Galapagos - Earnings Call - Q1 2019
April 26, 2019
Transcript
Speaker 0
Good day, welcome to the Galapagos Q1 Results Webcast. At this time, I would like to turn the conference over to Elizabeth Goodwin. Please go ahead.
Speaker 1
Thank you, and welcome all to our audio webcast. I'm Elizabeth Goodwin, Investor Relations at Galapagos. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today. So that your questions can be included, we kindly request you call in to one of the telephone numbers given in last night's press release. I'm gonna give you the one for Belgium right now.
That's (322) 404-0659, and our conference code is +1. I'd like to remind everyone we will be making forward looking statements during today's webcast. These forward looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environment. Because these forward looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Annoval Mastolka, CEO and Bart Filius, COO and CFO.
Ana will go through the operational highlights and Bart will explain the financial results. Then Bart will go into the guidance and Ana will close with the late stage clinical news flow we expect this year. You'll see a PowerPoint presentation on screen. We expect this will take about ten to fifteen minutes and that will be followed by a Q and A session with the executive committee members joining. I'd like to hand over now to Arno for the presentation.
Go ahead, Arno.
Speaker 2
Thank you, Elizabeth.
Speaker 3
Well, we are very,
Speaker 2
very pleased with the FINCH data that we reported this quarter. We reported the FINCH one and the FINCH three data, and they confirmed what we have seen previously in the other trials that we have run, FINCH two as well as the DARWIN trials, that filgotinib is doing everything that we expected it to do, both on the efficacy as well as on the safety. We had excellent efficacy data on all the clinical meaningful endpoints being ACR50, ACR70 on the DUT remission as well as on the radiographic progression. So really, this is a super moment for Galapagos that after twenty years, we now have completed week 24 Phase III program for filgotinib in RA.
Speaker 4
But
Speaker 2
clearly, in RA, the differentiator is going to be the safety profile in combination, of course, with efficacy. And the safety data were absolutely excellent. We saw very low rates of serious infections, low rates of DVTs, MACE, of death. We saw, again, improvement of hemoglobin and the lipid profile, and we saw, again, a decrease in platelets. So all in all, confirming what we have seen in the previous trials and altogether making this clearly in the league of the best
Speaker 4
in
Speaker 2
class for the treatment of RA. It bodes well for filgotinib going forward. Also very interesting is that we saw a nice dose response with regard to efficacy, but we didn't see any dose dependent difference on the safety side, which is really good news. So we anticipate that we'll get registration both for the 100 as well as the two hundred milligram doses, and that bodes well for the marketing of this drug because the other JAKs are likely to only have one doses approved, and doctors apparently want to see a clear differentiation with a possibility to subscribe a low and a high dose. So we hope to have a marketing advance from that point of view.
So hallmark program, a landmark for Galapagos, and we're very pleased that we could share that with everybody in this quarter.
Speaker 4
We go to the next slide.
Speaker 2
This also the Fintech also bring us
Speaker 5
closer to
Speaker 2
Galapagos stepping into the commercial space. We will be marketing filgotinib in our home territory, being in the Benelux, Holland, Belgium and Luxembourg, and we plan to initiate that when filgotinib gets approved in Europe next year, where we start booking the sales and marketing the drug in 2020. The next step will then be to expand our commercial operations into the big countries in Europe, where we will start marketing filgotinib in IBD, so Crohn's and UC, two of the Phase III trials that are currently underway. And then from 2022 and onwards, we anticipate to expand our geographic reach in commercialization, where we anticipate that sixteen ninety could be launched in idiopathic lung fibrosis. And then we also are planning to enter The United States as a marketing territory.
So clearly, our mission is to establish a global biopharma company. We do it step by step. It's difficult to establish the commercial footprint, but the way we have planned it, we believe we can do it and be successful in bringing these products to the market. If we go to the next slide, and let's look back on the clinical delivery in the quarter. Of course, filgotinib with FINCH one and three, complementing the FINCH two data of last year.
But that was not the only news on filgotinib. We completed the recruitment for the SELECTION study, which is the Phase III in ulcerative colitis. We also finished recruiting in Sjogren's and in lupus. We're actually expecting the data of these two Phase II studies this year. So that are new indications for filgotinib in these diseases.
And together with Gilead, we're building the commercial organization worldwide. Well, for us now in the Benelux, Gilead clearly the rest of the world. In IPF, we are fully going ahead with the recruitment in the ISABELA 16 '90 study. We're actually we are ahead of planning. So the recruitment is going faster than we had anticipated, which is very good news.
We also started the second trial with sixteen ninety in systemic sclerosis, the NOVEAZA trial. So that's underway. And we expanded our pipeline in IPF with compounds that we in licensed from Fibrocore and Evotec. We So really want to build a big franchise here, and we believe that we should look at a number of different mechanisms to target this disease. In 1972, in osteoarthritis, we saw a very strong recruitment in the ROCCELLA trial, which is a Phase IIb trial together with Servier, where we're clearly substantially ahead of the original planning, which is good news because we will be fully recruited in the next quarter.
