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Galectin Therapeutics Scientific Investment Thesis
Sifting through the ashes, to figure out what started the fire
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Investing in biotech/pharma companies is a high risk, high reward venture that puts most common investors at an increased risk when compared to their professional counterpart. Price fluctuation for small-cap stocks is heavily facilitated by short-term market sentiment over trivial factors, which at times can be counter-intuitive.
It is imperative to understand that almost all biotech companies are developed from a pure speculative standpoint: they have no product, very limited data, but they need money to continue to conduct research, thus they will pull every possible method to obtain funding. Some companies will bring on famous biotech leaders to their scientific advisory board to attract investors, gain market attention, and to network their way toward establishing a fund large enough to conduct experimental or clinical studies. Unlike the tech industry, where the product directs a company’s success, the biotech industry will proclaim that an idea has potential for company success. However, investing in an idea is very high risk.
We believe that a strong strategy is to invest with a long-term mindset to help mitigate the short-term risks. Strong science and strong business practices are two quantitative factors that provide a proper analysis regarding company growth and direction. The former requires specific expertise within the scientific field, and because the general public is more in tune with the company’s business practice, the company will oversell their science to gain market and investor attention.
We will primarily analyze the scientific or clinical data that drives every company, and present to you a dissertation that you can use to help facilitate your decision to invest. Unless otherwise stated, we will not present any news or technical analysis, such as daily chart observations, trend-lines, channel analysis, etc. because these factors are fueled by short-term interests, and ultimately subject to personal and emotional bias.
The fundamental science that embodies Galectin Therapeutics is driven by Glycobiology. Glycobiology is the field of carbohydrate (glycan) chemistry and biochemistry. In brief, carbohydrates are defined as complex molecules (polysaccharide) that are linked together by a number of individual smaller molecules (monosaccharide). The biological roles of carbohydrates are particularly important – from the assembly of complex multicellular organs and organisms, to the interactions between cells and their surrounding matrix, the field of glycobiology is incredibly diverse and essential to all mammalian life.
When we think of a cell, we imagine what we see in textbooks: a circular structure with a smooth outer membrane. This depiction couldn’t be further from the truth. A cell is in fact “hairy”. Many projections (carbohydrates) protrude from within, and into, the cell. These projections are like trees of a rain-forest (glycocalyx), they are incredibly diverse in both structure and function. Each flower, leaf, stem, branch, and trunk of a tree contribute to various cellular roles, and more importantly these projections are what allows our cells to communicate with one another.
About the Company:
Galectin Therapeutics is a clinical stage biopharmaceutical company that is engaged in the development of carbohydrate-based therapeutics, indicated for treatment against fibrotic diseases, skin diseases, and cancer.
Unlike the incredible success of small-molecule drug discovery, the discovery of pure carbohydrate-based therapeutics has been incredibly under-studied, despite the establishment that carbohydrates (glycans) have played an important part in the essential structure and activity of many small-molecule therapeutics – like the antibiotic Streptomycin or the anticancer agent Doxorubicin.
Galectin Therapeutics has two proprietary chemical entities in current development- GM-CT-01 (galactomannan), and GR-MD-02 (galactoarabino-rhamnogalaturonan), which are novel complex carbohydrate galectin inhibitors indicated for treatment against nonalcoholic steatohepatitis (NASH), cirrhosis, psoriasis, and cancer.
The following pipeline is listed below:
A gamble or an investment?
Cells release and respond to molecules as a means of communicating with one another. One specific molecule, Galectin, is a widely expressed family-class of lectins that bind cellular projections (carbohydrates) at very particular recognition domains (like birds that choose a specific branch to perch on a tree). Upon recognition, galectin binding initiates a wide range of cellular roles that include the development and regulation of immune cell activities, and the microbial recognition as part of the innate immune system. Recent advances have demonstrated that Galectin-3 (a particular type of galectin) is implicated in the pathogenesis of many disorders including, but not limited to, fibrosis, steatohepatitis, cancer, inflammation, and adipogenesis.
The rationalization for use of complex carbohydrate-based galectin-3 inhibitors is backed by evidence for treatment of the following indicated disease state: fibrosis and nonalcoholic steatohepatitis (NASH).
The table below highlights the conclusive findings per publication.
A. Experimental Studies
If you take a close look, there is one pressing question that has yet to be answered:
Is inhibition of Galectin-3 truly the mechanism by which GR-MD-02 exerts its therapeutic effects?
It has been clearly stated that “although improvement…in the activity of NASH and reduction in fibrosis was associated with reduction in the expression of Galectin-3 protein…it was not necessary to have a marked reduction [of Galectin-3] to observe the therapeutic effect”.
Inhibition of galectin-3 expression is independent from the benefit observed with GR-MD-02 or GM-CT-01-induced NASH improvement in vivo. Furthermore, it has been stated that though “Gal-3 mRNA expression tended to be down-regulated in the treatment groups compared with the vehicle group… levels did not reach statistical significance”
In other words, just because galectin-3 is overexpressed in inflammatory or immune disorders, does not indicate that inhibition of galectin-3 will afford any clinical benefit.
