Galectin Pays Stock Promoters to Entice Retail Investors
SeekingAlpha contributor Bleecker Street Research follows up on my tweet from Friday with more details on the financial ties between Galectin Therapeutics (GALT) and the penny-stock promotions firm Emerging Growth Corp. via its website SECFilings.com.
Like Galena BioPharma (GALE - Get Report) and The DreamTeam Group, Galectin is also paying for a promotional campaign designed to entice retail investors into buying its stock. Emerging Growth, through its parent company TDM Financial, describes itself as an investor relations and marketing company, but that's just a shiny facade on what is really an ugly penny-stock promotions scheme. Besides Galectin, "Featured companies" promoted by Emerging Growth can be found here and include RXI Pharmaceuticals (RXII), Aethlon Medical (AEMD) and Athersys (ATHX).
Last Thursday, Emerging Growth issued a press release, picked up by the Yahoo! Finance feed, which misleadingly compared Galectin to Intercept Pharmaceuticals (ICPT).
From a clinical stage perspective, Intercept is leading the race, having delivered positive data from a Phase 2 trial of obeticholic acid (OCA) earlier this year. Shares tripled on the news. Galectin, a newly-coined member of the Russell 2000, is nipping at Intercept's heels and actually may be closer than what first appears with a Phase 1 trial because of the potential to treat fatty liver disease even once it has progressed. What distinguishes their approach from others that the timing of intervention with their proprietary carbohydrate polymer drug GR-MD-02 may be largely irrelevant to outcomes, with GR-MD-02 seeming to work well even in advanced stages of liver fibrosis. This is especially important in fatty liver diseases because they are silent killers, often going undiagnosed for many years. The Galectin drug was granted FDA fast-track approval nearly a year ago.
Only someone being paid to shill would claim Galectin is "nipping at Intercept's heels." Intercept is way ahead in developing a drug to treats non-alcoholic steatohepatitis (NASH), a severe form of fatty liver disease, and its clinical studies to date have been designed using appropriate endpoints.
Galectin, by comparison, is conducting a phase I "safety" study of its NASH candidate enrolling a tiny number of patients and using endpoints which collect useless biomarker data. It's as if Galectin doesn't really want to find out if their drug is effective against NASH.
After Emerging Growth's misleading press release was issued Thursday, Galectin followed up with a press release of its own on Friday to announce a conference call for Tuesday morning. The subject of the call: To discuss updated results from its phase I NASH study.
You think the two press releases might have been coordinated? Galectin pulled the same stunt in March, which helped the company sell stock through an At-The-Market (ATM) equity sales agreement.
Last November, I explained Galectin's troubled past, including how the company evolved from a bankrupt penny stock.