Janney has initiated coverage of Galapagos NV (ADR) (NASDAQ: GLPG) with a Buy rating and fair value estimate of $64, citing potential success of
Filgotinib.
Galapagos has deals with Gilead Sciences, Inc. (NASDAQ: GILD) and AbbVie Inc (NYSE: ABBV) for the development of Filgotinib in inflammatory diseases and cystic fibrosis
(CF), respectively.
The brokerage said the emergence of oral-JAK inhibitors offers an "interesting paradigm" in the management of Rheumatoid
Arthritis (RA). Thus, in Filgotinib (partnered with Gilead), Galapagos has a "potential blockbuster."
The Filgotinib Advantage
"We are modeling peak sales of $1.9 billion for filgotinib in RA, and $658 million in Crohn's with Ulcerative Colitis offers
additional optionality (not in our FV)," analyst Debjit Chattopadhyay wrote in a note.
Chattopadhyay acknowledges that Filgotinib is at least two years behind Baricitinib, an RA drug from Incyte
Corporation (NASDAQ: INCY) and Eli Lilly
and Co (NYSE: LLY).
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However, since the company's drug is third in to launch, it may be a commercial positive, because experience from Pfizer
Inc. (NYSE: PFE)'s Xeljanz suggests physicians are
likely to become increasingly more comfortable with the safety profile of JAK inhibitors over the next two years.
"Filgotinib JAK1 specificity resulting in a superior hematologic safety profile over competitors could be an advantage (more so
in IBD); oral dosing increases convenience over biologics; and although experience with GILD suggests otherwise, filgotinib could
be priced attractively vs. other JAK's and biosimilars (we are modeling a $21,000 launch price in U.S.)," Chattopadhyay noted.
Cystic Fibrosis
Meanwhile, the analyst highlighted that Cystic Fibrosis corrector/potentiator commercial opportunity could exceed $7 billion
globally, and he assumes a 30 percent market share for Galapagos/AbbVie.
Currently, Vertex is the leader in Cystic Fibrosis market with its Kalydeco and Orkambi. The analyst noted that with about
70,000 patient commercial opportunities, it may not be feasible for Galapagos to develop a potentiator and corrector sequentially,
especially if Vertex's triple-combo succeeds in meaningfully improving upon Orkambi.
"Whether GLPG/ABBV will choose a phase 3 program prior to a triple-combo phase 2 is not yet clear, but will likely be data
dependent. Either way, progress on the CF program will be a key driver of sentiment on GLPG stock over the next 12 to 18 months, in
our view," Chattopadhyay added.
At time of writing, ADRs of Galapagos were up 0.77 percent to $54.62.
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Latest Ratings for GLPG
Date |
Firm |
Action |
From |
To |
Aug 2016 |
Janney Capital |
Initiates Coverage on |
|
Buy |
May 2016 |
Morgan Stanley |
Maintains |
|
Overweight |
Jan 2016 |
Goldman Sachs |
Downgrades |
Buy |
Neutral |
View More Analyst Ratings for
GLPG
View the Latest Analyst Ratings
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