NEW YORK (TheStreet) -- Galena Biopharma (GALE - Get Report) declined to answer questions about its stock promotion practices but did admit hiring the marketing firm The DreamTeam Group, which published articles under aliases touting the company's stock without disclosing who paid for them.
In a letter to shareholders released Friday, Galena CEO Mark Ahn accused me of having an "agenda when it comes to Galena" and said my reporting on the company was "tabloid-like" and "largely devoid of true information."
Ahn was responding to a story published Wednesday describing a Galena-funded campaign which used a marketing firm, The DreamTeam Group, to publish promotional information, including "analyst-like" articles, on Web sites, message boards and social media aimed at boosting the company's stock.
According to a document obtained by TheStreet, the DreamTeam Group published two articles on Seeking Alpha made to look as if they were written by individual investors recommending Galena as an investment. In fact, both articles were written by the same person under two different pseudonyms. Neither articles disclosed a financial relationship with The DreamTeam Group or Galena. Seeking Alpha removed both articles from its Web site last week.
"The only facts in Mr. Feuerstein's most recent article that are remotely accurate are that Galena previously engaged The DreamTeamGroup and that insiders at the company, including me, divested shares in mid January. All other accusations in this article -- as with his prior reporting on Galena -- are specious and conveniently arranged to create controversy," said Ahn, in his letter to shareholders.
But aside from labeling the story superficially plausible but wrong, Ahn's letter provided no factual evidence to support his or Galena's position.
Ahn also spoke to a reporter for The Oregonian who wrote a story on the Galena situation Friday night:
"Ahn, Galena's CEO, said the company did not intend to mislead investors. He [Ahn] did not know the DreamTeam Group was not disclosing that its promotional materials were funded by Galena. In fact, he said he'd been told DreamTeam didn't write the Seeking Alpha articles. It was 'an independent writer,' he said."
Ahn's defense contradicts the DreamTeam document which says the firm published the two Seeking Alpha articles on Aug. 7, 2013 and Nov. 22, 2013. The document also describes a third pro-Galena article published on Wall Street Cheat Sheet on Dec. 5, 2013.
There were 26 articles about Galena published on Seeking Alpha between July 2013 and last Wednesday -- the time period in which DreamTeam Group was providing paid stock promotional services to the company. Why did the DreamTeam document only highlight the two Seeking Alpha articles published on Aug. 7 and Nov. 22 -- and ignore all the others -- if the firm didn't write them? Whether Ahn knew or not about the source of the two articles, The DreamTeam Group knew and did not disclose pertinent information to investors.
TheStreet has uncovered a second DreamTeam document which further explains how the firm hires writers to publish articles on Seeking Alpha and other investor Web sites to promote the stocks of its paying clients.
This second DreamTeam document states:
"Although blogs are widely read and a key part of our social media relations strategy, they take a more informal approach and don't offer the deeper analysis our articles offer. Articles are directed toward sophisticated investors who understand complex evaluation of investments, and we publish our articles where these investors commonly go to seek new investment ideas - ensuring that the highest quality content about YOUR company gets seen by the right people. We use our own writers to generate content, and we utilize our network for distribution. We reach a vast audience through our partners and media contacts, and for those who do their own research, it certainly helps to have positive information coming from multiple sources.
Seeking Alpha, which boasts more than 1 million members, is the No. 1 outlet we use to circulate this kind of detailed information for our clients. Recognized as the premier Web site for actionable stock market opinion and analysis, Seeking Alpha handpicks articles from the world's top market blogs, money managers, financial experts and investment newsletters - publishing approximately 250 articles each day. Seeking Alpha was named 'Most Informative Web Site' by Kiplinger's Magazine and has also received Forbes' 'Best of the Web' award.
Utilizing this outlet, we've received more than 6,500 views for a single article, and our articles are also featured on many prominent sites, including Yahoo! Finance. We not only craft superior content - we maximize its effectiveness on your behalf." [Bolded emphasis added.]
Another question left unanswered in Galena's response to Wednesday's story: If there was nothing improper about the promotional material disseminated by The DreamTeam Group on Galena's behalf, why has The DreamTeam Group tried to erase all of it from the Internet?
References to Galena have been expunged from the DreamTeam Group's galaxy of Web sites, blogs and Twitter feeds since the publication of my story Wednesday. The compensation disclosure noting the $50,000 payment made by Galena to The DreamTeam Group was also deleted. Cached copies of The DreamTeam Group's promotional work for Galena can still be found on Internet archive sites.
As for the recent stock selling by Galena executives and directors, Ahn told The Oregonian that insiders were prohibited from selling stock until very recently because the company was in negotiations to acquire Mills Pharmaceuticals.
But when asked about insider selling in a different interview on Feb. 4, Ahn said he sold stock to "diversify for my family," and made no mention of insider sale restrictions, leaving yet another unanswered question.
-- Reported by Adam Feuerstein.
Follow Adam Feuerstein on Twitter.