Galapagos NV (NASDAQ:GLPG) Q3 2020 Results Conference Call November 6, 2020 8:00 AM ET
Elizabeth Goodwin – Investor Relations
Onno van de Stolpe – Chief Executive Officer
Andre Hoekema – Chief Business Officer
Bart Filius – Chief Operating and Financial Officer
Walid Abi-Saab – Chief Medical Officer
Piet Wigerinck – Chief Scientific Officer
Michele Manto – Chief Commercial Officer
Conference Call Participants
Lenny Van Steenhuyse – KBC Securities
Laura Sutcliffe – UBS
Emily Field – Barclays
Nick Nieland – Citi
Peter Welford – Jefferies
Rushee Jolly – Bernstein
Evan Seigerman – Credit Suisse
Brian Abrahams – RBC
Matthew Harrison – Morgan Stanley
Jason Gerberry – Bank of America
Benoit Louage – Degroof Petercam
Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Results Conference Call. I would now like to hand over the conference to your first speaker today. Elizabeth Goodwin. Please go ahead.
Hi. Thank you all for joining us today for third quarter results call. I’m Elizabeth Goodwin, Investor Relations, also representing our financial reporting to bring you this information today. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today.
Sell-side analyst and profession investors are invited to post the question at the end of our call and can dial in at series of numbers in our press release from last night. Here is one for Belgium, that’s 32-2793-3847, the code is 8542327, and I’ll repeat that right before Q&A starts.
I’d like to move now to our forward-looking statements and remind everyone that we will be making forward-looking statements during today’s webcast. The statements include remarks concerning future developments of the pipeline, future financial results, growth of our company and possible changes in the industry and competitive environment.
Because these forward-looking statements involve risks and uncertainties, Galapagos’ actual results may differ materially from the results expressed or implied in these statements. Outside of filgotinib and rheumatoid arthritis in Europe and Japan, none of our drug candidates are approved by any regulatory authority.
Today’s call will be like our other quarterly calls, CEO, Onno van de Stolpe, will cover operational highlights for the third quarter; Chief Business Officer, Andre Hoekema, will present our deal with OncoArendi announced last night; and Chief Operating and Financial Officer, Bart Filius will highlight our financial results and close with the outlook for the coming months. During their presentation, you’ll see the slides progress on screen and this will be followed by a Q&A session with the executives at the end.
And at this point, I’d now like to hand over to Onno to talk about the third quarter operations. Go ahead.
Onno van de Stolpe
Thank you, Elizabeth, and welcome everybody. Good afternoon. Good morning. We would like to start with the operational highlights. Clearly, the highlight of the year for us is the approval of the Jyseleca so that filgotinib in new better trial is in the EU and Japan, which of course is a hallmark moment for Galapagos. This was overshadowed by the complete response letter we received from the FDA for the U.S. approval.
In the CRL, they listed two reasons. One, the MANTA/MANTA-RAy results that they are awaiting before making a decision on the approval, which is the testicular tox study that we’re executing with Gilead. And they express their concerns the risk benefits of the 200 milligrams, very disappointing CRL, very unexpected, but the reality we got to face with. And certainly for the Jyseleca, we were pleased lastly to announce the filing of the Jyseleca in the EU for osteoarthritis, the second indication for this work that we are going to go for.
Very nice to announce that the first shipments were made, both in Germany and the Netherlands, Germany started two weeks ago. And Ireland actually started on Monday; on Tuesday, the first shipment was out of the order coming in on Monday. So, we are off and now we got to get to get off to a good start in the in the various countries the other European countries are going to follow shortly.
If we look at the rest of the pipeline, clearly we had a number of other news items, we presented the full selection data of osteoarthritis, for filgotinib trial, at the conference that caused the front pages there because it’s a very good data that filgotinib showed in that trial. We also had a positive top line results of ziritaxestat at 60-90 is a semi closest innovator trial, we are pleased with that data set that we’re discussing how to proceed with the with the ziritaxestat indication.
And then we had a very disappointing outcome of the 1972 molecule in the ROCCELLA study in osteoarthritis a yearlong treatment, where we didn’t see any difference between placebo and the drug, which means that 1972 osteoarthritis is development is endless. We are bringing 1972 back to the lab to see if we can find all the indications, but we’re not proceedings this osteoarthritis, very disappointing.
Last week, we did an extended science seminar on Toledo where we disclose the SIK that we are focusing on. I think it was a very good science and development updates for Toledo the whole package is very convincing, the identification of the targets and the essay, the necessary evidence of the mechanism of SIK targets, all the preclinical data that you have in the various diseases that are extremely convincing and the very positive Phase 1 data that we saw a nice target engagements with also a proof of principle because of the effect of IL-10 and TNF in that trial.
So, we clearly have a confirmation in humans that we have to do a mode of action, which is very, very reassuring. And we also from Phase 1 saw that we have a very nice window with regard to safety, which is of course important in the further development. We are now moving this forward in a number of different Phase 2 trials as we discussed, at the seminar and that will lead to quite some new flow in ’21 and ’22.
