Miami, FL – September 12, 2018 7:55 PM (EmergingGrowth.com NewsWire) — EmergingGrowth.com, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on Galectin Therapeutics, Inc. (NASDAQ: GALT).

GR-MD-02: Keytruda’s Partner

  • Tumors excrete elevated level of galectin-3
  • Galectin-3 diminishes T-cells’ ability to kill tumor cells
  • Galectin-3 aids in cancer progression
  • GR-MD-02 is safe, effective, and inexpensive, potentially becoming possible new standard immunotherapy used with Keytruda.

Introduction

Merck’s (MRK) Keytruda, a PD-1 inhibitor, is quickly becoming the most broadly-used cancer treatment worldwide. EvaluatePharma projectsrevenue of over $12 billion by 2024, just behind Bristol-Myers Squibb’s (BMY) Opdivo and Roche Holdings’ (RHHBY) Tencentriq.

Keytruda has shown amazing success for certain individuals(~40% ORR in dMMR patients, n = 149), and a relatively safe drug profile. However, there is much more room for improvement, especially consistent response improvement. The pursuit of the goal to enhance Keytruda’s efficacy has led to developments like screening for mismatch repair deficiency, which has shown to increase outcomes for certain patient groups. The efficacy of cancer treatments is still relatively far from a consistent majority overall response rate, and nowhere near a cure. For instance, Keytruda, with all its accolades from clinicians, only demonstrated a 33% ORRin advanced melanoma patients.

Unsurprisingly, the promise of immunotherapy and the specific shortcomings of immuno-oncology treatments like Keytruda has incentivized many companies to work on improvements. According to PhRMA, there are currently over 240immuno-oncology drugs in development, although other sources hint at much more [one, two]. Many of these treatments are intended to be used in combination therapy. T Market researchers projectthe immunotherapy market as a whole to reach $160 billion by 2024, with PD-1 inhibitor treatments taking the lead.

Given the heavy competition for a superior immunotherapy that can be widely used in conjunction with Keytruda, who might be the next company to develop an extremely valuable treatment? Companies with therapies that can target a broad range of cancers, such as tumor metabolism-focused Calithera Biosciences (CALA) (partnered with Incyte (INCY) or immune system stimulation-focused Affimed (AFMD) (partnered with Roche) may come to mind. And then there’s Nektar Therapeutics, which has multiple partners and a large pipeline, with a focus on NKTR-214, partnered with BMY.

While other companies have promising and undoubtedly useful approaches, I believe that Galectin Therapeutics’ (GALT) GR-MD-02 could potentially be an indispensable Keytruda combo treatment in the vast majority of cancers. Galectin’s approach is geared at neutralizing “tumor immunity”, and due to its focus partially on immune cells, loosely resembles Affimed’s Redirected Optimized Cell Killing (ROCK®) platform, which recently entered into a collaborationwith RHHBY and received $96 million upfront (with the potential for up to $5.0 billion in milestone/royalty payments).

However, Affimed’s platform (and a big part of Nektar’s pipeline) focus on stimulating T-cells and natural killer cells, while Galectin’s approach is aimed at taking down the cancer defense mechanisms against these cells, as well as being aimed against various cancer progression mechanisms. The benefits of the latter’s approach will be discussed later.

Modern Immunotherapy

The origins of immunotherapy are based on the concept that the one thing that all cancers have in common is a malfunction of the patient’s immune system. Normal cells mutate into cancer cells, and then the immune system is inadequate in its response, allowing a cancer colony to develop a foothold.

Tumor immunity is the byproduct of a patient’s compromised immune system, whereby cancer cells shield themselves from the various levels of a patient’s immune response. One component of tumor immunity is called a checkpoint blockade: normally, a T-cell (or a B-cell, or natural killer cell), through T-cell receptors(or B-cell receptors, etc.), can evaluate whether to destroy a cell by examining the presence of immune checkpointsin that cell: it can check whether it is a human cell or even whether has markers for uncontrolled growth (i.e.: a cancer cell). Cancer cells can shield themselves from certain immune checkpoints by various mechanisms. For instance, tumors can excrete proteins into the extracellular space that either keep T-cells busy by expressing proteins on the cell surface marking them as “friendly,”or by secreting proteins that compromise T-cell functions.

Checkpoint Blockades

Normally, the PD-1 protein expressed by T-cells, B-cells, and macrophages helps preventautoimmunity by attenuating a person’s immune response to a foreign agent. In a checkpoint blockade, a tumor may produce the PD-L1 and PD-L2 ligands, which interact with killer and suppressor T-cells’ PD-1 receptors to suppress the immune system. It does this in two ways: (1)PD-L1 (or PD-L2) activation of the PD-1 receptor on T-cells increases apoptosis(programmed cell death) in killer T-cells (which kill cancer cells) while (2)it reduces apoptosis in regulatory T-cells (which block or regulate the activity of killer T-cells).

