Galena BioPharma (GALE) CEO Mark Ahn continues to shell out big money for obsolete, rarely prescribed drug products.
Tuesday, Galena entered into a license agreement with MonoSol Rx for Zuplenz, an oral dissolvable film containing ondansetron, a drug approved to treat nausea and vomiting caused by cancer chemotherapy. Galena is paying $5 million in cash and stock for U.S. marketing rights to Zuplenz. Galena will also owe MonoSol double-digit royalties on Zuplenz net sales, if any accrue.
I say, "if any [sales] accrue" because Zuplenz has been a commercial flop. Approved in 2010, Zuplenz sales totaled less than $1 million in 2011, according to EvaluatePharma. MonoSol licensed the drug to Strativa, a division of Par Pharmaceuticals. In 2011, MonoSol revoked the licensing agreement with Strativa and has been looking for a new marketing partner ever since.
Enter Galena, which stands little chance of delivering higher sales of Zuplenz than its previous marketer. The drug competes against a host of low-priced generic formulations of ondansetron, including an easily dissolving tablet. Galena sales reps will now add Zuplenz to their bag along with the cancer pain drug Abstral, another under-performing product the company acquired last year.
Why is Galena acquiring products no one wants? Because it gives the company something to promote while waiting for the phase III study of NeuVax in breast cancer to inevitably fail.
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;
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