Wall Street Trader schreef op 19 januari 2021 10:26:
Thanks to avantiavantiMorgan Stanley extract uit update dd 19 januari 2020
Galapagos NV (GLPG.O)Too Many Catalysts In 2021 To Ignore; Upgrade To Overweight
Galapagos NV (GLPG.O)
From: Equal-weight To: Overweight
Price TargetFrom: $159.00 To: $129.00
Matthew Harrison, Connor Meehan, Zhen Zeng, Ph.D., Thomas F Lavery, J.D.
January 19, 2021Following filgotinib's return to Galapagos, we now see an attractive entry point. With GLPG trading below cash, we believe IPF optionality, the Toledo platform and a positive NPV for filgotinib in Europe provide sufficient upside drivers.
Upgrade to OW, PT to $129 from $159.
WHAT'S CHANGED?From: $159.00 To: $129.00Filgotinib pullback provides opportunity:
While Gilead's return of filgotinib is disappointing, we believe the market is now too heavily discounting the risks associated with filgotinib's European launch and has overlooked multiple potential upside drivers in 2021. First, we believe that while the peak sales opportunity for filgotinib in Europe is modest, mgt. will be disciplined with expenses and we expect an NPV positive opportunity. Second, since Galapagos' current cash balance of ~€5.30B is greater than the current market cap of ~€5.25B, we believe the market is overlooking the upside optionality from the IPF futility analysis and the Toledo program. We believe positive evidence of activity from either study can drive GLPG substantially higher.2021 will be catalyst-rich for key pipeline assets: For IPF:
The first half of 2021 will bring a futility analysis from the ISABELA trial, which is a PhIII trial evaluating ziritaxestat, an oral autotaxin inhibitor, in patients with IPF, or idiopathic pulmonary fibrosis. While ISABELA is a high-risk, high-reward trial, we believe the bar for futility is modest (<22mL separation of drug from placebo) and expect the trial to continue. Toledo: As discussed at the Toledo roundtable earlier this year (note here), Galapagos is developing a number of assets that target the novel SIK mechanism, which plays a dual role in the production of both immunoregulatory and pro-inflammatory cytokines. A number of trials with Toledo assets are already underway across a number of inflammatory indications. We expect proof-of-concept for the mechanism in 2021 and the market to begin to value the opportunity. At current levels, the risk-rewards for both the ISABELA and Toledo programs are skewed to the upside.FIlgotinib has a positive NPV, even with the restructured agreement:
Our updated estimates for filgotinib include EU sales in RA and IBD indications (UC/Crohn's), and in the U.S., we model modest royalty payment from Gilead on sales in UC and Crohn's. A sum-of-the-parts analysis (separate from our DCF) on the updated filgotinib opportunity suggests the drug contributes ~$25/share to overall valuation.We update our model for new filgotinib agreement: Our new PT of $129 incorporates key changes since the updated Gilead agreement.
We have removed US filgotinib sales in RA, PsA and AS and lowered our probability of success for UC/Crohn's. Further, we have adjusted our expectations for commercial spend and tempered our R&D growth expectations given mgt.'s comments that it will pause its R&D growth until there is greater clarity on near-term pipeline readouts. These changes reduce our PT by ~$30/share.