Welcome to Galena Biopharma's Third Quarter 2016 Earnings Call. [Operator Instructions] I would now like to introduce your host for today's conference, Miss Remy Bernarda, Senior Vice President, Investor Relations and Corporate Communications.

Thank you Liz and good afternoon, everyone and thank you for joining our call today. For those of you listening via telephone, I would encourage you to visit our website and log into our webcast presentation. As usual for our quarterly call, we will be using slides to enhance our information flow. The slides can be accessed on our website in the Investors section under Events and Presentations. These slides are posted both as a PDF document and will also be available on the webcast. The slides are viewer controlled, meaning that you, the viewer, will need to advance the slides. Our speakers will alert you to the slide they are addressing. As listed on Slide number 2 on our presentation, during today's discussion, we may make forward-looking statements about our future financial conditions and results of operations and potential for profitability, the sufficiency of our cash resources, our ability to obtain additional equity or debt financing, profitable partnering or other strategic opportunities for the development of our products and our clinical programs. Such statements include, but are not limited to, the development progress of our clinical product candidates, including patient enrollment, interim analysis, trial initiations and collaborations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under Risk Factors in our annual report on Form 10-K and quarterly reports on Form 10-Q and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements. Please now turn to Slide number 3, as I would like to introduce the members of management presenting on today's call. Dr. Mark Schwartz, our President and CEO; Dr. Bijan Nejadnik, Executive Vice President and Chief Medical Officer; Mr. John Burns, our Vice President Finance and Corporate Controller, who will review our financials; and Mr. Stephen Ghiglieri, our newly appointed Executive Vice President and Chief Financial Officer. Please turn to Slide 4 and Dr. Schwartz will begin our discussion.

Thank you Remy and welcome, everyone, to our 2016 third quarter corporate update call. On today's call, we're going to discuss a number of important areas, including the progress on our Phase III GALE-401 trial, the PRESENT interim topline data, along with a review of our immunotherapy programs and provide a corporate and financial update. Over the last quarter, we've had several key developments. On the clinical side, we have produced topline results from the PRESENT interim analysis and we'll discuss our understanding of what happened in the PRESENT trial on this call. We're also on schedule with our initiation plans for the GALE-401 Phase III study and excited to start that trial. On the corporate side, I'm extremely pleased to welcome Stephen Ghiglieri to our management team as CFO. His strong background working for companies in the life-sciences space will provide leadership in developing and executing on financing strategies, helping to ensure the effective and efficient use of our capital resources, helping us execute on the business development activities and joining me in an active dialogue with Wall Street. To effectively move Galena forward, I believe it is important that we take the necessary steps to strengthen our financial structure, starting with the reverse split. Affecting the reverse stock split will allow us to maintain compliance with the NASDAQ capital market minimum bid price requirement and garner additional interest from the investment community which we believe is in the Company's best interest and in the best interest of our stockholders. Stephen will elaborate on this later in the call, but we do believe that this change to our capital structure puts us in a better position to advance our clinical programs and grow the Company. As we mentioned in our press release, we're also going to discuss the topline…

Thank you, Mark and good afternoon to everyone. Please turn to Slide 7. On today's call, I am first going to review the results of our Phase III PRESENT interim analysis, followed by a discussion on our ongoing clinical programs. Our PRESENT trial, in addition to the evaluation performed by our internal team, we have consulted with outside experts, including Dr. Beth Middendorf, the trial principal investigator and with Dr. George Peoples, both of whom are expert in the field of immunotherapy and have essential experience with NeuVax. Our initial focus was to confirm that there were no irregularities in the operations of the trial and, as previously reported, we found no deficiencies, including in the area of data management, randomization, drug manufacturing and supply. We've then been focused on data review and analysis of the primary endpoint of disease-free survival or DFS, to understand the unexpected trial results. Of note, there were no major demographic imbalances such as age, tumor size or other based-on characteristics, including past medical history in patients enrolled in the trial. Before I go into the specifics, it is important to note that this data is from the data card prepared for the review by the IDMC at the time of the pre-specified interim analysis. We expect the database spot to occur by the end of the year and do not expect any significant changes in the data. Please turn to Slide 8 for the Kaplan-Meier plot showing our topline interim DFS results. By design, a KM plot is an estimator used to measure the proportion of the patients living free of disease for certain amounts of time after treatment. As you can see, there is a separation of the curves which is more substantial around 12 and 24 months. The median follow-up was 19.7…

