Galapagos Keeps Analysts Guessing About Future Plans
As JAK Inhibitor Jyseleca Beats Forecasts
Executive Summary
Analysts are scratching their heads over what direction the Belgian biotech will take in the coming months and years, with all eyes on an R&D day in October.
Galapagos NV is continuing to trim its pipeline under new CEO Paul Stoffels and the JAK inhibitor Jyseleca may be performing better than expected but investors are still unclear as to what the embattled Belgian biotech company will look like in the coming years, especially given its recent foray into cancer with the acquisitions of CellPoint B.V. and AboundBio.
The company's first-half 2022 results made surprising reading as sales of Jyseleca (filgotinib), approved in Europe and Japan for rheumatoid arthritis (RA) and ulcerative colitis (UC), reached €35.4m, way ahead of consensus estimates. Some observers had written off Jyseleca, following partner Gilead Sciences, Inc.'s decision to walk away from US development a couple of years ago as it could not see a path to approval for the JAK inhibitor after its rejection by the US Food and Drug Administration for RA. (Also see "Gilead Gives Up On Galapagos's Filgotinib In RA" - Scrip, 16 Dec, 2020.)
However, chief financial officer Bart Filius told analysts on a 5 August call that Jyseleca was now reimbursed in 15 countries for RA and six countries in UC, and the drug was performing particularly well in Germany. Galapagos has increased its full-year sales guidance from €65-€75m to €75-€85m and Filius noted that "we'll have Phase III topline data in the first half of next year in Crohn's disease and that should hopefully enable us to have an extra indication as part of the lifecycle of Jyseleca."
One potential problem for growth could come from an ongoing investigation by the European Medicines Agency’s Pharmacovigilance Risk Assessment Committee (PRAC), investigating the safety data of all JAK inhibitors amid concerns about the class. Chief medical officer Walid Abi-Saab said: "We're working and collaborating with the EMA and answering their questions. As you can imagine, none of this was a surprise ... the PRAC has to go through its process and we expect to have feedback by the end of the year."
On the pipeline front, Galapagos has terminated four early-stage programs, namely the JAK1/TYK2 inhibitor GLPG3121 for inflammatory diseases, a JAK1 inhibitor (GLPG0555) for osteoarthritis, GLPG4716, a chitinase inhibitor for idiopathic pulmonary fibrosis, and GLPG4586, a compound with an undisclosed mode of action directed toward fibrosis.
Toledo In Trouble
It also looks like the beginning of the end for Galapagos's much-touted Toledo program, which consists of a series of salt-inducible kinase (SIK) inhibitors. They had been touted as a potential pipeline hole filler following the recent failures of the osteoarthritis drug GLPG1972 and the fibrotic disease candidate ziritaxestat but the first Toledo compound GLPG3970 failed to live up to expectations in three clinical studies. (Also see "Galapagos Knocked By Knee Osteoarthritis Fail" - Scrip, 16 Oct, 2020.) (Also see "Ziritaxestat Failure Could Spell End For Gilead/Galapagos Pact" - Scrip, 11 Feb, 2021.)
Noting that GLPG3970 produced some positive but "not competitive results," Abi-Saab said: "It's no secret that we're evaluating this [and] we need to take stock of the data that we've had." There were some encouraging data with GLPG370 on objective measures in UC, he said, "but the exposures that we achieved with that molecule were not good enough to test the hypothesis."
Abi-Saab added that Galapagos had "a series of other molecules and we're trying to evaluate whether we will have enough to go forward … and we should be able to speak more later in the year (Galapagos is hosting a capital markets day on 5 October). He said: "It’s fair to say we're not going full-steam ahead as we were before, we slowed down to be able to fully evaluate this and take the appropriate decision in light of the totality of the platform."
The first deal with Stoffels at the wheel took Galapagos into oncology, with the Mechelen-headquartered biotech's June acquisitions of CellPoint and AboundBio. The CEO said the combined transactions "offer the potential for a paradigm shift in CAR-T therapy through CellPoint’s breakthrough, decentralized point-of-care supply model, developed in a global strategic collaboration with Lonza, and AboundBio’s cutting-edge fully human antibody-based capabilities to design next-generation CAR-Ts."
CellPoint had begun two Phase I/IIa studies ongoing to test a CD19 CAR-T candidate in relapsed/refractory non-Hodgkin's lymphoma and relapsed/refractory chronic lymphocytic leukemia and Stoffels said patient enrolment was progressing well, with topline results expected in the first half of next year. "Our near-term goal is to bring three additional differentiated, next-generation CAR-T candidates in the clinic over the next three years,” he said, noting that Galapagos is also planning to plan to progress its TYK2 inhibitor GLPG3667 into a Phase II program in dermatomyositis around year-end.
Puzzling
Analysts are not sure what to make of Galapagos since Stoffels took over the helm. Bernstein issued a note saying that "portfolio streamlining is a clear positive [and] it has been obvious from when Paul took over that he is not enamoured with the existing pipeline.” The analysts said that cutting early-stage JAK programs made sense and "it is understandable to pivot away from high-risk IPF when each million of euros spent is being scrutinized."
The Bernstein team noted that while the Toledo program continued for now, "it seems fairly likely that it also will meet a similar fate," and while "it is a positive to cull programs that are unlikely to generate returns, there is not much else left." They added that "the pivot to the completely unrelated area of CAR-T, while potentially interesting," makes the investment case quite a challenge. "Whilst Paul's track record suggests he will create value, the first deal certainly creates some questions and this is not a fundamental reason to buy the stock," they argued.
Analysts at Raymond James said the primary question for investors was whether Stoffels’ review of the existing compound library at Galapagos "has yielded any differentiated drug development opportunities, or whether the prior management team’s focus on a SIK portfolio has left the existing compound library sparse and in need of more aggressive external asset acquisition." They added that the 5 October R&D update would be "a critical point of understanding how long it could take to rebuild a credible Phase II drug portfolio."
The Raymond James team were not excited about the CAR T pipeline, saying that "while the concept itself is good, it essentially makes Galapagos a life science tools manufacturer and less a drug development company, while still retaining a need to pay for costly clinical studies."