Killer T-cells are a patient’s foot soldiers in the battle against cancer. The more functionalcancer-fighting cells in the body, the better the chances that they find and destroy their target. That’s what makes cancers which increase PD-1 expression, located on T-cells, B-cells, and macrophages, especially virulent. Keytruda, a PD-1 inhibitor,is a monoclonal antibody (MAb) that counteracts this effect by Attaching to the PD-1 receptor so that the PD-L1/L2 ligands cannot activate it.

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Immunotherapy: Stimulate the Immune System or Destroy the Defenses?

Many immuno-oncology (I-O) and chemotherapeutic cancer treatments attempt to simply stimulate the immune system, target the tumor, or direct drugs and T-cells to the tumor site. But the actual attack and defense mechanisms, such as the PD-1 checkpoint blockade, aren’t fully addressed by these treatments. To use a military analogy, it is like a medieval army attacking a city wall without any siege equipment, while being peppered by arrows from the defenders’ towers. That won’t work too well.

While Keytruda addresses one defensive mechanism of some cancers (the PD-L2/L1 overexpression), there’s still the matter of a literal defensive wall and other attack mechanisms, which is represented by galectin-3 over-production and secretions, as part of the next section will detail. Thus, inhibiting galectin-3, just like PD-1 inhibition before it, could become an indispensable strategy for cancer treatment.

The broad appeal of the PD-1 inhibitor Keytruda should come as no surprise because if its inherent versatility. The mechanism of action ((MOA)) of a PD-1 inhibitors pro-immune, pro-inflammatory, pro-killer T-cell, and is applicable to virtually every cancer type that  overexpress PD-L1 (or PD-L2), or somehow effects the PD-1 pathway. In cancer therapy, it’s crucial to focus on restoring immune function to normal levels (by preventing PD-1 signaling from attenuating an immune response, or by blocking the tumor’s attack which causes T-cell anergy), rather than stimulating it, due to the tumor’s defense mechanism against such signals.   During PD-1 inhibition, the immune system is protected from being attenuated, but the tumor still has other defense mechanisms that can prevent T-cells from attacking it. Disrupting galectin-3’s pathological functions could be imperative to defeating the vast majority of cancers.

Pursuit for the Ultimate Immunotherapy

In immunotherapy, creating bigger armies of T-cells by stimulating an immune response, without taking down this galectin-3 wall, is a fool’s errand, as the T-cells eventually succumb to the tumor’s defenses and become useless (anergic). And while other conventional treatments such as chemotherapy and radiation therapy can target quickly-replicating cells, it doesn’t target the growth factors that continue to stimulate defensive secretions or promote metastasis, two things that galectin-3 also promotes.

There is another reason why, in immunotherapy, it is critical for a person’s immune system to return to normal functioning rather than simply be stimulated. Our immune system is a complex and finely tuned self-regulating machine that will guard itself against overshootof many functions, such as immune stimulation. This is why therapies that can take down common cancer defense mechanisms can be more valuable than simple immune stimulatory treatments. According to immunologist Gordon Freeman:

“When you stimulate an immune response, T-cells make interferon which promotes PD-L1 expression by the tumour cells and this shuts down the T-cell response against the tumour. When you stimulate, you also put on the brakes.”

Therefore, it is important to restore natural function or block tumor attack, regardless of whether or not an immune response is stimulated. A superior immunotherapy will do this. This is what also GR-MD-02 does. As Freeman states, “the limiting step is not to turn on the immune system against cancer, but to avoid getting turned off by immune checkpoints.”Okay. So how does a GR-MD-02, a galectin-3 inhibitor, do this?

Mechanisms of Action of Galectin-3 in Cancer

GR-MD-02 and Galectin-3 Binding

GR-MD-02 is a galactoarabino-rhamnogalacturonan polysaccharide polymermixture of largemolecules derived from apple pectin in order to increase solubility and binding ability specifically to galectin-3. Galectin-3 binds to GR-MD-02 with a much higher binding affinityas compared to smaller oligosaccharides due to the “conformational change” of galectin-3 after its initial interaction with its carbohydrate ligands.

The Functions of Galectin-3 in Cancer

In order to assess GR-MD-02’s function in cancer treatment, the pathological processes of galectin-3 in cancer must first be detailed.

Research shows that galectin-3 is so intricately involved in so many facets of cancer progression that it’s likely some cancers could not even survive without it. The chart below depicts some of the mechanisms of galectin-3 that researchers are aware of. It is possible that this may be just scratching the surface of galectin-3’s functions in cancer, as the number of research articles on galectin-3 grows weekly.

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The illustration above shows all of the different effects galectin-3 has on cancer promotion. In this article, I will discuss some of these effects, excluding those three specific to nuclear galectin-3; that is, the effect of galectin in the cell nucleus, which are not yet well-understood. The resulting list of galectin 3’s effects on tumor progression, according to the above illustration, include:Immunosuppression, promotion of angiogenesis, cancer-endothelial adhesion, cancer-matrix adhesion, disseminating tumor cell adhesion and survival promotion, cell growth promotion, tumor apoptosis inhibition, and cell cycle promotion, among others.  Next, some of these effects and a few others will be examined. Below is a helpful flowchartof cancer metastasis that shows galectin-3 contributing to every process.

