Galecto initiated with an Outperform at Leerink

Leerink initiated coverage of Galecto (GLTO) with an Outperform rating and $46 price target In a reverse merger, Galecto acquired Damora Therapeutics to advance a pipeline targeting hematological cancers, including mutant calreticulin-(mCALR)-driven myeloproliferative neoplasms, important mutations driving pathology in essential thrombocythemia and myelofibrosis. The firm thinks lead asset DMR-001 has the potential to be a best-in-class agent for mCALR-driven MPNs, including patients with Type 1 and Type 2 mCALR mutations. Importantly, central to Leerink’s investment thesis is the disease-modifying mechanism of action for mCALR agents, which could meaningfully expand the market. It forecasts DMR-001 could generate peak sales of $3.3B in MF and $3B in ET, which represents $21/share and $19/share in the firm’s valuation model, respectively.