Short selling data can help investors make more informed trading decisions. Short-sellers tend to be sophisticated, high-conviction investors. If they’re targeting a stock, it can pay to approach that stock with caution.
In this report, we are going to highlight some interesting short-selling activity at Galectin Therapeutics Inc (GALT:US). Galectin is a clinical-stage biopharmaceutical company that is focused on drug research and development to create therapies for chronic liver and skin diseases and cancer. Its lead development program is in non-alcoholic steatohepatitis (NASH) with cirrhosis, the most advanced form of NASH-related fibrosis. The company is listed on the NASDAQ Capital Market and currently has a market capitalization of $277 million.
Galectin Therapeutics: Short Selling Activity
Our short interest data shows that in the last few weeks, there has been a huge spike in the utilization rate here. Utilization is the number of loaned shares divided by the available shares in the securities lending market, expressed as a percentage. It is essentially a ratio of demand to supply. A high utilization rate tells us that there is a strong demand to short a company’s stock relative to the number of available shares. At the start of April, Galectin had a utilization rate of 52%. However, in the last few days, the utilization rate has surged to above 90%.
Our data also shows that short interest at Galectin is high, at 13%, and rising. In the last 24 hours, the total number of shares on loan has increased by 7% to 7.5 million shares. This is concerning. Research on short selling has found that sharp rises in short interest are generally a bearish signal.
Share Price Surge
Galectin’s share price has surged from $2.20 to $4.90 in the last few weeks, after the company announced on 14 April that a paper published in the Journal for ImmunoTherapy of Cancer (JITC) provides further clinical evidence that using Galectin’s belapectin drug, a potent galectin-3 inhibitor, in combination with pembrolizumab (KEYTRUDA®), a PD-1 inhibitor, significantly enhances tumor response to immunotherapy in patients with advanced metastatic melanoma (MM) and head and neck squamous cell carcinoma (HNSCC). The paper, entitled “Enhancing Clinical and Immunological Effects of anti-PD-1 with Belapectin, a Galectin-3 Inhibitor” described results from an ongoing Phase 1 clinical study, a collaboration between Galectin Therapeutics and Providence Cancer Institute in Portland, Oregon.
While this news is encouraging, the short-selling activity here suggests that hedge funds and other sophisticated investors believe GALT stock has gotten ahead of itself. The fact that the utilization rate has spiked tells us that there is a strong demand for the stock from short-sellers right now.
Given the high level of short interest here, and the spike in the utilization rate, we believe caution is warranted towards Galectin Therapeutics stock at present.