“First, the intracellular (cytoplasmic) galectin-3 is antiapoptotic providing survival advantage to cancer cells. Second, galectin-3 promotes tumor neoangiogenesis. Third, the extracellular galectin-3 is involved in homotypic aggregation. Fourth, tumor–endothelial cell interactions required for metastasis are believed to be mediated by endothelium-associated galectin-3 and cancer cell-associated TFD. Fifth, tumor cell secreted galectin-3 induces apoptosis of cancer-infiltrating T-cells possibly promoting immune escape during tumor progression” (Ahmed et al. Galectin-3 as a Potential Target to Prevent Cancer Metastasis. 2015).

Mechanisms of Action: Encouraging Neoplastic Transformation (Intracellularly)

Neoplastic transformation is the transitioning of a normal cell to an immortalized cell and then to a tumorigenic cell. Galectin-3 has been shown to promotethis transformation by interactingwith some oncogenes such as β-catenin. This statement is also backed clinically in multiple studiesin breast tumors, thyroid tumors, and pituitarytumors. Though GR-MD-02’s extracellular galectin-3 inhibition does not directly affect intracellular galectin-3, this provides evidence that galectin-3 overexpression can lead to tumorigenesis, and therefore cancers generally overexpressing galectin-3, which is eventually secreted into the extracellular space.

Mechanisms of Action: Signaling T-Cell Apoptosis (Extracellular Galectin-3)

Just like the PD-1 overexpression that Keytruda battles, extracellular galectin-3 may induce T-cell apoptosis. Surface glycoprotein receptors, such as the CD29 and CD7 receptors shown in the above picture, as well as CD95, CD98, and the T-cell receptor, have been shown to associatewith extracellular galectin-3. As can be seen above, extracellular galectin-3 can bind to the CD29 and CD7 receptors, which triggers a signaling cascade that activates caspase-3 and triggers apoptosis.

Mechanisms of Action: Inhibiting Tumor Apoptosis (Intracellular Galectin-3)

In contrast to the above, intracellulargalectin-3 can inhibitvarious signaling pathways that induce apoptosis within the tumor cell. Intracellular(cytoplasmic, not nuclear) galectin-3 is a well-known apoptotic inhibitor, as demonstratedin breast, prostate, thyroid, bladder, colorectal, pancreatic, and gastric cancers, as well as myeloid leukemia, neuroblastoma, and some B-cell lymphoma.

Since galectin-3 is overexpressed in tumor cells, thereby inhibiting their own apoptotic signaling pathways, and then excreted in the extracellular space, where it induces T-cell apoptosis, it appears that tumors develop galectin-3 production and secretion as a dual defense mechanism against the immune system. Extracellular galectin-3’s immunosuppression can be counteracted by a large molecule galectin-3 inhibitor, although intracellular, cytoplasmic galectin-3’s role in tumor survival cannot be addressed with such a molecule.

Mechanisms of Action: Promoting Tumor Site Angiogenesis

Before examining galectin-3’s effects on angiogenesis and metastasis, an overview of the typical angiogenesis process of a tumor is warranted to understand galectin-3’s mechanism of action in promoting this function.

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“Tumor angiogenesis is a multistep process that occurs in almost all tumors and that is mediated by endothelial cells (ECs). When a cell has acquired genetic alterations that allow unlimited growth and escape from apoptosis, a small tumor is formed (A). As soon as the tumor volume has reached a few cubic millimeters, oxygen and nutrient supply are insufficient, and the tumor cells undergo an angiogenesis switch. This results in the production and release of growth factors into the surrounding tissue. The secreted growth factors bind to receptors on ECs [endothelial cells] in nearby vessels. Pericytes that stabilize the vessel detach, and vessel dilation occurs (B). In addition, the activated ECs start to produce proteases (not shown) that degrade the basal membrane and the extracellular matrix (C). Subsequently, the ECs start to migrate (D) and proliferate (E) into the growth factor gradient, forming new vascular structures. Finally, matrix proteins are deposited, and the new vessel is stabilized by pericytes to form a functional and mature blood vessel. The tumor cells can continue to grow, and metastasis formation is facilitated since the tumor cells now have easy access to the circulation (F)” (Victor, et al. Galectins in the tumor endothelium: opportunities for combined cancer therapy. 2007).

Basically, what galectin-3 does to promoteangiogenesis is link cells together and then interact with certain molecules on the cell surface (N-glycan and integrin), which causes the galectin-3 to cluster together and activatethe focal adhesion kinase (FAK). This stimulates the vascular endothelial growth factor (VEGF) and basic fibroblast growth factor (bFGF), thus influencing angiogenesis. Galectin-3 also mediates the angiogenesis process by attractingmacrophages to aid in the process. Galectin-3’s role in the process is pictorialized below. In addition to aiding angiogenesis through growth factors, galectin-3 can influence endothelial cell migration and proliferation, which also aids in tube formation (assembly of capillary-like structures).

