Galecto lays off 70%, hunts for 'strategic alternatives' in wake of fibrosis drug fail

A month after halting work on an inhaled treatment for idiopathic pulmonary fibrosis in the wake of a phase 2 trial fail, Galecto is laying off 70% of its workforce as the Boston-based biotech mulls its options.

The company has just completed a review of its business and is now conducting a “comprehensive exploration of strategic alternatives focused on maximizing shareholder value.” As is usual for biotechs in dire straits, the potential options include an acquisition, merger or yard sale of the company’s assets.

Galecto made the usual caveat that it couldn’t guarantee that any transaction “will be completed on attractive terms, if at all.” But one thing that is for certain is that 29 employees—equivalent to 70% of the company’s entire workforce—will be heading out the door.

The writing may have been on the wall for the biotech back in August, when Galecto announced that its small-molecule inhibitor of galectin-3, dubbed GB0139, failed to hit the trial’s primary endpoint of a demonstrating a slowing in decline in the volume of air exhaled from the lungs of patients with idiopathic pulmonary fibrosis. In fact, the average reduction in forced vital capacity was 316.6 ml among patients treated with a 3-mg daily dose of GB0139 for a year, compared to a less pronounced drop of 127.5 ml for those given placebo, meaning treated patients fared much worse.

The drug had a bumpy ride to even get to this stage, with a data safety and monitoring board recommending in March 2021 that the company ax the 10-mg treatment arm after an “imbalance” in serious side effects was cropping up.

With the 3-mg dose also coming up short last month, the biotech turned its attention to another galectin-3 inhibitor called GB1211, which is in development for liver cirrhosis. Galecto revealed at the time that it had recently wrapped a type C meeting with the FDA and was preparing for a placebo-controlled phase 2 trial in patients with decompensated nonalcoholic steatohepatitis (NASH) cirrhosis that it planned to launch early next year. There’s also an OXL2 inhibitor called GB2064 in a phase 2 trial for myelofibrosis.

In its postmarket release yesterday, the company made no mention of whether these plans would be affected by the workforce restructuring or search for strategic alternatives.

With $52.1 million in the bank as of the end of June, Galecto CEO Hans Schambye, M.D., Ph.D., had previously said he was optimistic about securing fresh capital to progress the NASH prospect.