Galapagos Suffers Record Drop as FDA Fails to Approve Drug

(Bloomberg) -- Belgian biotech company Galapagos NV lost about a third of its market value -- its biggest decline on record -- after the U.S. Food and Drug Administration failed to approve a rheumatoid arthritis treatment it’s developing with partner Gilead Sciences Inc.

The regulator is concerned about the benefit and risk profile of the treatment, filgotinib, and has requested more data before completing its review, the companies said in a statement Wednesday. The FDA’s decision drove Galapagos down as much as 33%, wiping more than 3 billion euros ($3.6 billion) off its market value. Gilead shares fell as much as 4.4% in the U.S.

“There’s really no way to sugarcoat this very surprising development,” analysts at Barclays including Emily Field wrote in a note. They cut their peak sales estimate for the drug to about 527 million euros from 1.3 billion euros. “This is essentially the bear-case scenario playing out.”

Safety concerns could delay a U.S. approval until at least the second half of 2021, adding risk to the drug’s regulatory prospects elsewhere, according to Michael Shah, a Bloomberg Intelligence analyst. Peter Welford, an analyst at Jefferies, called the FDA’s failure to approve the drug a “major setback.”

The shares were 24% lower at 4 p.m. in Amsterdam.

“Despite today’s news, we continue to believe filgotinib has the potential to provide an effective, new treatment option for patients with rheumatoid arthritis, where there remains a significant unmet need,” Walid Abi-Saab, the chief medical officer at Galapagos, said in the statement.

Filgotinib is being reviewed by regulators around the world, and recently received a positive opinion from a European Medicines Agency committee recommending authorization in the European Union, according to the companies.

©2020 Bloomberg L.P.