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Mechanisms of Action: Aiding in Tumor Metastasis, Migration, and Adhesion

In promoting metastasis, extracellular galectin-3 can adhere to circulating tumor cells and the facilitate adhesion to endothelial cells at a different site. Furthermore, the adhesion of circulating cells to endothelial cells has been hypothesized to further increase the endothelial cell production of galectin-3. Also, galectin-3 acts as a chemoattractantfor endothelial cells as well as macrophages. In one study, it was found that prostate cancer phenotypes that were more aggressive exhibitedhigher levels of galectin-3, and that galectin-3 enhanced tumor growth. So, correlations have been observed that galectin-3 both promotes metastatic adhesion to new sites, and then is produced as a result —a deadly cycle.

As for tumor cell adhesion after migration, overexpression of galectin-3 has been associatedwith increased invasiveness of cancers such as neuroendocrine tumor pheochromocytoma, ovarian, thyroid, melanoma, and colorectal cancers. The mechanisms of action are hypothesized or shownto be the myriad of interactionsof galectin-3 with numerousextracellular matrix (ECM) glycoproteins/glycoconjugates, collagen and other ECM molecules, cell surface epidermal growth factors, and cancer cell surface glycans. Below is the spatial process shown by which galectin-3 helps cancer cells survive, adhere, and finally metastasize to another site.

There is even more direct clinical evidence of galectin-3’s role in cancer progression, or galectin-3 upregulation in cancer. For instance, in one study, circulating galectin-3 levels were measured pre and post-primary tumor removal. Most galectin-3 levels decreased, implying that the tumors were producing galectin-3.

Another study showed that “galectin-3-transfected human breast cancer cells BT549, which is galectin-3 null, after intrasplenic injection, formed metastatic colonies in the liver, while gal3 null BT549 cells did not”(Ahmed et al. Galectin-3 as a Potential Target to Prevent Cancer Metastasis. 2015).

Ahmed et al. state that apoptosis from nitric oxide was blocked in those same cancer cells, furthering evidence that galectin-3 in the cytoplasm inhibits apoptosis, as previously discussed. The author goes on to conclude that galectin-3 expression in various cancers is correlated with the progression of clinical stages, and metastasis. These pieces of evidence show that tumors produce galectin-3 intracellularly to inhibit their own apoptosis, while excreting it to the extracellular space to prevent attack from T-cells, and to induce apoptosis in the T-cells, as previously discussed. GR-MD-02 could therefore be used for all cancer treatments with elevated levels of galectin-3, or as a preventative for metastasis, which is again pictorialized below.

Mechanisms of Action: T-Cell Adhesion Inhibition (T-Cell Anergy)

Galectin-3, in one of its most important roles in tumor survival, has been shownto prevent CD8+ T lymphocytes, the killer T-cells, from latching onto a tumor cell in order to secrete lytic enzymes and cytokines into the tumor in order to destroy the tumor. Below is an illustration of the inhibitory effect of galectin-3 on killer T-cells’ attack. The galectin-3 binds to itself (in pentamers and dimers) and then to the LFA-1 receptors, paralyzing the T-cell.

I liken the normal T-cell attack on a tumor to a rather heroic pirate ship attacking an evil cargo ship. The pirate ship (T-cell), in order to take down the cargo ship (tumor), initially approaches the cargo ship and shoots grappling hooks (LFA-1 receptors) at the cargo ship in order to attach to it. Next, the pirate ship inches closer and the gangplanks (secretory domains) come out, where the pirates (cytokines and lytic enzymes), proceed to raid the cargo ship.

The galectin-3 secreted by the tumor is like a heavy net that blocks the grappling hooks. Galectin-3 binds to the LFA-1 receptors and prevents T-cell adhesion to the tumor, thus preventing the T-cell making its final blow. The Ludwig Institute has likened the galectin-3 as a plaque that coats T-cells, making them anergic.

Mechanisms of Action: NK Cell Cytotoxicity Inhibition

In contrast to galectin-3’s role in T-cell dysfunction, its role in inhibiting natural killer (NK) cell cytotoxicity involves adhering to the tumor’s expressed ligands of NK cell receptors, and on NK cell receptors themselves. Basically, galectin-3 gets in the way of NK stimulation. Examples of the blocked receptors or ligands include the NKG2D ligand on the tumor, and the NKp30 receptor on the NK cell. Studiesshow that interfering with these NK cell natural cytotoxicity receptors can result in an almost complete loss of NK cell cytotoxicity. Interestingly enough, NKG2D is also expressedon CD8+ T-cells; however, unlike NK cells, where NKG2D stimulation is enough to launch a killing response, CD8+ T-cells require simultaneous T-cell receptor activation.

Van der Bruggen believesthat galectin-3 inhibition can therefore significantly increase response rate percentages in cancer immunotherapy. GR-MD-02 is clearly best positioned to be that inhibitor.\

Mechanisms of Action: Macrophage Differentiation

Galectin-3, secreted by tumor cells and by “alternatively activated M2 (anti-inflammatory, pro-tumor) macrophages”, has been demonstrated to alter macrophage polarization: M1 (anti-tumor, inflammatory) macrophages exposedto galectin-3 can differentiate to M2 form, dampening immune response.

