Galecto to eliminate 70% of workforce
26 Sep 2023
Phase 2IPOClinical Trial Failure
Galecto disclosed Tuesday that it plans to explore strategic alternatives for the business, including an acquisition, merger or divestiture. It also intends to implement a restructuring plan that includes reducing its workforce by about 29 people, or approximately 70% of its existing headcount. Company shares gained as much as 40% in after-hours trade.
The move follows its decision in August to end development of its GB0139 drug candidate in idiopathic pulmonary fibrosis (IPF) after it failed the Phase IIb GALACTIC-1 study. Following the readout, CEO Hans Schambye said the company would be evaluating resource allocation with the goal of extending its cash runway into 2025.
Analysts at H. C. Wainwright & Co. suggested at the time that there "[remained] intrinsic value in the Galecto pipeline," and that the decision to scrap GB0139 "ought not to have read-through to Galecto's other clinical-stage programmes. These assets do not share a molecular structure with GB0139 and are aimed at indications unrelated to IPF; namely, decompensated liver cirrhosis and myelofibrosis."
In its statement on Tuesday, Galecto said there was no guarantee that its exploration would lead to it pursuing a transaction; or if pursued, that any transaction would be completed on attractive terms. It has also not set a timetable for completion of its evaluation process, nor does it plan to disclose further developments or guidance on the status of its programmes until it deems necessary.
As of June 30, Galecto said its cash, cash equivalents and investments balance stood at $52.1 million.
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