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Is Galectin The Next Takeover Target for the Biotech World?

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Shares of Galectin Therapeutics, Inc. (GALT - Free Report) were up almost 36% on Wednesday.

It is being speculated that Galectin could be the next takeover target in the biotech world after Allergan plc’s highly expensive definitive deal to acquire Tobira Therapeutics, Inc. was announced on Tuesday.

Allergan has agreed to buy Tobira, a clinical-stage biotechnology company focused on making drugs to treat non-alcoholic steatohepatitis (NASH) and other liver diseases, for a total potential consideration of around $1.7 billion.

Importantly, the purchase consideration includes an upfront payment of $28.35 alone, which represented a stunning premium of around 500% to Tobira’s Monday’s closing price of $4.74. Shares of Tobira rose more than 700% after the acquisition was announced.

Like Tobira, Galectin is also a promising player in the NASH space. It is focusing on making therapies that target galectin proteins for the treatment of fibrotic liver disease as well as cancer. Its lead pipeline candidate, GR-MD-02 is in two phase II trials in subjects with NASH. While the NASH – CX trial (n=290) is evaluating the efficacy of GR-MD-02 in patients with NASH with cirrhosis, the NASH – FX trial is evaluating the candidate in NASH patients with advanced fibrosis (stage 3). Top-line data from the NASH – FX trial is due to be released this month.

Preclinical data in animals have shown that GR-MD-02 has robust treatment effects in reversing liver fibrosis and cirrhosis.

NASH, a severe type of liver disease, occurs when the accumulation of liver fat is accompanied by inflammation and cellular damage, leading to liver fibrosis or scarring of the liver, and eventually cirrhosis, liver cancer or liver failure. At present, no approved therapies are available for patients suffering from NASH, liver fibrosis, or cirrhosis, for which liver transplant is the only treatment available. According to a press release issued by Galectin, it is estimated that by 2025 the worldwide market for NASH treatments could approach $35 billion. Thus, the NASH market holds great potential, bringing small companies like Galectin in focus as acquisition targets.

Other companies that are also developing therapies for the treatment of NASH include Gilead Sciences Inc. (GILD - Free Report) and Intercept Pharmaceuticals.

Galectin has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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