So with the collaboration with MorphoSys, we are moving forward in atopic dermatitis, the program that we partnered with Novartis. And we just announced yesterday the start of the GECO Phase II trial together with MorphoSys and Novartis. And then earlier in the inflammation space, we started our first Phase I trial with three thousand two and twelve, which is the first generation of our Toledo program, and we expect the second one to start actually this summer. So we're putting a lot of efforts on that, as I've indicated before. And we also started a Phase I trial with JAK1TYK2 molecule 3,121.
So two Phase I trials added to the pipeline. With that, I would like to hand it over to Bart to give us the financial highlights. Thank you, Ono, and good morning, everyone, in The U. S. Good afternoon in Europe.
Let me take you through two slides on the financials for the quarter, the 2019. And then I'll finish off with saying a
Speaker 6
few words
Speaker 2
about the expected news flow for the rest of the year. First slide on cash. So we are landing the quarter end of the quarter at more than €1,200,000,000 of cash. So the cash position is still very strong for the company. And in the quarter, we have spent €76,000,000 on operating cash burn.
And we've also generated a little bit of money from warrant exercises, euros 3,500,000.0. And there's always a currency translation effect in our cash balance because we keep part of our cash in dollars. And this year, there's been a favorable translation effect of €5,000,000 So the €76,000,000 just to put that in perspective, our full year guidance for this year is between $320,000,000 and €340,000,000 And we are retaining that guidance for the full year. We're on track to be there. And €76,000,000 is representing a little less than onefour of that number with some quarterly fluctuations that's perfectly in line with expectations.
So a good cash position and in line with guidance is the key message on the financials. On the next slide, a couple of quick words on the P and L. Revenues have been €41,000,000 for the quarter, slightly lower than the 2018. We had some revenue recognition for cystic fibrosis still in the 2018, and that's a result of the transaction with AbbVie where we've handed back the rights on the CF molecules. There is a significantly lower revenue recognition.
So we're a little bit lower for the quarter, but it's all accounting wise on revenues. On operating costs, we are higher by €17,000,000 compared to the same quarter of last year, and that is mainly driven by cost for mid- and late stage developments. And within there, it's clearly sixty-ninety, where we're now fully on track in our ESA beta files, and that was not yet alive in the 2018. So a bit higher in terms of operating costs. There's also a bit of influence, which is also accounting on cost allocations for the warrants as the share price of Galapagos has performed nicely over the quarter.
We are also accruing for higher costs for warrants that are outstanding. That leads to the net results, which is €49,000,000 negative, which is a bit worse than the 2018 for the reasons I just described on revenues and operating costs and partly offset by a €5,000,000 positive currency translation effect. So that's it for the financials. I'll stick to that. I invite everyone to who's interested in further detail about split by program, etcetera, to look at our quarterly report, which is an online report available on our website.
Then let me finish off the initial remarks with the expected use flow for 2019. You can see this on this slide. The first half and the orange tick marks are the news that has already reached the market. So a big chunk of the news for the first half that we had promised and anticipated is with you all in the public domain. For the second half, there are some very, very interesting data sets still to come.
Ono mentioned it just now. We have data sets about Sjogren's and lupus for filgotinib, which could be an additional two indications that we will be further investigating together with our partner Gilead. We will also be starting the psoriatic arthritis trial together with Gilead in Phase III for filgotinib. So a lot of movements around this molecule. And then a bit further down on the slides, on MOR106, there we anticipate to be able to share some data on the bridging study later this year.
We have extended the time line for the news flow on the IGUANA trial. As we have increased the number of patients that are included in that trial, we now anticipate that the primary analysis will be in the 2020 rather than our previous guidance 2019. And then finally, on the earlier programs, so the Phase I programs, there is three Phase I readouts to be expected: 3,312, 3,121, so that's Toledo and
Speaker 7
the
Speaker 2
JAK1TYK1, JAK1TYK2 and then one further compound of which we've not yet disclosed the targets. We'll also be seeing Phase I data later on this year. And we'll start a second Toledo compound, 3,970, in Phase I. And we hope to start also a proof of concept with our first Toledo compound in an IBD indication in the second half of this year. So a lot of news flow to come still for Galapagos in the rest of the year.
With that, I'll suggest I stop the initial remarks. I hand it back over to Elizabeth and the operator for further Q and A, for which we have Valid and Pete also available. Thank you all.
Speaker 1
Okay. Thanks very much, Bartonano, for those prepared remarks. I'd now like to ask the operator, Savannah, to connect us to any callers with questions for the executives at Galapagos.
Speaker 0
And we will take our first question from Wimal Kapadia with Bernstein. Please go ahead.
