Galapagos' new CEO, Paul Stoffels, M.D., is ready to jump into acquisition and partnership talks and review new chief science officer candidates as he oversees a much-needed turnaround for the 23-year-old biotech.
The Gilead-partnered company has a "very strong foundation with a significant balance sheet, which allows [us] to start going after new opportunities, and that's very attractive," the ex-Johnson & Johnson chief science officer told Fierce Biotech in his eighth hour at Galapagos' Belgian headquarters. Stoffels wouldn't comment on whether he'll shake up the biotech's C-suite, given it was his first time meeting some of the management team.
Stoffels will immediately dive into acquisition discussions, even though he doesn't officially replace outgoing CEO Onno van de Stolpe until April. High on the priority list will be biotechs with late- to mid-stage assets; that approach could get a Galapagos med on the U.S. market quickly. But what's definitely not on the table is a Galapagos sale, thanks to a multiyear tie up with Gilead that prevents a near-term exit.
Despite multiple quarters of setbacks at Galapagos—and a laundry list of challenging duties to come—Stoffels decided to skip opportunities to join biotech boards in favor of being "close to the action" at a company with a "lot of cash," he said. The 59-year-old made up his mind about leaving the third-highest-paid pharma R&D post "some time ago" but stayed at J&J until last month to complete work on the healthcare giant's COVID-19 vaccine.
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Landing at Galapagos was no fluke for Stoffels, either. He was previously chair of the infectious disease biotech Tibotec, which launched Galapagos in 1999 through a joint venture with Crucell, which is now part of J&J.
Stoffels was announced as Galapagos' next CEO on Wednesday to replace van de Stolpe, who has helmed the company from the beginning. Van de Stolpe had hinted at a leadership announcement to come a few weeks ago at the J.P. Morgan Healthcare Conference, and it seems Galapagos had already found its man at the time.
Stoffels, who has brought more than two dozen drugs to market, envisions a long tenure at Galapagos, especially because he can't exercise his stock-option rights until 2026.
He inherits a biotech that has weathered a series of flops in recent years and a stock that has lost half its value in the past year. For one thing, the company was forced last year to shed a phase 3 program and midstage trials for ziritaxestat, a candidate in development through a $5 billion tie-up with Gilead. Plus, in 2020, safety concerns prompted the FDA to reject a JAK inhibitor therapy that was part of the Gilead deal.
Stoffels' appointment seems to have rallied investors. On day 1, shares climbed nearly 22% to $64.91 apiece, but that's still below what the outgoing CEO would like to see.
"[I]t's up to Paul now to first close the gap," van de Stolpe said in a side-by-side interview with Stoffels, who is returning home to Belgium to be closer to his four kids and seven grandchildren.
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With only one product on the market in Europe—the ulcerative colitis and rheumatoid arthritis med Jyseleca—Galapagos was on the hunt for late-stage inflammatory-focused acquisition targets earlier this month at the J.P. Morgan conference. But the company wouldn't shake hands on a deal until van de Stolpe's successor was revealed, the outgoing CEO said at the time.
Acquisitions will be pivotal to shoring up a pipeline that lost a phase 3 idiopathic pulmonary fibrosis therapy and a midstage systemic sclerosis asset last year.
"The gap between where we are with Jyseleca on the market and our own pipeline, it's just too big. We cannot bridge that in time, so we need to bring something in that's later than our current assets," van de Stolpe said.
To fill the holes in its late-stage pipeline, Galapagos will gobble up biotechs with midstage or phase 3 assets or ink partnerships to expedite the path to getting its first U.S. med on the market, the executives agreed.
Stoffels will also recruit a new chief scientific officer, and he'll have plenty of inside knowledge to bring to that search. Piet Wigerinck, Ph.D., stepped down from the job in June 2021.
RBC Capital Markets analysts were a little more cautious on the prospects for a speedy business turnaround at Galapagos. A "revamp will take time," they said in an investor note after speaking with management Wednesday morning.
"We expect [Stoffels'] reputation and contacts should open more doors to facilitate this, and he noted that their commercial infrastructure from Jyseleca could also improve partnering abilities," the analysts wrote.
While Galapagos is in the market to buy, the company is definitely not going to be for sale anytime soon because of its deal with Gilead, which rules out an exit in the next eight years, van de Stolpe said. Gilead's grip on the company also played a role in the CEO successor decision: Gilead CEO Daniel O'Day and Senior Vice President Linda Higgins, Ph.D., are on Galapagos' board.
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Had the Gilead deal not come to fruition, van de Stolpe would've been "very, very worried" that the "Pfizers of this world" would've swooped in and acquired Galapagos when it brought Jyseleca to market. The Gilead deal was the "icing on the cake" because it allowed Galapagos to continue without a Big Pharma parent, he said.
As for his legacy, van de Stolpe said he would "hate to see Galapagos become a 'me too' company." Prioritizing innovation and high unmet medical needs has come with high risk and high failure rates—"and we've experienced that," he said with a chuckle, noting innovation should not let up despite the setbacks.