Analyzing Gilead's Gamble on a Drug Both AbbVie and Johnson & Johnson Gave Up On

December 31, 2015
By Mark Terry, BioSpace.com Breaking News Staff

One of this year’s unexpected, but intriguing stories was when Foster City, Calif.-based Gilead Sciences inked a deal with Mechelen, Belgium-based Galapagos NV to develop and commercialize filgotonib for inflammatory diseases.

What makes it interesting, notes Corey Renauer, writing for The Motley Fool, is that filgotonib was abandoned by Chicago-based AbbVie Inc. in September 2014. AbbVie chose to develop its own JAK1 inhibitor, ABT-494.

JAK inhibitors are a new class of drugs being developed for a number of inflammatory diseases, including rheumatoid arthritis (RA), lupus and irritable bowel syndrome (IBS).

Johnson & Johnson has an arthritis drug, Remicade, which loses its U.S. patent protection in September 2018, and is being battered by stiff price competition in Europe. JNJ had partnered with Galapagos and Astellas for JAK inhibitors, but in 2014 split with Astellas. It then ended its partnership with Galapagos in March 2014.

Renauer notes that the RA market, which is worth about $16 billion, is “largely dominated by biologics that require injections, so an effective oral therapy should be well received.”

Pfizer, Inc. 's oral JAK inhibitor, Xeljanz, has been on the market in the U.S. since 2012, but sales have been softer than hoped due to a second-line indication and several black box warnings. “When Pfizer last reported,” wrote Renauer, “the drug was selling at an annual run rate of $508 million.”

Which isn’t spare change, but doesn’t compare well to blockbuster RA drugs like Humira and Enbrel.

So after AbbVie and JNJ jumped ship from Galapagos, analysts were a little startled to see Gilead drop about $300 million for the drug its competitors had abandoned.

What were they thinking?

Renauer thinks that Gilead was likely impressed by filgotonib’s performance in several clinical trials. In two studies in patients who didn’t respond to the standard first-line methotrexate treatment, 26 and 25 percent of RA patients showed a 70 percent decrease in the disease in 24 weeks with 100 mg or 200 mg of filgotinib. Which is better than Xeljanz, although the two drugs haven’t been analyzed opposite each other yet. Still, Galapagos’ filgotinib would seem to be a winner based on initial data.

And it may even be better than that. In appears to have a better rate than Humira, although again, the two drugs were not compared in a head-to-head trial. And Renauer also points out filgotinib appears to be effective in treating Crohn’s disease, an inflammatory bowel disease. In a Phase II clinical trial, Galapagos showed that 48 percent of patients treated with filgotinib went into clinical remission after 10 weeks.

Gilead has pretty much dominated the hepatitis C market with Harvoni and Sovaldi, and it’s doubtful filgotonib would do anything comparable for the RA and Crohn’s market, but Renauer does project that if approved, it could hit peak sales of $3 billion. This would definitely bolster Gilead’s so-so anti-inflammatory franchise, which to date has mainly been GS-5745 for irritable bowel disease.

Of course, nothing is ever so clear cut in the biopharma market. Filgotinib may have to compete with AbbVie’s ABT-494. In a Phase II trial, ABT-494 showed similar results to filgotinib, although there were some questions regarding dosage and efficacy.

“This kink will probably work itself out in larger trials,” wrote Renauer, “but you’ll want to keep a close eye on any data ABT-494 throws off in the year ahead. Given the $200 million upfront payment required to license filgotinib, about $1 billion in potential milestone payments, and double-digit royalties on potential sales, the economics surrounding ABT-494 are highly favorable for AbbVie.”