Galectin Therapeutics: Some more thoughts

Disclaimer: I'm long $GALT with a small position, and considering adding a bit more due to recent downswing in prices in $IBB.

So, I finally have some time to sit down and give some more analysis on $GALT, whose Phase I trial I wrote a snap-reaction to earlier in the week here. Give that a read, and then come back here.


       VS .     


One of the funny things that I've been reading about that seems to be a prevailing opinion from retail investors  is that GALT, with a successful Phase II (or even Phase I) trial of GR-MD-02, deserves a market cap valuation identical to ICPT's ~ $6B. This is ludicrous for a few reasons.

What am I long?

Quick one for today. Someone asked earlier "What are you long/short?"

I'm currently not short any biotech stocks, although I'm considering one that I'll write on sometime this week.

Currently long:

Ariad Pharmaceuticals ($ARIA) -- sometime to come
Galectin Therapeutics ($GALT) -- detailed yesterday


I'm thinking I'll write some on ARIA sometime in the next few days (as my schedule allows); I hope to have something a little more substantive than what I put out for GALT. Both of these seem to have some underappreciated value. We'll see.

I'm also really interested in getting some short ideas in biotech out there; I'll detail why in a few days.

Happy investing!

JVS


EDIT: I had previously written that I was long SNTA, which is no longer true; I'm not even sure if it was at the time I wrote this note, because this period was shortly after I had begun to clean my portfolio of a lot of my biotech names that I was long. :-) This was due to a lot of factors, but mostly my massive overexposure to biotech names that I really had no rationale to invest in. I quickly realized that SNTA was also one of those, because I realized I didn't really know enough about the company to make a rational case for why I was invested. As such, I will not be writing anything on SNTA. -- update from 6-28-14

Galectin Therapeutics ($GALT) Introductory analysis

*Disclaimer: I am long $GALT with a small position.

Company position: Galectin Therapeutics ($GALT) is a pharmaceutical developer of drugs targeting liver fibrosis and non-alcoholic steatotic hepatitis (NASH), diseases associated with the metabolic syndrome. GALT's main competitor in drugs directly targeting liver fibrosis is ICPT, a small pharma company that recently achieved a wildly successful Phase II clinical trial targeting the farnesoid X receptor; the study was halted early due to the overwhelmingly positive data. ICPT spiked from around $71 per share to around $370 per share, and now holds a market cap of ~ $6B. 

Pipeline: For GALT, the company will be made or broken on the back of its lead compound, GR-MD-02, an inhibitor of galectin-3 proteins, which have been demonstrated to be important in the pathology of fibrosis. 

Recent activity: Today, GALT gave a conference call on the completion of a Phase I trial of GR-MD-02 for the treatment of liver fibrosis in 6 obese individuals. This trial presented some interesting results, which I highlight here, along with the basis of my investment thesis: