Morgan Stanley extract uit rapport June 21 2017
Stock Rating Overweight
Price Target $93.00
R&D Update Showcases Broad Pipeline; Initial CF Triple Combo Data In Mid-2018 Represents A Modest Delay
3 unique CF triple combos highlighted with initial data by mid-2018.
Triple combo start delayed due to long-lived metabolite and seeking scientific advice in the UK to streamline the regulatory process. 2H17 catalyst heavy with PhIb efficacy data in atopic dermatitis, POC for IPF and CF dual-therapy
2017 R&D Update: Mgt. provided a corporate and R&D overview, an update on the filgotinib program (including data from the DARWIN3 filgotinib long-term extension study recently released at EULAR 2017 - poster here), updates on the timing and structure of the cystic fibrosis (CF) program, and brief updates on additional pipeline compounds GLPG1690 for idiopathic pulmonary fibrosis (IPF), GLPG1972 for osteoarthritis (OA), and MOR106 for atopic dermatitis. Slides from yesterday's presentation are available here.
CF Updates the key focus; A modest, but not unexpected, disappointment with initial triple data now due in mid-18: Yesterday's CF updates focused on a new timeline for initial triple data (about a quarter delay from prior guidance) and a detailed layout of all the triple combination studies. The first CF triple combination (potentiator GLPG2451, C1 corrector GLPG2222, and C2 corrector GLPG2737) has been delayed due to two factors. First, '2451 has an active metabolite with a ~1 month half-life. Therefore, mgt. will not complete any add'l healthy volunteer work (only doublet combination with '2222 has been studied) and instead will move into patients directly. Second, in an effort to streamline the regulatory process, mgt. will first seek scientific advice from the UK (given the UK did an assessment of Vertex's Orkambi for the EU), begin opening UK sites in 4Q17, and then subsequently finalize regulatory details and open sites in remaining countries. Mgt. hopes this process will limit conflicting feedback from multiple countries. Mgt. also announced that two additional triple combinations (GLPG3067 + GLPG2222 + GLPG2737, GLPG3067 + GLPG2222 + GLPG3221) will be progressed. '3067 is a second potentiator from a similar chemical series as '2451, but may be BID or QD. '3221 is another C2 corrector which is more flexible than '2737 and may open up more channels. Mgt. indicated '3221 consistently produces superior preclinical results to '2737. Finally, mgt. indicated that it expects to start its PhIIb program (12 weeks dosing as opposed to 4 weeks in initial studies) as quickly as possible following initial triple results. The PhIIb may include up to two triples, depending on the timeline (and superior profile) of the '3221 triples. PhIIb will be conducted globally (including the US) while PhIIa will only be conducted in Europe. See inside for additional CF program detail provided at the analyst event.
Many add'l proof-of-concept catalysts in 2H17: Outside of the CF program, additional upcoming catalysts include topline PhIIa data for autotaxin inhibitor GLPG1690 in IPF in 3Q17, topline PhI data from IL-17C antibody MOR106 in atopic dermatitis in 2H17, and possible updated DARWIN3 data at the American College of Rheumatology (ACR) 2017 Annual Meeting in November. A complete catalyst calendar is inside.
Moving toward building a fully integrated commercial company: Mgt. highlighted its desire to start one PhIII trial every 2 years (some 100% Galapagos funded) with 3 proof-of-concept trials filling the pipeline each year. With filgotinib as the flagship asset, mgt. plans to build its commercial expertise in addition to its already demonstrated development expertise. In the near-term, we expect investors to be heavily focused on the initial triple combination read-outs which will likely be measured against Vertex's initial data in 2H17. Importantly, mgt. has a broad pipeline and we are particularly interested in the initial atopic dermatitis data from MOR106 later this year.