Galera Therapeutics Decides Its Drug DOES Work

So, I’ve been examining (procrastinating by looking at other stuff) the various tools that come with all of these no-cost investing apps like Webull, Stash, Robinhood, and the like. I’ve also been playing around with the idea of delivering some micro-posts here on FinanceGourmet. Usually, I try and fully cover financial advice, or financial independence strategies and topics, in full detail. However, maybe some quick hits would be valuable along the way as well. We’ll see how it goes.

Galera Therapeutics Stock Rises 100% On Error

Typically, when a company reports a big-time error, its stock goes down. Not Galera Therapeutics.

Today, the company issued a press release before the market opened stating that it’s Phase 3 drug trial DID achieve statistical significance after it reported earlier that it DID NOT achieve statistical significance.

The Company previously announced the Phase 3 ROMAN trial of avasopasem in SOM did not achieve statistical significance on the primary endpoint. Upon further analysis, an error by the contract research organization (CRO) was identified in the statistical program. Correction of this error resulted in improved p-values for the primary and secondary endpoints.

Galera Therapeutics – Galera Announces Primary Endpoint Met Statistical Significance in Corrected Topline Efficacy Data of Phase 3 ROMAN Trial of Avasopasem (galeratx.com)

Sus.

It cannot be overstated how big of an “error” this is. Getting to a Phase 3 trial is VERY expensive. If your drug doesn’t work, then you have wasted a ton of money. One of the ways you decide if your drug works is to show mathematically that it changes the outcomes beyond what might just happen randomly, in other words, it achieves statistical significance. Not achieving statistical significance is basically the same as saying that it does not work.

Check out my Rakuten reviews

Now, that doesn’t mean you go back to square one necessarily. You could try another trial with a higher dose, for example. You could change who you let into the trial to try and say it works for this specific group of people, and so on. The catch is that all of those things cost money. So, when Galera reported earlier that its drug did NOT achieve statistical significance its stock went in the toilet. Look at the chart below. Look real hard and see if you can guess when the company reported that its drug trial did not achieve statistical significance. Can you see it? It’s kind of subtle…

Galera Therapeutics Decides Its Drug DOES Work 1
Galera stock reaction to report that its drug did not achieve statistical significance.

Maybe not so subtle, eh?

So now what?

Well, the company’s press release says that this was all just a math error, and it’s no big deal, and the company is happy it worked, and everyone should just be glad about that.

So, why didn’t the company’s stock shoot back up where it was?

Well, first, this is bad. Even if it turns out it was just bad math, the company let out bad math and took MONTHS to find and correct it. All after its stock tanked. Imagine if you sold all of your GRTX stock for a huge loss when the company announced the bad news, only to find out now that there was no bad news. Even if you didn’t get stung this time around, how much are you going to trust a company that can’t even get its major product announcements right the first time? What happens if you own GRTX stock during the next oopsie?

That sound you hear is securities lawyers sharpening their knives. Look for the next big announcement from Galera to be about how big the settlement is with shareholders harmed by the erroneous first announcement. Phase 3 trials aren’t cheap, but neither are big stockholder settlements.

About the Author

By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. At the time of publication, Mr. Nelson did not own any securities mentioned above, however, that may change at any time without notice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

Leave a Comment