Thank you and good afternoon everyone. In today's press release and slides, our financials are PRESENTED in a manner such that you can distinguish between our continuing and discontinued operations and all of our figures are in U.S. dollars. Our statement of operations can be seen on Slide 21 as filed in our press release. First, I would like to focus on our operating loss which includes our general and administrative and clinical development expenses. As reported, our operating loss of $6.5 million in the third quarter of 2016 compared to $8.6 million in the third quarter of 2015. The reduction in our operating loss was driven by a $2.1 million decrease in research and development expense quarter-over quarter primarily due to the closing of our Phase III PRESENT clinical trial in Q3 2016. G&A expense was consistent quarter over quarter at about $2.8 million which includes $0.5 million of non-cash stock-based compensation in both periods. Loss from continuing operations includes operating losses just described as well as nonoperating income and expense. Nonoperating income of $2.1 million during Q3 2016 was primarily due to a $3.7 million decrease in fair value of warrants accounted for as liabilities, partially offset by $1.4 million of interest expense. Interest expense increased during the quarter due to interest charges on our debt debenture. Of our total interest expense, $0.4 million was paid in cash and the remaining $1 million was due to non-cash interest and amortization of debt issuance costs and discounting. Our operating loss and nonoperating income and expense together results in our loss from continuing operations which was $4.3 million in Q3 2016 compared to a loss of $6.4 million in Q3 2015. We continue to experience residual costs from our former commercial business accounted for in discontinued operations. These ongoing expenses…

Thank you, John and good afternoon. It's a pleasure to join you in my new role of Executive Vice President and Chief Financial Officer. As some of you may know, I have been working with the Company for the last few months in a consulting capacity and, through that experience, I got a front row seat to evaluate the opportunity that exists within Galena. I believe the Company has a pipeline that will allow the development of meaningful therapeutic alternatives for patients while significantly building shareholder value through a combination of execution of our development programs and seeking to expand our portfolio through collaborations and potential product acquisitions. I won't take you through my background, as we included it in our 8-K filing, except to say that my experience in varied forms of financing, working with managements and boards of directors to develop and execute on strategic direction and working on the front lines implementing corporate development initiatives, are all key elements where I feel I can add significant value to Galena. And I'm happy to add that I have found this management team to be very high quality. In order to succeed in our development programs and in any product acquisition strategies we might explore, we need to ensure that our common stock is well valued and liquid. A key element in creating those dynamics is access which is why maintaining our NASDAQ listing is so important. This was the primary motivator in our recently announced reverse stock split. While I know reverse stock splits are unpopular with shareholders, the alternative of moving to the bulletin board or to pink sheets could severely impact our corporate progress. The reverse stock split has now been approved by our board, will be effective on Friday and will trade on a post-split…

Thank you Stephen. It's been a challenging few months as the Company worked to analyze the results of the PRESENT trial, develop financial footing for growth and structure our pipeline for the future. While we still face a number of challenges, I am very pleased with the progress the Company is making in the spirit and commitment of the team. As Bijan mentioned, we're preparing GALE-401 for a Phase III pivotal trial and have developed close collaborations with key leaders in the MPN field to both understand and to optimize our trial design for the compound. In parallel, our continued analysis of the PRESENT data, both NeuVax and GALE-301/302, continue to progress with support from our collaborators. We believe that basic activity of both compounds can play a key role in the prevention and treatment of cancer and we're continuing to look for opportunities to demonstrate the best setting for continued development and possible commercialization. I'm excited to have Stephen's financial and strategic experience as we work to conservatively manage our financial resources and seek collaborations and partnerships that will leverage our resources and our pipeline. As he indicated, we have taken a number of steps to position the Company for long term growth. As well, Galena has built its pipeline on in-licensing acquisitions and we will continue to look for pipeline expansion opportunities which will complement our clinical and financial profile and lead to increased shareholder value. For reference, our 2016 milestones are shown on Slide 26. We have hit a number of key operational milestones this year and in spite of the PRESENT outcome, the team remains focused on developing drugs in the pipeline in key clinical areas with no or limited other therapeutic options. As we move into 2017, we will continue to communicate our goals for all of the programs for next year. Thank you again for joining us. Have a wonderful afternoon. And I now open the call for questions.

