Shares in tiny Galectin Therapeutics ($GALT) fell 50% in after-hours trading on the back of data from a Phase IIa nonalcoholic steatohepatitis (NASH) trial. The study missed its primary goal and a clutch of secondary endpoints, adding to concerns GR-MD-02 will also come up short in a larger ongoing Phase IIb trial.
That Phase IIb trial, data from which are due late next year, will say more decisively whether Galectin or its critics are right about the merits of GR-MD-02. The Phase IIa was in a slightly different indication--NASH fibrosis as opposed to NASH cirrhosis--and was arguably too short, small and unconventional in its design for its outcome to say much either way about the efficacy of GR-MD-02.
The trial enrolled 30 NASH patients with advanced fibrosis at a single site, randomized them to receive either GR-MD-02 or a placebo and assessed their progress after four months against baseline using a magnetic resonance imaging test. Neither the duration nor endpoint are typical for fibrosis trials, but Galectin argues there were scientific justifications for the study.
“While most experts, including myself, feel that liver fibrosis trials should have treatment phases for at least a year in duration, the results from the Phase I study provided a rationale for studying a larger group of patients, with shorter therapy and exploring noninvasive technologies for assessing liver disease, liver stiffness and fibrosis with a goal of using these technologies in later trials,” Dr. Stephen Harrison, the principal investigator of the trial, told investors on a call to discuss the data.
Whatever the scientific merits of the thinking behind the clinical trial, the decision to embark on an exploratory study now looks questionable from a business perspective. A study that could have provided a quick, potentially unwarranted boost to Galectin’s stock has done the opposite, sending its share price back down to levels last seen in February.
Galectin last suffered such a rout in 2014, when results from the Phase I trial of GR-MD-02 in NASH patients with advanced fibrosis put a potentially permanent dent in its share price. The stock closed above $15 shortly before the release of the Phase I data. Since then, the price has rarely risen above $5 a share. The disastrous impact of data Galectin argued were positive prompted the company to lash out at “commentators on social media” who it blamed for the negative reading of the Phase I results.
On this occasion, the split between the publicly expressed views of Galectin and those of its investors have less to do with the fibrosis trial itself and more to do with what it says about the prospects of the Phase IIb study.
With the Phase IIb enrolling 162 NASH cirrhosis patients, treating them for a year and assessing efficacy on the hepatic venous pressure gradient, Galectin argues the Phase IIa data say little about the likelihood of success in Phase IIb. But, with Galectin’s stock falling 50% on the back of the Phase IIa data, it appears investors think otherwise.
The sharp decline follows a period in which Galectin’s stock rose as a result of Allergan’s ($AGN) acquisition of fellow NASH drug developer--and misser of primary endpoints--Tobira Therapeutics.