LAKE OSWEGO, Oregon ( TheStreet) -- Galena Biopharma's ( GALE) breast cancer vaccine NeuVax will fail when results of a phase III clinical trial are eventually announced in three years or so. I can boldy predict NeuVax's failure this far in advance because Galena is making the same mistakes and taking the same sloppy shortcuts that Keryx Pharmaceuticals ( KERX) did with its colon cancer drug perifosine. The warning signs with perifosine proved correct, as they will with NeuVax.
In early February, I called Galena (which was up 168% year to date at that time) a drug stock unworthy of the biotech bull market. This label still rings true, even more so given the stock's continued ascent. Galena's market value of nearly $80 million may seem puny but it's actually excessive when you consider that the company's only asset -- NeuVax -- is never going to reach the market. NeuVax is a cancer immunotherapy, or vaccine, that works by stimulating a patient's immune system to kill cancer cells. More specifically, Galena claims NeuVax works by training a patient's T cells to recognize and destroy cells in the body that express HER2, a protein that works like an "on" switch for breast cancer cells. Roche's ( RHHBY) blockbuster cancer drug Herceptin works similarly, except it's not a vaccine but an antibody that attaches to HER2 receptors on breast cancer cells. In order for Herceptin to be effective, however, the breast cancer cells must overexpress HER2, meaning the cells need to have large numbers of HER2 receptors on their surface. If NeuVax trains T cells to recognize and destroy HER2-expressing breast cancer cells, the vaccine should work best in tumors where HER2 expression is highest. This makes sense, right? After all, it should be easier for those newly trained T cells to find tumor cells if the target (HER2) is illuminated with the molecular equivalent of red paint and strobe lights. But guess what: NeuVax works best against breast cancer tumors that express low or middling levels of HER2; the vaccine doesn't work well in tumors that over-express HER2, says Galena. Really? That's strange and confusing. Can Galena explain why a HER2-targeted vaccine wouldn't work well in tumors that contain lots and lots of HER2? No, Galena just wants you to accept this odd, confounding "fact" about NeuVax as the gospel truth, which the company insists is supported by data from phase II studies. Let's take a look at these NeuVax phase II studies since Galena claims they were successful and instrumental in helping design the recently started phase III study in breast cancer. Galena bulls, a group dominated by retail investors, also apparently believe the phase II studies were a big positive. Not true. The phase II studies were designed to study NeuVax as an "adjuvant" treatment to reduce the risk of breast cancer recurrence. Patients recruited had breast cancer with all levels of HER2 expression that was successfully treated leaving no evidence of residual disease. Some of the patients were then injected with NeuVax and an immune system booster while others were untreated and simply observed. The goal of the study was to determine if NeuVax could reduce the breast cancer relapse rate compared to doing nothing. NeuVax didn't work. Of the 109 women vaccinated with NeuVax, 6.5% had a breast cancer relapse after 24 months of follow up compared to 14.5% of the 79 women in the control group, according to data presented at the 2010 ASCO annual meeting. NeuVax patients had numerically fewer relapses but the trend was not statistically significant, with a p value of 0.08, which exceeded the 5% benchmark typically signifying a positive study. Patients in these phase II studies were followed longer but the results didn't get any better. After 36 months follow up, the cancer relapse rate for NeuVax-treated women was 8.5% compared to the same 14.5% relapse rate for the control group of women. The relapse rate gap narrowed and the statistics behind the study got worse, with the p value growing to 0.187. The 36-month time point is especially important -- and damning for NeuVax -- because this is the same length of follow up used by Roche/Genentech to get Herceptin approved as an adjuvant treatment in breast cancer.