Galectin Drug is a Fatty Liver Flop

Fruit pectin is delicious spread on toast, but can an experimental drug derived from fruit pectin be effective as a treatment for fatty liver disease? Not so much, which explains the steep drop in  Galectin Therapeutics ( GALT) Tuesday. 

Galectin's experimental drug GR-MD-02 flopped in a phase I study of nonalcoholic steatohepatitis (NASH), a severe form of fatty liver disease. Across just about every biomarker for efficacy Galectin thought to measure, GR-MD-02 showed no difference from placebo. Galectin deemed the updated results from the phase I study to be a success because patients treated with GR-MD-02 reported no serious side effects, but of course, ineffective placebos rarely raise safety concerns. 

Shares of Galectin fell 53% to $6.76 in Tuesday trading. 

The stock promoters paid by Galectin to entice retail investors into buying the stock face a tougher challenge going forward.

La Jolla Pharmaceuticals  ( LJPC) shares were down 12% to $10.35 Tuesday because the company is developing a competing NASH drug which also claims to work in a similar way. 

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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