Speaker 7
Thanks very much for taking my questions.
Speaker 4
Kapadia from Bernstein. Just a couple, please.
Speaker 7
So first, I just wanted to get your thoughts on the lack of superiority in the FINCH studies versus HUMIRA. I appreciate that you guys has demonstrated superiority, but that it won't be a specific claim on the label. I But guess I just wanted to get your thoughts on whether you thought this would have an impact on penetration, particularly within the first line setting? Secondly, just on MANTA, can you provide any updates post the trial expansion into the new and into the additional indications? And then finally, given that the recruitment of the IPF trials is going extremely well, is it possible for us to see an interim of either Pinto or Isabella in 1H twenty twenty?
Thank you.
Speaker 4
Okay. So this is Alid. I will take your questions. So first regarding the superiority in HUMIRA for FINCH one, I think one of the things that you've seen in that trial is that once you use the sort of lower level type of efficacy endpoints like ACR20 or low disease activity for the last twenty eight, you see that the effects that we've seen with Humira, particularly HR20, for example, in that trial at twelve weeks, you've seen a good seventy percent, which has not seen in any of the previous trials with when they use it as an active comparator. In the UPA trial, also with the topa and with the berry trial.
So I think on that level, direct comparison on the low disease activity, which was the pre specified endpoint, just missed superiority. But once you go on higher degree of clinical rigor, looking at clinical remission with that 28 less than 2.6, There we do show superiority, but since it was lower in the hierarchy, have its nominal superiority because it was not alpha protected. To be clear, there was no expectation that you would get a superiority claim on the label with one trial demonstrating superiority. The regulatory authorities are clear on that. So that was not part of the expectations sort of going forward.
But again, I think here you see it's an artifact of having a higher response than expected. But then when you increase the threshold for more meaningful endpoints, I think you still see the same type of differentiation we expect from a JAK1 inhibitor like filgotinib. So for the MANTA, I think the MANTA is sort of talking about the expansion to an additional indication. It's part of our discussion with the FDA to try and essentially broaden the inclusion criteria to allow recruitment of the patient population. Often these studies are designed using sort of inclusion criteria based on WHO standards for usually healthy men.
And when we look at individuals who suffer from chronic inflammatory conditions, whether it be inflammatory bowel disease or rheumatoid arthritis or other rheumatic diseases, it becomes a bit difficult to find patients who would meet the criteria set forth or defined in the healthy subject population. So in discussion with the FDA, we agreed to broaden the inclusion and exclusion criteria, one of which is essentially broadening into the rheumatic disease indications. And because obviously the protocol and the sites to conduct those studies are quite different than the ones for IBD, we created essentially an identical protocol called Manta Ray that will expand to the rheumatic disease indications. And actually the data will be pulled from both studies to have a combined total of two hundred patients having completed the thirteen week of treatment of primary endpoint. So I think it should be viewed that way.
And the third point about getting results a bit earlier, I think it's a bit early to tell. I think by the end probably end of the summer, around September, we'll be in much better place for Isabella to be able to give some guidance as to how well we're moving forward with recruitment. The early days are looking good, and we're very happy with the way we're progressing and the excitement and the interest that we're seeing from various sites. But we still haven't activated the majority of our sites, and we should wait until that so that we can better inform. For the pinta, we are recruiting on target right now, and we're still expecting to have results in the second half of next year.
Speaker 7
Great. Thanks very much.
Speaker 4
Hope I answered all the questions along. Thank you. Thank you.
Speaker 0
And our next question will come from Ellie Merle with Cantor Fitzgerald. Please go ahead. Hey, guys. Thanks so much for taking the question. And also let me offer my congratulations on the truly impressive FINCH data sets.
So in terms of atopic dermatitis, where you're not currently studying filgotinib, just given that there are many JAKs of development for AD that have shown activity, I guess, what are your thoughts around potentially studying filgotinib in AD? And I guess, do you think the mechanism of JAK1 makes sense in this indication? Thanks.
Speaker 4
Thanks, Ali. So yeah, I think atopic dermatitis has been on our radar screen for some time. Frankly, we look at this in the context of the big program with filgotinib. If you recall, we are after a number of indications right now with RA, UC, Crohn's, but also ankylosing spondylitis and psoriatic arthritis, most likely now heading towards confirmatory trials. We have also Sjogren's syndrome and cutaneous lupus, we're gonna read out at the end of the year.
As you were evaluating the totality of the data, atopic dermatitis for a variety of reasons fell below the threshold to engage further. As you can imagine, this is always a space that is in flux. We will always reevaluate and reconsider. But for the time being, we don't have any concrete plans to move forward with AT. Whether it makes sense for the JAKs or not, mean, think you've seen some of the data which look interesting in terms of efficacy.
