The start of Galapagos NV’s phase IIa trial with its cystic fibrosis (CF) therapy, GLPG1832, triggered new speculation regarding what’s ahead for the apparently solid franchise in the space held by Vertex Pharmaceuticals Inc., a company that Morningstar analyst Stefan Quenneville called “a rare gem,” with CF drugs on the market and in the pipeline that are still not given their due on Wall Street.

Mechelen, Belgium-based Galapagos – which as part of an earnings report Friday posted its largest cash balance ever, €1.02 billion (US$1.12 billion) – in mid-February began the phase II SAPHIRA program, intended to test the safety, tolerability and efficacy properties of CF transmembrane regulator (CFTR) potentiator GLP1837 in CF patients with a G551D (SAPHIRA 1) or S1251N (SAPHIRA 2) class III mutation. Top-line results are expected in the fourth quarter of this year.

The company said it has a series of new corrector molecules that enhance the restoration of CFTR in combination with GLPG1837. If preclinical data hold up, GLPG1837 may offer a superior efficacy and safety profile compared to Vertex’s Kalydeco (ivacaftor), in Galapagos’ view, an important factor for a class III drug in the marketplace. But it might also be part of a class II therapy as well. (Class II mutations include the most common, F508del.) The firm said triple combination therapy of GLPG1837 with corrector candidate GLPG2222 plus other molecules from a separate series show up to 60 percent restoration of wild-type CFTR function preclinically, compared to the 20 percent demonstrated by the Kalydeco/lumacaftor combo, approved by the FDA last year as Orkambi for patients, ages 12 and older, who bear the homozygous F508del mutation. Correctors fix defects in the expression of the CFTR protein, and potentiators increase the activity of the main mutations. (See BioWorld Today, July 6, 2015.)

Boston-based Vertex also has the CFTR corrector VX-661 in late-stage trials, which could bolster its position further. Morningstar’s Quenneville believes “Kalydeco, Orkambi, and/or VX-661 are likely to form the backbone of CF therapy for the majority of patients for the foreseeable future, given their disease-modifying efficacy leading to over 50 percent reduction in hospitalization and limited near-term competition.” He wrote in a research report a week ago that “strong CF drug pricing and rapid patient uptake suggest over $6 billion market potential for [Vertex’s] portfolio of CF drugs,” but conceded that Vertex’s shares have suffered in recent months due to anxiety over the launch trajectory of Orkambi. The firm’s triple-combo approach – using Kalydeco, VX-661 and a second-generation corrector – “should further improve Vertex’s market position by reaching the remaining 25 percent of CF patients,” he said, and guessed a 50 percent likelihood of approval in 2020. “At [Vertex’s] current valuation, the market is discounting this opportunity, along with the potential of its earlier-stage non-CF pipeline,” he said. The company’s stock (NASDAQ:VRTX) has been drifting mostly downward since the end of December, and closed Friday at $88.36, down $1.09.

The most advanced would-be threats, if any, to Vertex’s CF kingdom have come from Galapagos and from Novartis AG, of Basel, Switzerland, with it phase II potentiator QBW251. But the latter may have derailed, said Jefferies analyst Brian Abrahams in a Feb. 25 report. “Several data points lead us to believe NVS may have discontinued” the compound, he wrote. Since the summer of 2012, QBW251 has been in development in 260 class III-VI patients. “We note that the clinical trials register in the European Union shows several countries having prematurely ended the study, and the CF Foundation website now lists the molecule as discontinued,” though the phase II trial still was listed on clinicaltrials.gov and Novartis “neither confirms nor denies” the shutoff. “While it was not a focal point for the Street as a major competitive threat, there was concern that ‘surprise’ data from this program emerging at some point could serve as a downside risk to Vertex,” he said, adding that whether “efficacy or safety issues, challenges recruiting or de-prioritization led to the possible discontinuation, we believe this could highlight the potential challenges to entering the CF market, given Vertex’s dominance.”

Galapagos, for its part, is allied with North Chicago-based Abbvie Inc. in CF, having entered a deal in September 2013. It was the second collaboration for the duo, and smaller than the blockbuster 2012 arrangement for GLPG0634, the Galapagos Janus kinase 1 (JAK1) inhibitor for rheumatoid arthritis, which was worth $1.35 billion to Galapagos, plus royalties, and included an up-front payment of $150 million. Abbvie, however, later declined to exercise its option to in-license the JAK1 inhibitor, electing instead to advance its own same-class candidate, ABT-494. (See BioWorld Today, March 1, 2012, Sept. 25, 2013, and Sept. 28, 2015.)

“Any competitor success would likely reduce out-year Vertex estimates,” allowed Abrahams, but “we believe the barrier to conduct trials and displace [the company’s] current and future products will be high.” Like Quenneville, he regarded Vertex shares as “fundamentally undervalued.”

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