GALT (Seeking Alpha) NASH Stocks Brace For Shockwaves From Galectin Therapeutics Trial Results


Market Void from Intercepts FDA Warning Letter.

Solid Case for Efficacy in Trial Results.

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Frenzied Response to PositiveTrial Results Likely.

Galectin Therapeutics (GALT), the leader in NASH will unveil its highly anticipated phase 2b pivotal clinical trial results in early December. If the market serves as any guide it has completely discounted any positive result. A NASH drug that works is worth anywhere between $2 – 5 Billion based on Allergan’s (AGN) purchase of Tobira for $2.1 billion. Ever since Intercept Pharmaceuticals (ICPT)’s FDA warning letter there has been a contraction of value in the NASH space and ironically ICPT’s loss of market cap has not been made up by the other players in NASH like Genfit (OTCPK:GNFTF) Cognatus (CNAT) or GALT. Investors need to realize that the FDA warning letter didn’t magically shrink the size of the NASH market in half. The epidemic still exists and continues to grow and there should have been a transfer of market cap from the loser ICPT to a winner. This gaping divergence exists in the NASH space and might see a resolution on GALT’s NASH CX trial results.

NASH Stocks – Market Cap Should be Increasing

The pure play NASH stocks lead by ICPT with its Breakthrough Therapy designation was on track to hit a total market cap for this basket of stocks of $5.0 Billion by the end of 2017. As estimates of the disease increase so should the market capitalization. The derailment happened on Sept 21, 2017 when the FDA warned doctors after 19 Deaths due to Ocalvia. There was a loss in the basket of pure play NASH stocks of almost $1.5 billion in market cap. The disconnect from the market reaction on this news is that participant correctly discounted ICPT’s shares but investors didn’t buy any of the other players.Right now there is about a $2.8 billion void in the basket of these NASH stocks as the market has failed to find a leader but in truth the most likely leader should have been the next company due to report pivotal trial results and that clearly is GALT with top line trial results due in early December. Since ICPT’s fall only GALT and MNOV have had any gains in market capitalization and they have been paltry at best. The market has completely discounted any favorable result by GALT.

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