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Why Was Gilead-Galapagos Drug Filgotinib Rejected by the FDA?

Ruchi Gupta - Author

Aug. 19 2020, Updated 11:51 a.m. ET

A Gilead Sciences-Galapagos drug has hit a snag with the FDA due to safety concerns. Both companies had to go back to the drawing board. The FDA refused to approve the Gilead-Galapagos investigational drug filgotinib in its current form. 

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The FDA requested additional trial data on filgotinib. The greatest obstacle that Gilead and Galapagos face in securing FDA approval for filgotinib is that the regulator has doubts about the drug's benefit and risk profile. 

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Gilead and Galapagos stocks tumbled in early trading today after the news about the FDA not approving their drug candidate. Galapagos was expecting a huge payout if the FDA cleared filgotinib to enter the market. 

The companies said that the FDA’s decision is a disappointing setback. “This FDA [decision] is very disappointing given the robust and comprehensive data package provided,” said Dr. Walid Abi-Saab, the chief medical officer at Galapagos.

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What does Gilead-Galapagos filgotinib aim to treat?

Gilead and Galapagos partnered to develop filgotinib as treatment for rheumatoid arthritis. The FDA is only one of the regulators reviewing filgotinib. Gilead and Galapagos have submitted approval requests for filgotinib in other jurisdictions around the world, including the European Union. 

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According to the companies, the European Medicines Agency advisory committee has actually recommended approving filgotinib for use in the European Union. In addition to rheumatoid arthritis, Gilead and Galapagos are developing the drug for other inflammatory indications. 

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Gilead holds the commercialization rights to filgotinib in the U.S., where the rheumatoid arthritis drug market is forecast to hit $9.3 billion this year. Globally, the rheumatoid arthritis drug market is on track to top $36 billion by 2027 from $24.9 billion in 2018. Galapagos will receive $100 million in a milestone payment if filgotinib secures U.S. approval. However, the approval windfall will be delayed as the FDA studies more data on filgotinib to decide whether to clear the drug to enter the market.

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Despite the setback with the FDA, Gilead and Galapagos think that they have a promising drug. For example, they said that filgotinib targets an area of unmet medical needs.

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What is Galapagos Pharma?

Galapagos is a pharmaceutical research company based in Belgium. The company has sites in several locations across Europe. The company has been around since 1999. Currently, the Galapagos pipeline includes candidates being developments for treating fibrosis, osteoarthritis, inflammation, and a range of other indications.

What is Gilead's stock price today?

Gilead's stock price fell almost 6.0 percent to below $66 in pre-market trading today following the FDA's disappointing decision regarding filgotinib approval. The stock closed at $69 on Tuesday, which represents a 6.28 percent gain since the beginning of the year. 

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The most bullish analyst on Wall Street sees nearly 38 percent upside potential in Gilead's stock price to $95. The most bearish analyst predicts a 10 percent drop in the stock from the current level to $62. Gilead stock carries a consensus hold rating. 

What is Galapagos’ stock price now?

Galapagos stock fell more than 30 percent to about $132 in pre-market trading today following the report of the FDA rejecting filgotinib. The stock is down 31 percent this year. The most bullish analyst predicts a 44 percent upside for Galapagos’ stock price from the current level. The most bearish analyst sees 20 percent downside potential in the stock. Galapagos stock carries a consensus hold recommendation. 


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