Jefferies
1Q Immaterial; Focus on Upcoming Filgotinib UC Phase III and RA Approvals
Peter Welford, CFA *, Philippa Gardner, Eng.D. *, Lucy Codrington *, Colin White, PhD *
Date May 7, 2020
Key Takeaway
1Q financials are largely immaterial for the shares, with lower Revenues and OpEx vs cons for a broadly similar underlying loss. Cash burn outlook trimmed €20m to €400-430m on COVID-19 trial delays vs JEFe €441m. We are optimistic upcoming filgotinib Phase III SELECTION data in ulcerative colitis will be positive and on arthritis approvals 2H20E. Initial Toledo '3312 is deprioritised over more selective '3970 with Phase IIa starts 2H for first efficacy 1H21E.
RATING
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PT €210.00
Insights
Optimistic on upcoming SELECTION data: Phase III SELECTION data evaluating JAK-1 inhibitor filgotinib in ulcerative colitis (UC) are on-track for 2Q20E. We previously outlined that placebo-adjusted remission of 10%-15% at Week-10 induction and 20%-25% at Week-58 would be competitive. Notably, on our recent KOL call, expert was very enthusiastic on JAK inhibitors as an oral option for inflammatory bowel disease, particularly Crohn's, but felt it would perhaps be challenging for filgotinib to differentiate on safety vs JAK1-3 Xeljanz.
We forecast $6bn WW peak sales for filgotinib, with $3bn in RA, $600m in Crohn's disease, $400m in UC, and a $2bn cumulative contribution for other indications, combined worth c.€94/share (c.45% of NPVs) at 95% probability.
[b]RA approval still expected 3Q20E, but uncertain delays to ongoing filgotinib trials:[/b] GLPG and partner Gilead still anticipate FDA, EU and Japanese approvals for rheumatoid arthritis (RA) during 2H20E. All Gilead filgotinib manufacturing sites are in good standing with FDA and are GMP certified, so inspections should not lead to delays. In light of the COVID-19 pandemic, recruitment into other filgotinib trials has been paused, likely leading to delays to Phase III Crohn's disease data (was mid-2021E) and Phase III psoriatic arthritis data (was 1H22E), among others; the Phase III ankylosing spondylitis trial is now expected to initiate 2H20E.
Funds to rapidly advance pipeline: Ziritaxestat (GLPG1690) is in the Phase III ISABELA trial in lung fibrosis (IPF) with >1,000 of target 1,500 patients now enrolled but recruitment slowing due to COVID-19. The interim analysis is anticipated 1H21E and final data 1H22E. The Phase II in systemic sclerosis is due to readout 3Q20E. Ziritaxestat contributes c.€16/share NPV based on 40% probability of $1.85bn WW peak sales in IPF. We expect a significant proportion of the c.$5bn from Gilead to be used to accelerate GLPG's secretive Toledo programme in order to maximise first-mover advantage with this undisclosed mechanism of action. Development of second-gen compound '3970 (TOL2/3) is now being prioritised given a "superior profile", due to start an extensive Phase IIa proof-of-concept programme across multiple inflammatory indications during 2H20E for data 1H21E. We assume $3bn peak sales for the broad programme at 15% probability for a c.€4/share NPV. GLPG1205 Phase IIa PINTA data also in IPF are expected during 2H20E. Data from the Phase IIb ROCELLA trial of GLPG1972 in osteoarthritis are expected 4Q20E triggering a 60-day opt-in period for Gilead for US rights; we forecast $3bn WW peak sales, for a c.€6/share NPV at 20% probability; Servier has ex-US rights.