Will the Galapagos share ever come close to 250 euros again? The record value on the stock exchange, February 2020, now sounds like a tradition from another era of the Belgian-Dutch biotech company.
Investors had put Galapagos on a pedestal at the time. But it fell hard from there when two candidate drugs failed in the final research phase in quick succession. The company lost 80 percent of its market value. So far, a new CEO and a change of strategy cannot turn the tide.
Galapagos recently announced that it is discontinuing drug trials for pulmonary fibrosis and kidney disease. Two hundred jobs (out of thirteen hundred) will also disappear. The company will focus on medicines for people with autoimmune diseases and on cell therapy for cancer patients.
“In terms of market size and potential, immunology and oncology are the biggest areas of disease right now,” said analyst Alex Cogut of investment bank Bryan, Garnier & Co about the reasons for this move. “And clinical development of this therapy can be completed relatively quickly, think of two or three years.”
It was previously clear that Galapagos is adding oncology to its portfolio through the recent acquisitions of CellPoint and Abound Bio. These companies are working on ‘CAR T’ technology: converting white blood cells, so-called T cells, into a souped-up variant that can attack and disable cancer cells. A treatment that can help, among other things, patients with aggressive lymphoma.
Galapagos’ ambition is to accelerate this form of cell therapy and enable it in multiple locations, so that more patients can be helped. “Now it works that blood cells are taken from patients in a hospital, frozen, brought to one central laboratory, processed there, sent back and then administered,” explains analyst Sebastiaan van der Schoot of Van Lanschot Kempen. The process takes about two to four weeks. “Galapagos promises they can do it in seven days, and in multiple locations. Automated, with a small device that CellPoint has developed.”
Investors don’t seem impressed with Galapagos’ new promises yet. After the presentation of the plans at the beginning of this month, the share price fell by about 10 percent. “Investors had expected more acquisitions, because Galapagos has a very good cash position thanks to a deal with a partner, pharmaceutical giant Gilead,” says Van der Schoot. “Now it actually became clear that we should not expect much more on that front in the coming period.”
Cogut also has another statement: “The success of the new programs has yet to prove itself, so investors want to see more data from clinical trials first.” Because CAR T may be a proven cell therapy, innovation of the technology is again subject to regulation and approval by regulators. In addition, it remains to be seen whether the CAR T cells that are made with the CellPoint machine work properly.
In short: another period of trial and error to Galapagos. In the first half of 2023, more will become clear about whether the existing drug Jyseleca can be prescribed to people with Crohn’s disease. That would be a boost for Galapagos. The drug is now on the market for rheumatism patients and for colitis, but only in Europe and Japan. The US regulator rejected the drug. An additional patient group prescribed the drug would boost Jyseleca’s turnover towards EUR 500 million.
A version of this article also appeared in the newspaper of November 14, 2022