(Reuters) - Shares of Galectin Therapeutics Inc (GALT.O) rose as much as 31 percent after an analyst at independent research firm Aegis Capital initiated coverage of the stock with a "buy" rating and set a target price nearly three-times its Tuesday's close.
Aegis Capital analyst Raghuram Selvaraju set a 18-month price target of $7 on the stock, which was trading up 25 percent at $3.12 Wednesday afternoon on the Nasdaq.
Galectin shares had already doubled this week after the company received a patent related to its experimental treatment for fibrosis -- scarring of the liver associated with chronic liver disease.
"Given the high unmet need in liver fibrosis, we believe peak global sales for a drug that can reverse fibrosis could be $1.7 billion in 2020," Selvaraju said in a note to clients.
The treatment, GR-MD-02, is currently being evaluated in animal studies.
"In our opinion, there is very strong pre-clinical proof that the company's drugs can reverse liver fibrosis," the analyst said.
The company, which changed its name from Pro-Pharma in May 2011, is also testing the compound as a possible treatment for post-transplant fibrosis.
Galectin aims to file an investigational new drug application with U.S. health regulators by 2012-end that will allow it to begin human studies in patients with fatty liver disease.
Selvaraju expects the company to begin an early-stage trial in liver fibrosis patients in early 2013, and expects to see mid-stage trial data by early 2014.
Reporting by Balaji Sridharan in Bangalore; Editing by Anthony Kurian