LONDON – Galapagos NV has raised €53.9 million (US$70.7 million) in an over-subscribed placing in which it has tapped into the strong appetite U.S. investors currently have for biotechnology.
This is Galapagos' fourth private placing since it went public in May 2005. "It definitely was easier than previous rounds: there was a minimal discount and we have attracted premier investment groups, in particular in the U.S.," said Onno von de Stolpe, CEO. "It's been a fantastic success," he told BioWorld Today.
Overall, 90 percent of the new shares were placed with U.S. investors, who von de Stolpe said were drawn in by the March 2012 agreement Galapagos signed with AbbeVie (then Abbott) for GLPG0634, a selective JAK-1 (Janus kinase-1) inhibitor. In what was claimed as the largest Phase II deal in the history of the industry, Galapagos took a company-transforming fee of $150 million up front, with a further $200 million to follow by the end of 2014 if GLPG0634 turns in positive results in a Phase IIb study in rheumatoid arthritis that is being run by Galapagos.
AbbeVie is lining up the orally available treatment as a potential successor to Humira, its anti-TNF alpha antibody which currently is the world's best-selling drug.
"Investors are focussing on AbbeVie and looking at all the products filling its pipeline – that gives exposure and generates interest in Galapagos," von de Stolpe said. He added that what they see on a closer inspection of Galapagos' portfolio is a strong pipeline with three products in Phase II. "This allowed us to attract specialist funds; it fits in with what they are interest in."
Galapagos placed 2.7 million new shares at €20 per share, a 1.7 percent discount. The shares comprise just under 10 percent of the issued equity and bring the total number of shares in the Mechelen, Belgium-based company to 29.7 million.
The new shares began trading last week (April 30) on the NYSE Euronext Exchanges in Brussels and Amsterdam. On the same day, NYSE Liffe, the derivatives arm of NYSE Euronext added options on the shares of Galapagos to its Brussels market.
"This was on the initiative of the stock exchange and because of the good liquidity [of Galapagos' shares]," von de Stolpe said. He hopes the listing will further improve liquidity and increase the visibility of Galapagos in financial markets.
Galapagos intends to use the proceeds of the new funding to keep programs in house for longer and develop them further. In particular, money will go into a cystic fibrosis program, and programs in breast cancer and inflammatory bowel disease (IBD).
In addition, the money is an insurance policy against the failure of GLP0634 in the Phase IIb study in rheumatoid arthritis and the eventuality that AbbeVie does not take up its options. "We've made it clear to the market we wanted to increase the cash position so if the trial is not positive we can still advance our other programs," said von de Stolpe.
In April it was announced that AbbVie was to provide additional funding of $20 million to Galapagos, enabling the Phase IIb program for GLP0634 to be expanded to 875 patients. Galapagos will initiate the six-month global study in the second quarter of 2013, under a trial design agreed with AbbVie.
Mirroring Humira's Label Expansion
First data from the program are due before the end of 2014 and if AbbVie decides to take up the license, GLPG0634 also will be developed in psoriasis, irritable bowel syndrome and lupus. That will mirror the way in which the label on Humira has been expanded beyond the initial indication of rheumatoid arthritis.
In terms of the in-house programs, in March Galapagos announced positive Phase I data for GLPG0974 in IBD, preparing the ground for a Phase IIa proof of concept study in ulcerative colitis which began last month. GLPG0974 is an inhibitor of FFA2 (free fatty acid receptor 2, formerly known as GPR43) for treating chronic neutrophil-driven inflammatory conditions.
Galapagos has been pursuing cystic fibrosis as the first orphan disease in which the company aims to discover, develop and launch its own medicines. This plan, announced in 2010, was based on a successful collaboration with the U.S. Cystic Fibrosis Foundation, the charity which has provided the spur for the development of a number of treatments for the inherited respiratory disease. Galapagos is developing small molecules to address a major mutation, with four separate programs in drug discovery. The company plans to select the first preclinical candidate later this year.
In the breast cancer program, Galapagos has discovered a drug that completely blocks tumor growth in a mouse model of triple negative breast cancer. The first clinical trials of the drug, GLPG1790, are expected to start within the next year.
In other financings news:
• Prana Biotechnology Ltd., of Melbourne, Australia, closed its share purchase plan on April 26. The company said it received applications for 10.4 million new shares, which were allotted on May 3. The company said it will mail holding statements to shareholders on May 8, enabling them to begin trading the shares. Funds from the offer will be used to advance the development of lead asset, PBT2, which is in concurrent trials in Huntington's disease and Alzheimer's disease. On Friday, the company's NASDAQ-listed American depository shares (NASDAQ:PRAN) gained 1 cent, closing at $2.27.