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STIFEL (PT $188.00)
We hope to see development acceleration in some late stage trials, for example, filgotinib in Crohn’s disease and ‘1690 in IPF. Other program updates: GLPG1690 ISABELA Phase 3 (in IPF) and NOVESA Phase 2 (in systemic sclerosis) trials continue enrolling patients. The PINTA trial in IPF with GLPG1205 is to
finish recruitment by YE19. It is a 26w-long trial with patients in EU/Mid-East/North Africa (OUS). We estimate topline data from PINTA in 3Q20. For MOR106, together with collaboration partners MorphoSys and Novartis, the ongoing Phase 1 and 2 trials are underway. The Toledo program remains largely opaque. The phase 1 readout of GLPG3312, the first Toledo compound, is
scheduled for 2H19 and followed with an initiation of PoC phase 2 study likely by YE19.
Berenberg (PT € 200)
We raised the value of GLPG1690 even as it is now partnered in the U.S. with
Gilead primarily as we have upped the probability of success in the program to 70% (from 50%). Given that GLPG1690 had not previously been evaluated in combination with SOC, we considered safety to be a key concern; how would combining these agents impact the side effect profile in a difficult to treat disease in an older patient population? With Gilead having access to blinded safety data, we think this aspect of the story is somewhat derisked, with the caveat that the data was likely based on a relatively small number of
patients. If GLPG1690 is eventually approved for treatment of IPF, we estimate the value of GLPG1690 reach €50/share. As it is, we value GLPG1690 at €30/share (vs. prior €22/share).
Barclays (UPSIDE CASE PT € 190.00)
sHOULD THE manta SAFETY STUDY READ OUT POSITIVELY, IT
WOULD LIKELY MEAN FILGOTINIB WOULD BE THE BEST-INCLASS
JaK AND WE WOULD INCREASE OUR PEAK SHARE
ASSUMPTIONS. sUCCESS IN THE PHASE 3 TRIALS FOR iPF
ASSET GlPG 1690 WOULD ALSO RESULT IN US RAISING OUR NPV.
GLPG 1690 / FIBROSIS
WiTH 1690, GlPG HAS NOT SEEN ANY COMPOUND-SPECIFIC TOXICITY (WHEREAS bRISTOL mYERS HAS WITH THEIR COMPOUND). Gild HAS SEEN THE BLINDED DATA THUS FAR FOR THIS ASSET. tHE 1690 FUTILITY ANALYSIS WILL BE DONE AFTER 25% OF THE PATIENTS HAVE CONCLUDED ONE YEAR TREATMENT, so that is “more than a year away.” tHE Pinta STUDY OF GlPG 1205 IS EXPECTED TO BE FULLY RECRUITED BY YE19.
H.C. Wainwright & Co (PT $205.00)
Thoughts on GLPG1690.
One potential concern voiced was that increased dosing of pirfenidone or nintedanib in the control arms could counter the decline in FVC leading to diminished clinical effect associated with GLPG1690. However, this is
unlikely given the tolerability issues with pirfenidone and nintedanib and we expect higher than recommended dosing could lead to increased rates of patient drop off in the control cohorts. FRI analysis from the FLORA study remains a key basis for management confidence in the program, but FRI remains a no-go in the Phase 3 ISABELLA programs due to cost and agency reticence. Note, validation for GLPG1690 comes from Bristol-Myers (BMY; not rated) decision to pursue a new molecule targeting LPA1, downstream of GLPG1690's target, and Boehringer Ingelheim's (private) decision to in-license an autotaxin program despite passing on GLPG1690 two years ago. Per management, the enrollment in the ISABELLA programs are now accelerating and is currently ahead of schedule.
Credit Suisse (PT € 174)
Beyond filgotinib, we think GLPG1690 has blockbuster potential in IPF (we conservatively model >$1B peak sales at ~35% PoS, launching in ~2022).
