Nomura Instinet 20 december 2017
Rating Remains Buy
Target Price Remains USD 124.00
Closing price 19 December 2017 USD 91.26
Potential upside +35.9%
ABBV Data Update and GLPG Co-Promote Filgo Emerging as the Safer JAK Inhibitor
Upa Boasts Comparable Efficacy to Filgo in Monotherapy (Fig. 1), but Safety/Tolerability Are Still Key Competitive Advantage for Fligo. No new safety signals in this study; SAEs occurred at 5% and 3% in the 15 mg and 30 mg groups, respectively, and at 3% in the MTX group. Filgotinib resulted in less reduction of NK cells and a lower rate of opportunistic infection compared with other JAK inhibitors (Figs. 2-3). Also, filgotinib patients experienced an increase in Hb levels.
GLPG Decides to Opt In to Co-promote Filgotinib, with Partner GILD, in 8 EU countries (Germany, France, Italy, Spain, UK, Netherlands, Belgium, Luxembourg). Outside these territories, Galapagos will be eligible for tiered royalties ranging from 20% to 30% on net filgotinib sales. We anticipated GLPG would opt in to the co-promote, given its desire to build a commercial organization and cash war chest. Deal terms were favorable, with GLPG funding 35% of co-promotion costs at a 50/50 profit split. See p. 5 for model updates.
Co-Promotion Lock-In Instills Confidence in GILD Collaboration Ahead of Equity Investment Lockup Expiration Date. The impending expiration of GLPG’s lockup and standstill agreement with GILD remains December 31, 2017. We believe GLPG’s decision to opt in on co-promotion of filgotinib ahead of the lockup expiration date speaks to management’s confidence in the potential of its highly selective JAK1 inhibitor.
Filgotinib’s Safety Profile Appears Superior to Upadacitinib’s on Paper. However, clinical experience may not differ substantially, potentially leading to marketing prowess trumping data, post-approval.