Galectin Therapeutics Inc (NASDAQ:GALT) Emerges as the Clear Leader in NASH

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Galectin Therapeutics Inc. (NASDAQ:GALT) had one of its best business updates in quite some time revealing their clear pathway toward regulatory approval and that they were no longer a one trick pony.  With $15.4 mil dollars in the bank and enough runway to completed the trial the company is on a solid course toward partnership with a major drug company.  GALT is due out with its topline NASH (Nonalcoholic Steatohepatitis) CX trial results in December this year.  The company hinted at the strong possibility of a Breakthrough Therapy designation if they meet their regulatory endpoints on HVPG and Fibrosis.  Right now in the NASH space only Intercept Pharmaceuticals (ICPT) has the Breakthrough Therapy designation.  There seems to be a clear pathway toward provisional approval as they outlined their plans to break the patient groups up into subsets for a follow on phase 3 trial.  It appears that they are looking for an international partner for the skin disease in that it would not interfere with the rights to NASH.   There also appear to be future catalysts in the timeline before the release of the NASH CX trial results.  The stock is trading at an extreme discount so close to a pivotal trial result.

As of late NASH has been broken down into two stages early and late stage.  ICPT, Allergan (AGN), and Genfit (GNFTF) have seem to have taken the spotlight in the early stage NASH.  Most of the controversy resides in the early stage as the debate rages over whether or not these therapies if approved would even be embraced by healthcare providers to provide a drug to treat a potential outcome as far as 20 years before it may become symptomatic.  The top companies focused on end stage NASH are GALT, Conatus (CNAT) and Gilead (GILD).  Only GALT is due to announce in 2017 and since GILD and CNAT just started their trials it’s too soon to say when they will complete their trials which are estimated to be 2019.  GALT has a commanding lead in NASH with late stage Cirrhosis and potentially even early stage NASH described later in the article.

One of the highlights of the business update from  Galectin Therapeutics Inc. (NASDAQ:GALT) was regarding clarification of the endpoints and the patient population.  The inclusion criteria in the NASH FX trial was Hepatic Venous Pressure Gradient (HVPG) greater than 6.  As this update revealed the mean baseline of the patients was targeted to be between 12 – 15 mmHg.  The reason this is so significant is because this patient population has partially decompensated livers and in time will eventually lead to a liver transplant, but for the time being not bad enough to be on the transplant list.  You can contrast this group to CNAT’s trial where a subset of >14 HVPG group is on the transplant list.  GALT seems to have threaded the needle by going after a large enough group to have a good market share with >6 HVPG yet recruiting patients sick enough to show meaningful improvement in population groups that would have a mortality benefit.  By recruiting a patient population >10 HVPG GALT is dealing with a group known to have complications whereby a 10-20% reduction in HVPG or an absolute change of >2 mmHg has a clinical benefit.  Dr Traber said “the study had a rigorous FDA agreed design that measures many parameters in patients with NASH cirrhosis who have not had serious complication and are not yet candidates for a liver transplant.” This FDA agreement should be highlighted to show a lot went into the design of this trial to get an agreement on acceptable endpoints.  Traber goes on to say HVPG “is potentially an acceptable regulatory endpoint for provisional approval with follow-up outcomes data.  Two thirds of the patient population in this group was >10 HVPG suggesting pivotal trial results should GALT reach the trials endpoints.  If you read into this statement a little deeper you can see the FDA is essentially saying get us the HVPG data and if it meets these endpoints we are going to give you provisional marketing approval with follow-up data.

The NASH CX study is blinded but the number of patients and power of the study is definitely open to analysis.  On this call we learned that the FDA was one of the key drivers in GALT’s trial design that assumed a 25% dropout rate.  This isn’t surprising given the recent reductions of recruitment in other trials where the need for a liver biopsy was having an effect on patient recruitment.  This is probably why the FDA suggested a robust trial design to account for significant dropouts.  Liver biopsies by themselves are delicate procedures that entail significant risks to patients.  Anecdotally it’s not hard to draw the conclusion that the reason for such a disparity in the unusually low drop-out rate is due to the clinical activity of the drug.  Traber reflected, that to date “a total of 10 dropouts out of 162, which is a 6% rate.” Keep in mind the trial was designed for 156 and in a way was oversubscribed.  Having 152 patients left in the trial at this late stage is quite encouraging since if you assume the current dropout rate continues then only 5 more patients would be expected to drop out over remaining 5 months of the trial ending in August.  The reason this point is important goes to the power of the study which should be approximately 95%.  It is clear that any efficacy data out of this trial should be treated a pivotal.

The actual dosing will end in August and then the final HVPG tests will be conducted shortly after that and then the data will be locked in October this year for analysis.  The company is looking to present 3 subsets of data by HVPG.  The first is HVPG of 5-10 then 10-15, and finally 15 and greater.  What is so encouraging is how well thought out this trial design was.  GNFTF has many issues with their phase II trial design but specifically the randomization had put many lower risk patients in the control so they could have gotten better with diet and exercise.  GALT’s trial design is robust because a majority of the patients are starting to show some symptoms but not quite on the borderline of needing a transplant which means any decrease in fibrosis or HVPG should be attributable to only the drug.  This definition of the “at-risk” group is optimally designed while others in the space are going after the early NASH patients.

