inoculation once every six months for a total of 11 inoculations over a three year period.

We continue to work with our investigators and site staff to ensure patient compliance with the treatment and protocol defined evaluations.

The next major milestone for the PRESENT trial will be achieving a positive read out on our event driven interim analysis that we had anticipate to reach at the end of this year or in the first quarter of next year.

The interim analysis is both a safety and futility analysis and the timing is based on occurrence of 70 events and a event defined as a recurrence or death. In addition to the PRESENT trial that is evaluating NeuVax as a mono therapy, we have a broad franchise with the product that continues to expand.

In general, cancer immunotherapy has made significant advances of late with the central focus of these therapies on enhancing the potency of tumor directed T cells. As Mark discussed in detail in our last call, NeuVax stimulates HER2 directed cytotoxic T cells and has been at the forefront of this approach.

As the field of cancer immunotherapy further develops, new possibilities of combination treatment regimens are emerging. We are just beginning to understand the complex interplay among the host immune response tumor cells, tumor microenvironment and affects the various treatments on these elements.

Galena is actively participating in the space with our two ongoing combination trials. Our Phase IIb combination trial with trastuzumab is depicted on Slide 7, this trial is enrolling 300 patients and is a robust clinical trial treating women who are no positive high risk no negative including triple negative and who are HER2 1+ and 2+ expressers.

We recently announced that we have expanded the eligibility criteria to include patients who are HLA-A24 and A26 positive. This decision was based on preclinical binding data that shows that NeuVax also binds to these deals.

This addition broadens the utilization of NeuVax in this trial particularly amongst women of Asian descent where these HLA Alleles are prevalent. Currently we estimate completion of enrolment in this trial in the first half of 2016 with a primary endpoint of disease free survival at two years.

Slide 8 summarizes our NeuVax trials and as you can see, we are also supporting a Phase II trial in breast cancer patients who are with higher HER2 3+ expressers.

These patients are no positive or no negative and are treated with trastuzumab and a taxane-based therapy in the neoadjuvant setting or before surgery and have failed to obtain a pathological complete response.

The primary endpoint for this trial is defined as time to invasive local, regional, or distance recurrence, a new primary tumor or death due to any cause. The trial is enrolling and we look forward to the emerging data in 2016.

As you can see in our product pipeline on Slide 9, our second immunotherapy asset GALE-301 is a peptide vaccine derived from folate-binding protein and is targeting the event prevention of recurrence in ovarian and endometrial cancers. Diseases where the recurrences are high and the outcomes are often quite far.

Similar to NeuVax GALE-301 is evaluating these women who have no evidence of disease after undergoing their primary first line therapy. The early data was presented last year at the Society of Immunotherapy of Cancer and our abstract was accepted for publication at ASCO. We expect to present a more robust dataset at a Scientific Congress in the fall.

We remain extremely encouraged about this compound and its potential to help women in this setting. To conclude my discussion, I wanted to provide an update on our hematology asset, GALE-401.

GALE-401 is our controlled-release formulation of Anagrelide in development to reduce elevated platelet count in patients with thrombocythemia secondary to myeloproliferative neoplasms.

Our Phase II top line data has been accepted for a poster presentation at the European Society for Hematology Meeting next month and we will refer to preliminary safety, efficacy, and pharmacokinetic results at that time.

The first quarter of this year has been very productive for the clinical team with the closing of enrolment in our PRESENT trial and advancement of our other clinical programs. We expect the remainder of this year to be as productive and look forward to updating you next quarter.

I would like now to hand over the call to Chris Lento to review our commercial programs..

Thank you, Gavin and good afternoon everyone. As we share our today’s earning release and as shown on Slide number 11, we reported actual net revenue of $2.8 million for the first quarter of 2015, our second highest quarter of net revenue since our relaunch of Abstral in 2013.

In addition the overall trend line is measured by end user product demand continues to grow with March representing one of our best months to date. Equally important our gross to net deduction also improved this quarter from 63% in Q4 2014 to 65% in Q1 2015.

One month into the second quarter our performance metrics indicate a very strong month for Abstral in April as measured by customer demand. But please remember that this is not a direct correlation to our net revenue which is recorded based on ex-factory sales.

We continue to focus on refining Abstral’s prescription fulfillment process as depicted on Slide number 12. As a reminder, Abstral is indicated for the treatment of breakthrough cancer pain and opioid tolerant adult cancer patients.

