Obscene Insider Selling of Galectin Therapeutics (GALT): Lost Confidence?

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Galectin Therapeutics (GALT) insiders are selling obscene amounts of stock, undoubtedly laughing up their sleeves as dilution looms and retail investors scoop up shares unloaded by insiders who bought shares for pocket change and in some cases, not a single penny.

The chief seller is the chief executive …

*CEO’s Out, Other Insiders Can’t Sell Fast Enough

Two days after being named the new CEO and three weeks before officially taking the position, Harold Shlevin has sold every bit of his company stock.

He exercised options at $0 and sold his last share on Wednesday of this week:

(Source: Company SEC filings)

As a member of the roundly criticized management team, the new CEO acquired shares over the last six years as Galectin’s chief operating officer.

On June 8 and June 11, Mr. Shlevin tanked up on cheap options, most at under $1, and sold nearly 115,000 shares at around $5.77 to $6.50 apiece.

(Source: Company SEC filings)

In the last two weeks, Mr. Shlevin has pocketed around $2 million dumping more than 350,000 shares of Galectin.

This week, another big seller was Chief Financial Officer Jack Callicutt, who exercised options and sold 9,294 shares at an average of $7.01 apiece. He’s left with only 1,260 shares.

(Source: Company SEC filing)

Mr. Callicutt last week unloaded 120,000 shares after exercising cheap $0.87 and $1.37 options.

(Source: Company SEC filing)

Not surprisingly lame duck CEO, Dr. Peter Traber, has been selling shares, too.dumping shares, too.

On Thursday, June 14, Galectin co-founder and director James Czirr, as managing member of 10X Fund, signed off on the sale of a couple hundred thousand shares from the fund.und.

(Source: Company SEC filing)

Last Friday, records show 10X Fund also sold off 110,000 shares … for about 2 bucks cheaper than the closing price on June 14.

(Source: Company SEC filing)

In the last three months, insiders have bought NO shares and sold almost 1 million shares:

(Source: Nasdaq)

Would insiders be dumping their stock it they really believed in Galectin as it struggles to advance its candidate for NASH or non-alcoholic steatohepatitis, a primary cause of liver cancer?

No way … and there are even more problems.

*Running On Fumes, Dilution Looms

Meanwhile, cash is burning up at a rate of $3.5 million per quarter.

With less than $4 million at the end of March, the company would have been down to fumes by now.

The company has no way of making money for years to come … if ever.

Sure, there’s a $10 million line of credit which could get Galectin by until early next year … if they just march in place.

*Big Losses, Big Failures

But, despite two failures to meet primary endpoints (page 17), the company plans to move forward.

They hope to go into Phase III trials. But this more demanding phase is typically a 2-year to 5-year process, involving anywhere from 300 to 3,000 participants. Average costs of Phase III clinical trials range from $11.5 million to $52.9 million… money that Galectin does not have.

Ever since inception 18 years ago, Galectin has handed shareholders loss after loss, year after year. Now losses exceed ~$186 million with no relief in sight.

“If we are unsuccessful in raising additional capital to fund operations before March 31, 2019, we may be required to cease operations,” the company states.

*Massive Rivals

This is a highly competitive field in which a couple of competitors have recently shown notable advancement.

Galmed Pharmaceuticals (GLMD) has released data indicating its NASH candidate, Aramchol, showed meaningful reductions in circulating enzymes used to diagnose liver damage. Also, patients receiving 400 mg per day showed a barely statistically significant 3.41% cute in liver fat content, while a statistically significant 47% of patients who received 600 mg showed a 5% or greater improvement (versus 24% for placebo). The company plans to meet with the FDA later this year to consider design of a larger, pivotal trial.

Galmed reported $1 million revenue in 2017 and $13 million cash.

Meanwhile, Madrigal Pharmaceuticals (MDGL) plans to meet with the FDA soon to discuss an upcoming pivotal trial, following results showing its MGL-3196 cut liver fat content 36.3% from baseline, versus 9.6% reduction for placebo. At 36 weeks, 39% of responding patients showed no NASH symptoms, versus only 6% of the placebo group.

The company is working with an investment bank regarding a potential sale, Bloomberg reports.

Madrigal reported $38 million in cash as of March 31.

Some of the biggest names in pharma are among those promoting more than 50 drugs considered potential NASH treatments in various stages of development (the list contains some misspellings as it has been compiled by a non-native English speaking author for Nash Biotechs) :

*Conclusion

Looming ahead, investors will likely see more insider selling, substantial dilution and great disappointment – if not outright disaster.

We expect this stock will plunge near-term to $5 per share.

* Important Disclosure: The owners of TheStreetSweeper hold a short position in GALT and stand to profit on any future declines in the stock price.

* Editor’s Note: As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking financial positions in the companies that they cover. To contact Sonya Colberg, the author of this story, please send an email to [email protected]

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