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Degroof Petercam 15 november 2019
TP 181 euro
Galapagos (Buy) – Main takeaways from annual R&D day
Yesterday, Galapagos hosted its annual R&D update. Speakers were the company’s CSO, CMO, CFO and the principal investigator (PI) Prof. Toby Maher, who coordinated the Phase IIa FLORA trial of GLPG1690.
Facts - Focus on R&D platform, Toledo, filgotinib and IPF
R&D platform.
The event was kicked off by more insight on the discovery platform and preclinical pipeline. Inflammation, fibrosis and metabolic disease will be the company’s main focus areas of future R&D efforts. The company will further boost its drug discovery potential by expanding the gene screening pool from 6,000 to 20,000 genes by 2025. In terms of drug types, the company will remain focussed on developing small molecules and will also look into oligonucleotides. The company currently holds five preclinical assets. Animal data indicating potential in type-2 diabetes were shown for one of these candidates, the lipid modulator GLPG4059.
Toledo.
An update was provided on the company’s largest early-stage program Toledo. Three Toledo candidates have been reported so far. Each have different selectivity profiles towards the yet undisclosed target, currently named ‘TOL’. First generation GLPG3312 seems to engage all TOL targets, while 2nd and 3rd generation GLPG3970 and GLPG4399 are TOL2/3- and TOL3-selective, respectively. GLPG3312 demonstrated promise in inflammatory bowel disease animal models, while GLPG3970 generated robust efficacy in arthritis and osteoporosis animal models. Both GLPG3312 and GLPG3970 are currently undergoing Phase I evaluation. In 2020, the company intends to initiate several exploratory Phase II proof-of-concept studies.
Filgotinib.
An overview was provided on the filgotinib clinical pipeline, with rheumatoid arthritis (RA), ulcerative colitis (UC), Crohn’s disease (CD), psoriatic arthritis (PsA) and ankylosing spondylitis (AS) regarderd as key indications. In each of the latter, Galapagos is in a position to be the first or second JAK-inhibitor on the market. In light of the recent initiation of Phase III PENGUIN trial in PsA, the company emphasized on filgotinib’s durable efficacy and safety observed in the Phase II EQUATOR trial, which suggests consistent performance of filgotinib across several indications. The company repeated its hypothesis on the advantages of filgotinib’s selectivity towards JAK1-inhibition and functional preservation of JAK2 and JAK3.
IPF.
PI Prof. Toby Maher provided a clinician’s perspective on idiopathic pulmonary fibrosis (IPF), more specifically on the severe, progressive nature of the disease, the steeply increasing incidence and the clinical performance of the two approved drugs pirfenidone and nintedanib. The company’s CMO further highlighted the limitations of current IPF treatments in scope of only being capable of slowing down the decline of forced vital capacity (FVC) and exerting poor tolerability leading to treatment discontinuation. More insights were provided on GLPF1690’s Phase III program ISABELA, comprising 1500 patients across two identical trials, each evaluating two doses of GLPG1690 on top of standard of care (SOC) versus SOC alone. This program has a futility analysis, which requires 500 patients to reach the 52-week treatment duration mark. The latter is anticipated for 1Q21 based on current recruitment rate. Topline readout is expected in early 2022.
Our view – Full steam ahead on all levels
The R&D day clearly indicated that the company will further intensify its R&D development efforts with the objective to launch one Phase III trial every year while in parallel being in full launch mode for filgotinib. This will guarantee an abundance of newsflow in the upcoming years containing various potential valuation catalysts, including the approval and commercial launch of filgotinib in RA, the Phase III readout of filgotinib in UC and topline Phase IIb data of GLPG1972 in osteoarthritis in 2020. We maintain our Buy rating.