Carbohydrate-based therapeutics is incredibly complex, as limitations such as lack of specificity, molecular stability and clinical relevancy hinders drug discovery and development. One common obstacle within t
he field of Glycobiology any medically-related scientific discipline, is identifying key molecular pathways that directly contribute to a distinct clinical phenotype.
B. Clinical Studies
Clinical trials for each experimental drug is listed below (from SEC FORM 10K). It is clear that GR-MD-02 is the lead drug candidate.
Though the company has presented a very admirable drug portfolio, each of which are in various phases of clinical trials, one should not ignore the fact that (1) The mechanism of action in vivo remains unclear and (2) GR-MD-02 has failed to meet statistically significant primary endpoints in both NASH-FX and NASH-CX trials.
A closer look at fibrosis…
1. The NASH-FX trial, a Phase 2a pilot trial NASH-FX for patients with NASH advanced fibrosis that explored use of three non- invasive imaging technologies.
The trial did not meet its primary biomarker endpoint as measured using multi-parametric magnetic resonance imaging (LiverMultiScan(R), Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure liver stiffness as a surrogate for fibrosis using, magnetic resonance-elastography and FibroScan® score.
2. The NASH-CX trial, a larger well-designed multi-centered clinical study that assessed the therapeutic efficacy of GR-MD-02 against liver fibrosis and portal hypertension in patients with well-compensated NASH cirrhosis, did not meet their primary endpoint with statistical significance in 162 patients across 36 sites in the United States.
They did, however, find statistical significance in a post-hoc analysis (after failing to reach statistical significance, additional analysis were performed to find a significant correlation between therapy and clinical outcome)
Key NASH-CX findings are reported below (SEC Form 10Q):
“(1) GR-MD-02 had a statistically significant and clinically meaningful effect in improving hepatic venous pressure gradient (HVPG) vs placebo in patients with NASH cirrhosis who did not have esophageal varices at baseline; this effect was seen regardless of the patient’s baseline portal hypertension. Furthermore, we believe that patients with esophageal varices may have masked benefits in the total patient population
Question to consider: what does improvement of HVPG have anything to do with providing a clinical meaningful effect in NASH patients?
The FDA questioned the clinical meaningful effect of HVPG changes and did not grant the company “breakthrough designation” for GR-MD-02, due to the fact that further confirmatory data is needed to identify the level of change in HVPG that is reasonable likely to predict clinical outcomes”
(2) There was an important drug effect of GR-MD-02 in the total patient population on liver biopsy with a statistically significant improvement in hepatocyte ballooning (ie cell death)
Question to consider: If investigators can stratify their population data to patients without esophageal varices (1), what would the data look if hepatocyte ballooning was also stratified to the same subset of the total patient population? Significant? Insignificant?
(3) There was a statistically significant reduction (p = 0.02) in the development of new esophageal varices in drug-treated patients compared to placebo; we believe that this is a clinically relevant endpoint related to patient outcomes
Questions to consider: Was this an initial clinical endpoint? Or did investigators present this data after failing (1)?
If indeed this is the case, presenting data that was not initially implicated as a clinical endpoint may serve as a strategic ploy to counter insignificant data with a “beside-the-point” statistically significant analysis.
Take a look at the Final NASH-CX Trial presentation and note the following slide:
It is not scientifically sound to play around with data to fit ones hypothesis. If GR8 did not show any therapeutic efficacy with regards to NASH, then GR8 should not be used as a means to increase statistical significance when assessing the development of esophageal varices. Why not compare GR2 to placebo?
(4) There was a drug effect in both the 2 mg/kg and 8 mg/kg dosage groups on liver biopsy and in the mild portal hypertension group, there was a consistently greater and statistically significant effect of the 2 mg/kg dose of GR-MD-02.
Question to consider: If the proposed mechanism of therapeutic efficacy is Galectin-3 dependent, why is there not a dose-dependent relationship?
(5) The apparent lack of a dose response in the GR8 group may be explained by variable pharmacokinetics in the high dose group, and this suggests use of an additional and intermediate dose between 2 and 8 mg/Kg in subsequent trials.
Question to consider: Is it possible that the lack of dose response suggests that the therapeutic efficacy is not dependent on Galectin-3 inhibition (as observed in the experimental publication?) Benefit observed may be an off-target effect = esophageal varices?
(6) GR-MD-02 appears to be safe and well tolerated in this one year clinical trial
(7) Investigators believe this is the first large, randomized clinical trial of any drug to demonstrate a clinically meaningful improvement in portal hypertension or liver biopsy in patients with compensated NASH cirrhosis without esophageal varices.”
Unfortunately, the positive conclusions they are presenting do not support the endpoints that were designed to assess the clinical success/failure of GR-MD-02. The company’s early experimental studies have all failed clinical trials. Any information beside that point should be considered as a strategic move to urge investors to focus primarily on forward-looking statements, as opposed to the concrete evidence that has been clearly under-represented.
