UBS has opened coverage on Galecto Inc. (NASDAQ: GLTO) with a buy rating and set a price target of $45.00, which UBS notes represents approximately a 54% increase from Galecto's recent share price of $29.12. The brokerage highlighted the company’s lead program, DMR-001, as the principal driver behind its positive view.
DMR-001 is described by UBS as a long-acting antibody engineered to selectively bind the mutant form of calreticulin. That mutation is a central pathogenic driver in a portion of patients with essential thrombocythemia and myelofibrosis - estimated at about 25% and 35% of patients with those conditions, respectively. Taken together, the mutation is implicated in roughly one-third of patients with these blood disorders.
UBS emphasized two attributes of DMR-001: its selectivity for mutant calreticulin and its subcutaneous route of administration. If developed successfully, the therapy would represent the first treatment to target the underlying disease driver via a subcutaneous antibody, with an intention to address both symptomatic burden and the mutant clonal population that underlies disease biology. UBS also noted that these clonal populations can progress to more severe leukemia in roughly 10% of patients, a statistic the firm cited in framing the clinical importance of targeting the driver mutation.
The DMR-001 asset was added to Galecto’s portfolio through the company’s recent reverse merger with Damora Therapeutics. Market interest in Galecto has been strong following that transaction and other corporate actions - the stock has recorded a 509% return over the past 12 months.
Concurrently, Galecto completed a material capital raise. The company sold approximately 14.5 million shares in an underwritten public offering priced at $19 per share, representing an 11.7% discount to the company’s most recent closing price. The offering is expected to generate about $275 million in gross proceeds before underwriting discounts, commissions, and offering expenses. In addition to common shares, the company is offering Series C non-voting convertible preferred stock to select investors, and underwriters have been granted a 30-day option to purchase additional shares.
On the corporate governance front, Galecto announced that Hans T. Schambye has stepped down as Chief Executive Officer and President, effective immediately, and has also resigned from the board of directors. The company stated the departure was not the result of any disagreement with its operations or policies. Galecto has also moved to increase its share authorization and received shareholder approval for a set of corporate measures tied to its strategic priorities in blood cancer therapeutics.
Taken together, UBS’s initiation, the addition of DMR-001 via the Damora reverse merger, the substantial equity infusion, and the leadership transition mark a period of significant change for Galecto as it advances a strategy focused on therapies that target disease drivers in myeloproliferative neoplasms.