NEW YORK (AP) — Shares of Galena Biopharma continued to skid Tuesday after the company said the Securities and Exchange Commission is investigating the company and an investor relations firm it hired in 2013.
Galena said it is cooperating with the inquiry and added it would not comment further. The SEC says it does not confirm or deny any investigations.
In recent weeks several media outlets have reported that Galena hired a firm, DreamTeamGroup, that paid writers to write positive articles about Galena and another biotech company. The writers didn't disclose that they'd been paid for their work, which appeared on financial websites. Galena's stock climbed in late 2013 and early 2014, during the purported public relations push, but Galena insiders sold their stock at the same time. The company confirmed in February that it hired DreamTeamGroup and that some company insiders sold stock.
DreamTeamGroup, based in Indianapolis, also did not immediately respond to a request or comment.
Galena stock lost 39 cents, or 12.1 percent, to $2.83 in afternoon trading. Shares of the Portland, Ore., company climbed from around $2 in November to more than $7 in January. However the stock has fallen 57 percent since Jan. 15 and it closed at $3.22 on Monday.
Several potential class action lawsuits have been filed against the company, Galena said. The lawsuits allege the company violated securities laws by making false and misleading statements in press releases and in SEC filings. Galena said it will defend itself vigorously.
Galena said Tuesday it appointed Irving Einhorn to board. Einhorn founded the advisory firm Einhorn Securities Enforcement Consulting, and the company said he worked as an SEC attorney for 17 years and has 40 years of experience with SEC rules.
Galena Biopharma Inc. is studying an experimental cancer treatment called NeuVax, which is designed to induce immunity to cancer recurrence in certain patients. The company is running late-stage trials of NeuVax as a treatment for breast cancer and is also studying it as a treatment for prostate and gastric cancer.
The company launched the drug Abstral in 2013 and reported $1.3 million in revenue during the fourth quarter. Abstral is a treatment for bouts of severe and unpredictable "breakthrough" pain in patients who are already being treated with other opioid pain drugs, and whose bodies are adjusting to the medication — meaning the medication is becoming less effective.
Galena, which has never posted an annual profit, lost $48.5 million, or 46 cents per share, in the fourth quarter.