December 9, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Thousand Oaks, Calif-based Amgen has indicated it may be in the market for a big acquisition, and analysts have been speculating on who they might buy ever since. The target is Belgian-based Galapagos NV , based on a positive clinical trial data for a Crohn’s disease drug.
On Dec. 7, Galapagos announced that its 200 mg filgotinib, a once-daily, oral drug for moderate to severe Crohn’s disease, was shown to be effective and safe. Crohn’s is an inflammatory bowl disease (IBD). Filgotinib is a highly selective JAK1 inhibitor. The company is also planning to start a Phase III trial with the drug in rheumatoid arthritis in the first half of 2016.
“The results of this study are exciting and show that with an oral treatment and new mechanism of action we are able to induce a high rate of clinical remission in moderate to severe Crohn’s disease patients,” said William Sandborn, chief, Division of Gastroenterology at the University of California San Diego School of Medicine, in a statement. “Taken together with a favorable safety profile, filgotinib has a good potential as future treatment for IBD.”
In September 2014, AbbVie Inc. returned the rights to filgotinib to Galapagos, deciding instead to develop its own JAK1 inhibitor, ABT-494. AbbVie apparently believes that its drug is more effective than Galapagos‘s, and has a better safety profile. Since investors thought maybe AbbVie Inc. was going to develop filgotinib itself or jointly, this hammered Galapagos stock for a while, losing about a third of its value in a single day.
This week’s announcement led the company’s stock to jump over 17 percent. Galapagos is currently trading for $57.43.
George Budwell, writing for The Motley Fool, said, “Before investors get too excited, though, it’s important to understand that there are several other experimental treatments in ongoing trials for Crohn’s disease, including ABT-494. Thus, filgotinib will need to be able to differentiate itself from currently available therapies—and any forthcoming competitors—in this increasingly crowded space to be a major value driver for Galapagos going forward.”
Which circles back to Amgen. JAK inhibitors are a new class of drugs that are being developed for a variety of inflammatory disorders, including IBD and rheumatoid arthritis. Because of Galapagos’s early successes, it gained interest from AbbVie, as well as Johnson & Johnson . JNJ’s arthritis drug Remicade lost its U.S. patent protection in September 2018. It is also getting beat up by some low-priced drugs in Europe.
JNJ, in an effort to deal with this, partnered with Galapagos and Astellas for JAK inhibitors. Last year JNJ split with Astellas, and then with Galapagos in March 2014.
AbbVie, on the other hand, has Humira, an arthritis drug, which loses its U.S. patent in 2016 and its European Union patent protection in 2018. Humira accounts for about 60 percent of AbbVie’s sales. It needs an alternative RA drug as well. In 2012, it partnered with Galapagos to develop filgotinib, but backed out of this deal in September of this year.
So Galapagos may be available for partnership or acquisition, should Amgen come calling. In an earlier research note, Matthew Harrison, an analyst with Morgan Stanley, wrote, “Galapagos management can negotiate another deal with a key rheumatoid arthritis player and advance filgotinib quickly.”
Amgen, which says it’s looking for deals in the $10 billion range, has a top-selling anti-TNF drug, Enbrel, whose U.S. patent expired in October 2012, but received a 16-year extension. But it lost its European exclusivity last year. In addition, Novartis ’s Sandoz will be launching an Enbrel biosimilar soon.
Picking up Galapagos would add a potential blockbuster to Amgen’s portfolio, and it already has been partnering with Galapagos since 2003. Galapagos’s current market cap is about $2 billion.
The risks, according to Bidnessetc, is competition. Pfizer Inc. , launched a JAK inhibitor, Xeljanz in 2012. Eli Lilly & Co. and Incyte Corporation had positive Phase III trial data for its JAK inhibitor, baricitinib, compared to placebo and Humira. Galapagos’s drug will need to prove that it’s either different or better than its competitors.
