Who says you have to be a mega-conglomerate in order to pursue a spinoff? Galena Biopharma (GALE), a $46m market cap biotech company, announced that it will spin off RXi Pharmaceutical via stock dividend sometime in the coming months. While the board has not set a final payment date, the date of record will be March 8, 2012 and the actual distribution will take place within 60 days of that day. The transaction is still awaiting approval, but RXi is expected to trade OTC under the ticker RXII. Here is a company issued FAQ related to the transaction.
According to Mark J Ahn, Galena’s President and CEO, Galena will “continue focusing on our development-stage, targeted oncology pipeline, led by NeuVax™ which recently commenced a pivotal Phase 3 clinical trial for low-to-intermediate HER2 breast cancer patients,” while RXi will focus on “developing novel RNAi-based drug candidates.” This step is the final piece of the company’s decision to focus more on the cancer drug versus the RNA space mainly because it is further along in its development. Interestingly, one of the first steps of the process according to a recent prospectus was a company name change in September from RXi to Galena.
Even though there are no revenues to be found here at either company, it has still been a wild ride for the stock over the past year. The company has more than tripled from its lows and was up 10%+ on the spin announcement yesterday. I tend to avoid many biotech names because I have absolutely no idea how to evaluate these companies or their prospects. Heck, I can’t even understand the company’s presentations. Management seems more optimistic about Galena (although it is retaining a small stake in RXi), but in the end this is still a tiny company in an extremely risky sector – speculate at your own risk.
Disclosure: Author holds no position in any stock mentioned.