To me, the key question is where is the unmet medical need, and does a JAK inhibitor which could lead to a potentially higher level of immunosuppression than you would expect from other treatments that are now available for atopic dermatitis, whether it makes sense. It's kind of ironic that the most safe and efficacious so far data wise from the JAKs is the only one that's not pursuing atopic dermatitis, but I think it's something that we will be continuing to monitor and see whether it makes sense to go in that direction or not.
Speaker 0
And we will move on to our next question from Emily Field with Barclays. Please go ahead.
Speaker 1
Hi, thank you. I was just wondering, you know, given the safety profile that you've seen from the FINCH trials thus far and that you're running the MANTA study, do you think that there would be any potential to avoid a box warning on The U. S. Label? Or does that remain sort of a baseline expectation?
And then just also, the control arm response rates on ACR20 seem to be much higher in the FINCH trials versus the SELECT trials. And I was just wondering if you had any thoughts on that. Thank you.
Speaker 4
So may I ask clarification, the box warning, can you say specifically on what specific box warning you're talking about?
Speaker 1
No, just I was wondering, given the safety profile that you've seen thus far across thrombosis, thrombotic events and then also infections, if it's your baseline expectation that you will have a box warning on The U. S. Label, or do you think that that could be avoided?
Speaker 4
Yes. So I think I mean, it's premature to be able to say this with any level of confidence, but I would imagine that there's a general box warning around risk of infection and malignancies that probably will be all JAKs will have to have that. With regard to the thrombotic events, I think our data so far are quite differentiating, and I would expect that we should avoid having any labeling in that respect. But we will see how the agency will look at this. We will have a glimpse as to how they think about it when they will have discussion around the OPA, which should be coming up in the next few months.
But it is my expectation that filgotinib will be positively differentiated in that space. Talking about the placebo response rate and active control response rates in our FINCH program, I cannot give you more than speculation at this point because we haven't yet done the additional subanalysis, which I would imagine that would be part of an upcoming scientific presentation. We will have maybe more chance to discuss it. But I think at this point, if you look at FINCH one and three, we tended to have a little bit more patients probably from Eastern European or maybe countries like India in the trial, more so than FINCH two, for example, that could potentially explain this. Sometimes these trials also have a condition that if patients actually worsen during the trial, will have to exit the trial and go and be treated with the standard of care.
And in some of those countries, standard of care is not really that great. So it's kind of an incentive for patients to kind of do better and stay in the trial. I don't know if those actually played a factor in it, but those are kind of speculation on my part without really having any of the analyses and the data to back it up. So wait and see for more analyses when we disclose further the data.
Speaker 1
Great. Thank you very much.
Speaker 3
And
Speaker 0
our next question comes from Devjit Chattopadhyay with H. C. Wainwright. Go ahead.
Speaker 8
Hey, thank you. Good morning and good afternoon. So I've got a couple of questions. First one on $16.90, could you walk us through the year end go no go decision on 1690 from a study powering perspective and especially how much alpha spend is associated with the interim look and the final p value assumptions assuming the trial moves forward?
Speaker 4
Yes. So there's no it's not in the year end. So just to be clear, the timelines are not year end. So maybe I can take a step back and can explain a little bit. So this program includes two identical studies, each one with seven fifty patients, two fifty per arm.
And it is powered it has 90% power to detect a difference of one dose versus placebo of more than eighty ml difference in FVC. And we use the of the rate of decline analysis in those trials. Our plan is to conduct futility analysis once twenty five percent of the patients combined from both trials, so fifteen hundred, twenty five percent, so three seventy five patients would have crossed the one year line. At which point we take all the data, those for whom we have data more than one year, those for whom we have data less than one year, and take the totality of the data to calculate the rate of decline in FVC. And if there's low chance that we will be able to differentiate from placebo, then on both doses, so neither dose will have differentiation from placebo, at that point we will I don't have more details on this right now as to what would that specifically, what is that number specifically is, because we still have to discuss it with the health authorities and come to an agreement with.
But that's the general framework of how we are approaching it.
Speaker 8
Yeah. Got it. So just
Speaker 2
to clarify, is it one eight ml or eight zero ml?
Speaker 4
Eight zero.
Speaker 8
Thank And then one just one more follow-up question. So from filgotinib, as you think about going commercial, is this now a game of rapid market share gains with pricing as a key metric, or will it play out on the safety front with the two dose flexibility that filgotinib offers? And thank you so much.
Speaker 4
So Bart, would you like to take this? Or do you want me to take it?
Speaker 2
No, I'll take it, Valente. But I think generally, David, it's a bit early to tell because we first want to see exactly what the label is going to look like and also what the competitive situation is going to be in the marketplace once we are ready for launch. And then together with our partner, Gilead will establish the appropriate strategy into that market. No further details really on our launch strategy at this moment in time.
Speaker 8
Thank you so much. Good luck.
Speaker 2
Thanks.
