BOSTON - Galecto, Inc. (NASDAQ: GLTO), a biotechnology firm specializing in cancer and fibrosis treatments, has announced a strategic shift to concentrate on oncology and liver disease, utilizing its clinical asset GB1211. In alignment with this focus, the company has acquired global rights to BRM-1420, a dual ENL-YEATS and FLT3 inhibitor, from Bridge Medicines, potentially offering a new therapeutic option for acute myeloid leukemia (AML).
The company's CEO, Dr. Hans Schambye, expressed confidence in the potential of BRM-1420 to treat challenging AML subsets and its synergy with standard-of-care therapies. AML remains a condition with poor patient prognosis and high unmet medical needs. Bridge Medicines has developed BRM-1420, which has shown promise in preclinical models, inhibiting the growth of leukemia cells and extending survival.
Galecto's transaction with Bridge Medicines involved issuing common and preferred stock, with Bridge Medicines' CEO, Matthew Kronmiller, joining Galecto's management team. The deal was advised by Leerink Partners for Galecto and Lazard (NYSE:LAZ) for Bridge Medicines, with legal counsel provided by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, respectively.
BRM-1420 is set to enter clinical trials for AML following an Investigational New Drug (IND) application expected in late 2025 or early 2026. Galecto plans to leverage the drug's potential in combination with current treatments and those under development, such as menin inhibitors.
Galecto continues to advance GB1211, its galectin-3 inhibitor, through clinical trials for liver cirrhosis and in combination with pembrolizumab for oncology indications. However, the company has decided not to advance its LOXL-2 inhibitor candidate GB2064 at present.
This strategic move by Galecto is based on a press release statement and reflects the company's commitment to addressing significant unmet medical needs in cancer and liver diseases through its pipeline of novel treatments.
In other recent news, Galecto has regained Nasdaq compliance, following a period of non-compliance with Nasdaq's minimum bid price requirement. The pharmaceutical company has also executed a 1-for-25 reverse stock split, reducing the number of outstanding common shares from approximately 27.1 million to around 1.1 million. This adjustment was part of Galecto's strategic move to modify its capital structure.
In addition, Anne Prener, M.D., was elected as a Class I director to the Board of Directors during the company's Annual Meeting. EY Godkendt Revisionspartnerselskab was also confirmed as the independent auditor for the fiscal year ending December 31, 2024. In terms of financial performance, Galecto reported Q1 2024 operating expenses of $5.7 million and a cash balance of $27.2 million.
Following these financial results, Oppenheimer analysts adjusted their price target for Galecto from $10.00 to $9.00. Despite encountering challenges with its Phase 2b GALACTIC-1 study of GB0139 for idiopathic pulmonary fibrosis, Galecto is exploring strategic options, including potential mergers, acquisitions, and partnerships. The company continues to advance other clinical programs in the wake of these recent developments.
InvestingPro Insights
Galecto's strategic shift towards oncology and liver disease aligns with its current financial position and market challenges. According to InvestingPro data, the company has a market capitalization of $12.68 million, reflecting its status as a small-cap biotech firm. This relatively modest valuation underscores the importance of Galecto's focus on high-potential areas like AML treatment.
An InvestingPro Tip reveals that Galecto holds more cash than debt on its balance sheet, which is crucial for a biotech company investing in research and development. This financial cushion could provide the necessary runway for advancing BRM-1420 and GB1211 through clinical trials.
However, investors should note that Galecto is not currently profitable, with a negative EBITDA of -$21.91 million over the last twelve months as of Q2 2023. This is typical for early-stage biotech companies and highlights the importance of the company's strategic decisions to prioritize promising assets like BRM-1420.
Another InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year, which is consistent with Galecto's focus on long-term value creation through its clinical pipeline rather than immediate profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Galecto's financial health and market position. In fact, there are 6 additional InvestingPro Tips available for GLTO, which could be valuable for those considering an investment in this evolving biotech story.
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