So the first readouts of the POC three, in ’21 with 390-70, also our second molecule for Toledo targeting the SIK will move into the clinic and give a readout in ’21 and then ’22 will get a number of different readouts. And hopefully we get the first Phase 3 readout in ’22, so we can prepare for Phase 3 already in ’22.
Clearly, we have a development plan set up to bring this innovation. This program is a lot of potential to patients as fast as possible. I think that is very important for the patients, but also for Galapagos. We believe that this is a once in a lifetime opportunity that’s we’re progressing. We’re extremely excited about the targets, the mechanism, as well as the first results that we have for 390-70 and 43-99.
So, let’s hope that the good data will continue to come in this program and you will hear much more about it in ’21 and ’22.
With that, I would like to hand it over to Andre Hoekema, our Chief Business Officer to talk about the deal that we announced in OncoArendi late last night. Andre.
Thank you, Onno. Good afternoon everybody. In our presentations, we often speak about our internal pipeline and here I would like to highlight how we also add external assets. There’re actually two reasons to do that. First of all, we have a very strong balance sheet and we really want to use that not only to grow our internal pipeline and accelerate programs through the clinic, but actually also add external assets to our R&D engine.
And talking about the engine, both in discovery and in clinical, we have a lot of expertise that engine really fire on all cylinders. So in our view, it really makes a lot of sense to not only use it for internal molecules, but also add more tools from third party stuff that we think really makes sense.
Of course, in that effort we’re really focused on inflammation and fibrosis, the core indication areas of the Company and it will not surprise you that when we talk about criteria, we really look for molecules that really fit Galapagos that means multiple modes of action high-risk high-reward. And in that way, they should strengthen our pipeline.
On the next slide, you actually see the deals that we have since signed this year. We signed a number of deals with molecules that hit all those criteria, Fibrocor and Scipher both from North America, Canada and Boston. Just a few words about it, Fibrocor has come up with noble targets in fibrosis based on patient samples, very complimentary to what we do. And we’ve moved to the first program that we licensed in Fibrocor to a candidate drug, so very pleased with that.
And Scipher, it’s some similar complimentary technologies operating from Boston. They identify target targets based on the molecular signature in patients. We think that also fits very well with our own internal programs. In Ryvu, identified a novel inflammation targets that we really liked companies are located in Krakow, Poland, because we’ve seen a deal. And today, I’m really pleased to say a few words about the first clinical phase efforts that we licensed from companies, also in Poland, in Warsaw in fibrosis.
So, let me first say a few words about the business deal. It’s a collaboration on a really novel class of fibrosis targets, and currently getting ready some breakthrough work in public in this target class, chitinase and chitinase play a role in fibrotic diseases and mostly in lungs so that really fits with interest.
We have a fibrosis franchise under ways which really [indiscernible] 1205 on earlier programs and we really think there’s a very nice niche where we can add another program. So, we decided to work with OncoArendi. You see the deal structure, an upfront 25 million development, regulatory sales milestones for a total of 220 million cost of royalties. We also negotiated the right to get access to other chitinase programs in case those fit in candidate as well.
So, let me say a few words about this novel target class. Chitinase are known to play a role in lung fibrosis and it is a very novel class. But at the same time, we’d like it because there’s quite a bit of elevation. In knockout mice, you see that mice line that chitinase shows a very reduced disease burden in IPF models, and moreover, the molecule that OncoArendi has in development OATD-01 in those two mice and they really reduced the disease burden.
So the tech class to chitinase, as I said, very well validated, we are not aware of any competition. So, typically go off first in class potential. We think there’s really a lot of room to bring us into IPF and possibly other fibrosis disorders. And at this point, the Piet and Walid are preparing a Phase 2b study to bring this molecule forward.
So, if I can have the next slide, just a bit of detail on the elevation that I just mentioned. Here you see some data that show what bleomycin, which is the standard animal model for IPF. Just on the left to control if you see healthy mice. On bleomycin treatment, you get a formation of lesions in the lungs, expressed by Ashcroft score.
And as you can see, the molecule from OncoArendi really reduces that net effect similar to the syndrome. So, this is one of the validations that I talked about. And we’re really excited about clinical asset that fits in right behind ziritaxestat, which is in a large Phase 3 study, as you all know, and troubled by where we report the Phase 2 data shortly. So, in summary, I am very happy to be adding this asset to our pipeline.
And with that, let me hand over to Bart to get through the Q3 three financial data. Bart?
Thanks, Andre and good morning everyone in the U.S., good afternoon in Europe, happy to say few words about the financial results for the quarter, and I’ll finish off with an overview of the short term outlook in terms of events.
But first on the financials, as you can see here on the slides, starting off with our cash position, healthy cash balance of €5.3 billion at the end of September 2020, which brings our cash burn for the first nine months of the year to €433 million. As usual, we exclude two particular categories of cash flows both income and expense.
On the cash income side, we are excluding €25 million that we received over the first nine months due to increases in capital as a result of warrant exercises. And we also had a quarter, which was — this is nine months total, but we had a quarter where that you were still where we can significantly compare to the euros.