Of course, those alternatively activated M2 macrophages then secrete more galectin-3, which recruits and activates more M2 macrophages, in a tumor-suppression feedback loop effect. In studies, suppression of tumor-expressed galectin-3 also resulted in a high number of tumor-reactive T-cells (that’s a positive thing). The multifaceted role of galectin-3 in this process can be summarized by the picture below: suppressing T-cells from activation of M2 macrophages (that produce galectin-3), suppressing the T-cells directly from tumor produced galectin-3, and protecting the tumor from the T-cells with the tumor and M2 macrophages’ galectin-3.

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 In addition to all of the discussed and more direct actions of galectin-3 in promoting tumorigenesis, growth, metastasis, and immune evasion, galectin-3 indirectlydampens the immune response not only by increasing the ratio of M2 to M1 macrophages, but by slightly upregulating PD-L1 and greatly upregulating PD-L2expression (when activated by other cytokines, at least, when exposed to IL-4, IL-10, and TGF-β, and IL-13). Thus, galectin-3 plays an indirect role in suppressing CD8+ T-cells by stimulating the PD-1 receptor on T-cells and other cells. In conclusion, galectin-3 inhibition from GR-MD-02 should help boost the same mechanism of action of Keytruda.

It is clear that galectin-3 is very beneficial to cancers, and thus hugely problematic in cancer treatment. Therefore, GR-MD-02, a galectin-3 inhibitor, should be extremely beneficial in increasing outcomes in cancer therapy. But, the real question is: what cancers can GR-MD-02 be used for? In other words…

Which Cancers Exhibit Galectin-3 Overexpression?

A quick look through previously linked articles in this article reveals an extremely wide rangeof potential cancers that might benefit from extracellular galectin-3 inhibition.

Various breast, lung, ovarian, various gastrointestinal (colorectaland colon, gastric, pancreatic), non-Hodgkins lymphoma, neuroendocrine tumor pheochromocytoma, thyroid, melanoma, prostate, bladder, and head and neck cancers, endometrial, pituitary, liver,cervical, renal cell, pheochromocytoma, glioma, as well as myeloid leukemia, neuroblastoma, and some B-cell lymphoma all have been shown to overexpress galectin-3, at least in certain cases.

It appears that galectin-3 overexpression is quite common, and while not proven to be implicated in allcancers, it has been shown to be implicated in a large variety of cancers. In addition to being secreted by tumor cells, “there are also reports indicating its [galectin-3’s] expression in vascular endothelial cells” (Funasaka et al. Galectin-3 in angiogenesis and metastasis. 2014).  This is no surprise, given that galectin-3 aids in endothelial tissue for normal angiogenic functioning. Therefore, galectin-3 inhibition may be useful in preventing metastasis regardless of the cancer’s expression of galectin-3.

Furthermore,mostnon-tumor cell types exhibit some level of galectin-3, meaning that there is the possibility of overexpression of galectin-3 in all of these listedcells, which would of course possibly lead to cancer cells, that through galectin-3 mediated tumorigenesis, overexpress galectin-3. Below is a simple bar graph showing relative normal levels of galectin-3 in certain tissues.

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As galectin-3 is expressed in many cell types, promotes tumorigenesis, is overexpressed in many cancers, and has many pathological functions that promote cancer progression, it may therefore may be an effective and broad therapeutic target for cancer treatment. GR-MD-02, the lead existing galectin-3 inhibitor, is set to take full advantage of any further development in galectin-3 inhibition for cancer treatment. However, there is a concern among investors regarding dosing in cancer that must be addressed.

Will GR-MD-02 Work Better in Immunotherapy at a Higher Dose?

One concern has been about the dose response in the NASH trial. Will Galectin’s phase 1 cancer trial exhibit the same issues?

A higher dose might not work better, due to the fact that galectin-3 is a complex signaling protein. However, at least some galectin-3 needs to inhibited, as a T-cell cannot adhere to the tumors to begin their attack if they are bogged down with a galectin-3 “glue.” So, if the phase 1, cohort 3, 8 mg/kg group does not perform as well as the 4 mg/kg group, that is ok. The cohort 2, 4 mg/kg results were stellar. Actually, the same type of paradox was shown in the development of PD-1 inhibitors. Accordingto Francisco et al:

While many studies have shown that PD-Ls can inhibit T-cell proliferation and cytokine production, others have found that PD-Ls enhance T-cell activation. The reasons for these contradictory results are not yet clear and remain controversial. Some studies have shown that PD-L1 can increase T-cell proliferation by inhibiting IFN-γ-induced nitric oxide production (47). When macrophages were used as APCs, anti-PD-L1 and anti-PD-1 increased IFN-γ and IL-2 production by T cells but paradoxically inhibited their proliferation. This effect was found to be due to IFN-γ-dependent induction of nitric oxide production by macrophages, which leads to inhibition of T-cell proliferation. These findings suggest that some of the positive effects of PD-L1 and PD-L2 may be explained by inhibition of negative signaling. In addition, there are data indicating that PD-L1 and/or PD-L2 may signal bidirectionally.