[Operator Instructions]. Our first question comes from the line of Kumar Raja with Noble Financial. Your line is now open.

So, on the pseudo progression, what do we know from [indiscernible] with regard to the timeline of the like how long it takes before you see this progression and how long it lasts? And also in the trial, obviously, after all of the patients who were imaged, only some seem to have this progression. What are the reasons for those?

I'm just trying to understand your questions. So, the first one was what is the timing for through the progression, how long does it last and when do you expect it to be over? The second question, however, I was -- would you like to tell me again what was that?

Yes, yes. So basically some of the patients, they were proactively imaged. And it seems like not all of the patients seem to have obviously the unknown clinical significance, right? So you are saying that they are seeing something which is of unknown clinical significance. Obviously, they are thinking it's a progression. But is it seen in all the patients? If not, why is it only seen in some patients than in other patients? Is it a difference in the immune response in these patients and what are the causes for that?

Yes, these are absolutely great questions. So let me answer the first one. Pseudo-progression really depends on, first of all, the disease you are treating. The underlying disease and the time of the division of the cells is a very important one, because not everything is pseudo-progression, but then also how immunologically active the underlying disease is. For example, you could see that relatively quickly in metastases of melanoma, because it's already an underlying immunological disposition to melanoma or renal cell carcinoma. However, in some other cancers such as breast cancer, that level of immunologic predominance or tendency is much lower because they are neurologically cold. Therefore, the attraction of the tumor infiltrating cells is -- happens much slower over time. The other variable there is the kind of treatment you are administering. In the case of active immunotherapy such as -- let me just talk about the passive first. The passive immunotherapies such as with immunoglobulins, the examples is the checkpoint inhibitors, you expect that to happen much faster because of the fact that you are giving the immunoglobulins to the patient right there and then. And probably that effect on the tumor starts immediately, so you could more or less see that within the weeks or a few months. In the case of vaccination which is active immunotherapy, the story is a little different because what you are doing there, you are gradually giving the vaccine on the multiple occasions and you give boosters and you're inducing the T cells. And there are several steps between administering the drug and the active immunologic effect at the tumor level. Those timings have not been exactly measured. This is something that would be very interesting for science to do that, but I am not aware of having the exact time. I'm just imagining that, as you give the boosters, you're predisposing the patients more into having the pseudo-progressions. And a great question too is why it happens only in some people? Well, it happens in some -- we saw it in some people because those people had the micro metastases a the -- right after the adjuvant therapy and surgery. A lot of people don't have those micro metastases or those micro metastases or the immune system is not induced or activated. It really depends on the host whose immuno stimulation is more active, more predominant or some people who do not react to vaccine to begin with. So you can find the variability there that's expected.

And in terms of the timing of the end of the Phase II meeting with regard to Anagrelide and what is the expectation of -- what are you expecting from this meeting? Any thoughts on the trial design for the Phase III trial?

Trial design for Anagrelide. Sure. Well, we're very actively -- I mean very closely working on a Phase III trial. We have had several advisory boards talking to the experts in the world. As you can imagine, this is a disease which is treated with a limited number of physicians and we have gotten, we believe, that great insight into the disease and how to proceed with the design of the trial. We have the design in prepared protocol. We have already discussed, communicated with the FDA in that regard and they have given us a timing for meeting face-to-face to discuss that with us. So we're very excited about this and we're hoping that we can push that forward. As you can imagine, within those discussions, things can come up, but the overall view is that we would be able to get that Phase III trial going. And the main reason is that there is not a whole lot of options there for those patients. And in that regard, I think that this is a trial in which the investigators, the patients, the regulatory others, have all the reasons to look at it favorably.

