Galapagos hits all-time high as 24-week RA data shorten odds of AbbVie deal

Galapagos ($GLPG) has presented a surprise-free update on the trial of its AbbVie ($ABBV)-partnered rheumatoid arthritis drug, filgotinib. The data led observers to cut the odds of AbbVie of taking up its $200 million (€182 million) buy-in option--or even making a bid to acquire Galapagos outright--and led to the company's stock hitting an all-time high on Euronext Amsterdam.

Galapagos CEO Onno van de Stolpe

Investors are viewing the release of 24-week data from the Phase IIb DARWIN 1 trial of Galapagos' selective JAK1 inhibitor filgotinib as the clearance of one of the last events that could scuttle a deal with AbbVie. And with the data backing up what Galapagos found after 12 weeks, analysts and observers cut their odds of the deal coming to fruition, helping to send shares in the Mechelen, Belgium-based company up more than 11% over a 5-day window. The remaining question for Galapagos and its investors is whether AbbVie sees better value in other parts of its pipeline.

"We acknowledge AbbVie's own JAK1 inhibitor ABT-494 potentially offers the pharma better economics," Jefferies analyst Peter Welford wrote in a note to investors. Filgotinib is more advanced than ABT-494, though. ABT-494 is in Phase II dose-finding studies in patients with rheumatoid arthritis and Crohn's disease, but data aren't due until late 2015 and mid-2018, respectively. AbbVie is due to make a decision on filgotinib in late September, after the release of 24-week data from the DARWIN 2 monotherapy trial.

Welford thinks AbbVie could still back out but is unlikely to do so. "We are skeptical as to the extent to which AbbVie is 'obligated' to opt-in if defined criteria are met for filgotinib, but view DARWIN data to-date to be highly competitive, raising the bar," he wrote. If AbbVie opts in, it will hand over $200 million and agree to up to $1 billion in milestones in return for rights to the drug, which could lessen its concerns about the loss of patent protection on Humira. A further $50 million awaits Galapagos if AbbVie wants to bag filgotinib for use in patients with Crohn's disease, too.

Given that the drug could be a key component of AbbVie's post-Humira future and the Big Pharma bought a $30 million stake in Galapagos earlier this year, some are predicting a bigger deal. "I think Abbvie buys the lot," Jim Mellon, a renowned British investor and co-author of biotech investment book "Cracking The Code," wrote on Twitter.

- read the release (PDF)
- and Jim Mellon's tweet

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