Because Abstral is a class 2 narcotic and part of the TIRF REMS program, the vast majority of appropriately identified patients will require a prior authorization of their insurance provider. We encourage our providers to utilize our Galena Patient Services or GPS program that is managed through an outside vendor for assistance with this process.

Once the prescription is approved by the payor the prescription can be filled at an authorized pharmacy and the patient becomes eligible to use our voucher and our co-pay program depending on their coverage to help reduce their out-of-pocket expense.

Regarding Abstral reimbursement and coverage, our managed markets group had a significant advance this quarter securing exclusive or co-preferred status for Abstral as of April 1 with Caremark.

This improves coverage and access for approximately 32 million commercial lives, I will now walk you through our continued progress on several key performance metrics. On Slide number 13 you can see the increase in the average number of Abstral units per transaction.

Looking back to the year end March 2014, the average units of Abstral per pay transaction or prescription was roughly 50 tablets while in March of this year the average number increased 41% to 72 tablets per transaction.

The profitability of our overall business is best valuated by calculating the actual revenue derived from each billed or paid transaction.

As I discussed last quarter the various data warehouses such as IMS and Wolters Kluwer report database solely on a number of prescriptions filled and do not distinguish between strength or quantity of units in the prescription.

With the variability in Abstral strength in the variety of quantities that can be prescribed one prescription does not necessarily equal one in terms of the actual dollar amount. On Slide 14, you can see that our average transaction price continues to grow each month.

While some of this increase was related to a price increase we took in February, continued adoption of our GPS and patient assistance programs are playing a crucial role.

Again looking back a year, our average transaction price increased almost 100% therefore each transaction we generate is becoming more valuable and leading Abstral and Galena towards great profitability..

If you turn to Slide Number 15, I’m extremely proud to report that the percentage of our oncology business grew significantly quarter-over-quarter and we now have 34% of our business coming from oncology focused specialists, this up from 21% last quarter.

We anticipate this number to continue to grow overtime and expect that our promotion of Zuplenz will further increase the penetration of Abstral into the oncology space. Moving to Zuplenz, please turn to Slide Number 16.

Our team has extremely sited about the pending commercialization of our second product and our commercial management team has everything in place to run a successful launch.

For the past six months, our commercial team has been engaged in prelaunch and market studying activities which will allow for more effective and efficient launch as Galena becomes a true portfolio organization with two supportive care products to help patients suffering from the debilitating side effects of cancer.

At this time our partner MonoSol Rx is manufacturing the product to be sent for Galena labeled packaging. Once this is complete, the product will be shift to our third part logistics provider for distributions of the wholesalers and we expect this final product to be ready for sale in July.

As a reminder Zuplenz is approved by the FDA for the treatment of patients with chemotherapy, radiation and postoperative induced nausea and vomiting, otherwise known as CINV, RINV or PONV. The active ingredient in Zuplenz is Ondansetron and I provided you some information on this therapy on Slide Number 17.

Ondansetron is the market leader and goal standard in the anti-emetic class with over 20 years of clinical experience and more than 20 million prescriptions written worldwide making it to go to anti-emetic for healthcare providers.

Zuplenz is bioequivalent to Ondansetron ODT or all this integrating tablets better known under its branded name as Zofran. Zuplenz also has several patient benefits as depicted on Slide Number 18 including its ease of use via the oral soluble film delivery method.

It dissolves on the tongue in less than 30 seconds, does not require water to administer, can be taken with or without food, there's a soothing peppermint flavor with no gritty after taste associated with other valuable versions of Ondansetron. Zuplenz’s in a classic medications known as 5-HT3 receptor antagonists.

Turning to Slide Number 19, the branded 5-HT3 market continues to grow despite generic competition with a current branded market size of almost $1.2 billion in the U.S. In addition we estimate the entire 5-HT3 market including generics to be in the neighborhood of $6 billion in the U.S.

We continued to make progress to expand our managed care coverage for Zuplenz with multiple payors. We have increased our Medicare Part D coverage from 1% at the acquisition of Zuplenz to approximately 40% at launch. And we continued to work on improving formulary status with part D and commercial payors.

We expect to be at or near parity with the branded competition in 2016. The previously described indications for Zuplenz fit perfectly with our current existing commercial structure with clear promotional synergies as you can see on slide number 20.

