For over the past 15 years I have had a ring side seat to what is to become one of the biggest revolutions in medical advancement over the coming century. It’s a blessing and a curse to possess this knowledge. In a worst case scenario Galectin Blocking drugs have turned cancer into a chronic disease and in a best case scenario a pathway to a cure. Imagine having loved ones that are afflicted with cancer and having the knowledge that they can be saved through the power of a Galectin Blocking drug. Now add to this equation an eye witness testimonial of your friend who scientifically beat cancer through a compassionate use of a Galectin Blocker drug in 4 months. After you witness what others would call a miracle, almost a decade passes while hundreds of thousands of people continue to suffer from cancer when you know a solution is just an FDA registration away. Then come to find out that these same Galectins are also implicated in almost every chronic disease from heart disease to kidney fibrosis to psoriasis to diabetes. What would you do when you realize that Galectin blocking drugs represent the penicillin of the 21st century? Shout it from the mountaintops and tell the story one person at a time.

I know what you are thinking. If this is such big news why haven’t I heard about this before? Well you have this regulator body called the FDA and they prohibit you from making unsubstantiated claims and then you have doctors who don’t know how to tell a good story running the company into oblivion. That makes for a perfect storm. You have doctors scared of the FDA so they don’t share their successes.
The cornerstone of this company is the science behind the drug development. It all boils down to one core question – DOES THE MEDICINE WORK? I’m pleased to unequivocally say after 15 years of relentless pursuit the answer is YES! I don’t expect you to take my word on it but let me show you how I came to this conclusion. Recent events in the past year have revealed that there is clear biological activity of GR-MD-02 used in Psoriasis and Atopic Dermatitis. Please examine these before and after pictures of Psoriasis. The Galectin-3 is the target associated with both diseases and recited over and over in scientific literature. We also know that both of these diseases are immunological in nature and a result of immune system dysfunction. Furthermore, we know that Dr Will Redmond is presenting on February 7th at the GTCbio 9th Immunotherapeutics & Immunomonitoring Confrence at 1:40PM
GALT made the picture below of patient # 5 before and after treatment for psoriasis public in their November 10, 2016 press release:

Here is an excerpt from the title of Dr. Redmond’s poster presentation. As you can see from the title the drug has an effect on the immune system the only question is that we don’t know how much or do we?
“The combination of immunotherapy plus galectin-3 inhibition with GR-MD-02 improves anti-tumor immunity and survival: Insights from mice and a first-in-human phase I clinical trial”

It’s worthwhile for me to take a moment to digress about Dr. Redmond and his credentials. He’s the clinical trial administer of the Providence Cancer Institute and a world renown expert in immunology so when he publishes one would expect many analysts or wall street authors willing to impugn the voracity of his data. In November 2015 I want you to read the title of his poster presentation “Galectin-3 inhibition using novel inhibitor GR-MD-02 improves survival and immune function while reducing tumor vasculature” Let me point out the marked similarity to his last presentation in 2015. What has changed? His conclusions remain exactly the same but now instead of this being about mice the results are about HUMANS giving our very first insight into a survival benefit. Survival benefit is in fact and endpoint for registration with the FDA. Let’s peek at the data from 2015 to see if we can extrapolate what % survival will be announced. Looking at figure A there is a 50% survival rate with the combination therapy indicated by the dotted blue line. There is a 30% survival rate with anti OX40 therapy alone which closely resembles Keytruda’s 33% overall response rate in humans. The preclinical data in both Yervoy and Keytruda correlated with the trial results. It’s not a stretch to expect the same correlation. If it does correlate and we see over a 33% objective response there is an extremely high likelihood that the FDA will approve this drug on that information alone. If we find out that 2 or more patients had a complete responded that could completely change the narrative. Overall survival is the gold standard for demonstrating clinical benefit.

There are two topics being address in this YET TO BE RELEASED presentation, survival and anti-tumor immunity. So far we have only talked about survivability and response rate. Now let me explain why the second set of metrics regarding anti-tumor immunity which is equally important. First we need to talk about TCells and what they do. TCells are specialized white blood cells and we all know from basic biology that white blood cells fight infections and cancer too but the question is how. Tumors express unique antigens and when these antigens are released in the blood stream they eventually come in contact with a Dendritic cell which engulfs it and the travels to the lymph node for processing. In the Lymph Node the TCell docs onto a dendritic cell and becomes programmed to target this antigen. Once programmed with the antigen the TCell will produces cytokines within the cell which will be released when the TCells finds its target cancer cell. This is how our body’s immune system is supposed to work but tumors have a defense mechanism.

