DEgroof Petercam 25/5
Galapagos (Buy) - Phase III study with filgotinib ready to start, 200mg allowed (EUR 53/TP EUR 63)
Facts
Galapagos and their partner Gilead have successfully completed the discussions with the FDA and EMA over the design of Filgotinib's Ph III trial in rheumatoid arthritis (FINCH; RA) following their end-of-Phase II consultations.
Gilead and Galapagos will test both a 100mg QD and 200mg QD dose in both males and females with RA in the Phase III trials. Key-element is the FDA’s blessing to use the 200mg QD dose in U.S. men, an uncertainty that remained.
The FINCH program consists of three registration studies whereby Filgotinib will be assessed in RA patients. In addition, they are forced to conduct a testicular safety trial in males in parallel (a minor nuisance).
Filgotinib's Phase III Program In Rheumatoid Arthritis is to start in 3Q16, no further details on the trial set-up have been disclosed. It’s our understanding that a filing on clinicaltrials.gov on the trial is set for the coming days.
Our view
Remember that the Phase II trials (DARWIN) doses ranged from 50mg QD to 200mg QD and 25mg BID to 100mg BID, with the 200mg dose being the most effective. However, the FDA had safety concerns on potential testicular toxicity on the 200mg dosing which meant that men were dosed at a lower level in the U.S.
The dosing uncertainty was the rumoured reason for the opt-out of AbbVie, creating uncertainty among investors. Since the conclusion of the Phase II study, Galapagos’ mgmt. was in discussions with the FDA to allow the 200mg dose to be used. In recent roadshows mgmt. body language was already quite comforting about this topic. Nonetheless, investor's concern remained. With this issue gone we anticipate a relief rally.
Only surprising element is the inclusion of a testicular safety study, a minor nuisance required by the FDA to allow the 200mg QD dose to be tested.
Investment conclusion
During the FY15 results and recent roadshows, Galapagos’ management stressed that they were in discussions with the FDA to demonstrate that additional preclinical toxicity work and that men dosed at 200mg within the DARWIN trials in other regions (EU & Australia) had no impact on sperm count. Nonetheless, this was a concern among investors. With this uncertainty gone we anticipate positive reaction from the market. We comfortably stick to our Buy recommendation with TP EUR 63.