While we share the common call point between our two commercial products with medical oncologists, radiation oncologists and palliative care providers. Both products also target the pain and surgical specialties.

The dark blue triangles on the graph of the specialist, our team is currently calling upon and where we have established strong relationships. This is where we can simply add on Zuplenz. The lighter triangle in the non-oncology specialties will be in an expansion area for Zuplenz.

We plan to implement a controlled launch with our existing customer base in a targeted oncology clinic. We are slightly modifying the organizational structure of our sales team to maximize customer penetration across the multiple specialties to which we will be promoting Zuplenz.

Q1 was quite productive and the positive customer demand trend has continued through Q2. We’ve set the table for Zuplenz with a great dealer preparation in prelaunch activities. We remain excited for the prospects for both brands and our opportunities this year.

With that I will turn the call over to Ryan Dunlap, who will discuss our current financial status..

Thank you, Chris and good afternoon everyone. I’ll start with our P&L as shown on Slide 22. Net revenue from the sale of Abstral for the first quarter of 2015 was $2.8 million which compares to $2.2 million for the same quarter last year.

Based on our historical tends thus far as well as very positive trends we’ve seen in the last part of Q1 and into Q2 we’re pleased with the direction of our sales trends and remain confident in our 2015 net revenue guidance of $15 million to $18 million.

Also with the launch of Zuplenz, we expect that piece of our commercial business to begin contributing to our net revenue by the end of the year. I’ll call beyond that with a few items mentioned on last quarter's call that could cause delays in our revenue recognition for Zuplenz.

These include one, our agreement to assist our distributors in clearing the channel of old products sold by the previous licensee by replacing it with new longer dated Galena product.

Two, the deferral of revenue recognition into the point of sale through or in the right of return from our customers no longer exists and three the relatively high growth from that deductions, typical of the first few quarters after a product launch.

We look forward to launching Zuplenz this year and realizing the operational leverage in accretion we expected to add. Operating expenses for the first quarter of 2015 were $13.9 million compared to $14 million for the same quarter last year and $14.6 million last quarter.

To breakdown these cost, SG&A expense for the first quarter was $7.4 million compared to $6.8 million in the same quarter of last year and $7.6 million for last quarter.

The year-over-year increase in SG&A cost was driven by the expansion of our management team and infrastructure needed to support our growing commercial programs and development pipeline as well as non-recurring legal and other professional services incurred during the period.

Moving forward we expect SG&A cost to increase somewhat as we complete the ramp up of our commercial infrastructure to support the upcoming launch of Zuplenz. R&D expenses were $5.9 million for the first quarter of 2015 compared to $6.7 million in the same quarter of last year and $6.3 million last quarters.

The decrease in R&D cost year-over-year and from last quarter is a result of completing the enrollment period for our NeuVax Phase 3 PRESENT trial.

Overall operating loss improved to $11.1 million in the first quarter of 2015, $700,000 better than the $11.8 million reported in the same quarter last year and $300,000 better than the $11.4 million reported last quarter. Our loss per share for the first quarter of 2015 was $0.08 per share meeting out consensus estimate of $0.09 per share.

Moving to our cash flow on Slide 23, we have $52.9 million in cash and cash equivalents at the end of the quarter compared to $23.7 million at the end of 2014.

So roughly $30 million increase in cash during the quarter represents the $42.2 million raised in follow on equity financing offset by a $11.6 million in cash used in operations, $900,000 in principal payments on long-term debt and $500,000 in additional payments on the Zuplenz asset.

With the respect to our financing activities during Q1, in March we announced a closing of an underwritten public follow on offering and which we raised net proceeds of around $35.4 million due to the sale of common stock. Also during Q1, we raised $6.6 million under the Lincoln Park and ATM agreements.

These financings contributed $42 million cash during the first quarter of 2015. In addition in April the underwriter exercise their option to purchase the over allotment of shares for additional net proceeds of $5.4 million which is not included on our Q1 balance sheet.

In summary, we remain as confident as about the direction of businesses heading and the progress of our commercial and pipeline investments. With that I’ll turn the call back over to Dr. Schwartz to summarize our upcoming milestones and future value drivers..

Thank you, Ryan. As a team walk you through our clinical and commercial programs had made significant advances thus far this year. As you can see on Slide 25, we have several key milestones upcoming in 2015 and during last quarter we solidified our balance sheet to support these endeavors.