A closer look at plaque psoriasis…
The plaque psoriasis trial began after making an observation in the NASH-FX trial in a single patient. “During our Phase 1 NASH fibrosis trial with GR-MD-02, a clinical effect on plaque psoriasis was observed in a NASH patient who also had this disease. This patient had marked improvement in her psoriasis, with improvement beginning after the third infusion. She reported that her psoriasis was “completely gone” and her skin was “normal” after the fourth infusion. Her skin remained normal for 17 months after the final infusion of study drug. The patient is convinced that the improvement in her psoriasis is related to the study drug.”
Plaque Psoriasis conclusions:
Despite the interesting results, “there are already existing drugs on the market in this disease that produce greater efficacy and higher improvements in 60-90% of the patient population”.
A closer look at cancer immunotherapy…
Immuno-oncology is a vastly growing field within the cancer field. In brief, immune cells are harvested from the cancer patient and re-administered as a method of boosting the patients immune system against their own cancer cells. One particular challenge regarding immunotherapy, however, is the reduced efficacy, in part, due to the tumor micro-environment- a complex ecosystem involving multiple immuno-suppressing factors. It is thought that the galectin-3 plays a major contributing role.
To date, both cancer clinical trials are currently under clinical investigation.
1.Phase IB Study of a Galectin Inhibitor (GR-MD-02) and Ipilimumab in Patients With Metastatic Melanoma
Goal of study: “To determine a safe dose of GR-MD-02 used in combination with the FDA-approved dose of ipilimumab (3 mg/kg) in patients who have advanced melanoma. GR-MD-02 is a galectin. Galectins are a family of proteins that have numerous functions in normal mammalian biology including the facilitation of cell-cell interactions, regulation of cell-death and regulation of immune system responses. The hypothesis is that a safe dose of GR-MD-02 when given with the FDA-approved dose of ipilimumab can be found.“
- Primary Outcome: Determine a safe dose of GR-MD-02 used in combination with the approved dose of ipilimumab (3 mg/kg)
- Secondary Outcome: Response rate to combined therapy
Study started in March 2014 with an estimated primary study completion date of December 2018.
2. GR-MD-02 Plus Pembrolizumab in Melanoma, Non-small Cell Lung Cancer, and Squamous Cell Head and Neck Cancer Patients
Goal of study: “This study will employ a 3+3 phase I design with dose escalation of GR-MD-02 in conjunction with the standard therapeutic dose of pembrolizumab in patients with advanced melanoma who have had progression after ipilimumab and/or BRAF targeted therapy when a BRAF mutation is present, non-small cell lung cancer patients with disease progression after targeted therapy, or head and neck squamous cell carcinoma patients with disease progression after at least one platinum-containing regimen. In addition to monitoring for toxicity and clinical response, blood and tumor samples will be obtained to assess immunologic measures relevant to galectin biology and pembrolizumab T-cell checkpoint inhibition.“
- Primary Outcome: Frequency and severity of treatment-related adverse events measured by common terminology criteria for adverse events
- Secondary Outcomes: 1- Measure the response rate to combined therapy with GR-MD-02 and pembrolizumab in patients. 2- Assess the biological activity of GR-MD-02 in combination with pembrolizumab.
Preliminary results were released in September of 2018: Investigators are utilizing the Response Evaluation Criteria in Solid Tumors.
- Combination immunotherapy of GR-MD-02 and KEYTRUDA for all cohorts reported shows an Objective Response Rate of 50% (seven of fourteen patients).
- The published response rate of KEYTRUDA alone is 33% in melanoma
- Providence Portland principal investigator, Dr. Brendan Curti, encouraged by the results and plans to add more patients to the study
- Both Advanced Melanoma and Head and Neck Cancer being studied
The mechanism of action of their lead candidate GRMD02 is not only unknown, but demonstrated no significant efficacy in their primary disease indication = NASH. Though failure in NASH does not mean potential failure in the cancer trial, it does however provide more questions regarding company focus than answers. What makes the investigators confident that GR-MD-02 will inhibit Galectin-3 in patients suffering from cancer? Unfortunately, the cancer immunotherapy trial more of a gamble, as opposed to an investment.
Investment Due Diligence Conclusion:
Multiple ongoing shareholder derivative action lawsuits, lack of funding past the first quarter of 2019, and lack of company foresight, puts investors at an incredibly high risk compared to other competitors in the same field.
Is this investment scientifically or clinically sound?
We applaud the investigators for the amazing work and effort they put into developing a drug that addresses an unmet clinical need. However, the ambiguity regarding GR-MD-02’s mechanism of action in vivo is a major red flag in NASH experimental models. In addition, galectin-3 levels did not correlate with therapeutic efficacy, and a lack of dose response suggests an alternative mechanism of action that may be gal-3 independent. Such limitations may have contributed to failure of P2 NASH clinical trials. Furthermore, we found that investigators stratified certain patient populations in their post-hoc clinical data analysis in such a way that increases statistical significance. Currently, this company does not qualify as a viable long-term asset. It does however, make for a great high-risk/high-reward gamble via anticipation of immunotherapy clinical data and/or announcement of NASH P3 partnership.