Our Blue Sky Scenario (PT € 225)
Our blue sky valuation of €225 is based on 100% POS of filgotinib in rheumatoid arthritis, ulcerative colitis and Crohn's disease, as well
as better-than-expected data from the pipeline drugs GLPG1690, and GLPG1972.
Our blue sky valuation is based on a DCF driven by a 10% WACC and discounted cash flows through 2029, with 1% terminal growth rate thereafter.
GLPG1690 in IPF has blockbuster potential: Galapagos has a small but rapidly advancing pipeline in idiopathic pulmonary fibrosis (IPF), a rare lung disease with high unmet need and large market potential. Current treatment options for IPF have limited efficacy and some significant side effects. Nonetheless, patient uptake of IPF therapy has been surprisingly strong with 2017 WW sales reaching $2B. Galapagos' lead IPF candidate GLPG1690 has a novel mechanism of action (MoA) with the positive Phase 2 (FLORA) trial setting the stage for the much larger 1,500 patient Phase 3 pivotal program
(ISABELA 1 and ISABELA 2), with updates expected 2H20. Also in the pipeline for IPF is GLPG1205, currently in Phase 2 (PINTA). After the announced deal, Galapagos retains full EU rights, while Gilead will market the drug ex-EU. Phase 3 costs will be split 50/50, while Galapagos will receive a $325M milestone on US approval and 20-24% in tiered sales royalties.
Nomura (PT $209)
If ‘1690 is approved, GILD will pay GLPG $325mn;
GLPG1690 (autotaxin) in IPF
ISABELLA 1 (NCT03711162) and 2 (NCT03733444) Ph3 Trials for IPF
• GLPG indicated on the 2Q19 call that recruitment is “good,” and they plan to provide a timeline update later in 2019.
• The ISABELLA trial design was presented at ATS 2019.
• Allow for accrual of a large, controlled dataset to warrant broad label and utilization.
• Monotherapy P2a FLORA data supports potential efficacy in any setting, though
combination with other IPF drugs may cause unexpected SAEs.
– FLORA Ph2a data showed target engagement and favorable safety and tolerability.
• There will be a futility analysis in 2020E, based on both safety and efficacy. GLPG1690 in Systemic Sclerosis
• NOVESA (NCT03798366) Ph2 trial dosed first patient in 1Q19.
• GLPG will provide recruitment timeline update in 2H19.
Degroof Petercam (PT € 186)
A promising mechanism of action in IPF
GLPG1690 is an oral autotaxin inhibitor currently in Phase III clinical development. Autotaxin is an enzyme that converts lysophosphatidylcholine to the bioactive lipid lysophosphatidic acid (LPA).
Autotaxin remains a promising target in IPF. The mechanism of action has been further validated through recent licensing deals and data by competitors. One of the largest players in IPF, Boehringer Ingelheim, recently announced a licensing deal with Bridge Biotherapeutics for up to USD 1.1bn (EUR 45m upfront) to get access to a Phase I autotaxin inhibitor, BBT-877. Further, Bristol-Myers Squibb obtained encouraging efficacy results with its LPA1 antagonist (BMS-986020) in IPF, demonstrating a significantly slower rate of decline in FVC vs. placebo. However, the program was discontinued due to compound-specific toxicity.
GLPG1690 is currently in a pivotal trial, which should be completed in 2021 (data expected in 2022). Combination therapy will likely be the way forward in IPF. We appreciate the company’s decision to include treatment-naïve patients as well as patients on Ofev or Esbriet, which could allow to obtain a broad label, potentially including monotherapy as well as add-on (combination) therapy.
Although the data on GLPG1690 are still limited and do not allow straightforward extrapolation to the Phase III trial, the demonstration of stable disease up to 12 weeks is encouraging for the evolution of GLPG1690 in IPF. We have assigned a probability of success of 45% to the program at this stage. Adding Gilead to the equation, our rNPV points to a valuation of EUR 1.1bn (EUR 20/share).