Biotech Stock Mailbag: Galectin, Keryx, Navidea, Cytori

NEW YORK ( TheStreet) -- Let's kick off this week's Biotech Stock Mailbag with a few questions about Galectin Therapeutics ( GALT), which until recently (and quite surprisingly) was one of the best-performing drug stocks this year.

On Oct. 25, Galectin announced an "At The Market" equity sales agreement through which the company's broker MLV & Co. will sell up to $30 million in stock. These ATM stock sales are opaque -- the timing of sales and the number of shares sold is known only by the company and its broker. Galectin is only obligated to disclose ATM sales in its quarterly SEC filings.

Galectin's ATM was announced a week after the stock hit an all-time high of $12.45 per share. You could say the company is being smart and opportunistic, but the market tends to view the dilution and opacity of ATMs bearishly. At Thursday's close, the stock is down 28% from its high. Galectin shares are under added selling pressure because its largest shareholder, 10X Fund, has been exercising warrants. The fund exercised 200,000 warrants on Nov. 1 on top of an warrant exercise in October.

I happened to have spent an hour on the phone with Galectin Co-Founder/Executive Chairman Jim Czirr and CEO Peter Traber on Oct. 25, the same day (but hours before) the ATM was announced. Neither executive mentioned the ATM but Czirr -- also a partner in 10X Fund, by the way -- did tell me he'd been fielding phone calls from "marquee" institutional investors.

Czirr didn't identify the names of these investors, but he assured me they were interested in Galectin as a successful turnaround story and the potential of the company's experimental liver fibrosis and cancer immunotherapy drugs.

Galectin's current cash runs out in the second quarter of next year. Czirr was upfront about the company feeling a sense of urgency to raise more money soon but he was definitely trying to sell me a rosy story with hints that a traditional follow-on stock offering was in the works with some A-list (B-list at a minimum) investors. Instead, Galectin decides to dribble out shares via an ATM.

Institutional investors own just 5% of Galectin, according to S&P CapitalIQ. Wall Street disinterest in owning Galectin is a significant risk factor.

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