A cancer tumors immunity is dependent upon expression of a receptor called PD-1 depicted above. This isn’t the only receptor tumors use to defend themselves. Did you know that Gal-3 is over expressed on all solid tumors? Volumes of literature suggest that Gal-3 is responsible for inactivating the T-Cells, Angiogenisis, and Metastasis. So the tumor secretes Gal-3 which is soluble in the blood stream and then it comes in contact with a Cytotoxic TCell referred to as a CD8+ cell deactivating it. This deactivated TCell is called anergic and loses is cytotoxic ability and is incapable of killing the cancer cell. This is how the tumor shields itself from the immune system.
There are at least ½ dozen ways to turn the T-Cell on an off. The Checkpoint Blockade Therapy is an example of how the TCell is regulated with the combination of Yervoy and Keytruda targeting both the PD-1 and CTLA-24 receptors on the TCell. Increasing TCell counts of CD4+ and CD8+ IN THE TUMOR is considered a positive endpoint. Increasing TCell counts in the Lymph nodes doesn’t necessarily translate into clinical benefit in the eyes of the FDA. It simply doesn’t do any good to increase the TCell count outside the tumor. You need them inside the tumor to be effective at killing cancer cells. So if we go back to Figure 3 we see that TCells were increased in the Tumor NOT the Lymph nodes indicating they got through the Galectin Shield protecting the tumor. Review Figure C focusing in on the CD8 T Cells graph. Notice how lgG is at a factor of 1 and how the combination is a factor of 4. Then each blocker the OX40 and GRMD02 are at 2. Their effect seems to be cumulative because each is taking on a different receptor. GRMD02 activates the anergic TCells while the OX40 stimulates production of them. In Figure D you can see the opposite effect where you have few cytotoxic CD8+ killer TCells in the lymph nodes with the combination therapy. This proves that the TCells made it to their target inside the tumor thus neutralizing the anti-tumor immunity.

This slide is a throw back to 2011 from the Ludgwig institute. The reason this slide is so powerful is that it proved in vitro that DAVANAT reactivated the anergic TCells. This study took TCells from 3 cancer patients and measured the number of cancer cells killed over a 20 hour time frame. The graph on the left is representative of their natural immune response killing about 10% of the cells over 20 hours. The graph on the right is essentially exponential and shows the killing of about 35-40% of the cancer cells. You have to ask yourself what this graph would have looked like had the done the study for 30 or 40 hours. Also consider that GRMD02 was deemed to be much better than DAVANAT so if we did the same study we would expect much better results. This graph is simply just another data point that shows that Galectin Therapeutics Galectin Blocker Drugs are having a profound impact on the immunological pathway and are on course for approval.
Notice how much I have discussed so far and I haven’t even touched on the NASH or Fibrosis indication let alone all the indications and potential applications of the drug. The reason is quite simply that the company is in a holding pattern waiting for CX trial results in December 2017. Without the results of the Liver Biopsy and the HVPG reading from the Phase II trial we cannot prove the efficacy of the drug and file for registration. All indications up until now look great. The CX trial design is very robust and FDA registration endpoints are clearly defined. It was designed to have a power of 80% and assumed that 25% of the patients would drop out. Halfway through the trial only 7 have dropped out representing only 4% of the group. What that means is that we could potentially be looking at trial results with a confidence of 95%. The safety profile of the drug is fantastic and boasts over 2100 doses without any SAE’s (Serious Adverse Events). The drug is derived from apple pectin and is consequently safe, well tolerated, and inexpensive to manufacture.

