Could Galectin Therapeutics Stock Be Your Next Home Run?

Earlier this year, Intercept Pharmaceuticals exploded higher after reporting positive data for its liver disease drug. With Galectin Therapeutics racing to develop a similar drug, this stock could be in line for a major leg upward.

Jul 3, 2014 at 12:40PM

The wisdom of the so-called "buy and hold" strategy to equity investing will perhaps never go out of style. Besides the inherent tax advantages, it's the only method known to produce exponential gains consistently over the long term.

Biotech investors are certainly aware of the rewards that come with buying and literally never selling promising companies, even as they go through the typical speed bumps associated with clinical and regulatory pathways. Investors that purchased the IPO of Intercept Pharmaceuticals (NASDAQ:ICPT) in 2012 without selling in the interim, for example, have been richly rewarded with gains topping 1,000%. 

ICPT Chart

ICPT data by YCharts

Intercept's parabolic move upward last January was catalyzed by its experimental treatment for nonalcoholic steatohepatitis (NASH), called obeticholic acid (OCA). As a refresher, the drug's mid-stage trial was stopped early for efficacy, causing shares to jump over 500% in a single day. 

What's key to understand is that there are no approved treatments for NASH, despite the disease growing at a monstrous rate in most developed countries due mostly to the out of control obesity pandemic. Moreover, NAFLD (nonalcoholic fatty liver disease, of which NASH is the more severe form) is expected to outpace hepatitis C as the leading cause of liver transplants in the U.S. by 2020, showing the clear need for new treatments.

All told, the real reason Intercept shares skyrocketed is because the commercial opportunity for an effective NASH treatment is expected to easily exceed $2 billion a year, although the diagnosis of early stage cases still remains a real problem that could limit the commercial opportunity in the meantime. 

Galectin is developing a treatment for advanced NASH with liver fibrosis
Given the stunning success of Intercept, Wall Street has actively been looking for the next home run in this untapped market. Fortunately, there are several companies racing to follow in Intercept's footsteps.

Galectin Therapeutics (NASDAQ:GALT) is a unique candidate among these contenders that investors might want to pay special attention to moving forward. Unlike other companies developing NASH drugs, Galectin is specifically targeting patients with advanced disease with liver fibrosis. Most importantly, Galectin is aiming to actually reverse liver fibrosis with its GAL-3 inhibitor, known as GR-MD-02.

To date, Galectin has completed enrollment for the second cohort in an early stage trial for GR-MD-02 as a potential treatment for NASH, with a top-line data readout expected by the end of next month. Previously, the company reported that the initial cohort of patients receiving the drug showed that it was both safe and well tolerated.

In sum, Galectin's drug is in the early throes of clinical testing, but the market opportunity for NASH, compared to the company's market cap of roughly $300 million, has caught the attention of Wall Street.. 

Foolish wrap-up
I think Galectin is an intriguing speculative biopharma that could be a compelling buy and hold candidate. With early stage studies wrapping up, we should see a mid-stage trial soon that may lead to an early regulatory filing -- akin to Intercept's drug, especially since the company has been granted Fast Track status for GR-MD-02.

That being said, Galectin will more than likely need to raise money soon, given that it only had $36.6 million in cash and cash equivalents at the end of the first quarter. Furthermore, the NASH market has attracted big name biotechs like Gilead Sciences (NASDAQ:GILD) that are developing their own competing therapies. Gilead's experimental drug for NASH called "simtuzumab" is clinically more advanced than Galectin's, meaning that GR-MD-02 will likely have to outperform competitors in order to gain market share. 

In sum, Galectin is not without its risks moving forward, but its value proposition makes it a stock worth putting on your watchlist. 

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George Budwell has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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