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Galena, Free Fentanyl Samples and the 'Zombie Apocalypse'

Bronte Capital fund manager John Hempton takes to his blog Monday to excoriate Galena Biopharma (GALE) for marketing its fentanyl-based painkiller Abstral with free samples. 

Hempton's blog post, titled, " Get your opiates for free: Capitalism meets the Zombie Apocalypse" is a must read. Here's a sample:

Galena's hot new product is a sublingual version of an old drug. The marketing ( on their website) argues this drug is really fast. To quote: "Patients preferred Abstral for speed". However to give it that extra marketing pizazz they are giving it away. Here is the pitch - which I believe as a matter of policy should be criminalized.* [I note that tobacco companies are not allowed to give free samples of cigarettes - and it is curious that same does not apply here.] The advert has an irony of its own. It shows a new-age style woman completely blissed out (with a smiling kid) and the slogan "time better spent." We have US corporations doing hippy-alternative-lifestyle drug marketing for drugs that are especially effective in turning you into a zombie. Capitalism meets the zombie apocalypse.It is as if Tim Leary was reincarnated as a cynical capitalist going for the mega-dollars.

Galena doesn't make any money when it gives away Abstral for free -- something to keep in mind when the company reports fourth-quarter and 2013 financial results later this month. Ever since Abstral's commercial launch this fall, Galena bulls have pointed to growing prescription numbers as evidence the drug is taking market share from all the other fentanyl-based products used to treat breakthrough cancer pain. Well, market share gains derived from free samples don't mean much, just ask Amarin (AMRN) and Arena Pharmaceuticals (ARNA)

Galena shares are down 16% to $4.43 today. The stock has lost more than 40% of its value since Jim Cramer used the bully pulpit of Mad Money to raise questions about the company's chief asset -- the breast cancer vaccine Neuvax. 

A rash of recent insider selling by Galena management hasn't helped.

I've been a longtime Galena bear because anyone who looks objectively at previously presented clinical data on Neuvax understands the breast cancer vaccine doesn't work. The ongoing phase III study -- which Galena is having trouble enrolling patients -- is likely to fail. You can read an analysis of the Neuvax phase II data from April 2012 and May 2012. I've also explained how Galena over-hyped its relationship with Teva (TEVA)

And of course, there's the insidious ways in which stock promoters have used Seeking Alpha to tout Galena to retail investors

It's nice to see additional truth-telling on Galena get air time recently. 

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.


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