The preclinical data above shows how the drug improves liver fibrosis which eventually leads to cirrhosis.
Let me recap the results of the Psoriasis trial. Five out of five patients improved and the mean reduction was a 52% PASI score. One patient depicted above had an 80% reduction in the size and severity of his skin plagues, per the PASI score, after 8 weeks of treatment. Unfortunately we had low recruitment levels and were unable to complete the trial but the good news is that we got enough compelling data to hire a consulting firm to seek out a drug partner. If you turn on the TV for an hour you are sure to see a Plaque Psoriasis commercial for Humera or Oztesla. Pay attention to the disclaimers which talk about getting cancer and suicidal thoughts. Think about how bad this disease is because the people effected with Plaque Psoriasis are desperate enough to try drugs that are known to give you cancer just to get some temporary relief. GALT’s drug is proving to have a much better side effect profile than many of the psoriasis drugs used today. From the results we also learned that we might not be using the optimal dosing regimen. A drug partner could help us quickly advance this indication.
On a related note I have to talk about the patient that was treated for Atopic Dermatitis. This man is 36 years old and has been suffering with Atopic Dermatitis since he was 16. That means for 20 years he has been failing all sorts of therapy including topical steroids, methotrexate, mycophenolate mofetil, phototherapy, Xolair (omalizumap), Xeljanz(tofacitinib), and Otezla(apremilast). After only 4 doses over the course of 2 months his itching was nearly resolved and he was sleeping better and even his eyebrows were regrowing. This is an immunological disease and since there is no known treatment it is classified as an unmet medical need. Two more patients are in the trial and since the target is still Gal-3 and the immunological pathway I feel good results are going to continue.
The next question is WHAT IS THE CHANCE OF APPROVAL? Let us first look at the Psoriasis indication where a more extensive trial needs to be conducted and the dosing regimen needs to be refined to meet the endpoints. The safety profile of the drug is a clear asset when compared to existing drugs. A clear pathway toward commercialization exists if the right partner is found. The Atopic Dermatitis has a lower bar to meet than Plaque Psoriasis since there is such a large unmet medical need. The imminent trial results from Providence Cancer Center suggest that approval is a foregone conclusion after we see just how conclusive the results were. I tried to handicap what those numbers would look like and how the FDA would view them. Finally we have results from the CX trial due at the end of this year tackling the largest epidemic and unmet medical need in the nation. So GALT basically has at least 4 indications with better than a 50% chance of approval. So if you flip a coin 4 times what is your chance of getting heads once. Then you have additional coin flips with each indication of organ fibrosis as well as the diabetes indication. The common link in all of this indications is this the Gal-3 which GRMD02 is designed to block. It is inconceivable that this drug doesn’t get approved given all the positive data surrounding it.
What follows next is WHAT IS IT WORTH? It’s never a bad idea to comparing this drug to its peers and make adjustments for the effectiveness of the drug and the stage of clinical development. Recently Tobira was acquired for 1.7 Billion by Allergan for a failed Phase II NASH Drug candidate. If GRMD02 shows efficacy I don’t see why GALT couldn’t be double the price on that basis alone. Cognatus received a $50 mil licensing deal with Novartis to continue development of their early stage NASH disease. That put a value of $150 mil on their company a far cry from Allergan’s bid but we can say its very conservative because GALT is a relatively the same development stage if not ahead since Cognatus has yet to start its Phase 2b trial. Then you have Intercept with a market cap of $2.6 Bil for a drug that is arguably stalled awaiting a phase 3 trial while they are trying to convince the FDA of the clinical benefit. So on a Current valuation basis GALT should be somewhere between $150 mil - $2.6Bil. Sitting at close to a $30 million market cap we are grossly undervalued.
What if we valued the stock on it future potential. NASH will affect millions but let’s assume that we only get 500K patients. The only treatment for NASH is a liver transplant which is estimated to cost $500K and that doesn’t even include the rejection medications you need to take. So lets price the drug at $50K/year. That equates to revenue of $25.0 Billion making this the biggest selling drug of all time. Given that future earnings power, the current market price is only pricing in a .12% probability of success of the drug coming to market. Does that make sense?
Now comes the most important question of all WHY BUY IT NOW? Before I can credibly answer the most important question I have to address the elephant in the room. WHY IS IT SO LOW? There are a number of reasons but I think the biggest is that there has just been a lack of public awareness. After the baseless shareholder lawsuits precipitated by the Fuerenstein attack the company fell into a trap that was seemingly managed by the attorneys and was simply unable to capture the imaginations of investors. Couple that with the short attacks from the likes of Adam Fuerenstein and the Street.com dissecting our trial data we had a perfect storm. Clearly our presentations and shareholder communication hasn’t been the same after the Fuerenstein Heist. Then we failed to properly design and execute two trials back to back (Psoriasis and FX). The market lost confidence in our ability to design a successful trial and assumed that the CX trial and the Providence Cancer Trial coming up will fail. Adding to that perception management failed to make a statement to shareholder that they believe in the medicine by taking their salaries in stock and failing to make insider stock purchases. So here we sit at major crossroads. You have to ask yourself do I want to look back or look forward? There are major catalysts coming this year. The first is the GTCBio Conference, then expected results from Atopic Dermatitis, perhaps a drug partnership with Psoriasis, then the CX trial results. There is truly very little downside risk now that Dick Uline put over $4.0 mil into GALT via the 10X Fund. This gives the company enough runway to complete the CX trial and report results. Who knows we might get a drug partner to do Psoriasis that could bring in much needed money to develop some of our other indications. The GTCBio Conference could also be an inflection point for the company as people wake up and realize what an incredible risk to reward ratio this stock represents. Another possibility is that we could wake up one day and be acquired and if that is the case I promise to do my best to maximize your value since any buyout would require the 10X Funds approval.