The results in skin disease are exemplary with one response over 80% in psoriasis.  Although the trial size is extremely small the growing body of research suggests the galectin protein is implicated in many diseases.  This is why GALT’s CEO sees “additional approval pathways for registration trials.”  This is one of the first times since 2011 when GALT started the Liver trials that the company has candidly stated that there is more to the drug beyond liver disease.  GALT is in fact exploring partnerships in skin disease overseas where it would according to Traber “not impair or protect the very large potential of a deal in NASH.”  Although they didn’t indicate where they were pursuing partnerships overseas, one could speculate that big pharma might not be interested in China.  That’s a big market with many potential partners with a lot of money for clinical trials.  Additionally, GALT commented that “there hasn’t been a drug approved in 30 years in atopic dermatitis, so we see the opportunity there as greater than psoriasis.”  Little did Dr. Traber realize that less than 2 hours later REGN received approval to treat adults with moderate-to-severe eczema (atopic dermatitis).  One interesting point is that if you look at Regeneron (REGN) and their trial with dupilumab it was only 16 weeks long. Once REGN came out with its projections the race is now on to compete with them in atopic dermatitis and with GALT’s preliminary results so robust in these 3 patients the partner could easily replicate the same trial design to meet the same endpoints which means with an aggressive partner phase 2b trial results could be done within a year.  The market took this as a negative but it is clearly a positive as it demonstrate an almost certain approval roadmap in the atoptic dermatitis indication.

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Dr Traber, CEO of GALT indicated that they had a “late-breaking abstract at EASL, which is focused on the methacetin breath test.”  EASL will be held in Amsterdam from 19 – 23 April, where GALT is planning on talking about baseline values of the 13C-methecetin test and how it correlates with HVPG.  The Methacetin breath test is being evaluated as a diagnostic that measures the level of liver damage.  Studies have been done in the past show the correlation to the MELD score and the Child-Pugh score.  If this test shows strong correlation this would be a big boost for Exalenz the maker of the test but also for drug makers looking to recruit patients.  Base line in GALT’s NASH CX trial included the Methacetin Breath test, Liver Biopsy, and HVPG.  Although ICPT has not said directly that they are having trouble recruiting patients the drastic reduction in their phase 3 trial size was a surprise because it lowered the power of their overall study.  Based on their phase 2 data they have such a low margin of error it’s hard to believe that they would sacrifice power unless it was growing very difficult to find patients.  It’s not a stretch to believe that it’s difficult to find patients willing to undergo a risky biopsy procedure for a disease they are showing no symptoms.  Positive data on this less invasive breath test could be a blessing for all drug companies in the NASH space if it also reduces the need for a liver biopsy.  For GALT, if provisional approval is given in December it could potentially mean having to do away with HVPG which is a costly and arduous test in its Phase III trials and allow for the quick recruitment of patients in phase III.  It might also be a positive for CNAT since they are the only other drug company in NASH using HVPG as an endpoint.

GALT has many significant catalysts leading up to the NASH CX results in December.  The very next catalyst is the EASL presentation 19 – 23 April using CX baseline data with the Methacetin test.  The Maui presentation on psoriasis should be compiled by the company shortly and give some insight on how GR-MD-02 compares to other existing treatments.  The final Data Monitoring Safety Board (DMSB) should renter its final assessment in June.  The next significant catalyst could be at the beginning of Q3 perhaps in July when GALT is set to announce atopic dermatitis results.  Given their statement that they would be willing to move forward without a partner we could see their trial design at the end of Q3 because it could be a simple cut and paste of REGN’s trial with some tweaks to it.  Although there are no definite plans there could be a final presentation at a meeting in July or August regarding the final trial results of Atopic Dermatitis.  In the interim the company is preparing the publication of the FX trial and investors could get valuable insight from the biomarker data which has yet to be released.  In August the company should complete dosing of the NASH CX trial.  Finally in September there could be a possible Phase 2b trial design in Atopic Dermatitis.  The wild card is that at any time prior to CX results GALT could ink a deal for a skin partnership in Psoriasis or Atopic Dermatitis.

 

Galectin Therapeutics Catalysts Summary 2017 Just a few of the many catalysts to look forward to:

  • Methacetin Breath Test Presentation (preparing manuscript) April
  • Maui Dermatology Psoriasis Presentation – April
  • Final Data Safety Monitoring Board – June
  • Atopic Dermatitis Presentation – Meeting possible – no definite plans – July
  • Preparing publication of NASH FX Trial (potential biomarker data) – May – Jul
  • Completion of Dosing in NASH CX Trial – August
  • Possible Atopic Dermatitis Phase 2b Trial Design – September
  • Close data for CX trial – October

GALT is the clear leader in NASH well ahead of it’s peers with the only potentially pivotal trial in NASH in 2017.  Behind it in end stage NASH are GILD and CNAT.  It’s unclear and too early to speculate on how the Methacetin Breath test might impact the overall NASH space with phase 3 candidates like ICPT and GNFTF who don’t have the test built into their protocol.  GALT has a market capitalization of $70 mil while its followers are multiples ahead.  Given that GALT is in the lead with actionable data in less than 9 months, the market caps of these NASH companies are extremely overvalued or GALT in absurdly undervalued.  Given it has a platform in NASH, cancer, organ disease, skin disease, and even diabetes there might be room for significant upside once Wall Street realizes how close these results really are.

Market
Stock Price/Share Capitalization a/o 3-29-17
Galectin Therapeutics (GALT) 1.99 63.7 mil
Conatus (CNAT) 5.02 131.37 mil
Genfit (GNFTF) 31.75 983.67 mil
Intercept Pharma (ICPT) 115.61 2.87 bil
Gilead (GILD) 67.26 87.91 bil
Allergan (AGN) 241.34 80.9 bil

 

The numbers are very compelling, and definitely make GALT worthy of continued attention from investors. Do you want to continue to receive updates and insights on GALT? Sign up for Street Register’s 100% free newsletter right away! Simply enter your primary active email into the box below (your info is kept completely secure) and submit, and you’re all set!

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