Is it really a coincidence that the same relationship could be seen with galectin-3? The human body has many feedback loop processes so that it can react to stimuli, yet keep controlled levels of molecules and cells in the body. It’s like a PID loop. It’s a biologic control system. For instance, normal hormonal cycles are governedby positive and restraining negative feedback loops. Also, in NASH cirrhosis, Galectin Therapeutics has shownthat the optimal dosing of GR-MD-02 in NASH may be 4 mg/kg, or that drug exposure may actually be the key to dosing.

A Galectin-3-Responsive Dosing Approach?

Galectin Therapeutics, in analyzing their NASH cirrhosis data, found that in their not-statistically significant 8 mg/kg group (the same doses will likely not correlate for cancer indications) actually wasstatistically significantexcept for the patients who had too high of a drug exposure (integral of drug concentration with respect to time). This prompts the question: is a straight dosing regimen the best way to dose a patient?

Developing Keytruda and GR-MD-02 data seems to suggest that instead of flooding the body with GR-MD-02, the patient should first be provided with a dose equal to the best guess of the GR-MD-02 needed based on an initial screening. Then, based on subsequent readings, the patient could be up-dosed incrementally until results stop showing improvement due to the potential loss of response due to low galectin-3 levels. Of course, this would only be done if there is a drug exposure based fall-off in efficacy, which remains to be seen in cancer. Investors should, however, expect significant amounts of dose-response variability due to the differing initial levels of galectin-3 in individual patients.

Satisfying the Goldie-Coldman Hypothesis as a Cancer Treatment

With the emergence of I-O drugs, the last decade has borne witness to a sea-change in cancer therapy. As one can see from scientific data, galectin-3 has emerged as an important guardian of the tumor microenvironment. Redmond et. al summarizes these findings in the Feb 2018Journal of Oncoimmunologyarticle titled: The role of Galectin 3 in modulating tumor growth and immunosuppression in the tumor microenvironment. Blocking galectin-3 is essential to maximizing patient outcomes for Keytruda and other immuno-oncology drugs. Galectin Therapeutics has the needed blocker: GR-MD-02.

One of the main principles guiding cancer treatment, and known to every oncologist, is the Goldie-Coldman hypothesis. The Goldie-Coldman hypothesis is a mathematical model that predicts the time to tumor cell mutation to a resistant phenotype. The mutations in this model occur at a rate dependent on their intrinsic genetic instability. The probability that any given cancer contains drug-resistant cells is positively related to (1)the mutation rate and (2)the size of the tumor.

The overwhelming majority of chemotherapeutic regimens used to treat cancer call for the administration of multiple drugs either concurrently or sequentially. The validity of this approach can be traced back to several papers published in the late 1970s and early 1980s by Canadians James Goldie and Andrew Coldman in which they linked clinical treatment failures with the genetic instability and mutation rate inherent in malignant cells. Simply stated, the larger and more genetically active a tumor is, the more likely that even at presentation it will already be harboring cells that are resistant to a slew of drugs. In order to reduce the chance of such a possibility actually occurring and leading to a poor clinical outcome, multiple drugs with different mechanisms of action and toxicity profiles are used to attack on multiple fronts. So if one cell-line might be resistant to X-Mycin, it may still be sensitive to treatment with Y-Mycin or vice versa. Hence the multi-drug approach.

Using a multi-drug cocktail to overcome drug resistance is not unique to oncology. It is also used in the treatment of several infectious diseases: e.g. HIV, tuberculosis, and others. However, Galectin blockers may be able to do even better.

1)First, their toxicity profile is remarkably benign. Unlike standard chemotherapeutic agents which may have additive or even synergistic toxicities, galectin blockers appear to have little effect on normal tissue.

2)Galectin antagonists not only have a remarkable lack of toxicity but also have been shown to prevent and even reverse the side-effects caused by several standard chemotherapy drugs: e.g. adriamycin-induced cardiac toxicity and bleomycin-induced pulmonary toxicity. One such example is from Galectin’s otherwise discarded compound (for lack of efficacy vs. GR-MD-02), GM-CT-01. This drug was shown to reduceside effects of Avastin and 5FU.

3)Galectin blockers target a variety of molecular choke-points, thereby potentially reducing the risk of drug resistance emergence. In fact, there is evidencethey may actually reverseresistance to several drugs. Furthermore, this target multiplicity may potentially lead to responses that are synergistic, as stated in sections above.

4)The variety of cancers susceptible to galectin-3 inhibition, and furthermore manipulation of other galectin concentrations, is nothing short of remarkable, and includes common as well as uncommon malignancies, e.g. cancers of the brain; thyroid, pituitary, and adrenal glands; lung, skin, esophagus, stomach, colon, liver, pancreas, breast, cervix, ovary, testis, kidney, bladder and prostate.

The Significance of Galectin-3

In 1928, a simple mold that produced penicillin took center stage in the medical community.  Until that point, infectious diseases were humanity’s primary driver of mortality. By 1945, penicillin was being produced en-masse. Gradually, more specialized antibiotics were developed, significantly reducing infectious disease mortality worldwide.

