When amateur fanboy investors interview CEOs, the questions are lobbed softballs and the responses easily deflect away from the real issues.
Case in point: The "gee whiz" interview of Galena Biopharma (GALE) CEO Mark Ahn conducted by "Regarded Solutions" and posted on Seeking Alpha this afternoon. Hagiography is probably a better term to describe whatever took place between the pseudonymous author and Ahn, who slipped into CEO bullshit mode without breaking a sweat.
Let's take a closer look at some of Ahn's most blatant sidesteps.
Regarded Solutions: Hi Mark, thanks for taking time to do this interview and responding to as many questions that you can. All any investor can ever hope for is the truth and the facts and hopefully you can shed some light on issues that I feel need to be addressed. With that, let's get right to my questions: There has been a lot made of the recent insider selling of options, realizing that you can only speak for yourself can you shed some light on why you chose to sell your options?
Ahn: Of course Alan, I've been a board member since 2007 and CEO since 2011, and invested my own money in the company at inception and have purchased shares along the way. We've grown the company from $20 to $500 million market cap. I sold less than 20% of my equity position to diversify for my family. I'm contracted as the CEO and fully committed to the company's success and building significant further value for all shareholders.
Oh yes, the old "diversification" excuse. Isn't it amazing how insiders almost always "diversify" out of their options and free shares at the top, just as the stock starts to roll over? Excellent timing, Ahn!
Regarded Solutions: Let me ask this, after the Seeking Alpha article came out, there were several other articles and blogs written about the marketing of the drug Abstral. The "free" giveaway and specifically Bronte Capital calling Galena "hitting a new low in the pharma business". Can you give us a clear picture of the marketing of Abstral?
Ahn: Absolutely, as an oncology focused company, Galena Biopharma's first priority is patients. Abstral is approved for cancer patients suffering from breakthrough pain. Breakthrough cancer pain is an often debilitating condition caused directly from a patient's cancer, or from their treatment to fight the disease. Breakthrough cancer pain significantly impacts a patient's quality of life, both physically and emotionally. Abstral is an important treatment option to provide supportive care for these patients to help them go about their daily lives. Abstral is only available through a prescription from a physician.
The diversity of insurance carriers in the United States requires very specific systems to be followed in order for patients to receive coverage for their prescribed medications. As a result, Galena has established a Patient Assistance Program to help patients who need financial assistance to receive their medication. This effort is consistent with our research-led, patient-focused strategy, to ensure everyone who can benefit from Abstral, receives the therapy for their condition.
The Company remains dedicated to our mission of developing and commercializing innovative, targeted treatments that address major unmet medical needs to advance cancer care. Galena's corporate strategy is to build a full-scale commercial organization led by Abstral, with three additional products in the pipeline in five ongoing or planned clinical trials.
Awesome dodge, Ahn! The key issues are the appropriateness and magnitude of the Abstral giveaways, which Ahn doesn't address. We all know cancer patients suffer from pain, which is why there are a half-dozen or more fentanyl-based products already on the market in addition to Abstral. Galena may try to goose its market share by giving away as much Abstral to doctors as it can, but freebie fentanyl won't last for long. At some point, Galena's "Patient Assistance Program" will run smack into the company's inability to pay for it. Free Abstral doesn't generate sales. And despite Galena's claims, Abstral is no better than any of the other fentanyl-based products, many of which are cheaper.
For anyone interested, here's a more truthful picture of Abstral relative to its competitors.