Top 3 Galectin Biotechs Set to Surge on Top Line Readout

Topline clinical trial readouts typically represent binary events for biotech investors.  If the company announces good trial data the stocks will typically gap up and hit a new equilibrium based on the stage of trial and their chances of getting an FDA approval. If the company announces bad data the stock gets crushed and investors can lose a lot or make a lot depending on whether or not they are short. Biotech stocks that have drugs that treat the same disease or have a similar way of treating patients also trade in sympathy with the company announcing.  Then there are instances where biotech stocks that compete against each other in a certain disease will go up or down as the others in that sector do the opposite.  

Galectin Therapeutics (Nasdaq: GALT) 

Has a major phase 2 readout in MASH cirrhosis due before the end of the year.  The company telegraphed they would release this topline data after the Drug Safety Monitoring Board (DSMB) issued its final safety recommendation in December.  The shorts are all over this stock claiming that the trial failed once before and will fail again and that dilution is coming. As shorts their job is to instill fear right before the readout and during the readout to hijack the message so they can realize profits.  The longs have to see through the FUD and look at the facts the shorts are trying to distort.  The first fact about GALT is that the chairman is a billionaire and has been funding this through notes at a modest 2.5% interest for the past 5 years so dilution is not a factor.  

The science is extremely sound and the market cap is a tiny $125 million compared to what they are about to announce. The risk reward is incredibly skewed toward the long term investor.  If they fail the trial the billionaire will simply put in more money and go after the next indication.  What you don’t know about galectin science is that it has strong ties to blocking inflammation in at least 100 chronic diseases.  So failure might result in a loss of 50% of your investment according to the shorts but if you are long this stock could be a multibagger in just weeks.  

The HC Wainwright analyst following this stock has an $11.00 price target which is a market cap of $700 million but that is small in comparison to its quasi competitor Madrigal Pharmaceuticals (Nasdaq: MDGL) which has a market cap of $6.7 billion.  If GALT has a successful readout that leads to an quick approval MDGL might take a hit because they have a early stage MASH drug that people have to take for prevention even though there are no side effects in early MASH compared to MASH cirrhosis which is what GALT is reading out on.  

The statistics for their last trial back in 2017 indicates the drug is going to meet the endpoints this time because back then they had a hastily designed trial.  This time the trial was designed really well and part of it was almost an exact repeat that got statistical significance back then but procedurally the FDA couldn’t accept that data because it was after the fact.  This clinical trial is essentially a procedural speed bump from the FDA.  They basically passed the trial once and they should do it again this time with flying colors.  The shorts are going to fry on this one if investors look at the premiums and open interest on the near term options.  

Bioxytran Inc. (OTCMarkets: BIXT) also has a galectin blocker that can pretty much do the same thing GALT’s drug does but it’s an easier to take oral drug versus GALT’s intravenous drug. An interesting aside is that the CEO of BIXT was also the CEO of GALT over 15 years ago.  It’s not hard to guess that his new drug is way better and finished its Phase 2 clinical trial for COVID19 with a 100% responders rate.  Any good readout from GALT could boost BIXT because big pharma is going to want a pill versus an intravenous drug every 2 weeks.  The only issue is that BIXT hasnt tested it in MASH but it won’t matter to a pharma partner because both drugs inhibit the same target, galectin-3. The BIXT drugs also have no toxicity so they are shoe ins for approval. The market cap of BIXT is only $8 million and a screaming opportunity.      

Galecto Biotech (Nasdaq: GLTO) recently expanded their pipeline but they mainly have a galectin blocker going after MASH as well.  They are GALT’s nearest competitor.  Expect a lot of institutional money to flow into the stock after the GALT readout either way.  If it’s good they are next in line to compete with an oral formulation and if it’s bad they are next in line in MASH anyhow.  The only issue to watch out for is that GLTO had a failed trial for toxicity but it was explainable.  The market cap of GLTO is only $12 million.      

Conclusion

Blocking galectins is a big business.  This is probably some of the most disruptive technology in biotech.  Remember how CAR-T cells were a thing, what about mRNA, well galectins are bigger than those two combined and there are only 3 public companies in the space.  After GALT announces successful trial results all these stocks could levitate together. A basket buy of all three ahead of the readout makes the most sense but BIXT and GLTO are extremely undervalued. For investors looking for leverage and low risk high gain, GALT has options.     

As always, investing in micro-cap stocks carries inherent risks, and it is crucial for investors to conduct thorough research and consider their risk tolerance. However, today’s most active micro-cap stocks are worth keeping on your radar as they continue to generate significant market interest.