Analysts: Galera Has Novel Pipeline For Radiation Oncology Market, Commercialization Remains Headwind

Galera Therapeutics Inc GRTX, a biopharma company working on novel therapeutics for transforming radiotherapy treatment in cancer, recently IPO'd, offering 5 million shares at $12 apiece.

Following the expiry of the IPO quiet period, Citigroup analyst Yigal Nochomovitz initiated coverage of Galera with a Buy rating and $20 price target.

Credit Suisse analyst Evan Seigerman initiated coverage with a Neutral rating and $14 price target.

New Player with a Novel Approach In Radiation Oncology Market

Nochomovitz said Galera has demonstrated good proof-of-concept Phase 2b data for lead drug GC4419 in the prevention of severe oral mucositis – a radiation side effect common in head and neck cancer.

Nochomovitz assigned an 80% probability of the FDA approving GC4419 for he indication, with the pipeline asset most likely to become standard-of-care. He also expects positive readthrough for GC4419 in a second indication – esophagitis in lung cancer.

"We see potential upside for second asset GC4711 if initial proof-of-concept data in locally-advanced pancreatic cancer (LAPC) are positive," Nochomovitz wrote in a note.

The firm estimates peak risk-adjusted revenues of $370 million for oral mucositis, $200 million for esophagitis and $9 million for LAPC.

See Also: Attention Biotech Investors: Mark Your Calendar For These December PDUFA Dates

Commercialization Faces Significant Challenges

Galera's lead asset GC4419, an intravenous administered, small molecule dismutase mimetic currently in Phase 3 development for oral mucositis, addresses an unmet need with differentiated efficacy, but Seigerman said there are likely to be headwinds to broad commercialization due to pipeline competition and logistical challenges.

The analyst expects the pivotal Phase 3 data from the ROMAN study to be positive, supporting approval by 2023. Commercial launch is likely by 2023, with the asset estimated to rake in unadjusted peak sales of over $200 million by 2025.

With GC4419 required to be administered as a 60-minute infusion immediately prior to radiation, the analyst sees only a limited number of facilities as capable of offering the IV infusion as well as radiation.

"We see a favorable risk/reward for the early pipeline for esophagitis and anti-cancer efficacy improvement, but the path to commercialization remains unclear," Seigerman said.wrote in a note.

The firm said it's assigning no value to indications outside of oral mucositis, although it sees upside to its forecast stemming from pipeline progress.

Price Action

Galera's stock traded lower by 1.8% to $12.30 per share at time of publication.