Galectin Therapeutics Inc (NASDAQ:GALT) shares are gaining back 15% in value today after being hit with a nearly 38% plummet when the market caught news of a Phase 2b trial in cirrhotic NASH that missed its primary endpoint.
However, Roth Capital analyst Yasmeen Rahimi believes that “every cloud has a silver lining,” lowering his expectations on mixed NASH data results, but nonetheless staying with the bulls on this drug maker’s bigger picture.
For what was “the first large, randomized study in NASH cirrhosis,” while the analyst “cannot argue that missing a primary endpoint is not important,” he presents a “few positive points to your attention,” including the point that GALT’s asset “enhanced the toughest bar in histology,” a type of liver cell death known as hepatocyte ballooning, as these cells die while jumping up in size.
Acknowledging that it is never easy to go “first,” the analyst reiterates a Buy rating on GALT stock while chopping the price target from $10 to $3, which represents a just under 30% upside from where the stock is currently trading. (To watch Rahimi’s track record, click here)
Rahimi finds it worthy to note that this trial bears the brunt of “a far more severe patient population, with half having esophageal varices (swollen veins in the lining of the esophagus) that leads to bleeding, a common complication of cirrhosis,” and adds, “Although the Street is not forgiving in missing primary endpoint, we believe regulatory agencies will likely be, as mortality rates can reach 60% for cirrhotics and no FDA-approved therapy is available.”
Take under account that the company’s NASH asset GR-MD-02 did meet statistically significant reduction in the primary endpoint of hepatic venous pressure gradient (HVPG) from baseline, which measures is an effect of chronic liver disease, when the 81 patients with esophageal varices of a total 161 pool were not included. “Although the Street may think GALT is cherry-picking its subgroup analyses, we know from literature that variability in HVPG (which blunted statistical significant differences) occurs with the presence and severity of varices,” the analyst writes.
Ultimately, “The safety data from this trial was very promising, indicating GR-MD-02 as well-tolerated and deemed safe,” Rahimi contends, noting that a what is a “first glance” disappointment could be deceiving. This analyst still bets on Phase 3 development to progress accordingly, leaving an issue of financial overhang left for the GALT team to resolve.
TipRanks highlights a bullish unison on Wall Street when it comes to Galectin’s prospects that back Rahimi’s perspective, with all 3 analysts polled in the last 3 months rating a Buy on GALT stock. With a massive return potential of nearly 161%, the stock’s consensus target price stands at $6.00.