Speaker 0
And our next question comes from James Quigley with JPMorgan.
Speaker 9
Hello. Thank you for taking my questions. Just a couple from me. So the JAK TIC-two, which inflammation indications do you intend to focus on? And in terms of the preclinical data, how does it compare in inflammation disease models compared to filgotinib and also the Toledo assets?
And sort of what are the additional benefits of targeting JAK1 and TYK2 as opposed to targeting one or the other on its own? Then the second question on Manta Ray. Currently, there's only one center that's listed on the clinical trials record. How quickly can you add additional centers? What are the challenges in order to get those centers added?
And are they going be mainly in Europe or in The U. S? And thirdly, a question on modeling. What should we expect in terms of the phasing of the deferred income? I mean, know it's noncash, but in terms of AbbVie upfront, I think at the end of last year, there was sort of €3,000,000 left to amortize, only €400,000,000 was amortized in Q1.
Similarly with Gilead, what should we expect in terms of phasing? Thanks.
Speaker 5
Okay. Pete, yes. Thanks for the question. I'll start on the combined JAK1TYK2. So when we decided to take that one forward, it's clearly that was based on data where in a number of preclinical animal models, we've seen that the combined inhibition of those two targets gives us really hope that for the first time in the more serious diseases like lupus, we can make a difference.
It's clearly we've been evaluating our JAK1 as well. There's a clinical study ongoing. But if you compare there with JAK with a combined JAK1TYK2, the combination really performs much stronger. Next, there is also good rationale to go to the IBD models and indeed the JAK1TYK2 performs better there as well than our selective JAK1 inhibitors. But looking to the broader picture, the Toledo really clearly outperformed any other mechanism of action that we ever have seen in the IBD model.
So there is a rationale to go for a combined JAK1, JAK2, but our bigger hope there remains Toledo. And that's as far as I wanna answer on the JAK1, JAK2. Walid, over to you.
Speaker 4
Yes. So for MANTA Ray, I'm not sure I haven't really looked specifically on clinical trials as of what's out there. But clearly, we have many more sites in being planned, definitely more than 100. Those will be in mostly in Europe, but also in India as well. So we're quite active moving that forward.
So definitely much more than one site if than one side is what you would be seeing. And Bart, I guess the last one is for you.
Speaker 2
Yes. I'll take the last one on the deferred income, James. It's indeed AbbVie's deferred income and Gilead's deferred income, which was still on the balance sheet at the December. For AbbVie, this is all connected to finishing off all the transfer of activities to AbbVie, and you should assume this to be fully depleted from our balance sheet probably by the first half of this year. On the Gilead deferred income, this is related to mostly the upfront that was paid in twenty sixteen January twenty sixteen, And we anticipate this also to be fully depleted by the end of this year.
Speaker 9
Excellent. Thanks very much.
Speaker 0
And our next question comes from Christopher Marai from Nomura. Please go ahead.
Speaker 10
Thank you for taking the questions. Congratulations on
Speaker 8
the progress. Neil, first, just
Speaker 10
maybe touching upon your pre NDA meeting with the FDA. I was wondering if you could provide an update on that timing. Has that occurred or is that still pending? I know it should be the next month or two. And then on that point, is there any updated thoughts that you could share regarding MANTA or MANTA RAY data in terms of their requirement for the submission?
You know, do you expect that data to be required at the time of submission or that it may be possible to submit it just prior to approval? And then I have a follow-up. Thank you.
Speaker 4
Thanks, Chris. It's Walid. So I think we've discussed this kind of strategy before and Gilead has also discussed it, that once we have the FINCH data, which has occurred, we will ask to have a discussion with the FDA based on the known risk benefit that we've seen so far in the FINCH program and discuss with them this filing strategy. And that's the pre NDA meeting, I think you're referring to. We would expect that to happen in the next few months, but we don't we're not guiding on a specific date.
Although there could be more information that will be shared by Gilead, I believe, next Thursday, May 2 will be their earnings call. And I direct you guys to follow-up there because there might be more information at that point. In terms of whether or not the data from the MANTA program will be needed for filing Again, that's gonna be the crux of the discussion. So at this point, it really becomes an opinion that I would have on this, and so I think it's better for me not to speculate on it.
I think we concrete data right now that we have in the such program, and we have clear progress that we've made with the MANTA program and clear commitment that we're doing these studies. Those will form the basis of discussion with the FDA and we'll see based on that what the outcome will be.
Speaker 10
Okay. Thank you, Walid. And then just a follow-up. I'm thinking about the FINCH 1.3 patient populations. I know you noticed that versus prior trials, there were differences across geographies.
And I was wondering, it seems to have impacted, obviously, placebo rates. But but do you have any expectation or reason to believe that this could also impact, you know, your PE DVT rates observed or lack thereof in your in your trials because perhaps they were somehow less severe or had other lack of comorbidities or otherwise? Thank you.
