GALT is Primed for Acquisition or Partnership

Last Updated on January 16, 2019 by Sultan Beardsley

Overview

Galectin Therapeutics (NASDAQ GALT $5.96) is a leader in the development of a treatment for  Non-Alcoholic SteatoHepatitis, an unmet medical need worth billions. Their star drug candidate GR-MD-02 has performed impressively in pre-clinical and clinical trials for both NASH, skin disease, and cancer immunotherapy. On September 6th at the 20th Annual HC Wainwright Investor Conference Galectin’s CEO Dr. Harold Shlevin’s gave a corporate presentation. In that presentation he missed a pivotal opportunity to communicate the gravity and magnitude of what GALT has achieved medically, and is on the cusp of accomplishing in the near future.

NASH

On May 14th, 2018 GALT gained approval from the FDA to advance to phase 3 for GRMD02 as a treatment for NASH. This alone is huge. There are no medical treatments for people suffering with NASH, especially patients with cirrhosis. Harold mentioned this yes. But what he did not drive home was that the endpoints the FDA has permitted Galectin to choose from in the trial are optimal and give GRMD02 a high chance of success in P3 and commercialization. There will also be an interim analysis at the 18 month mark which beats getting Breakthrough Designation status.

Within the results from the phase 2b NASH trial which justified the FDA’s decision to approve phase 3, there was an unequivocal significant treatment effect in ALL the patients without varices. There are 230K Americans diagnosed with NASH without varices ready for treatment. Using Intercepts pricing model for Ocaliva ($70K/year) that projects $170-$180 million in revenue in 2018. If approved, GRMD02 could generate $1.6 billion in revenue charging the same price. What’s even more remarkable that Shlevin did not emphasize was that absolutely NONE of the patients without varices in the 2mg treatment group formed varcies. That’s 0/25. You think this drug works?

Moreover, the patients without varcies showed very statistically significant reductions in liver cell death and blood pressure, both medically accepted biomarkers for NASH.

Shlevin further failed to drive home to investors listening in to the presentation that the FDA has approved progression of varices as a phase 3 primary endpoint. That is, the patients enrolled in the study and the ultimate target population will be patients with NASH but have not yet developed varices. The key point being that this endpoint was achieved in 100% of patients without varices in the 2mg group of the phase 2b trial. Assuming repeated performance by GRMD02 which seems highly likely given that all patients with varcies benefited significantly from treatment, and the Interim analysis, revenue to start rolling in 18 months.

The market seems to miss the magnitude of this. Whatever big pharma, whether its Merck (MRK) or Bristol Myers (BMY) who partners with or acquires GALT, is gaining the rare opportunity to conduct a low risk phase 3 trial to meet an unmet medical need worth billions, and with endpoints achieved in 100% of the target patients in phase 2. The question of buyout or partnership is not ‘if’, it’s ‘when’. The answer to that is almost certainly after cancer data is released.

Cancer Catalyst Imminent

GALT and Merck donated their drugs to Providence Medical Center in Portland Oregon to test the combo therapy on patients with metastatic melanoma and head and neck cancer. These patients were refractory and Merck’s drug keytruda was ineffective alone. Being a phase 1 trial demonstrating safety was the goal. Instead, they saw safety and efficacy in two cohorts of patients! The waterfall chart speaks for itself. There was an overall response rate of 66% with the combo therapy compared to 30% with Keytruda alone.

These patients who were unresponsive to Keytruda alone had complete and partial responses when GALT’s drug was added, meaning they went into remission or their condition greatly improved renewing hope for life. Immediately cohort 3 was enrolled with more patients and a higher dose of 10 mg of GRMD02. The data release date that the company has maintained is Mid Summer-2018. On the corporate presentation they did not change that time line and said its expected ‘Near-Term’ (i.e. imminent). The last day of summer officially is September 26th, so it must drop before then for the company to remain in SEC compliance.

Investors want to get in GALT now. Given everything discussed here including phenomenal leadership by company chairmen Richard Uihlein, a strong patent portfolio (including cancer), engagement of Back Bay Transaction Advisory, imminent cancer catalyst, and the sizable financial incentives for executives to secure a buyout, partnership, or license agreement, its only  matter of time before GALT becomes fairly valued at $10-$20 a share.

And if we’re being honest the only reason $GALT isn’t trading in double digits is because of short selling. Don’t let them impede this potential medically revolutionary drug any longer. Fight back, buy back.

I am/we are long GALT

I was not paid to write this. It reflects my own opinions regarding GALT and the company’s outlook. I have no business ties with them