Barclays 12 september 2018
Gilead Sciences
Thoughts on the filgotinib FINCH2 RA data
Stock Rating/Industry View: Overweight/Positive
Price Target: USD 90.00
Price (11-Sep-2018): USD 72.23
Potential Upside/Downside: 25%
Tickers: GILD
Efficacy data in-line, positive safety profile potentially offers differentiation. We look for modest strength in GILD shares tomorrow morning following the announcement of positive top-line data from FINCH2, the first phase 3 of filgotinib—partnered with Galapagos (covered by EU Pharma analyst Emily Field; OW/Pos, €130 PT)—in rheumatoid arthritis (RA). That the efficacy outcomes are positive—FINCH2 hit on the primary and all key secondary endpoints—isn’t much of surprise given the strong phase 2 data in RA (DARWIN1 and 2) and other indications (UC, Crohn’s, psoriatic arthritis). Moreover the oral JAK inhibitors (JAKis) class for RA has become increasingly de-risked following the approval of Pfizer’s Xeljanz (2017 sales: $1.3B) and Lilly/Incyte’s Olumiant and AbbVie’s comprehensive upadacitinib’s positive phase 3 outcomes (see ABBV - Thoughts on the SELECT-COMPARE data, 04/09/18)—and we note the generally comparable efficacy outcomes of FINCH2 vs. other phase 3s in patients with inadequate responses to biologics (Figure 2). However given that safety/ tolerability concerns of the JAKis delayed the approval of Xeljanz in Europe and Olumiant in the US (see LLY/INCY - FDA approves 2mg Olumiant dose with black box warning, 06/01/18), we see potential differentiation of filgotinib’s safety profile—likely attributable to its relatively high specificity for JAK1 (Figure 1) leading to fewer off-target interactions—allowing for meaningful penetration in what looks to be an increasingly crowded market.
Filgotinib bolsters near-term growth outlook; filing remains likely 1H20. Although filgotinib is not a significant contributor to our positive thesis on Gilead, offering incremental upside relative to HIV near-term and the CAR-T portfolio longer-term—we forecast initial sales in 2020 of $134M (cons: $168M) growing to $650M in 2022 (cons: $775M)—it remains a part of an attractive pipeline (including NASH), reinforcing our outlook for growth starting 2019 following a 2018 trough. Looking ahead, read-outs for the remaining phase 3 RA studies FINCH-1 (methotrexate-inadequate responders) and FINCH-3 (methotrexate-naïve) are expected 1H19, which together with additional safety data—including from the male toxicity study MANTA—which remains the rate-limiting step, should support a regulatory submission possibly late 2019 but more likely 1H20 (see GILD - Thoughts on the filgotinib potential regulatory timeline, 08/03/18). Maintaining OW and $90 PT for Gilead.
FINCH2 overview and efficacy data. FINCH2 was a randomized, placebo-controlled study evaluating two doses QD (100mg and 200mg) of filgotinib in N=448 RA patients with an inadequate response to biologic disease-modifying anti-rheumatic drug(s) (bDMARDs) on a background of conventional synthetic DMARDs. The study met its primary endpoint, proportion of those achieving an ACR20 improvement, with 57.5% at 100mg QD (p=<0.001) and 66.0% at 200mg (p=<0.001) vs. 31.1% of placebo at 12 weeks. Other key secondary endpoints were also met including: ACR50, ACR70, low disease activity (defined as DAS28(CRP)=3.2), and clinical remission (DAS28(CRP)<2.6) (see Figure 2 for a cross-trial comparison).
FINCH2 safety data No new safety signals were observed in the study, with most TEAEs and SAEs described as mild-to-moderate. Discontinuations due to TEAEs were not disclosed but reported to be similar across the arms. There were two cses of herpes zoster in each filgotinib arm; two cardiovascular events were also observed, one in the placebo arm and one in the filgotinib 100mg arm. There was also one case of non-serious retinal vein occlusion in the 200mg treatment arm, but no incidences of deep venous thrombosis, pulmonary embolism, opportunistic infections, malignancies, or deaths in the study.