Speaker 4
Yeah, no, good question, Chris. I don't see that. When we look at the actually patient demographics and
Speaker 2
stuff like that, I don't
Speaker 4
think we see much of a difference. And again, the location or demographic changes that we talked about in terms of location, geographic location are speculation on my part. But I think it has more to do with the incentive to stay in a trial as a result of the alternative being standard of care, which probably is not as good as it would be in more Western countries like EU and The U. S. But in terms of comorbidities like that, we haven't seen anything that was different based on an evaluation of the data right now.
So I cannot imagine that that would explain the low rate of DVTs and PEs. As a matter of fact, FINCH two actually had no DVTs or PEs in
Speaker 2
it either.
Speaker 10
Great. Thank you very much.
Speaker 0
And our next question comes from Adam Walsh with Stifel. Please go ahead.
Speaker 11
Hey, good morning. Thanks for taking my questions. First one on filgotinib beyond RA, could you give us an update on filgotinib and other indications, namely in Crohn's and ulcerative colitis, just how the enrollment is going there and when you feel like the next data points will be revealed? And then a second question, Walid, if MANTA turns out to be gating for the filing, when would the MANTA program be complete as it's currently laid out with the current program structure? And then I have a follow-up.
Thank you.
Speaker 4
Thanks, Adam. So beyond RA, I think for UC, the program has finished recruitment a couple of months ago, I think, or a month ago. This is an induction followed by a maintenance study. So the in life phase of the study is one year long. And so I would imagine by this time next year, we should have results from the UC program and that should enable us to then proceed to filing in that indication.
Crohn's disease, I think our best guess at this point is about a year behind UC. That's kind of our best guess at this point. Regarding MANTA, so we've been very careful in discussion with our partners, Gilead, about what to say and how much to guide on this because until we know whether MANTA is gating information about how well it's progressing and so on and so forth is not material. And then there's also a spectrum. The FDA could agree that there's no need to have MANTA as part of the package, and it will be post approval or whenever the data are available.
Or it could be that there's a certain number that you must have by a certain time to be able to file. And again, since this has a spectrum of different dates, Gilead has not been wanting to share any more information until we have clarity. So I'd imagine after we have the meeting with the FDA and we have clarity on the filing strategy, Gilead, actually you'll hear from them first about what were the results and as a result, what does that mean for filing. And if MANTA is on the critical path or probably on the critical path, they will guide about the timing for the MANTA program.
Speaker 11
That's really helpful. And then just one on MOR106, the GECO Phase II trial with the subcu formulation was just initiated. And you have a Phase Ib bridging study still ongoing with the subcu formulation. Kind of can you talk about the relationship between those two on the subcu formulation and kind of where you are in development with that formulation? And is there any connection between those two studies?
And then how do we think about the IV and subcu dosing regimen in terms of frequency and dosing and what have we learned so far? Thanks.
Speaker 5
Okay. Thanks for the MOR106 questions. So with the GECO, we take or we turn a new page in the program. So one hand side is the first time we bring the program to The US. So that that's an important one to validate that all we've been doing is done according to how FDA expected.
But the second big step we took is indeed is the first time we do subcu study only and the plan it up from now onwards, all studies will be subcu only. So we have the DoseRanger IGUANA ongoing, that's a big study that will give us the right dose for Phase three. But when we filed the GECO indeed, we had high hopes that the bioavailability we've observed in the IV subQ study is good enough to allow us to do subcu dosing in the future only. So that IV SubQ bridging study is still ongoing, the multiple dose studies in the patient is still ongoing, but the single dose data we have on file and made us confident to initiate a subcu study only. Thank you.
Speaker 11
Thank you.
Speaker 0
And our next question comes from Matthew Harrison with Morgan Stanley.
Speaker 12
Hi, this is Vikram on for Matthew. So we just had one quick follow-up on the Crohn's program. So the divert
Speaker 0
And Matthew, your lines are cut out. Can you please repeat the question?
Speaker 12
Sorry, I'm not sure where I cut out. I was just saying that the Phase III Crohn's study, that that started around the same time based on clinicaltrials.gov as phase three selection study. And as far as we're seeing now, the primary completion is around the same same date. So And I know that it was just mentioned that Crohn's is roughly a year behind UC. So we're just curious about what was happening with that trial, what might have caused the delay based on the dates we're seeing on ct.gov?
Speaker 4
Yes. So the in the Crohn's disease programs, I don't know if you followed a number of different companies have been facing some significant delays because lot of competition. So when we look at how things are progressing, we estimate that it's going to be probably about a year behind Crohn's disease. I think we'll have a discussion with our partner to see what kind of updates we'll need to make it to clinicaltrials.gov. But this space is highly competitive.
Think if you look at a number of different companies, they've been delayed by a significant amount of time from what they originally set out to do.
