neverinside schreef op 6 maart 2012 19:47:
Deel II (+ 1/2)
3. Newsflow expected for several early
stage candidates
Whereas many biotech companies develop only one single product, Galapagos has been able to build
a full range of innovative targets (GPR43, Cystic Fibrosis, Alzheimer...), or approaches (JAK1, antiintegrin
oral compound). We intend to conduct an extensive review of Galapagos’ R&D pipeline in
April, after the R&D day, but would like to outline three of them that are going to deliver phase 1
results in the coming weeks. NB. We are not taking these products into our valuation pending
results, but believe they will provide support for the share price, demonstrating that the story
is just at the beginning.
3.1. GLPG0187, the next success?
GLPG0187, an integrin receptor antagonist, is the company’s second most advanced
development-stage product and is currently in Phase 1b for solid tumours. Integrin is a
transmembrane protein that is over-expressed in solid tumours. Preclinical models have demonstrated
that integrin inhibition by GLPG0187 reduces tumour diffusion and growth.
The Phase Ib endpoint is to determine the maximum tolerated dose for GLPG0187 and to confirm
integrin as a biomarker. Patients with integrin over-expression are the most likely to benefit from
GLPG0187. At the same time, Galapagos is performing preclinical research to develop a GLPG0187
pro-drug, both oral and subcutaneous, with 20x the bioavailability compared to the current
intravenous formulation. We consider the project to be highly promising, but do not apply a
value given its early stage of development. Interestingly, Merck KGaA is developing Cilengitide,
in several Oncology indications. However, this compound is not given orally and binds to a smaller
panel of integrin receptors, which could lead to a lower efficacy than GLPG0187.
A novel target in inflammatory: GPR43
GLPG0974 is the first GPR43 inhibitor evaluated clinically. This compound, whose rights were
returned by GSK in December 2011, is part of Galapagos’ immuno-inflammation development. Its
potent inhibiting GPR43 action should reduce neutrophils’ migration. Phase 1 is evaluating
pharmacokinetics after single dose (amount of GLPG0974 in blood) and pharmacodynamics (safety
and tolerability). GLPG0974 could provide a novel treatment approach, targeting this antiinflammatory
mechanism involved in diseases such as inflammatory bowel.
3.3. GLPG0492, a candidate for a licensing deal
GLPG0492 is currently in Phase I “Proof-of-mechanism” study as part of Galapagos’
Selective Androgen Receptor Modulator (SARM) programme. This molecule is targeting
potential treatment for musculo-skeletal diseases such as Cachexia leading to weight loss and
muscle mass occurring in cancer, chronic obstructive pulmonary disease or AIDS. Two
million people die annually from the consequences of cancer related to cachexia. The market, which is
expected to increase in the next few years, should reach one billion dollars on our estimates. The drug
is also being tested in a pre-clinical model of Duchenne muscular dystrophy and has shown
improvement of muscle strength and running performance. During pre-clinical development,
GLPG0492 showed an improvement in muscle mass in animal models with minimal side-effects and
could be an alternative to traditional androgen therapies like testosterone.
Phase I was completed in December 2010 with a good safety and pharmacokinetic profile once-daily
dosing. According to clinical trials.gov, Phase Ib “Proof of Mechanism” was completed in December
2011. Results should be published in Q1 2012 and we expect them to assess safety and tolerability
with multiple ascending dose which could lead to an out-licence deal by the end of 2012, if the results
are convincing enough. Another option would be for Galapagos to conduct a phase 2 PoC to have
more data.
Alliances will continue to deliver over
2012
With 2012 revenues guidance at least EUR150m, milestones payments from Pharma alliances will
continue to flow in. As an example, the latest one of EUR3.5m was paid by Servier in the framework
of its osteoarthritis alliance. We reiterate the potential of this alliance business as shown by the
decision from GSK to in-license two Galapagos compounds that completed phase 1 PoM,
namely GLPG0778 and its back-up GLPG0555. This was the first time a big Pharma decided
to exercise its option and continue the development in-house.
Fig. 11: Over EUR2.5bn in potential milestones with 5 big Pharmas
Indication Partner Deal Value Year Valuation/share
Immuno-inflammation GSK EUR200m + royalties 2006 0.7
Rheumatoid Arthritis Janssen EUR1bn + royalties 2007 0.5
Anti-Infectives GSK EUR219m + royalties 2007 0.2
Osteoporosis Lilly EUR275m + royalties 2007 0.4
Fibrosis Roche EUR550m + royalties 2010 0.5
Osteoarthritis Servier EUR300m + US rights + royalties 2010 0.3
Oncology Servier EUR260m + US rights + royalties 2011 0.1
Total >EUR2.5bn EUR2.7
Source: Company Data; Bryan, Garnier & Co ests.