The juvenile finished runner-up behind the highly-regarded Valalie on debut after an interrupted preparation.
"He had to have a week in the paddock with a bit of a snotty nose, he was only really half ready," McKay said.
"I expected him to blow out the last 200m so it was a really good run and he was beaten by a smart one."
Epaulette is the sire of Gallagher
"It's obviously a quick back-up, but he pulled up so well and the Matamata Slipper is his main aim and if he went straight there it would be a month between races.
"He's definitely improved with his last run, he's just thriving. He's still a colt as well so some black type will increase his value."
A $45,000 Karaka purchase for McKay, the son of Epaulette has impressed from day one.
"I've been rapt with him, I really think a lot of him," McKay said. "He shows a lot of natural ability and he's going to make a very nice three-year-old as well.
"He's a very genuine colt and he's never put a foot wrong."
Gallagher will be accompanied south by Danger Dee, who will contest The Metrotel Handicap (1300m).
"I had to scratch him last week after he kicked himself in the box, but he's come right," McKay said.
"He strung a few nice races together before nothing went right for him at Ellerslie on Boxing Day." – NZ Racing Desk.
