Galmed Notches Second Bullish Rating On Aramchol Opportunity

Two days after Cantor Fitzgerald gave Galmed Pharmaceuticals Ltd (NASDAQ: GLMD) a shot in the arm with an ultrabullish rating, Stifel Nicolaus administered a booster.

Galmed spiked 15 percent Friday morning after already having risen 21 percent in the preceding session.

The Analyst 

Stifel analyst Adam Walsh initiated coverage of Galmed with a Buy rating and $35 price target.

The Thesis

As with Cantor Fitzgerald, Galmed’s Aramchol was again the point of optimism.

Walsh considers the candidate a multibillion-dollar opportunity for the treatment of non-alcoholic steatohepatitis, or NASH, and forecast a “decent chance” of an Aramchol partnership deal materializing ahead of the Phase 3 trial launch in the first half of 2019. (See Walsh's track record here.) 

“We think large-pharma validation could drive shares significantly higher,” the analyst said. 

With positive Phase 2b results failing to stimulate the stock, Stifel said the Street overlooked Aramchol’s strengths and thereby created a buying opportunity.

Aramchol did not reach statistical significance on either of two approvable endpoints — but they were secondary endpoints and were not powered for statistics, Walsh said. 

“While Aramchol did not hit statistical significance on either of the two approvable endpoints, we remind investors that these “Despite this, Aramchol nearly hit on NASH resolution without worsening of fibrosis and showed strong trends on the fibrosis improvement with no worsening of NASH.”

The analyst expects the next phase to generate the statistically significant data investors demand.

After conversations with management, Walsh rejected concerns over dropout rates and competition from Madrigal Pharmaceuticals Inc (NASDAQ: MDGL).

Price Action

Galmed shares were rallying 16.27 percent to $14.85 at the time of publication Friday morning. 

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