Dive Brief:

• Shares in Galapagos tumbled by more than 10% Thursday after the Belgian drugmaker revealed disappointing preliminary results from three studies of an anti-inflammatory disease drug key to the company’s research ambitions.

• The drug, dubbed GLPG-3970, is the second to emerge from Galapagos’ secretive “Toledo” development program, which is directed toward a trio of cellular targets the company discovered and believes to be important in regulating inflammation.

• Data from the early trials in patients with psoriasis, ulcerative colitis and rheumatoid arthritis showed “biologic effects” to inhibiting Galapagos’ chosen targets, the company said. But, in ulcerative colitis and arthritis, those effects did not translate to superior benefit than placebo on the studies’ main goals. Galapagos will advance two other preclinical candidates from the Toledo program as a result.

Dive Insight:

A year and a half ago, Galapagos was worth about $17.5 billion, a lofty valuation swelled by the biotech’s wide-ranging research deal with Gilead the year before and the promise of an arthritis drug called filgotinib.

Clinical and regulatory setbacks since then, most notably the August 2020 rejection of filogitinib by the Food and Drug Administration, have steadily eroded Galapagos’s market worth. After factoring in the roughly 13% decline through mid-morning Thursday, Galapagos is now valued at about $3.8 billion, well below the $5.1 billion the company held in cash and investments at the end of March.

With filgotinib diminished, at least in the U.S., a major component of Galapagos’ research prospects is tied up in the Toledo drug development program. The company has spent years on the program, which for a long while it kept largely under wraps. At one point, Galapagos had deployed half of its research organization to Toledo-related work.

Broadly, Toledo covers a family of salt-inducible kinases, a type of “master switch” that Galapagos scientists view as important targets for restoring immune balance in a wide range diseases like psoriasis, rheumatoid arthritis, ulcerative colitis and lupus.

Before GLPG-3970, one other SIK-targeting compound had been advanced into Phase 1 testing. But Galapagos chose GLPG-3970 as its lead Toledo candidate based on what it described as a “better pharmacological profile,” advancing the drug into five proof-of-concept studies.

Initial results from the first three of those trials, however, were not as strong as the company had hoped. In psoriasis, more patients treated with GLPG-3970 experienced skin clearing than those on placebo. But there was no difference between patients given the drug or given placebo in the ulcerative colitis and rheumatoid arthritis studies.

In a statement, Galapagos Chief Medical Officer Walid Abi-Saab called the findings an “important step forward,” but suggested the company would not be forging ahead with GLPG-3970. “We aim to apply key learnings from these studies to the further development of our Toledo portfolio of SIK inhibitors,” he said.

According to analysts from Cowen and RBC Capital Markets, Galapagos executives confirmed on a conference call Wednesday that they wouldn’t advance GLPG-3970 further. The company did not respond to BioPharma Dive’s request for comment.

Tempering the disappointment from Toledo were results from a Phase 1 study of another drug called GLPG-3667 that works in a similar way to a high-profile drug being developed by Bristol Myers Squibb. Galapagos said, based on the results, it would start a Phase 2b trial in psoriasis next year.