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Galectin Therapeutics Inc (NASDAQ:GALT) Is An Alternative Catalyst Play

Galectin Therapeutics Inc (NASDAQ:GALT) Is An Alternative Catalyst Play
Written by
Chris Sandburg
Published on
February 16, 2017
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Galectin Therapeutics Inc (NASDAQ:GALT) is drawing some considerable volume at the moment, and the company is up more than 45% this week alone as a result. Year to date, this number rises to 84%. From a purely quantitative perspective, it has been a great stock to hold this year. However, look a little deeper, and the driver behind the momentum isn't immediately clear. There are a number of players in the space, and for many investors, Galectin's peers are more attractive exposures right now.With that said, however, we cannot negate the gains that Galectin holders are sitting on. The question is, are there more to come?Well, the company just presented at the BIO CEO & Investor Conference in New York, and the presentation seems to be drawing a lot of speculative attention towards its pipeline. We sat in on the event, however, and in all honesty, we aren't sure why this latter statement is true. Sure, management touched on the development pipeline, and reinforced the scientific hypothesis that underpins its lead treatment (which, for those not familiar with this company, is a NASH therapy). All standard presentation stuff. As far as fresh updates go however, there were none.To quickly touch on the catalyst drivers for Galectin, the company is currently undertaking two phase 2 studies in the above-mentioned NASH indication, one targeting NASH fibrosis and another targeting NASH cirrhosis. The drug under investigation is called GR-MD-02, and it is part of a family of drugs called galectin inhibitors. The mechanism of action for this drug type is rooted in the inhibition of the carbohydrate-binding domain of galectins, in particular one called galectin-3. Galectin-3 inhibition can theoretically result in apotosis (which is the word used to describe the natural process of cell death). This apoptosis inducing serves up the potential for application of the mechanism of action to a range of indications, and various oncologic targets are in the pipeline. However, the liver disease targets are the primary right now, and underpin the majority of this company's valuation.So, what is our take on the situation? Well, data from the above-mentioned trials isn't going to be released before December, and this sort of leaves the company in a bit of a limbo situation. To put this another way, there is not really anything set to hit the press that is going to drive a considerable revaluation near-term, at least from an operational perspective.Normally, therefore, this would make the company and unattractive entry at the present time.This isn’t a normal situation, however. The NASH space is very tightly correlated, in the sense that developments from one company will generally induce an almost equivalent response from shareholders of another. This correlation is rooted in the similarity of the mechanisms of action for the drugs being used to target the condition. Companies like Conatus Pharmaceuticals Inc (NASDAQ:CNAT), one of Galectin's major competitors in the sector, and Intercept Pharmaceuticals Inc (NASDAQ:ICPT), a larger entity but with a similar development target, are putting out data supportive of an efficacy thesis on similar types of treatment, and this efficacy is filtering through to Galectin in the form of upside run.This alters the exposure somewhat.Basically, the fact that Galectin doesn't have any internal catalysts until the end of the year doesn't mean it can't see some upside momentum based on the developments coming out of other companies. Additionally, and looking specifically at the application of Galectin inhibition to NASH, the science looks sound, and the data from early studies is in place to back up the hypothesis.This means that not only could we see some near-term upside momentum on the developments of other companies, but that even if we don't, and even if the company remains flat near to medium term, it could be a nice opportunity to load up while markets are looking the other way ahead of the data drop come December.Bottom line – not a traditional catalyst play, but well worth a look nonetheless.We will be updating our subscribers as soon as we know more. For the latest updates on GALT, sign up below!Disclosure: We have no position in GALT and have not been compensated for this article.

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