Fatty liver drug developer Galmed raises $75m on Nasdaq

Allen Baharaff Photo: Eyal Izhar

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The company took advantage of a boom in its share price following a successful Phase IIb trial.

Galmed Pharmaceuticals Ltd. (Nasdaq: GLMD) has raised $75 million at $15 a share, 4.5% lower than yesterday's share price at the close of trading, but 140% higher than the share price last week before the announcement of success in the company's Phase IIb trial of its treatment for fatty liver disease. The company says that this success will enable it to move to Phase III trials.

The underwriters for the offering were SunTrust Robinson Humphrey, Stifel, and Cantor Fitzgerald, together with Raymond James and Roth Capital Partners as additional chief underwriters and Maxim Group and Seaport Global Securities as secondary underwriters. The large number of underwriters who joined the offering indicates that the market believed that the financing round would be completed and worthwhile to those involved in it. The underwriters will receive an option valid for 30 days after the offering is completed to purchase additional shares up to 15% of the offering.

Galmed's market cap is now $242 million. The company's share price is down 3.2% in preliminary trading.

Galmed is developing a drug called Aramchol for treatment of inflammation caused by fatty liver. The investors' expectations from the results of the trial published last week were fairly low because the product had already failed in a smaller trial for treatment of fatty liver among AIDS patients. The results, which will probably enable Galmed to continue to a more advanced trial, were enough to send the share price soaring. Galmed's market cap is still substantially lower than that of other players in the sector, such as US company Madrigal, whose market cap is $4.6 billion.

In the now completed trial, a 400-milligram dosage of the drug reduce the level of fat in the liver after one year to a statistically significant extent in comparison with the control group, which received a placebo. The company said that the change in the 600-milligram group was both statistically and clinically significant (a decrease of more than 5% in the amount of liver fat), although it notes that these results were part of an ad hoc analysis of the result. In an ad hoc analysis, patients who make problems are sometimes removed from the sample and other statistical analyses that reduce the power of the results are sometimes omitted.

The company also reported that it had also obtained significant results in a secondary measure of the number of patients who experienced a NASH resolution without increased scarification of the liver. Galmed said the US Food and Drug Administration (FDA) was likely to approve fatty liver products for marketing on the basis of this index. Galmed also reported a larger number of patients (although not significantly larger) with improvement in both the degree of scarification and significant improvement in liver function indices for both dosages of the drug in comparison with a placebo.