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Here's Why Galapagos NV Rose 34.5% in July

By Maxx Chatsko - Updated Aug 5, 2019 at 1:09PM

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The Belgian biopharma bagged $5.1 billion from its most important partner.

What happened

Shares of Galapagos NV (GLPG -3.36%) jumped more than 34% last month, according to data provided by S&P Global Market Intelligence. The run-up was catalyzed by news that the Belgian biopharma had forged a deeper collaboration with Gilead Sciences (GILD 0.70%) and hauled in a $5.1 billion investment in the process. The total consideration comprises a $3.95 billion cash payment and a $1.1 billion equity investment.

The announcement followed news in early July that Gilead Sciences was moving ahead with plans to file a new drug application (NDA) for filgotinib as a treatment for rheumatoid arthritis by the end of 2019. The drug candidate, co-developed with Galapagos, is also being studied in a phase 2 trial in men with moderately to severely active ulcerative colitis or Crohn's disease.

Galapagos ended the month by reporting first-half 2019 operating results underpinned by progress in the clinic.

A businessman looking at his laptop while riding a cartoon rocket.

Image source: Getty Images.

So what

The Belgian biopharma reported first-half 2019 revenue of 108.5 million euros and an operating loss of 97.6 million euros, marking a 6% and 48% increase, respectively, from the year-ago period. The business exited June with 1.15 billion euros in cash (1 euro is equivalent to $1.12).

The financial performance isn't too concerning for a development-stage pharma company. Investors are much more interested in advances in the company's deep pipeline, which was just de-risked by the massive $5.1 billion investment from Gilead Sciences. Case in point: Some analysts expect filgotinib to reach peak annual sales of at least $4 billion across all of its proposed indications.

Now what

Galapagos has been one of the more promising pharmaceutical stocks since making its debut several years ago. It was always a little under the radar due to its geographic location, but recent pipeline progress and a deepening partnership with Gilead Sciences have certainly worked to unravel the mystery in the eyes of investors. If filgotinib earns marketing approval and other pipeline assets continue to deliver success, the company should maintain its promising trajectory.

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Stocks Mentioned

Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$63.62 (0.70%) $0.45
Galapagos Stock Quote
$56.02 (-3.36%) $-1.95

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