Keeping in mind that penicillin was derived from mold, let’s take a look at other natural derivatives that have become well-known drugs:

  • Mold – Penicillin
  • Poppy – Morphine
  • Willow Bark – Aspirin
  • Cocoa Leaves – Cocaine
  • Ephedra Sinica – Sudafed
  • Apple Pectin – GR-MD-02?

Chronic diseases are on the rise; currently, the largest chronic disease, due to rising obesity, is diabetes. Can cancer become a chronic disease (although it is now for some cancers) —perhaps even a curable one? A galectin inhibitor could be the “penicillin” of the 21st century.

In summary, galectin-3 seems to have a critical function in every step of cancer development, as well as pathogenic functions in many other diseases. Therefore, it should probably be screened for consideration in every cancer treatment. Given GR-MD-02’s possible role in preventing these pathologic processes and its potential in treating a very broad range of cancers, how should an investor value GR-MD-02 in cancer? One way of looking at it is to examine Merck’s Keytruda.

A Stab At Evaluating GALT’s GR-MD-02’s Market Value

Disclaimer

Valuing Galectin Therapeutics is a highly subjective process, and this valuation can drastically change based on the value of various inputs. As there are many unknowns in determining Galectin’s future possible revenue streams, certain guidelines have been referenced as a starting point. We can think of Galectin’s valuation as a rough average of many possible outcomes, including, but not limited to, higher or lower sales volumes and prices, and clinical trial and regulatory successes and failures. Ultimately, one with extreme conviction in Galectin Therapeutics’ science may have a much higher expectation of future value than the value calculated by the following simplified and somewhat arbitrary analyses. In contrast, one with no conviction in galectin-3 inhibition, or GR-MD-02 specifically, may believe that this company is worth absolutely nothing.

Cost of Goods Sold

Before a rough and relatively conservative valuation of GR-MD-02 is attempted, it is important to examine GR-MD-02’s cost of goods sold vs a typical product. While typical pharmaceutical products have COGS between 10% and 15%, GR-MD-02 might have a COGS as low as 2%. Here is the reasoning:

Let’s assume the average person taking GR-MD-02 is 150 kg, or 330 lbs, to be conservative on cost — though there very well may be patients who are heavier. Using an optimal dose of 8 mg/kg (again, to be conservative) that would mean that each dose requires an average of 1.2 g of GR-MD-02. Next, we assume that 26 doses are administered each year, so that means that a patient will use about 31 grams of GR-MD-02 in a year.

If we assume that the price is just made up of wholesale unrefined apple pectin (what GR-MD-02 is derived from), we come up with a price of $2.40 per year, given a price of $35 per pound. But the actual product will require refined apple pectin, several other materials, and involve several manufacturing steps.

The other materials required for manufacturing are: NaOH, ethyl alcohol, water, energy for heating and mixing, celite, sodium ascorbate, NA/K Tartrate and CuSO4(see Fehling’s solution, where both of these compounds plus NaOH are used – how the saccharides with ketone groups are unaffected, while the aldehyde groups are oxidized), hydrogen peroxide, and HCl. These materials are common and relatively inexpensive, in general.

So, in order to simplify the COGS estimate and to be conservative in valuation, manufacturing and packaging is assumed to be ~500x the cost of the pectin that was calculated, which results in a COGS of $1,200 per year of treatment; this compares favorably to many biologics, and certainly against Keytruda or other I/O drugs. This is an extremely important point in valuing GALT, as pharmaceutical COGS have been shown to be around 30%of operating costs, based on the average of many innovative pharmaceutical firms. These costs would theoretically be minimized, accompanied by a reduction in some R&D costs associated with molecule development and manufacturing, which can simply be taken from large batches instead of made in small batches. 

GR-MD-02’s Valuation (Cancer Indications) Assumptions

  • Compare to Keytruda’s peak sales: 2015 – 2024 to $12B in sales after approval (10 years)
  • 4 years to approval – skip phase 2
  • Risk: 88% regulatory success*, 30% phase 3 success** (assuming efficacy already proven in phase 1b)
  • 5x peak sales multiple, therefore 8 years of 10% discount (0.29 multiplier), since most peak sales estimates are on a 5-6 year sales ramp. Translates to a discount multiplier of 0.467.
  • ~⅓ of Keytruda price (Keytruda is $150,000 per year, and because of NASH treatment, GR-MD-02 is assumed to be $55,000 per year, less than the price of Ocaliva, which is anticipated to be approved for NASH)

Result: $2.5B rNPV

GR-MD-02’s Valuation (NASH Cirrhosis) Assumptions***

  • Simple NPV calculation with given assumptions:
  • TAM: 5 millionpatients in 2019, 6.66% growth
  • 4 year peak sales ramp – lack of treatment and liver transplants*
  • Sales adjusted to account for treating 1.5M (46% of 2034 market) by 2034
    • (superior treatments command 50% of market share – assuming competition)*
  • Treatment price: $55,000 (average Ocaliva predicted price), 3%* price increase YoY with inflation
  • Patients treated for 1 year only (could assume 3 year treatment due to average NASH cirrhosis trial of CNAT and GILD)
  • COGS: 2%, Marketing: 3%, SG&A, 28% translate to 68% net margins*
  • Terminal Value: pricing fall-off of 50%, sales fall off of 75% at year 16*
  • Discount Rate: 10% (WACC for average large pharma/acquirer)*
  • 64% phase 3 success chance*
  • 88% regulatory success chance*
  • $50 million required for phase

*David, Frank.The Pharmagellan Guide to Biotech Forecasting & Valuation.

