Shares in Galectin Therapeutics (GALT) rallied 32% yesterday and traded back to its fair value. Below is a chart showing the exit in November, and the Re-Buy of these shares into the February Conference. We think these shares are fairly valued around the $2.00 level. Note in the chart below, the exit by portfolio managers during Sept 16 – 22 during a volatile week of drug failure and ratings cut by Roth Capital and you can see my screen markings noting the volume tracking this exit. Also in the chart (Yahoo Finance attribute) it shows the re-buy in front of the GTCBio Conference, and the accumulation fueling the rally. I am watching the accumulation in any subsequent sell off.
I can tell you that the first thing on the mind of the Portfolio Manager ( I will leave him unnamed ) back in September was how to properly exit his position and employ a tax loss sale. Following the exit, his immediate plan, was to buy the stock back in Q1 2017. This is it. This is the buyback. Now the question comes – does the PM have the skill to buy this stock into strength, and will it cost too much? Buying into strength is always the hardest trade for a portfolio manager to execute.
Will this become a momentum play in 2017? It has all the components to do this….and I can tell you back in Q4 2016 with the Nasdaq breathing down the neck of Galectin Therpuetics threatening a de-list – this is much better for them. Often in these stocks the bus leaves with the fewest on-board, and looking at this stock it seems like the bus is leaving.
The important price point to watch are any closes above $2.08 with higher than average volume, and if you trade this stock you know the peril of chasing shares up or down. It is best to make a bet and sit in the lawn chair and watch the outcome. The good thing about a two dollar stock is .. you know exactly what your risk is... because stocks can NOT trade below 0.00 GALT is essentially a Long Biotech Call and expect Portfolio Managers and Analyst to return to Galectin.
We are trying to determine what needs to happen for shares to become a darling stock in 2017 and gain some upside momentum. Know that on February 7, 2017 at the GTCBio 9th Immunotherapeutics & Immunomonitoring Conference, Dr. William Redmond of the Providence Cancer Center in Portland, Oregon, released human data on the increase in survival of both Keytruda and Yervoy (approved cancer therapeutics) in combination with Galectin Therapeutics’ GR-MD-02 as well as the extent of the increase in anti-tumor activity. Shares immediately turned higher, and reviewing price action back to Thanksgiving 2016 tells the entire story of tax loss selling and the re-buying of this position. We want to understand why this occurred and what crossroad big Pharma faces with Galectin (GALT).
Michael Sheikh writing on Seeking Alpha had some great observations supporting our theory..saying
“…..Two big pharma giants Merck (NYSE:MRK) and Bristol-Myers Squibb (NYSE:BMY) could be getting ready to square off in a bidding war for a Galectin Inhibitor that they know little about. The stakes could be the future of their respective immunology franchises. On February 7, 2017 at the GTCBio 9th Immunotherapeutics & Immunomonitoring Conference Dr. William Redmond is set to release human data on the increase in survival of both Keytruda and Yervoy in combination with GR-MD-02 as well as the extent of the increase in anti-tumor activity.”
We will be covering Galectin Therapeutics (GALT) as part of our 2017 portfolio.
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