Maxim Group lowered its price target for Galmed Pharmaceuticals (NASDAQ:GLMD) to $9 from $24, citing a bearish biotech market environment, catalysts, and revisions to timelines, as well as other related assumptions. The stock was changing hands at $4.26 in Monday afternoon trading.
Analyst Jason Kolbert writes that the next major inflection point for Galmed is proof-of-concept data for Aramchol in nonalcoholic steatohepatitis (NASH) in 2018.
Minor catalysts, such as small regional partnerships like the one announced last week with SAMIL in Korea, which provide sources of non-dilutive capital in the form of modest upfront payments and potential milestones, may represent positive events. “However, we note that Galmed traded lower on the day that news was announced, suggesting that investor focus remains solely on NASH,” Mr. Kolbert added.
He said the net effect is a valuation that is skewed to the low end of the historical range. “Our original price target was set at the height of the bull market when Galmed’s IPO was completed (and interest in the NASH space was very high).”
He figures that when including the $2-million upfront payment from SAMIL, the company has $18-million on the balance sheet. “This should provide sufficient runway to data, but we believe that investors’ concerns will increase as cash balance declines,” he added.
However, he noted that proof-of-concept data could set the stage for acquisition interest, which could push the valuation range back to the high end.