Speaker 11
Understood. Thanks.
Speaker 0
And our next question will come from Patrick Trucchio with Berenberg Capital Markets. Go ahead. Thanks.
Speaker 13
Thank you. Good morning and good afternoon. My follow-up is
Speaker 7
on
Speaker 13
MOR106. First, can you discuss IL-17C and its role in the pathogenesis of atopic dermatitis? And then secondly, atopic derm is getting crowded with Dupixent on the market, multiple JAKs and IL-13s in development. So I'm wondering where you see MOR106 in the treatment paradigm in the IV formulation and how this may change if or when MOR106 is approved in a subcu formulation? Thank you.
Speaker 5
Okay. Thanks for the MOR106 question. So let me start with IL-17C. So IL-17C is what we call an amplifier of the inflammation locally, and its expression is restricted to, epithelia only. In that sense, it's a mechanism of action when we block it.
We don't expect any systemic side effects and being by many companies flagged as one of the of the ideal targets if you if if you wanna treat skin diseases. So in that sense, IL-17C stands out as a unique target. Second, on the competitive placement, so the plan is to do in Phase III only subcu, so we will not do IV further. So we are doing a dose range IV to get the dose. But as I said on the previous question as well, we have high hope that our subcu suite has been performing and will perform, will allow us to do once every other week, once every month dosing subcu.
And then as it's a unique target with a unique safety profile, we believe it's going to be a competitive drug in this space. Thank you for the question.
Speaker 0
And we will take our next question from Vamil Divan with Credit Suisse. Please go ahead.
Speaker 6
Hi, great. Yes, thanks so much for taking the questions. Think most of mine have been asked, but just a couple of follow ups. One, just again on MOR106. You mentioned the increase in the number of patients in IGUANA.
Can you just comment on what sort of drove that decision? What have you seen led you to increase the number? And then separate topic actually on your cash, and you mentioned the €1,200,000,000 curious, obviously, very healthy balance sheet and along with investing in the business, are there any sort of thoughts or opportunities you see in terms of external opportunities for business development? Thanks so much.
Speaker 5
Okay. I'll start with the MOR106 question. So the decision to increase the number of patients is to allow us a very smooth transition from Phase 2b to Phase three. And so we have designed our program. We discussed with Novartis.
They saw the different studies for the IV subclubridging, the HEPL study and then they said, well, but if we want to be sure that we can very smoothly as soon as we have the Phase 2b data and go into Phase three, we would like to see a bit of more data and that's what has driven this to be sure that that step into Phase three can be taken very smoothly. Thank you. Bart, for you to cash or
Speaker 2
Yes, I'll take the question there on. Hi, Bam. Bart speaking. So indeed, cash balance. And the primary purpose really of that cash balance is to fund the broad pipeline that we're running at Galapagos.
Basically, we have at any moment in time more than 20 programs in discovery. We have 10 molecules that are in preclinical or in Phase I stages. And then we have the four bigger ones that are in Phase II or Phase III. So there's an enormously broad pipeline at Galapagos that we want to fund. So that's the primary purpose.
We never rule out, and I don't think any company should, that we do something also externally. We're always on the lookout to see if there's great science in other places also beyond our company. We did actually do two smaller in licensing transactions in December. Those will not make a dent into the cash balance because they were relatively early stage assets, both in the discovery phase, but just to highlight that we are that we have a very active team looking at the external world as well, and we'll put our cash to use if see a good opportunity there.
Speaker 6
Okay. Thank you.
Speaker 0
And our next question will come from Greg Svaniakov with Goldman Sachs.
Speaker 14
Thank you very much. Good afternoon and good morning. Also congrats on the FINCH data. Just want to send that again. My question, I've got two.
My first is around filgotinib and beyond rheumatoid arthritis. But given the JAK1 selectivity and given that you're evaluating filgotinib across 11 total indications, is there anything about JAK1 or just JAK biology that gives you a sense that as you look at the other indications that there might be, at least on an indication specific basis, a higher or lower probability of success? Meaning are there certain indications that you feel that you're more confident in, versus others where just based on the biology it might be a little more challenging? So any sense of that would be helpful. And then second is really more around modeling as we look at the first quarter results.
That cash burn of $76,000,000 I think is tracking nicely with your guidance for the year. I think it does leave about 5% to 10% or so increase to achieve that guidance over the next three quarters. And I'm wondering if you could help us think about how the quarterly evolution of your whether it's revenue or OpEx might be over the next three quarters. That would
Speaker 4
be helpful, too. Thank you. So I'll start with the filgotinib question. So, so far, I mean, I think what we have seen the data that we've seen so far for at least RA, the story is very clear. In our hands also continuing with rheumatic diseases for psoriatic arthritis, the results that we've seen in our Phase II study were outstanding in terms of efficacy.
