Galectin Therapeutics (NASDAQ:GALT)
"It's now or never, come hold me tight/ Kiss me my darling / be mine tonight / Tomorrow will be too late/ it's now or never"- Elvis Presley "It's Now or Never"
GALT CEO Dr. Peter Traber at his recent Elvis Presley-themed Las Vegas wedding.
Galectin Therapeutics is a development stage biotechnology company that is developing drugs for fibrotic diseases and cancer. From the GALT website:
Galectin Therapeutics is a biotechnology company focused on discovery and development. We apply our leadership in galectin science and drug development to create new therapies for fibrotic disease and cancer. Drug candidates based on our unique carbohydrate technology target galectin proteins, which are key mediators of biologic and pathologic function.
GALT has strong ties to well known stock promoters, and has been paying for campaigns targeting retail investors and retirees. GALT has been paying for these campaigns and has done significant capital raises on the back of these promotions. Since these promotions have begun, GALT's stock has more than doubled and volume has exploded. But first, some history.
The History of What Is Now Galectin Therapeutics
What is now Galectin Therapeutics was founded in 2000 as Pro-Pharmaceuticals, Inc. Adam Feurstein provided some color in his Biotech Mailbag on Pro-Pharmaceuticals all the way back in 2010. While one shouldn't hold what happened to Pro-Pharmaceuticals against GALT, it does provide some interesting context. GALT's story begins on May 26, 2011, when Pro-Pharmaceuticals changed its name to "Galectin Therapeutics." That's when the current GALT story began.
The Promoters Enter The Scene
From the time of the name change up until TDM Financial began getting paid to promote the stock, GALT was a sub $5 stock that traded sparsely. The promotion worked, as GALT's stock has nearly tripled since TDM Financial began targeting retail investors and retirees. Since the promotion began GALT has used the strength in its stock to do a $100 million offering which included a 500,000 share sell from Richard Uhilein. How do we know GALT is targeting retail investors and retirees? TDM Financial has provided a "case study" on its website of the GALT promotional campaign complete with a quote from GALT's chairman.
The stock has gone up partially on the back of numerous press releases such as this one, which have been written by Emerging Growth Corp.
TDM Financial said GALT hired them to:
"Galectin Therapeutics Inc. engaged TDM Financial on July 12, 2013 to broaden and enhance their shareholder base, as well as reach an audience of sophisticated individual and institutional investors, through a combination of dedicated list mailings, targeted content syndication, and other forms of measurable and effective outreach."
Under the "Audiences Targeted" section of the report, TDM Financial says that they are targeting retail investors and retirees.
TDM Financial goes on to boast that its campaign increased the price of the stock and its visibility.
The promotion has continued to work, if one measures the success of a promoter by an increasing stock price. This is clearly being done by retail investors buying into the constant flow of positive press releases.
Indeed GALT has continued to steadily pay TDM Financial for its services, having paid $35,00 since the beginning of the promotion.
So how do we know Emerging Growth Corp is also TDM Financial? Well it's pretty easy. It all goes back to one Daniel Minton of Whitefish, Montana. Daniel Milton's LinkedIn page shows that he is the owner of TDM Financial.
Using the State of Montana's LLC search to search for "Emerging Growth Corp." one sees that Daniel Milton is listed as the registered agent for this entity. An interesting note, while Emerging Growth Corp. has been promoting stocks for well over a year now, the LLC was only two months ago.
If you're still not satisfied that TDM Financial is Emerging Growth Corp, going to emerginggrowthcorp.com should settle it for you. Going to that web address takes you to TDM Financial's website.
Who Else Has Emerging Growth Corp. Promoted?
You can see the full list of stocks that Emerging Growth Corp (a/k/a Daniel Milton) here. As you can see it is a list mainly comprised of penny stocks. Just in the last month Mr. Milton has promoted these stocks through his Emerging Growth Corp.
As you can see, most of these are truly penny stocks with microscopic market caps. Can you spot the outlier? (It's GALT). So why is GALT using a penny stock promoter for "marketing services"?
Another Penny Stock Promoter Has Been Involved
Having connections to one stock promoter is bad enough, but GALT has ties to another stock promoter. This time the stock promoter is Patrick Cox, who also promoted PVCT right before the stock plunged 90%. Patrick Cox has promoted numerous biotechs, here is an interview in which he touts several biotechs including GALT. As BuyersStrike points out, Patrick Cox has colorful background. This is Patrick Cox. This is Patrick Cox calling GALT a company that will "change the world." Here is a picture of Patrick Cox.
Who Owns The Stock? (Hint - The promotion has worked)
The promotion has targeted retail investors and retirees, among others. And that's basically who owns the stock. Institutional ownership is very low and insiders have been selling stock.
Institutional ownership is just 16% of the float.
Insiders Selling The Stock
Over the last twelve months there have been a total of 17 insider buys in the open market, while there have been 16 insider sales in the open market. While that doesn't sound too bad, according to NASDAQ, insiders have bought less than 15,000 shares while they have sold 700,000 shares in the last twelve months.
GALT R&D Spend vs. General & Administrative Spending
Since the name change to Galectin in 2011, GALT has never spent more on R&D than it has on General & Administrative (G&A).
If you look at other biotechs in similar positions they are spending substantially more on R&D than they are on G&A. For example, Sarepta (NASDAQ:SRPT) spends around $2 in R&D for every $1 it spends on G&A.
On Tuesday, July 29th the company will announce the findings from its Cohort 2 of Phase 1 in the Clinical Trial of GALT's main drug, GR-MD-02. This cohort will be dosed with twice the level of Cohort 1. Only 8 patients are in this Cohort. If the data is positive the stock will likely go up, if negative it will go down. This article is not attempting to forecast the results of an 8 person Cohort in a Phase 1 trial, but rather to examine the background of those involved with GALT.
They say you judge the character of a person by those with whom they associate. If that holds true with corporations, then GALT has been associating with penny stock promoters that have pushed all sorts of subpar companies on retail investors and retirees. Perhaps GALT is showing its true colors by associating with these types of people. Time will tell.
Note: I have contacted GALT IR about their connection with Emerging Growth Corp and TDM Financial but have not heard back. If I do hear back I will update this article if necessary. I am long put options on GALT, however I am not short the stock.
Disclosure: The author is short GALT. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.