What happened

Shares of Galapagos NV (NASDAQ:GLPG) jumped over 13% last month and have posted a year-to-date gain of 49% through the first week of July, according to data provided by S&P Global Market Intelligence. While much of the pharma specialist's recent stock movements have been driven by the JAK1 inhibitor filgotinib, the only pipeline update in June was for GLPG1972 in knee osteoarthritis -- but investors have reason to be cautiously excited.

Galapagos and Servier announced that a phase 2 trial for GLPG1972 completed enrollment in mid-June. The global trial spans 850 patients in 12 countries. It will be another year or so before initial data is available, but the drug candidate represents a significant long-term opportunity for the business and its shareholders. 

A rising yellow chart being drawn by a man in a suit.

Image source: Getty Images.

So what

The stock's current run began in March, when Galapagos and Gilead Sciences announced that filgotinib aced two pivotal trials in rheumatoid arthritis. Fool.com contributor George Budwell noted that some analysts expect peak annual sales of $1.1 billion in that indication alone, although gaining approval in additional autoimmune diseases could push peak annual sales to $6.6 billion or more. 

In early July, Galapagos announced it will submit a New Drug Application for filgotinib to the U.S. Food and Drug Administration (FDA) this calendar year. That promises to keep it as the main catalyst for the stock, but it won't be the only one. 

GLPG1972 is billed as a disease-modifying osteoarthritis drug candidate because it mops up a cartilage-degrading enzyme that leads to the disease. In a phase 1 trial, the drug reduced a biomarker of cartilage breakdown by 50% after just two weeks. Delivering similar results -- and proving they're actually relevant to patients -- in the more robust phase 2 trial, which spans 52 weeks, could signal that the drug candidate has blockbuster potential. 

Now what

Given the massive market opportunity and unmet medical need, analysts at H.C. Wainwright think GLPG1972 could achieve peak annual sales of $5 billion by 2030. However, it would have to ace mid- and late-stage clinical trials, and the same analysts currently think it has a 10% probability of success. Nonetheless, the optimistic estimate goes to show that Galapagos has plenty of potential in its pipeline beyond filgotinib.