Noble: Galera merger to give Obsidian listing is 'lifeline' for GRTX shareholders

Shares of Galera Therapeutics, a micro-cap developer of therapies for advanced breast cancer, surged 88% on the over-the-counter market on Tuesday after the company announced a merger with privately held Obsidian Therapeutics. For Galera shareholders, whose stock had been trading below $0.05 per share prior to the announcement, the deal is a lifeline, while for Obsidian it is a calculated path to the public markets bypassing a traditional IPO process, Noble Capital Markets writes.

Galera shares rose 88% on the OTC market on Tuesday to $0.08 per share, the highest level since late 2024. In early trading on Wednesday, they continued to edge higher, gaining less than 1%.

The rally was driven by the company’s announcement of a merger with privately held Obsidian, which develops cell therapies for solid tumors – those that form in specific organs rather than in the blood.

The combined company, which will operate under the Obsidian Therapeutics name, plans to apply to list its shares on Nasdaq under the ticker “OBX,” Galera said.

The deal has already been approved by the boards of both companies and now requires approval from shareholders as well as regulators. The transaction is expected to be completed by the third quarter of 2026.

In support of the transaction, the companies will carry out a private placement of $350 million, with participation from both new investors and existing Obsidian shareholders, the micro-cap company said.

This represents a substantial financial reserve for a clinical-stage biotech company – one that does not yet generate revenue and is still spending on development – and signals strong confidence from institutional investors in Obsidian’s pipeline, Noble wrote.

The companies plan to complete the placement “immediately prior to completion of the proposed merger transaction.” They expect the proceeds to fund the combined company’s operations into the second half of 2028. The company will primarily focus on further developing Obsidian’s cell therapy programs.

Galera’s current shareholders are expected to own 1.8% of the combined company, Obsidian’s shareholders 53.2%, and private placement investors 45%.

The current deal is a lifeline for Galera shareholders, whose stock had been trading below $0.05 per share prior to the merger announcement, Noble wrote.

However, it was not always the case. Galera, which at the time focused on developing a drug to reduce the side effects of radiation therapy in cancer, held its IPO on the Nasdaq in November 2019, offering 5 million shares at $12 per share, excluding the underwriters’ option. Since then, the shares have fallen 99.4%.

The decline was driven by a series of setbacks in its pipeline. In 2023, the U.S. Food and Drug Administration declined to approve the company’s lead drug candidate for complications from radiation therapy due to insufficient clinical data.

In August 2024, Galera said its board had approved a plan of liquidation, which was subject to shareholder approval.

However, by the end of 2024, the micro-cap drugmaker said it was shifting strategy to focus on cancer treatments. The announcement had little impact on Galera’s share price.

For its part, Obsidian will avoid the costs of a traditional IPO through the deal with Galera while securing a Nasdaq listing and raising new capital, Noble concluded.