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A form-4 just filed on 02/04/2019 by Galectin Therapeutics (Nasdaq: GALT) reports that GALT director Gilbert Amelio sold 30 thousand shares in two transaction on 01/30/2019 and 01/31/2019 respectively at $5 per share. Following the sales Mr. Amelio directly owns 154,614 thousand shares. Basically he sold 16% of his holdings. Is this a big deal worthy of a negative reaction? Not really. Although we may see one anyway.
Not much has changed. The next step for GALT is to announce detailed plans for a phase 3 trial design investigating their lead molecule GRMD-02 in patients with NASH cirrhosis. The pivotal question has been how will GALT fund this trial. The most logical options on the table are a buyout or partnership. Considering recent development the latter is more likely in our opinion. Dilution is always a background concern but an unlikely strategy.
On January 15th Galectin’s largest institutional shareholder the 10X fund converted their series B preferred shares into common stock. If dilution were coming right now would be a poor timing to convert. Another development was the purchase of 51,050 share by director and board chairmen Richard Uihlein at an average cost of ~$4.80. This would not be a strategic move on his part if a buyout was coming in the next 6-months because of something called the Short-Swing Profit Rule. Essentially if Mr. Uihlein sold his shares bought in January for a profit within 6-months the profits would have to be returned to the company. That in conjunction with the extension of the retention bonuses indicate the direction GALT is headed is toward partnering. Either way, the future looks bright for Galectin Therapeutics in our opinion. According to the most recent 10-Q the company has adequate cash to fund operations into September, 2019. We anticipate the announcement of a partnership within this time frame.
We are long GALT
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