And as we report in euros, we are incurring a translation effect. So this is not realized but it’s a translation effect of our dollar position that we have on our balance sheets, which is roughly 20% to 25% of our overall cash balance. That’s obviously one quarter goes up and the other quarter goes down, it’s not included in our cash burn nor is it in our guidance.
So 433 is the first nine months on cash burn in total, we retain our full year guidance of between €490 million and €520 million. And for those of you that are doing the maths, 433 for nine months, if you divide by three multiplied by four, you get up higher than the 520. The key thing that’s happening in terms of cash in the fourth quarter is also the receipts of the milestones for the approval of filgotinib from Gilead, which by the way meanwhile.
I’ve been receiving a lot of October, which were $105 million. Hence, our cash run-rate to get from 433 to an extra 520 is a bit lower in the fourth quarter than it has been in the first nine months. Then on the P&L itself, let me highlight three categories, revenues, first of all, and €370 million in revenues is to a large extent driven by accounting revenues for previous events.
And those are related to our deferred income position on filgotinib and our deferred income position on what we call the access rights to our platform. Both of which are a consequence of the transactions of as we recognize those receipts over time, and they’ll be in one shot, to the largest extent. So hence, we have now recognized a big chunk of our total top-line in terms of accounting revenues here.
In terms of cost, bit over €500 million of operating expenses. That’s an increase compared to the first nine months of last year. And that’s driven along by the R&D investments that we’re taking in filgotinib Toledo and in our earlier programs. But it’s also driven by increases in staff and most notably in the commercial area, where we’re ramping up clearly for the launch of filgotinib in Europe and rebuilding our infrastructure in the key European countries.
Then finally net results. There is between operating results and net results. There’s a gap strategies within by financial expenses. I’ve already highlighted the currency effect, which you can find there. But there’s also a bit of accounting to be done on this Gilead awards that are outstanding, which depending on the volatility of this year can be positive or negative from one quarter to the next. But here you see the numbers that are in those line items.
Then if I conclude this part of the prepared comments and the presentation, let me say a few words about the outlook. And in two categories, first of all on filgotinib, and I’m sure we’ll discuss a little bit more detail in the Q&A as well. But we’re still anticipating the type a meeting with the FDA in the fourth quarter of this year.
We are on further and also anticipating after the filing that we’ve done in Europe. In Q4, we anticipate the filing in Japan in first half of next year. And also the first half of next year, we should get a peak at the MANTA/MANTA-RAy data and get that understanding of what those are telling us.
And then on the other programs still to come for the fourth quarter of the results in 1205 our PINTA program. We have first dosing in study for the molecule called 3667. We look at disclose the targets of that molecule, but we’re doing the study in choices and we anticipated fulfilling in the fourth quarter.
And then on Toledo as you know, we have already dosed in a couple of folks last month as we were discussing in the webinar, but we’re also anticipating in the beginning of next year, to dose, to further indications lupus and severance. And then finally for the first half of next year, a big milestone obviously is also the futility analysis on these events, so quite a lot of useful in the next six to nine months coming up.
Let me conclude there and Elizabeth, if you can take over for the Q&A please.
A – Elizabeth Goodwin
Thank you. That does conclude the presentation. Today, we invite sell side analysts and professional investors again to pose their questions. Here’s the dial in number for Belgium, Country Code 32-2793-3847 and the code is 8542327. For those already dialed in. [Operator Instructions] our first question comes from Lenny Van Steenhuyse from KBC Securities.
Lenny Van Steenhuyse
Congrats on the interesting OncoArendi deal. You’re looking to further position this one in IPF clinical trials mentioning Phase 2b trial. I was wondering if you could give some additional color on what we should expect in terms of clinical trial design as you were mentioning, a Phase 2b in that sense, we might not expect a better lifestyle, but perhaps something more extended. Could you perhaps elaborate a bit on that?
And as a second question 3Q report also mentioned the JAK-1 inhibitor Galapagos 0555 entering Phase 1 study again, I believe this compound also went through some safety studies quite some years ago. So it was wondering if this was what triggered the revival of this compound and what’s the strategy and indication life for this one? Thanks.
This is Walid. I’ll take your question on the OncoArendi otherwise known 4716 now, extend that price today actually. So our plan is to do a study where we just multiple dosing so that’s we’re calling it Phase 2b. And we’re still early in the design of the trial, but in the larger trial then PINTA and the duration probably will be about the same. And we’re talking about a trial probably about 200 patients store in the significant amount in the PINTA looking at patients with IPF with no background therapy and also on top of the continuity. So that is the current plans, but you will come back with more details as we get closer to starting the study.
And I’ll turn over to Piet to talk about 555
Okay Walid, thank you. So 555 for those of you who follow us for a long time triglycerides and molecule at GSK to convert and then after while GSK gave back to us then we had a very interesting data package where they evaluate the 555 in OAX plans and all total package which showing effect that compared to JAK inhibitors 555, we did something special on the cartridge of OA patient. So, we’ve taken the package and now started in intraarticular that the whole game. During an intraarticular injection which will be done injection once every six months in the end to see that we can pick up some senior info a patient. Thank you.
Our next question comes from Laura Sutcliffe from UBS.