That also tells us the story that actually JAK1 is what we need and supporting our preclinical data that indicated that's all we need in terms of efficacy in that space. Ankylosing spondylitis gives you also the same story. From the IVD program, I think we have very good data with FICTROY And although we don't have any data yet in ulcerative colitis, we feel pretty good about those having gone through the interim analysis and future data analysis movement to officially into Phase three. Although we haven't seen the data, but I think that also bodes well.
The remaining part, I think lupus is the other disease where there's a large unmet medical need, but also this is a space that has been somehow tested to some degree with the JAK. So again, preclinical data support going forward JAK with concoctative and support the fact that JAK1 selectivity should do the trick. I think, again, I've said this many times when you have the selectivity for JAK1, it allows you to use doses that will maximize activity on JAK1 without having to worry about bleeding into other targets like JAK2 and JAK3 buy you more liability than not. So I think the totality of the data so far have been supporting this hypothesis. We'll see what happens when we see data from lupus.
Zurgin is the space probably where we haven't had any clinical data as far as I know, JAK the space. Again, I think in general, we feel quite confident with the data that we have seen so far. We are awaiting the results from JEGS and lupus, which actually should be coming in the second half So we will know quite soon where we stand. Bart, should I turn it over to you?
Yes.
Speaker 2
Take the rest of the question from Greg, which was around the modeling. Indeed, the 76,000,000 that we spent in the first quarter compares to, if you linearly take our guidance, the 80,000,000 to €85,000,000 that every quarter should take. In all fairness, I think this type of deviation is what you should expect from quarter to quarter, a little bit more, a little bit less. Clearly, there are some balance sheet positions moving at the same time. I think, frankly, for the rest of the year, it's pretty linear.
Generally, our third quarter is a little bit slower in terms of cash burn and our fourth quarter, a little bit higher. But our overall, our expectation is that the cash burn during this year 2019 is going to be rather linear from quarter to quarter.
Speaker 14
Bart, if I could follow-up. So the revenue that was in the first quarter, is that a good run rate to annualize for 2019?
Speaker 2
Yes. Revenues, in all fairness, is a bit more specific, and then you really need to look at the underlying number. Jessica, some further details in the report. It goes a bit too far to get into that for the call here. But I think on the previous question that I got from I think it was James around revenue recognition from the upfronts that we received previously from Gilead that I think helps answering that.
And then there are some other elements in revenue, which are quite linear from years to years. But revenues tend to fluctuate a bit more than the cash burn in 2019.
Speaker 14
And
Speaker 0
our next question comes from Brian Abrahams with RBC Capital Markets.
Speaker 3
Hi, this is Bert on for Brian. Thank you for taking our question. I have one on filgotinib. Now that you have kind of the full Phase III data in RA, which populations of RA patients do you think would benefit most from filgotinib? And then I guess, alternatively, are there any populations where you think it might be more difficult to gain traction with?
Speaker 4
Yes. Thanks, Bert. Well, I mean, I think the data with filgotinib has shown across all stages of RA that we have very strong efficacy across the board. And what promises to be best in class safety profile. I think the answer that I'm gonna be giving you is a general answer in the field, not pertaining specifically to filgotinib, because I don't see any difference in terms of the performance of filgotinib in one group versus the other.
Again, I see the data that are very solid across the board in FINCH three, which is the early RA, stage one, which is the methotrexate experienced individuals who didn't have full response, and those who failed one or more biological in stage two. But I think, in general, when you look at the field, you see clearly there's a greater interest now in thinking of the JAKs in terms of their efficacy being fairly superior to the TNF alpha and the convenience of the oral administration and the lack of concern about losing effect over time that one encounters with biologic, there's going to be a faster uptake. I would imagine that as the field moves forward, it's gonna become very clear that the JAKs will be used before the TNF alpha and other biologicals. That's how I would review things. Whether or not they will be used early on in the disease before methotrexate or not, I think that will be a little bit more further down the line.
Methotrexate is a compound that actually works. The the rheumatologists have, you know, have been using it for decades, and I think it's it's very well entrenched. In addition to the the cost, which is very low, I think it's gonna be much more difficult to come ahead of methotrexate. But I think it would be early on probably in the disease. And as we accumulate more and more data, especially with the second generation JAK inhibitors like filgotinib, you gain more confidence in the efficacy but also with the safety of the compound and you're going to start feeling more comfortable to use them early on.
That's kind of my assessment of where this would go.
Speaker 3
Great. Thanks a lot.
Speaker 1
All right. I'm going to jump in here. This is Elizabeth. I just want to say that our time is up for today. We've had some really good questions, excellent dialogue here.
And if there's any question that you still want to ask, please reach out to either me or Sophie von Kajesel in the IR team to get that handled. So our next scheduled call will be for the half year 2019 results on the July 26. We look forward to speaking with you all, and thank you very much for your support and participation today. Goodbye.