1.	Nature of Business

Galena Biopharma, Inc. (“we,” “us,” “our,” “Galena” or the “company”) is a biopharmaceutical company focused on developing innovative, targeted oncology treatments to address major unmet medical needs to advance cancer care. We currently are developing innovative, peptide antigen-based “off the shelf” cancer immunotherapies for potential application to treatment of large populations of cancer survivors.

We acquired NeuVax™ in April 2011 in connection with our merger acquisition of Apthera, Inc, or “Apthera” (see Note 4). Prior to that time, we were engaged primarily in conducting discovery research and preclinical development activities based on RNAi. In connection with our acquisition of NeuVax™, we reduced the scope of our RNAi activities.

On September 26, 2011, we changed our name to Galena Biopharma, Inc. from RXi Pharmaceuticals Corporation in connection with the proposed partial spin-off of our former subsidiary, RXi Pharmaceuticals Corporation, or “RXi.” RXi was initially incorporated as RNCS, Inc. and assumed the name RXi Pharmaceuticals Corporation in conjunction with the change in our name to Galena. On April 26, 2012, we completed the partial spin-off of RXi, which is engaged in the development of novel RNAi-based therapies.

Unless the context otherwise indicates, references in this annual report to the “company,” “we,” “us” or “our” refer (i) to Galena, Apthera and RXi, collectively, prior to the partial spin-off of RXi; and (ii) to only Galena and Apthera, together, after the partial spin-off.

As the company has not generated any revenue from inception through December 31, 2012, the company is considered a development-stage company for accounting purposes.

The company had cash and cash equivalents of approximately $32.8 million as of December 31, 2012. The company believes that its existing cash and cash equivalents should be sufficient to fund its operations through at least the second quarter of 2014. This projection is based on our current planned operations and is subject to changes in our plans and uncertainties inherent in our business, and we may need to seek to replenish our existing cash and cash equivalents sooner than we project.

We have not generated revenue to date and may not generate product revenue in the foreseeable future, if ever. We expect to incur significant operating losses as we advance our product candidates through the drug development and regulatory process. We expect to continue to devote a substantial portion of our resources to research and development programs. As a result of the costs expected to be incurred in connection with our recently commenced clinical trials of NeuVax and FBP, our research and development expense has increased significantly from historic levels. We will need to generate significant revenue to achieve profitability and might never do so. In the absence of product revenue, our potential sources of operational funding are expected to be the proceeds from equity financings, funded research and development payments and payments received under partnership and collaborative agreements. There is no guarantee that additional funding will be available to us on acceptable terms, or at all. If we fail to obtain additional funding when needed, we would be forced to scale back or terminate our operations, or to seek to merge with or to be acquired by another company.