Did Galectin Therapeutics Inc (GALT) Really Fail Big in NASH? This Bull Says No as He Hikes Up the Price Target

H.C. Wainwright's Ed Arce believes the market's reaction is not on point, instead opting to recognize GALT's NASH cirrhosis Phase 2b study as a "landmark," clinically meaningful win.


Galectin Therapeutics Inc (NASDAQ:GALT) shares dove nearly 38% in the two days following a failure to meet the primary endpoint in the biotech firm’s NASH cirrhosis mid-stage trial. As Galectin recovers its share weakness today, one bull on Wall Street is so adamant that the market got it “wrong, again” that he is not only not running for the hills, but in fact lifting expectations.

A failure is clearly in the eye of the beholder, as H.C. Wainwright analyst Ed Arce believes Galectin’s NASH-CX 2b study is a “landmark” in treating cirrhosis, revealing the “first ever benefit” seen. To dismiss this simply because of disappointment hovering around the overall primary efficacy endpoint shortcoming marks “the inability of many biotech investors to recognize any value from a trial result that does not myopically present as a ‘clean win,'” asserts Arce. Have scientific discoveries ever proceeded in a “neat, straight line?”

In reaction, the analyst reiterates a Buy rating on GALT stock while jumping the price target from $6 to $10, which represents a 352% increase from current levels. (To watch Arce’s track record, click here)

On top of what comes across as the first time witnessing a “pharmacological benefit in NASH cirrhosis (across several parameters),” Arce sings the praises of Galectin’s lead asset for defining “a highly clinically significant and easily identifiable patient sub-population for treatment: cirrhotics with mild portal hypertension (MPH), in other words, those without esophageal varices.”

Clinically, the analyst likewise recognizes that a prospective indication of NASH cirrhosis without varices is actually meaningful from a clinician’s standpoint, considering that it is standard of care (SoC) practice to evaluate the presence of varices through conducting an upper endoscopy for all cirrhotics. Worthy of note, Arce highlights that the threshold of 10mmHg or higher by hepatic venous pressure gradient (HVPG), the marker of clinically significant portal hypertension (CSPH), “exists precisely because that is the point at which esophageal varices begin to develop.”

For Arce, the market’s pullback is very much been-there-done-that considering how investors first reacted to two other similar events lately in the NASH sphere, from the read-out of Genfit’s Phase 2 GOLDEN-505 trial to Tobira’s CENTAUR trial just last year. The first example led to an ongoing pivotal Phase 3 study for Genfit and the second saw “strategic player” Allergan seizing on the “value in a drug that also missed its primary endpoint.”

Overall, the analyst asks the Street take heed of a not black-and-white scenario at stake, concluding: “We remind investors that NASH is a complex, multi-factorial continuum of diseases for which there are no approved therapies precisely because our scientific understanding of the underlying mechanisms are only now beginning to reveal appropriate pharmacological approaches. With multiple paths likely available to Galectin for a registrational Phase 3 program.”

TipRanks demonstrates that Wall Street consensus aligns with Arce’s bullish perspective on Galectin’s opportunity at hand, considering that all 3 analysts polled in the last 3 months rate a Buy on the biotech stock. With a massive return potential of 187%, the stock’s consensus target price stands at $6.00.