The biotech company Galapagos piled up the setbacks, but has billions available to reinvent itself after the departure of founder Onno van de Stolpe.
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Galapagos’ share
share price was almost 8 percent higher on Tuesday after the announcement of the departure of Onno van de Stolpe, the ambitious Dutchman who co-founded the company in 1999. Van de Stolpe brought the company to the stock exchange, raised billions of capital and was able to market its first product in Europe with the rheumatoid pill Jyseleca (filgotinib). But he had to announcing one setback after another for the past year and a half. The fact that the share price is rising is not a sign of the mistrust of investors in van de Stolpe, but perhaps a relief that work can be done on a new start to a Galapagos 2.0.
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Onno van de Stolpe, the CEO and founder of the biotech company Galapagos, will retire when a successor is found. His departure was imminent, but comes a little earlier than expected. Galapagos saw promising projects fail in the past year and did not receive the green light to sell its first drug in the US.
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Galapagos is looking for an external CEO. The cash mountain of 5 billion euros that van de Stolpe collected through alliances and well-timed capital rounds increases the chance of a restart.
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1. What should Galapagos do?
Where does Galapagos have to adjust to get out of the sucker alley? Doing acquisitions of new products, filling the pipeline with new research programs or, above all, attracting a new CEO to give impetus and confidence? “All three must be done,” says Werner Cautreels, a Flemish top manager from the pharmaceutical sector who was on the Galapagos board until early 2019.
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“Galapagos has always had a very rich pipeline of advanced products, but due to setbacks, it now has the pipeline of a fledgling biotech company. The funds in the pipeline will certainly not come on the market before 2025 or 2026′, says KBC Securities analyst Lenny Van Steenhuyse.
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The search for new products in inflammatory diseases is a priority, according to the analyst. ‘Galapagos has built up a commercial organization for the launch of the rheumatoid pill filgotinib, but you cannot build such an organization for one product. Since there is no follow-up for filgotinib in the pipeline, it would make sense to supplement the sales portfolio with a product that is either very advanced in its development or already on the market.”
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Closing holes in the pipeline is easy by acting like big pharma: quickly paying a high price for a biotech company with an interesting product. But analysts and investors fear that Galapagos will pay too much for a deal thanks to its generous bank account. ‘You can pay 50 euros for an apple in the store, but what good is that?’, says Van Steenhuyse. That investment risk is why Galapagos has been worth less than its cash mountain for several quarters on the stock exchange.
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The problem is that the field of inflammatory diseases is dominated by very large pharma players with deep pockets such as Pfizer, Abbvie, but also the Belgian UCB. ‘They also look at interesting new products that are being developed and brought onto the market,’ says Van Steenhuyse. Galapagos is also active in niches such as the treatment of pulmonary fibrosis, a much smaller disease domain with less competition.
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Galapagos also has to take into account the American alliance partner and largest shareholder Gilead, admits van de Stolpe. “Gilead has the right to join any program that comes to us after phase 2. Then if you make a 2 billion deal for two Phase 3 drug programs, you see that Gilead also needs to be talked to.’ The new CEO may also join the table. “You’re not going to make a big deal without informing your successor.”
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It would be good if the new CEO had a scientific profile. Then he is complementary to operational director Bart Filius, who is commercially and operationally good.