Aramchol's Failed Past Isn't Its Future; Galmed Gets An Upgrade

Galmed Pharmaceuticals Ltd GLMD lost a bull in February on Aramchol’s failed ARRIVE study for HIV-related fatty liver disease.

However, the drug is now generating optimism for distinct indications.

The Analyst

Maxim Group analyst Jason McCarthy upgraded Galmed to Buy and introduced a $14 price target.

The Thesis

By McCarthy’s estimates, Galmed’s Phase 2b data for Non-Alcoholic Steato-Hepatitis will catalyze the stock’s next inflection point.

“Our views may be considered ‘aggressive,’ but we don’t see the ARRIVE study results as a reliable predictor of the outcome of ARREST,” the analyst wrote in a note. “When we consider ARREST on its own, based on the factors above, we believe the risk/reward is favorable.”

The drug’s ARREST study is distinct from ARRIVE in indication, disease pathology, trial size and time and is not considered indicative of the candidate’s general prospects.

“The focus, in our view, should remain on the design of ARREST in NASH, based on positive data from a prior study, trial size and endpoints which we believe, at the current valuation, points to a favorable risk/reward profile,” McCarthy wrote.

ARREST data will be released in the second quarter, and McCarthy expects approval of Aramchol in 2022.

Price Action

Galmed spiked 15 percent in pre-market trading, but waned to trade up about 5.3 percent around $6.52 at time of publication.

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