Credit Suisse (PT € 169)
We also have lower expectations for ‘1690 in idiopathic pulmonary fibrosis (IPF) given the challenges in developing drugs for this indication, while ‘1972 in osteoarthritis (OA) is a highly competitive space. We await for key data updates in 2020 for both ‘1972 and ‘1690 before being more constructive.
Bernstein (PT € 155)
For GLPG1690 which will see no interim data but will confirm a go/no-go from the agency on trial progression. If the probability that the primary will not be met is small enough, the trial will continue. This is enough to be a major catalyst in our view.
The product compares well vs. approved products. As we have previously stated, cross trials comparisons in IPF are a challenge. Even more so given the fact that the GLPG1690 study (i) was over a shorter period of only 12 weeks vs. +52-weeks for Esbriet/Ofev, (ii) only recruited 17 drug treated patients vs. hundreds for Esbriet/Ofev, (iii) recruited a slightly different patient
population, (iv) had different endpoints (Exhibit 32). We have to take 17 patient data with a pinch of salt but looking at the 12-week data for both Esbriet and Ofev, (i) neither were able to demonstrate any form of improvement in FVC, which GLPG1690 did, (ii) both have inferior tolerability profiles, particularly GI, and (iii) both have inferior dosing schedules.
GLPG1690 is a selective autotaxin (ATX) inhibitor. IPF is a severe, progressive lung disease marked by a highly variable clinical course which makes a confident diagnosis challenging to achieve. The track record of products in IPF is pretty poor and the only curative therapy for IPF remains lung transplantation. Drug treatment changed in 2014 with the approval of 2 drugs for the treatment of IPF (Esbriet and Ofev). However, tolerability is an issue, with substantial discontinuation rates for both medicines.
In IPF, ATX levels rise in the broncheoalveolar fluid, and increased ATX activity has been detected in a range of inflammatory and fibroproliferative diseases in the lung, kidney and skin. ATX is the enzyme responsible for generating lysophosphatidic acid (LPA), with LPA being formed locally in areas with increased ATX levels and acting locally via its receptors.
In the lung, LPA signalling via LPAR1, and possibly via LPAR2, activates G-protein-mediated signal transduction cascades (Exhibit 23). Apoptosis is triggered in epithelial cells, which in modelled pulmonary fibrosis is the initiating pathogenic event. Epithelial cells are also induced to secrete IL-8, which is both proinflammatory and stimulates permeability of endothelial cells,
thus promoting pulmonary oedema. LPA has several effects on fibroblasts: it is a chemotactic factor that promotes fibroblast recruitment, while also being a stimulator of fibroblast activation (via TGF beta) and promotor of fibroblast survival.
It should be noted that LPA signals through at least six receptors (including LPAR1 and LPAR2) which are expressed differentially across a wide range of tissues and with overlapping specificities. While GLPG1690 targets autotaxin (thereby reducing LPA production more generally, and reducing the effects of LPA through any of its receptors), LPAR1 is also being considered as a potential target for IPF treatment (e.g., BMS-986020 is an LPA receptor antagonist being developed by BMS that has completed p2 trials for IPF, although the data highlighted elevated liver enzymes and no active trials are on-going -
link). The choice to target autotaxin might lead to unintended consequences; for example, LPAR2 is thought to protect against excessive innate immune responses to tissue injury, so targeting ATX might reduce this protective effect. However early clinical trials do not seem to suggest that GLPG1690 has unacceptably high rates of adverse events.
The product compares well vs. approved products. As we have previously stated, cross trials comparisons in IPF are a challenge.
Even more so given the fact that the GLPG1690 study (i) was over a shorter period of only 12 weeks vs. +52-weeks for Esbriet/Ofev, (ii) only recruited 17 drug treated patients vs. hundreds for Esbriet/Ofev, (iii) recruited a slightly different patient population, (iv) had different endpoints (Exhibit 32).
We have to take 17 patient data with a pinch of salt but looking at the 12-week data for both Esbriet and Ofev, (i) neither were able to demonstrate any form of improvement in FVC, which GLPG1690 did, (ii) both have inferior tolerability profiles, particularly GI, and (iii) both have inferior dosing schedules.
With Galapagos owning full rights for the IPF portfolio, our peak sales estimates of €1.5B in 2030 (very realistic for an efficacious product, 2 existing products already +$1B 5 years in, detailed model in Exhibit 35) can be a big contributor to GLPG value (see our valuation analysis below). We would not call IPF a graveyard for drug development (we have better examples e.g.
SLE) but given some patients may go periods of months with no worsening of disease, it will always be challenging to say with certainty that GLPG1690 will demonstrate superiority (hence our 30% probability of success). The initial data suggests the product should do well and given the complementarity to existing treatment, we would expect to see an additive benefit for patients. The way we see it, get an approval (late 2021/early 2022 launch) and the drug will sell.