SCHEDULE: Paragon Therapeutics Discloses 7.5% Stake in Galecto

Paragon Therapeutics, Inc. has reported a 7.5% beneficial ownership stake in Galecto, Inc.'s common stock, excluding shares from convertible preferred stock pending stockholder approval.

Summary

• Paragon Therapeutics, Inc. has filed a Schedule 13G, disclosing beneficial ownership of 120,473 shares of Galecto, Inc. common stock.
• This represents 7.5% of Galecto, Inc.'s common stock outstanding.
• The ownership percentage is calculated based on 1,597,321 shares of Common Stock outstanding as of December 29, 2025, as reported in Galecto's definitive proxy statement.
• The reported beneficial ownership excludes shares of common stock issuable upon the conversion of Series C Non-Voting Convertible Preferred Stock directly held by Paragon Therapeutics.
• Conversion of the Series C Preferred Stock into common stock is contingent upon receiving approval by Galecto's stockholders in accordance with Nasdaq rules.
• Each share of Series C Preferred Stock will automatically convert into 1,000 shares of Common Stock, but is subject to a 4.99% beneficial ownership limitation for Paragon Therapeutics.
• Paragon Therapeutics certifies that the securities were not acquired for the purpose of changing or influencing control of Galecto, Inc., except for activities solely in connection with a nomination under Rule 14a-11.

Sentiment

Score: 6

Explanation: The filing is largely neutral as a disclosure of ownership. However, a significant stake (7.5%) by an institutional investor like Paragon Therapeutics can be seen as a moderately positive signal of confidence in Galecto, Inc., despite the conversion limitations on preferred stock.

Positives

• Paragon Therapeutics, Inc. has taken a significant beneficial ownership stake of 7.5% in Galecto, Inc., indicating confidence in the company.
• The filing explicitly states the acquisition is not for the purpose of changing or influencing control, which can reduce uncertainty regarding potential hostile actions.

Negatives

• A substantial portion of Paragon Therapeutics' potential ownership, represented by Series C Preferred Stock, is currently non-voting and its conversion to common stock is contingent on future stockholder approval.
• The conversion of Series C Preferred Stock is subject to a 4.99% beneficial ownership limitation, restricting Paragon's immediate full realization of its potential stake.

Risks

• The conversion of Series C Preferred Stock into common stock is subject to Galecto's stockholder approval, which, if not obtained, would prevent Paragon Therapeutics from fully realizing its potential ownership.
• Nasdaq rules compliance is required for the conversion, adding a regulatory hurdle.
• A beneficial ownership limitation of 4.99% on the Series C Preferred Stock conversion could restrict Paragon's ability to increase its voting power beyond this threshold, even if stockholders approve the conversion.

Future Outlook

The future conversion of Paragon Therapeutics' Series C Preferred Stock into common stock is contingent upon receiving approval from Galecto, Inc.'s stockholders in accordance with Nasdaq rules, which would increase Paragon's direct common stock holdings.

Management Comments

• The securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect, other than activities solely in connection with a nomination under §§ 240.14a-11.

Industry Context

This filing indicates a significant investment by Paragon Therapeutics, Inc. in Galecto, Inc., a common occurrence in the biotechnology or pharmaceutical sectors where strategic investments or partnerships often precede deeper collaborations or acquisitions. Such stakes can signal confidence in a company's pipeline or technology, potentially attracting further investor interest.

Stakeholder Impact

• Shareholders: Existing shareholders may view Paragon's significant stake as a vote of confidence, potentially influencing stock price positively. The potential future conversion of Series C Preferred Stock could lead to dilution if not already factored in.
• Management: Galecto's management will need to address the stockholder approval for the Series C Preferred Stock conversion.
• Paragon Therapeutics: The filing formalizes their significant investment and outlines the path to full common stock ownership.

Next Steps

• Galecto, Inc. stockholders need to approve the issuance of shares of Common Stock upon the conversion of Series C Preferred Stock.
• Paragon Therapeutics, Inc. will convert its Series C Preferred Stock into Common Stock upon receiving stockholder approval and subject to the 4.99% beneficial ownership limitation.

Key Dates

Recommendation

The disclosure of a significant 7.5% stake by Paragon Therapeutics is a positive signal, suggesting institutional confidence in Galecto. However, the full extent of Paragon's potential ownership is currently limited by the need for stockholder approval for Series C Preferred Stock conversion and a 4.99% beneficial ownership cap. This introduces a degree of uncertainty regarding the ultimate impact on the capital structure and voting power. Until the conversion is approved and executed, and the implications of the ownership limitation are clearer, a 'hold' recommendation is prudent, allowing investors to monitor these developments.

Keywords

Galecto Inc, Paragon Therapeutics Inc, Schedule 13G, Beneficial Ownership, Common Stock, Series C Preferred Stock, Convertible Securities, Stockholder Approval, Nasdaq Rules, Investment