**Extrapolated from The Pharmagellan Guide to Biotech Forecasting & Valuation

***Please refer to this articlefor information on GR-MD-02 in NASH cirrhosis

Result: $22B rNPV

Based on a 5x peak sales multiple on one-and-done treatmen

Result: $20B NPV

For 3 year treatment: (rNPV * 2.74)

Result: $59B NPV

Discussion

These valuations are estimated values from an acquirer’s standpoint and do not include GR-MD-02’s uses in any other lucrative indications such as idiopathic pulmonary fibrosis, psoriasis, atopic dermatitis, or other autoimmune or fibrotic diseases, which would be much lower due to the platform not being developed as much, although one could possibly calculate a substantial value from plaque psoriasis.

The value of the drug to Galectin Therapeutics would be substantially less as they would essentially have a higher WACC and, in my opinion, would not be able to put ample resources towards drug development (too many diseases develop GR-MD-02 for), and would have to hire a sales force and fund the development and rollout of the drug with more expensive debt or capital. It is also important to note that the total value of the drug in each indication will drastically increase as the pipeline is “de-risked” (or decrease due to failure) – especially GR-MD-02 in cancer immunotherapy.

Therefore, say, for an acquisition, the company would be theoretically sold between the summation of the cancer and NASH franchise valuations from an acquirer’s view, and the value of the drug to Galectin Therapeutics. In other words, I believe that, since the value of Galectin’s drug could easily worth be over $60 billion to a large pharmaceutical company and also provide a novel pipeline in an extremely wide range of diseases, of which the company could bypass phase 1 testing in many cases due to the proven safety of the GR-MD-02, it is not at all unrealistic that the company, if truly negotiatingto sell itself, should be sold for, at the very least,$10 billion and/or some other value with CVRs, where large pharmaceutical company executives would likely be much more comfortable making an already enormous purchase. This is also assuming that Galectin Therapeutics can find an acquirer that is able and willing to buy their whole pipeline, which would erase possible issues with intellectual property and selling the drug off label in different indications, across different companies, which would be the case if the company agrees to multiple partnerships.

Although these valuations are exciting, it is important to remain objective in and grounded in the science surrounding glycobiology, and assumptions in sales projections given that there is only one other drug company in the world that also has a galectin blocker in human clinical trials (Galecto Biotech), which should make an acquisition or partnership very intriguing to a large pharmaceutical company.

Risks

The success of another extracellular galectin-3 inhibitor would pose a significant valuation discount on Galectin Therapeutics, although this seems like a very unlikely situation. Additionally, GALT may fail to meet NASH cirrhosis or cancer endpoints, or fail to achieve a scientifically impressive outcome. Lastly, Galectin may fail to negotiate a good deal with a larger pharmaceutical partner or acquirer, and be forced to run a phase 3 NASH trial on its own, eventually requiring it to raise capital at a discounted price.

Conclusion

Before Applying GR-MD-02, Should We Screen For Galectin-3, Or Go For Blanket Usage?

Patients who are candidates for Keytruda, due to the side effects and very high cost, have their cancers screened for applicability.

By contrast, GR-MD-02 has an excellent safety profile, with no serious adverse events observed thus far, and is potentially widely applicable, as galectin-3 (1)is expressed in multiple cell types, (2)promotes tumorigenesis, (3)has multiple pathological functions that promote cancer progression, and (4)is overexpressed in many cancers. Further, due to GR-MD-02’s very low cost, it may make sense, especially in time-sensitive situations, to not screen the cancer at all.

An acquisition of Galectin Therapeutics for, say, $10 billion could turn out to be an extremely lucrative acquisition; the acquiring company could develop and market GR-MD-02 at extremely high margins, giving them a very conservative $20-30 billion NASH cirrhosis (and possibly fibrosis) franchise, a multibillion dollar cancer immunotherapy franchise, and a large pipeline of high-margin products based on GR-MD-02, including proven efficacy in psoriasis, and implied efficacy in other fibrotic indications and autoimmune diseases —some of which currently do not have relatively safe treatments for perpetual use.

The potential for Galectin’s pipeline and GR-MD-02 is, conservatively speaking, very large, especially as the drug has been shown to be clinically safe, with no serious adverse events. Once GR-MD-02 makes it to the market, its potentially significant clinical efficacy would then be reflected in very highsales, making its value enormous, undeniable, irrefutable.

I am a firm believer in the galectin-3 inhibition science. I hope, for patients’ sake, that GR-MD-02 quickly makes it to market. It is simply my intention to elucidate the mechanisms of action of galectin-3 inhibition in cancer to achieve better awareness of galectin-3 among both investors and the public at large. I believe that galectin-3 inhibition is a critical part of the global effort to solve the cancer puzzle in the slow yet steadfast march towards an effective cure.

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