On Tuesday, Galectin Therapeutics Inc (NASDAQ:GALT) reported that its pipeline investigational drug GR-MD-02, designed to treat liver fibrosis, missed its primary endpoint in the Phase 2 NASH-FX trial. GALT hoped to evaluate whether its drug could mark improvement in liber fibrosis measured by a LiverMultiScan called cT1, but instead realized failure coupled with misses in both secondary endpoints, liver stiffness, which is a surrogate for fibrosis, as measured by magnetic resonance elastrography and FibroScan.
In wake of the NASH-FX failure, H.C. Wainwright top analyst Ed Arce downgrades GALT from a Buy to a Neutral, while slashing the price target from $8 to $1.50.
The analyst asserts, “From a fundamental perspective, in our view, the results of NASHFX likely carry negative implications for the probability of success (POS) for NASH-CX (see below), due to readout in December 2017. And, from a trading perspective, the 15-month long data catalyst gap likely renders the shares of this microcap as dead money until (or shortly before) then. Thus, given our increased doubts about the true therapeutic effect of GR-MD-02 on fibrosis or cirrhosis, and a clear lack of catalysts for the shares within our 12-month investment horizon,” Arce is no longer bullish on the stock.
Arce concludes, “So, while it is difficult to generate a reasonably plausible read through to NASH-CX, we believe the overall implication of NASH-FX is neutral at best, and likely negative.”
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Ed Arce has achieved a high ranking of #40 out of 4,181 analysts. Arce upholds a 50% success rate and realizes 36.3% in his yearly returns. When recommending GALT, Arce garners 53.3% in average profits on the stock.
TipRanks analytics exhibit GALT as a Hold. Based on 3 analysts polled in the last 3 months, 1 rates a Buy on GALT, 1 maintains a Hold, while 1 issues a Sell. The consensus price target stands at $1.50, marking a 7% upside from where the stock is currently trading.