I’d just like to pursue the OncoArendi deal a little bit more. We now got full IPF hormones at least, I think if we include the mentioned that IPF in your Toledo presentation. Could you just sort of outline how all of these things fit together for us in a little more detail? That would be great. And I just want to check one thing on your is a valid trial if that’s the case, please. All those trials got 555 background therapies and if not should we be concerned about whether or not you can get a useful result from them?
So let’s start from the first question. We have Galapagos saying that we’ve been quite interested in building a franchise in fibrosis and IPF is always an indication that we are, we have a number of compounds in development here. As you guys know, IPF is a very serious disease. So with a very good prognosis and essentially, patient after diagnosis, the immediate survival is about two to five years.
As such, there’s a huge unmet medical users to essentially stop the progression of the disease. And consequently, when you develop medicines, the idea is to develop a combination therapy, particularly when you have molecules with very good safety and tolerability profile, and combined together with the ambition to stop the progression of the disease.
And hopefully, patients with this stimulus will no longer have to worry about dying from IPF, and actually living with a disease that’s not going to progress anymore, that is our ambitions. It’s a tall ambition, but that’s our ambition.
And so that we need multiple shots on goal and it’s beyond the scope of our discussion today. But we look to target market literature, looking at a variety of cellular mechanism, biological mechanisms from fibrosis to inflammation to be able to have complimentary efficacy you just spoke.
And our plan is to advance the molecules and as they show efficacy, as they lend themselves to combine with each other some biological mechanisms, as I mentioned, and also from safety and tolerability as plan will due to combine them together.
Coming to the ISABELA program, the ISABELA is certified between the treatment on the [indiscernible] ziritaxestat. And you stratify based on background therapy either on your background on the internet or on pet. So, we do certification on those plans. And just to remind us, based on our discussions with the FDA, these phase are going to be with them and also, especially with the FDA. This type of design will allow us to get indication for the treatment of IPF. So, I hope I answered your question. If you did, thank you.
Okay, thanks very much, Laura. Our next question comes from Emily Field from Barclays. Go ahead, Emily.
On Gilead’s recent call, they seem to indicate that, at least that they expect that there could they could learn something somewhat definitive from this type A meeting regarding the path forward. So, for filgotinib in RA, it seems to indicate that perhaps there could be some indication of whether there remains a path forward for 200 milligram. I was just wondering, if you could give any thoughts on that? When we would expect that meeting to occur? And then just what exactly will be communicated to investors? Then also, if you have any insights into one decision was made to pause the other trials for our PSA ASN uveitis. And when we could expect or what the bar will be to get those trials restarted? Thank you.
Onno van de Stolpe
Okay, thank you, I hope you guys can hear me better. Now, I was told that voice before was not as great. Okay, so the, I’m not sure I’m going to be able to add much more color than what Gilead has been, has been sharing. It’s essentially the type a meeting will take place, as Bart said few minutes ago, still this year before the end of the year. And that’s our expectation, and in terms of what we’ll be getting out of it, that could be a number of potential ways forward.
And that’s I think, Metadata, the CMO at Gilead talked about a few days ago, there’s going to be an effort to seek clarity about the path forward for the CRL to address the concerns that the agency has on the risk benefit, as well as medical, and also specifically, the exact data that would be that would have to be shared about the MANTA program.
And, and I think, based on that, so coming out of the meeting, I think you Gilead’s will have a sense about the prospects of some filgotinib and as a result, whether or not the trials that were paused, will be able to resume and I think that will guide right after that meeting, based on the outcome of the meeting.
And that the meeting is expected to occur before the end of the year?
Onno van de Stolpe
All right. Thank you very much for that. And our next question comes from Nick Nieland from Citi. Go ahead, Nick.
So, this is a quick on Gilead [indiscernible] the OncoArendi the assets. Secondly, for Bart, to the rest of the questions on the breakdown of your R&D spend, please. So firstly, do expect your filgotinib spend in ’21 to be lower than 2020? Secondly, you’ve spent less on the taxes that in 2018 you did in’19? I was wondering why that was and will that be more interesting 2021. Toledo spend looks like it will nearly double this year what gross can we expect for that in 2021? And then can you just describe what’s good in the other programs that’s nearly half, your spend, and which is growing at over 50% so far this year? And then just a very quick question on the — accounting question on the $105 million milestones over what period these will be recognized in your revenue? Thank you.
Onno van de Stolpe
Bart, can you take those?
Yes, I’ll take those questions. I was just keeping notes to make sure I get track of all of the points that you raised. Nick. So first of all, clearly have note the advice of your R&D and the answer is yes. So as with all our compounds, both in licensed and self-developed, at the end of Phase 2b, there’s an open in moment for Gilead that there is a milestone of 150 million, for in which they will share the rest of the R&D expenses 50-50. And they got the device for ex-Europe against the royalty of 20% to 24%. So this follows the normal economic structure of compounds.
Then on the R&D breakdown a couple of points that you raised. First of all, fiscal 2021, it’s a bit difficult to assess at the moment, as it was just expressing the question mark around PsA, AS and uveitis, that’s going to be obviously driving factor in the expenses for 2021 as well, depending on whether that’s resumed or falls. So that’s what answered that I cannot be to give you today.
On [indiscernible] it’s less, but that’s only mechanical because last year before the collaboration, we were taking 100% of the cost of [indiscernible] then we started to share this 50-50 only as of September 2019. So one should look at the comparison of the first nine months this year, this last year, you see a decline, but it’s effectively underlying increase in the actual expense whether it’s shared with Gilead.
And to certain extent that happens on figure over to the other direction their cost are increasing. But that’s also reflecting that we are spending 20% of those costs in 2019, at least in the first six months and then 50% in the remainder of the year.
Toledo growth correct, that it is growing significantly this year compared to last year. We do anticipate some further growth as those proof-of-concept studies are getting online as we speak. And we’ll be continuing to run throughout 2021. So indeed for Toledo, you should expect some further increases.
And then finally the other portfolio. That’s really the whole portfolio that’s in development, both in preclinical development and in the clinic. And so those include the molecules that we refer to earlier in the call such as 3667. 555 as people highlighting, and then at the moment I think we have in PCC and Phase 1 status, not mistaken somewhere between 5 and 10 different programs that we’re running. So that’s explaining why this other category is meaningful and is also growing.
Then lastly, your question on the accounting treatment for the milestone, it’s actually treated together with all the other filgotinib income that we have received in the past and we will receive in the future. We are basically ramping them all together and then spreading them out over the period of the development program of filgotinib. And that basically is currently estimated to be, and then I mean, the regulatory development program for the next three to four years still to go. So it’s a complicated accounting treatment, but we don’t recognize everything 105 immediately, but we actually are spreading that out over the periods. I hope I have answered your questions.
And so our next question will come from Peter Welford from Jefferies.
I’ve got two. Firstly, just returned to Gilead, if we can just read the comments that are made on the rest of arthritis, if you just curious here how this works as far as this is now a 50-50 cost again? Obviously Gilead does understand that they have a focus on the U.S. But clearly for these indications as well, those trials are essential for other geographies as well. So I guess, curious to understand the thinking behind pausing these studies given this is an FDA specific problem, and how Galapagos thinks about this, and what we can sort of think of a path forward, given obviously, the potential challenges that could be there in the U.S., particularly the significant opportunities there is elsewhere?
And then, secondly, on chitinase inhibitors. Just curious if you can ask, is this a target that you have tried addressing with your internal drug discovery platform efforts? And if so, I guess curious, why you think this particular asset is differentiated? Or perhaps why they’ve done something that you couldn’t do, if it’s the case or why you haven’t pursued it, I guess, internally. And then just a quick one for Bart, is the €27 million that you’re paying to OncoArendi, I presume that’s within the cash burn guidance for this year. But could you just clarify that that is right? Thank you.
Onno van de Stolpe
Let me take the first question on the Gilead. Look, I think these programs on psoriasis, ankylosing spondylitis antibiotics were designed with the idea to have to address the global regulatory sort of situation. And as the U.S. situation is less clear, Gilead decided to pause these in consultation with us, and we were aligned with that because we need to have clarity as to what’s happening in the U.S., and what is the future plan there before we can decide whether the studies the way they are designed, they could go, and they would address the geographies where we’re interested in and where we can have a way forward.
And so, it seemed like a sensible way to go forward to have this much more influence or reform by the discussion with the FDA, that needs to be some changes made and that’s why it stopped. And then we’ll see where we go from there after we have that meeting and we can adjust accordingly. And we will be talking with much more clarity at that point.
This is Elizabeth. I just think it might be helpful to add that it’s a pause in enrollment only, is that correct?
Onno van de Stolpe
Yes. That’s correct.
Thank you. And we had a question on the kinase inhibitors, why they’re differentiated?
Onno van de Stolpe
Peter given this finest target ourselves, the answer is no. And that’s sort of very subtle reason is that this target is expressed only in active macrophages. And we never did the type of targets. We never did the target in the facts of cells for fibrosis. So in that sense, as we did screen macrophages for fibrosis, we didn’t set up ourselves to find it. We were impressed with the data, it’s a completely target, make sense in the disease, and bored the compound data and the local data for I just make a great a sense. And we believe in nicely complements our internal IPF portfolio. That’s why we did it.
Yes, that’s mine. So Peter, I can confirm your question. So, the 27 million that is paid to OncoArendi is part of this transaction is part of our cash burn forecast of between 490 and 520.
Our next question will be coming from Rushee Jolly at Bernstein. Go ahead, Rushee.
My question is on the small molecule 4059 into the clinic and in the quarter. And the last year of your on R&D essay, we showed preclinical based on the aspects and demonstrated the impact on triglycerides rate and blood. And those were the taking and forming. I appreciate the mechanism of undisclosed presence and it’s very early. And but could you talk a little about that there are many aspects of the molecules that you feel may be particularly differentiated? And that’s given that we have several diabetes drugs on the market, with the fact that stretch beyond weight and blood sugar? And then prior to that sick as well also seems to be an interesting target for and diabetes and obesity. Do you have any plans to furnish any Toledo assets into these diseases as well? Thank you.
Okay, I’ll take both questions. Let just start from [indiscernible] and metabolic an easy one. We are aware of those publications and we follow-up with every molecule in every animal model, whether or not we see something that points us into that direction as potential application for the Toledo platform. And if he decided at a certain moment, indeed, this is a path forward hearing from us, but it’s well known, and it’s on our radar.
On 4059, sort of composites to Phase 1, it’s a complete novel target, and in that sense, on its own already working in a complete different way than older and more recent drug. So we want to see what it does in Type 2 diabetes, we believe it has positions its own. We’ve compared heavily to older and newer drugs. And with the profile, we see it is different from what is out there. So the moment we move into Phase 2, we will update you more fully on how we see this dress fitting in total.
Our next question comes from Evan Seigerman at Credit Suisse. Go ahead, Evan.
Thanks Elizabeth and thank you for taking my question today. So one for Bart, can you expand on some of the differences that EMA and FDA between the JAK class? I think in the U.S. we don’t realize how more open the European regulators are the JAK and I think that might help put into context the launch that you’re starting with, filgotinib?
Yes, let me let me transfer that question Evan to Michele our Chief Commercial Officer who is also on the line and I think he’s happy to take it.
So, yes, this is Michele Manto. So, we’ve seen a difference in the uptake of the molecule. So, if you look at the sclerosis, if you look at Europe, we’ve seen that the classes really growing — going strong. So, we’ve seen that before only with organic sellers in the market. The seeds are 15% share and we are also seeing that coming into the market earlier so in Germany, these went up to 20%. So, the class keeps growing, and also not cannibalizing between the molecules, which is also leaving a good a good base for our ongoing launch.
Also, what we are seeing is that in the dynamic markets, the advanced ones, so like Germany, you see 20% of the bio-naive is really going on JAK inhibitor, and one third of these patients going on JAK inhibitors. So you see also different days of use. And of course, at the same time we invoke is going strong as well in the U.S., indicating that the demand is there. For the rest, of course, difference in their regulatory scene between FDA something that’s Toledo already addressed. And the next news, we come to type A meeting outlook, as already indicated. This answers your question.
No, that is helpful. I mean, just I guess one more thing to follow-up there. Do they look at the risk benefit of JAKs differently in European which seems that FCA is a little more conservative when you look at baricitinib and filgotinib, whereas you have approvals in Europe?
Walid, you’d like to take that one on the regulatory side?
Yes, sure. I mean, I think that’s a fair assessment. I mean, to GDP if you compare. The situation is very similar between Europe and the U.S., is pointed to that direction. Yes, I’m not sure what board to add to it. Honestly, I think these agencies form their own opinions. Based on the review of the same data, sometimes they talk to each other, but in the end their decisions could be different anything in this case, you see Europe going one direction, and the U.S. in different direction. So, let’s hope filgotinib will prove that theory wrong. And we’ll get it approve with those doses in the U.S. and see which way we go forward from there.
Thanks, Evan. We now turn to Brian Abrahams at RBC. Go ahead, Brian.
Thanks so much for taking my questions. On filgotinib, I guess, two questions for me. First off, can you talk about the potential for approval of the 200-milligram dose for a more narrow, say, TNF refractory, RA population. Is this something that’s playing for discussion of the type A meeting? And would you want to potentially commercialize it in RA in the US with that kind of label, if your partner Gilead does not wish to? And then secondly, can you frame for us expect your expectations and I guess specifically in the possible durations of follow-up necessary for the MANTA/MANTA-RAy studies, and how that might shape you and your partners? You and your partner’s go forward decisions on filgotinib? Thanks.
So, let me take the political questions, the regulatory questions and then I’ll ask Michele to answer the hypothetical commercial question. Look, I think this type A meeting is meant to engage with the FDA to see where — what potential avenues we can have going forward. The FDA, as we’ve said before and Gilead has actually said, raised questions about the risk benefits of the 200 milligrams and the target indication.
And therefore, that could be potentially a way forward. When you look at patients where the risk benefit is a bit more different, essentially people who have — who are biologic incomplete responders where the difference between 1000 and 200 efficacy is a bit more prominent and those are patients usually are in need of new medicines.
So, that’s a potential way forward. And it’s something that will be discussed, whether that will be a way forward or not, whether Gilead would be excited about it, all of these are part of the myriad of potential outcomes of a faculty meeting. And it would be very difficult to speculate on this.
Regarding MANTA, I think that those studies have been designed with a clear collaboration with the FDA and actually great extent, dictated by them, as they describe those studies in a white paper, there is a similar study that was done obese and healthy subjects with a compound by Pfizer called pregabalin. So those are studies are well designed and are standards. So again, the, the primary endpoint of the study will be 315. Although the double blind proportion — portion of the study is 26 weeks of treatment as we talked about.
Now as any of those studies, we do follow the patients afterwards for those who might have a reduction in sperm count, we follow them for a period of year after the end of the 2016 or until they reverse. And then we do stop following them. That’s how the studies are designed. And I think those are also explained on clinical trials also.
And for the commercial question, I’ll turn it over to Michele.
And thank you Walid. So on the BioIR is a growing segmentalso in the U.S. causing the number of therapies, and we see also the JAK inhibitors also taking place there. On top of that we’ve seen in institutional the 200 milligram high risk profile for filgotinib. Then from these to the commercial scenario and opportunities, this highly depends on the actual outcome, and the different combination that would come out of the label and that anything. So it’s not important to have a straightforward answer here. And we’ll need to see what was type A and the outcome discussion with the FDA will bring us.
Thank you. Our next question comes from Matthew Harrison at Morgan Stanley. Go ahead, Matthew.
Great, thanks, Elizabeth. Good afternoon, everybody. I guess two things for me, one, can you just remind us of sort of the steps for commercialization in Japan and pricing their relative to some of the other geographies. And then secondly, I guess, any updates or any clear thoughts on when we could see the futility analysis for ISABELA? I remember there was a piece around further enrollment that influenced that. So thanks very much.
Hi, Matthew. Thanks. I think the first one will be commercialization in Japan. They are doing nice that Gilead owns and where they act. So pricing as will be a decision that they take. They in Japan Gilead operates also in collaboration with their local companies, which to maximize the operations there and I’ve also is an indication of the opportunity to maximize market share with the presence of ISA has in the metrology market.
Thank you, Piet. Essentially for facility for ISABELA, I think, currently, we are still planning for having the futility in the first half of next year. With the big caveat of the uncertainty around corona right now, reflect that applies for all of our pipelines just like any other company right now. So we’ll see how that’s going to evolve. But so far, we’re sticking with our plan. And we will be guiding in the future, if we have any changes? Thank you.
And now next up is Phil Nadeau from Cowen. Go ahead, Phil.
My question is actually on the Toledo Phase 2 trials. Reviewing the designs, the structure is a bit small. It looks like in each of the trials and right sizes, and you see only about 15 to 20 patients will actually get 3970. When we compare that to the Phase 2 proof-of-concept social with filgotinib, these trials were more like somewhere between 100 and 150 participants. So, what’s the rationale for the small efficient numbers in the Toledo program? And do you think those trials are each large enough to give you a clear signal for efficacy and safety in the different indications?
Onno van de Stolpe
Piet, will you take that?
You can go ahead.
Onno van de Stolpe
Okay, thank you. Look, this is our approach as Galapagos, the way we develop our medicines in general. We try to take — we cast a wide net and an indication of Toledo, we really want to learn from the lead compound to inform the whole platform and build the bridge from the preclinical data to the Phase 1 type of a dynamic data that we shared with you to the proof-of-concept data that we see and see whether our story, as we build it based on the biology frequently on the models are pulling out, when we go to the clinic.
If you want to do larger studies, then it will be a significant investment. And as such, you need to choose and we think then you lose the ability to explore the wide array of potential diseases that could benefit so much from adaptive to in the community as we shared with you also we could lower. So as such, we do smaller studies, where you can have one of the outcomes, either you see nothing, and therefore it’s not worthwhile, continuing sufficient that bond for that particular disease, or you see something that’s while very impressive, that will allow you to take a very decisive next step and then go straight into larger trials, or you get something that gives you a signal that is worthwhile pursuing, maybe changing of the type of further patients maybe going to sub-population, maybe change the endpoint that you look for and learn from it.
That’s kind of the approach that we take there. With the five proof-of-concepts that you see across psoriasis, UC, RA, [indiscernible] Sjögren and lupus; however, as we talked the other day, and I’m pulling the plug for it again. In the case of psoriatic arthritis, because of the mechanism of action, because it sits to benefit from both innate and adaptive immunity model based on what we understand of the biology, we decided to take a bet there and go straight into those range finding study in psoriasis, psoriatic arthritis. I should say, because that is the chance that we gets to bring this particular class of medicines, fastest to patients by jumping straight in a dose range filing study.
So our next question comes from Dane Leone from Raymond James. Go ahead, Dane.
Before your second the top line results of the PINTA 1205 study in IPF. Just points of interest on that one, based on clinical trials.gov that study completed in August. Just wanted some color in terms of, it’s now being November, what analysis is being done or kind of the context that you’re putting in from that study, to then deliver the top line results? And then secondly, and I’m not sure how much you can get into it, but there have been questions around the PK profile of 1205 from the IBD studies, or the healthy volunteer studies maybe, they were dosed descending, there was accumulation of the drug given a long half life. Could you just comment in terms of how that might be different in terms of the dosing strategy, whether you just need to use lower doses and IPF relative to IBD that have been explored?
I’ll take the in the PINTA question. In the PINTA in 26-week study patients with three different backgrounds, and we report out on SCC and FRI. So FRI on its own is a massive data set. And so we are making our way through that everyone understand for me at the moment that we present those data. So that’s the analysis ongoing. That FRI is huge, I can tell you, and we want to be 100% sure that we have everything ready when we come out.
The PK profile 1205 in compound, just to city state level we did, PINTA is approximately where we took a single dose. We can go over based on targets for which we can go over if that’s the latest. We did not anticipate or we do not anticipate that there is a difference between IBD patients and IPF patients with the data will need to show that.
Our next question comes from Jason Gerberry from Bank of America. Go ahead.
I guess first one for me, one of the hypothetical Gilead talked about on their call was a potential, path forward or moving forward with UC but not RA. So I just want to make sure I understand that correctly because that would presume that you have an approval for 200 mg for UC, but not perhaps RA? And is there a rationale there, is essentially that you need to push those with UC or maybe an inherent predisposition of RA patients to blood clots that presuppose that scenario?
And then my second question is just, the European launch and realizing that there’s probably a lot of nuance at the country level, but how do you guys think about order of entry effectively, kind of third, amongst the next generation JAKs? Do you look at the [indiscernible] at launch? Do you think that as later entrants come into the market, are there any price negotiation considerations that come into play? Just wanted to know if you can kind of clarify some of the order of entry considerations with the broader EU launch? Thanks.
Thanks, Jason, I’ll take your first question. And it is actually in, we’ve see and we know from the biology and from prior molecules that in UC, you often need a higher dose than what you have in RA. Also, I want to be very clear, the FDA never said that the 200 milligram in RA is not approvable because of a specific safety concern with that dose. But the FDA has said, and you’ve been very clear on this, is that they believe that the risk benefit of the 200 milligram compared to the 100 milligram, and they have concerns about that. So, in other words, the 100 milligram dose is very good.
So, in their opinion, it’s not warranted to use the 200 milligram in their indication, and they specifically said in that indication. So I think it’s a different scenario in UC. Also the population is different. And you’ve seen recently when you share the data from selection, as you GW you see the more color on efficacy, but also on safety. And you see the profiler 200 milligram continues to look very good as well as in this patient population.
So, I think the agency will have to make that determination on its own. Of course, they’re not going to completely ignore all the data that they have, from other indications. But I don’t think the read through is 100% because they need to evaluate the risk and benefits of the 200 milligrams in the IBD population. And I pass it on to the Michele.
Thank you, Walid. So, on the European law and of course, the differences in the different countries on the healthcare system reimbursement and et cetera, so the first thing is that we really started after the you approve out with all the procedures to really be on fees and get there reimbursed and accessed to both as soon as possible. And then the pricing well, without getting too much details, of course, we have systems in different countries which are now going to be prepared for the negotiation and discussion for Japanese and that’s a good one, because we can navigate the system without demanding complexities or new things which again, can play on timing on parking lots of similar to their investment and at the same time without really getting on pricing on different levels, the motives and before in the market. In terms of all of entry, there is no special consideration to the direct consumer and industry of your industry.
Thanks, Michele. And I know we’re coming up on the hour, but we’ve got one more question from Benoit Louage at Degroof Petercam. Go ahead, Benoit.
Hello, good afternoon. Thank you for taking my questions. I have two related to the IPF franchise, more specifically for 1205. I was just wondering, now awaiting the PINTA trial readouts, if this trial will be positive, on which timeframe approximately could we expect, you communicating on the next terms going forward with this compounds in IPF and actually, as well in systemic sclerosis?
And as a follow-up on that, I was just wondering, what would your view and Gilead’s view would be in the speed of trying to evaluate 1205 and ziritaxestat and is kind of a combination therapy setting in Phase 3? Would that be something for within the very near future to look into and to initiate? Or what you will wait, maybe some monotherapy evaluation in Phase 3 first before taking or into such strategies? Thank you.
Thank you, Benoit. This is Walid. I’ll take those questions. So I think we’ve talked a little bit about our plans for the OncoArendi program to evaluate this in dose range finding in Phase 2 to program. I think the idea would be depending on the results of PINTA. We can — if the results are fantastic, we can jump straight into ISABELA program Phase 3. If they are somewhere in the middle, we can propose something like the OncoArendi or 4716 program going forward.
Regarding the question on — and I’m sorry — regarding the timeline for it. Again, it’s really hard to predict these ahead of time. The scenario play for all these we prepare, but then until you see the data, it’s very hard to predict. If it’s straightforward then we can — the delay will be very short because we usually plan for the things ahead of time. If the data requires us to scratch our heads that might take a little bit longer for us to come up with a clear path forward as to what we want to do.
Regarding combinations 1690, that’s always been an option. But again, we think as you can imagine, if you have two experimental drugs and you don’t know the dose for neither one of them, then doing these factorial design type of trials become prohibitive. So I think we must think cleverly about it and do some combination work that will enable us to figure out which dose we would use going forward.
So, there’s a little bit of thinking already on that. And we’re starting to do some work pre-clinically to allow us to do so. But we don’t have any clear clinical plan that I can share with you right now. But it’s definitely something that is on our radar screen and something we are certainly interested in across all of our IPF franchise and candidates compound as I said before, thank you.
Okay, thank you for the feedback.
All right, thank you very much. And that we’re going to wrap up today. Please reach out to the IR team Sofie Van Gijsel or myself if you have any questions.
Looking ahead, we’ll be webcasting Executive Presentations at the Jefferies Healthcare Conference later this month and at the JPMorgan Healthcare Conference in January.
Our next scheduled financial results call will be for the full year 2020 results on the February 19, 2021.
We thank all callers for participating today and please stay safe and well. Thank you. Bye-bye.
That does conclude our conference for today. Thank you for participating. You may all disconnect.