Our next question comes from the line of Jason Kolbert with Maxim Group. Your line is open.

This is Susan Lee calling on behalf of Jason McCarthy. Actually I said the wrong name. But my question is for GALE-301/302. Can you guys walk us through the next steps in clinical development? And more specifically, how do you plan to use the variable FBP expression level data you presented in October to design the next clinical trial?

We're still -- there are still -- the two phases -- this is Mark Schwartz. The two Phase II, Phase I, Phase I/II trials, are wrapping up now. And we're still collecting the final data. We have several publications, as Bijan mentioned, abstracts being presented. Actually it's SITC this week and at the San Antonio Breast in December. And we're still aggregating the data, talking to a number of experts in the field, put together exactly what the best path forward is. Fully binding protein is expressed in different cancers differently and what we've learned is that something like the optimal dose may not be the same from cancer to cancer and setting to setting. So I think our first steps which we're doing now, is looking to try to identify what would be the best path forward and how to structure it. And I think, as we move through into early next year, we will have a better sense of that.

And also, what are your next catalysts for the ongoing investigator sponsored NeuVax studies? Can you give us a sense of if and when Dr. Reddy's may move forward in gastric cancer?

So, we should complete enrollment in the HNN HER2 1+/2+ combination trial in Q1. The first efficacy interim analysis will be one year from the last patient in, so that would put that sometime in Q1 of 2018. That's probably the most approximate and I think the most important milestones that we have. Let me just remind you it's a 300 patient study and as Bijan had indicated in his prepared remarks, that we're not doing proactive scans. So we hopefully would expect to see a more straightforward and robust immunological readout on that one. And I'm sorry, the second part of your question was -- gastric. We're talking to Dr. Reddy's now. The work on that slowed down over the summer as the interim analysis came out and we paused to do a deep dive into the data there, but our discussions with them continue to try to get that up and running.

This is Remy. I'll just add one thing. On the DCIS trial, we still estimate that to initiate by the end of the year.

[Operator Instructions]. Our next question comes from the line of Reni Benjamin with Raymond James. Your line is open.

This is David on for Ren. Thanks for taking the questions. My first question is for Mark. So for Anagrelide, what might the trial look like for 401 in terms of the enrollment target and the timing, as well as if you can give any additional color as to what the endpoint would be?

So let me start that, but I'll ask Bijan to jump in if I don't adequately cover your questions. So as Bijan had indicated, there is a dearth our lack of really good treatments. In fact, there is only one compound that's formally indicated for treatment of central thrombocythemia. And so right now, our thoughts are looking at patients that fail the first-line therapy that really have a variety of other not so great treatment options that physicians tend to choose from, so we can provide patients a path to go from hydroxyurea which was the first commonly accepted first-line treatment, although it's not indicated for that and if they fail hydroxyurea and that failure rate is pretty high, somewhere in the 20% to 30%, 25% or so range. And they could move to Anagrelide CR or GALE-401. And I think that would provide a significant opportunity for physicians to have a more defined path for treatment of those patients. We're -- as we said, we're meeting with the FDA to look for a 5(2)(b) pathway which would be an accelerated pathway over an NME-type of approval cycle. We hope to start in Q2. And it's a little bit early to pontificate on exact timings, but certainly we would look to initiate enrollment in Q2 and get that done as fast as possible. So, I think we're a couple of years out from there.

And I think maybe just another question for John and maybe Steve. So how should we be thinking about the cash burn rate from 4Q onwards? Should we be thinking about that range as sort of the baseline going forward or do you have anything else to maybe add?

This is John. I think I'll touch on it. So, we did give guidance for Q4, but as we finalize the 401 trial, we're going to provide you updated guidance with our Q4 earnings. But we do expect to go down from that range as we get through some of these related discontinued operations [indiscernible] we still have to pay out. So as we get into 2017, we do expect the burn to go down, but we're not ready to give a specific range just quite yet.

I'm not showing any further questions in queue at this time. I'd like to turn the call back to Mr. Schwartz for closing remarks.

Thank you very much everybody, appreciate your attendance on the call and look forward to talking to you next quarter.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day.