Degroof Petercam 31 mei 2018
Galapagos (Buy) - Success in psoriatic arthritis (EUR 85.8 / TP EUR 103 from EUR 98)
Facts – Efficacy in psoriatic arthritis and progress in ulcerative colitis
Gilead and Galapagos have announced the results of the Phase II EQUATOR study in which the safety and efficacy of filgotinib was evaluated in 131 psoriatic arthritis patients (85% of patients were naïve to anti-TNF treatment).
The primary endpoint of ACR20 at week 16 was achieved. There was an ACR2 response of 80% for filgotinib as compared to 33% for placebo (p<0.001). The ACR50 and ACR70 scores were also significantly higher for filgotinib versus placebo (ACR50: 48% with filgotinib vs 15% placebo; ACR70: 23% with filgotinib vs 6% placebo).
Filgotinib was generally well-tolerated, with no new safety signals observed. The adverse event rate was similar in both groups. There was one serious infection in the filgotinib group, a patient who experienced pneumonia with fatal outcome. Another patient receiving filgotinib developed herpes zoster. There were no cases of opportunistic infection, tuberculosis, thromboembolism, or malignancy.
Separately, the companies announce that an independent Data Monitoring Committee recommended the Phase IIb study for filgotinib in ulcerative colitis to proceed as planned into Phase III at both the 100mg and 200mg doses. This event triggers a USD 15m milestone payment from Gilead to Galapagos.
Our view – Competitive JAK1 inhibitor
The psoriatic arthritis safety and efficacy data appear strong. We were looking for ACR20 responses of at least 40% higher vs placebo to deem filgotinib competitive in the treatment of psoriatic arthritis. Additionally, the ACR50 score, which is clinically more relevant, is also in line with our expectations. As a comparison, tofacitinib, approved for the treatment of psoriatic arthritis, demonstrated ACR20 response rates at month 3 of 50%-61% (5mg/kg-10mg/kg), as compared to 33% in the placebo group.
Adverse events such as the reported infections can be expected with JAK treatment. Overall, the death rate and infection rates in the filgotinib studies remains low.
The futility analysis in the Phase II/III ulcerative colitis study evaluated whether filgotinib was performing better than placebo. Management already indicated it would be very unlikely that the trial would be stopped for futility. As such, this news comes as expected.
Investment conclusion
These results open up the potential for filgotinib to move into Phase III for psoriatic arthritis, ultimately targeting a 1 million patient population in the US and Europe. Following the successful data, we increase the probability of success of filgotinib reaching this market to 30%. As such, our target price increases to EUR 103 (vs 98.) The remainder of the year will bring additional news flow on filgotinib, including the first Phase III results in rheumatoid arthritis. We reiterate our Buy recommendation.