Our move to San Francisco Bay area will invigorate our organization in one of the leading life science hubs in United States and will allow us to establish and grow relationships to rather companies in our sector in the world-class talent pool.

With completion of enrollment in our PRESENT trial and our upcoming data for GALE-301, our caner immunotherapy programs remained at the forefront of this evolving space.

Our commercial franchise has built a strong foundation with Abstral and we look forward to expanding our sales efforts in the oncology supportive care space with the addition of Zuplenz. We’ll now open the call for questions..

[Operator Instructions] Our first question comes from Mara Goldstein of Cantor Fitzgerald. Your line is open..

Thank you for taking the question.

On the clinical side, I was wondering if you could just maybe refresh us around the interim for the present trial and I’m curious as to certainly a very positive outcome would be stopping at the interim but given the number of patients that have been enrolled for less than a year I’m curious as to why you might say -- have that expectation?.

Hi Mara it's good to talk to you. Thank you for the question. The interim analysis is a pre-planned interim analysis for the special protocol assessment. It is a futility analysis and a safety analysis. So there is nothing in the protocol that would in a statistical way or pre-planned way call for stopping the trial..

Okay..

Of course the DSMB as they do with any trial could do that on their own if the data so inspire them to but our interim -- our upcoming interim is strictly a futility analysis and we have no formal stopping rules..

Okay.

And then if I could just two number thing, the first is on that move to San Francisco just if there will be any charges associated or additional cost above and beyond sort of what's the expectation for the year and then could you just review the price increase on Abstral that was taken?.

Thanks Mara this is Ryan. I’ll answer the first part of your question..

Thanks Ryan..

There will be some incremental cost, obviously the cost of living and it's a little bit higher and the rents are little bit higher. But we do expect those costs to be offset by the decrease we’ll experience and travel cost and the entire Management Team collating around one Epicentre in the Bay area.

So we don’t expect a material impact from the move..

Okay..

Hi Mara it’s Chris the second part of your question, thank you for the question. We took a 12% price increase all fixed rents on December, excuse me, February 15, of this past year..

Okay. Thank you. I’ll just -- I’ll jump back in the queue and thanks..

[Operator Instructions] Our next question comes from Robert LeBoyer of Maxim. Your line is open..

Good afternoon and congratulations on the quarter. I had a question for Gavin on the changes to the NeuVax trial with Herceptin and the HLA it was added it looks like there’s no change in the number of patients enrolled.

And if you just elaborate on that change there and also the plans going forward for 401?.

Yeah so thank you Robert for the question. So the HLA-A24 and A26 were added to the -- what we call the HNN trial Herceptin and NeuVax trial. The overall sample size have not changed. The reason why we added to A24, A26 is that we wanted to understand whether we could increase the utility of NeuVax and we have as I mentioned earlier in the call.

There’s preclinical binding affinity data that is not yet published. But we do intend to at some point in future to make that publicly available and so as such it doesn’t impact the overall sample size, but it does gives us an opportunity to expand the patient pool if you like of NeuVax does that answer your question for the first part..

Yeah, yeah so far so good..

And 401 relative to GALE-401 so with GALE-401 as you know we’ve completed enrollment on the trial it’s a clinical proof-of-concept trial single arm 18 patients enrolled we presented some data back in ASH 2014 it was the preliminary efficacy and safety very early on data.

And as I mentioned earlier we submitted yet another abstract to the European Hematology Association and that abstract has been accepted as a poster presentation. We hope at that presentation to update what was presented at ASH and finish off the study so to speak by the end of this year with the final presentation at ASH in 2015..

Okay. Thank you. And if I could just ask one more research related question.

Are there -- is there any guidance as to what the full year R&D spending is going to look like now that it’s down a little and you’re in a new phase of the present trial?.

Yeah sure Robert this is Ryan I’ll answer that question as we’ve been mentioning on previous calls the expectation is that our research and development expense will and is going down now that we’ve completed enrolment obviously we will reallocated some of those that savings to efforts such as making sure that we have a complete patient retention.

But I do expect overall some additional decrease in our R&D spend as we move through the rest of the 2015..

Okay, great. Thank you very much..

Welcome. Thank you..

It looks like I’m showing no further questions at this time. I’d like to turn the conference over back to Dr. Schwartz for any closing remarks..

I want to thank everybody for attendance this afternoon. I appreciate the support and have good evening everyone..

Ladies and gentlemen this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect..