Degroof Petercam 10 augustus 2017
Galapagos (Buy) - GLPG1690 Phase IIa data show stabilization of disease in IPF patients (EUR 62.6 / TP EUR 96)
Facts
Galapagos announced results of its Phase IIa study (FLORA) for GLPG1690 in patients with idiopathic pulmonary fibrosis (IPF).
FLORA was an exploratory, randomized, double-blind, placebo-controlled trial investigating a once-daily oral dose (600 mg) of GLPG1690. The drug candidate was administered for 12 weeks in 23 IPF patients, 17 of whom received GLPG1690 and 6 placebo.
Over the 12-week period, patients receiving GLPG1690 showed an FVC increase of 8 mL, while patients on placebo showed an FVC reduction of 87 mL (mean from baseline).
In addition to the demonstrated absence of lung function decline over the 12 week period, more sensitive functional respiratory imaging (FRI) confirmed disease stabilization in the GLPG1690 arm, versus disease progression in the placebo arm, reaching statistical significance on two specific parameters.
Patients on GLPG1690 treatment showed a clear reduction of serum LPA18:2, a biomarker for autotaxin inhibition, as expected based on the mechanism of action of GLPG1690. Thus, the level of target engagement observed in Phase 1 with healthy volunteers was confirmed in IPF patients in FLORA.
GLPG1690 was found to be generally well tolerated in this Phase 2 trial. Rates of discontinuation due to adverse events, as well as serious adverse event rates, were similar between patients on GLPG1690 and placebo.
Our view – Very encouraging Phase IIa results
IPF is a chronic and fatal disease characterized by progressive decline in lung function due to the build-up of scar tissue (fibrosis). The disease affects approximately 200k patients in the US and Europe and has a poor clinical prognosis, with a median survival at diagnosis between 2 to 5 years. To date, no effective therapeutics have been developed, leaving a high unmet need. The only two drugs approved for treatment of IPF patients, Ofev (nintedanib) and Esbriet (pirfenidone), only slow down the fibrotic process, but do not significantly prolong life expectation.
Galapagos was able to identify autotaxin as a target for IPF and independently developed GLPG1690 (autotaxin inhibitor) as a potential therapeutic for the indication. GLPG1690 received orphan drug designation in 2016. It is the company’s aim to continue development on a stand-alone basis.
While not powered to show statistical significance on efficacy parameters and including only a small number of patients, the Phase IIa FLORA study shows that GLPG1690 can halt disease progression over the 12-week treatment period. Comparing this outcome (although preliminary) to Esbriet and Ofev data, this is a clear improvement to these marketed drugs that have only been able to reduce the decline in FVC, slowing down the fibrotic process, but not halting it.
Interestingly, Galapagos is using a new technique in the field to assess disease progression, namely functional respiratory imaging (FRI). This enables a more sensitive evaluation by modelling the breathing of patients in high detail through high resolution CT scans. This technique confirmed disease stabilization in the GLPG1690 arm, versus disease progression in the placebo arm, reaching statistical significance on two specific parameters.
Galapagos is determined to move ahead fast in this program, next steps in the clinical development of GLPG1690 have been discussed with the regulators. The company is now assessing the best strategy to bring this drug to the patients as fast as possible. Details of the next clinical phase are not available at this stage, it is also unclear whether GLPG1690 will have to be tested as an add-on to Esbriet or Ofev. We expect to get some more clarity on this as well as more detail on the results in the webcast scheduled at 2pm CET today.
Investment conclusion
While early-stage, the GLPG1690 results shown today are clearly encouraging and bid well for a positive outcome of a next Phase IIb trial. The goal of this study was to assess whether GLPG1690 would proceed to Phase IIb, it is clear today that the company will indeed proceed fast and will likely assess the possibility to initiate a pivotal trial as a next step. Today, GLPG1690 only represents EUR 4.5 of our EUR 96 target price. We will likely tweak our target price upwards, but prefer to await the conference call for more detailed information on the results to make a final judgement. The share price of Galapagos has been under pressure since the release of Vertex’ results in cystic fibrosis. While we recognise this is indeed an item to be watched, the success in this program again underlines the potential of Galapagos’ broad pipeline and discovery platform. As such, we believe the weakness of the share price is an ideal moment to enter the stock. Remember that Galapagos is our preferred name in the healthcare space. We reiterate our Buy recommendation.