What happened

Shares of Galapagos (GLPG -1.37%), a biopharmaceutical company, are under pressure following clinical trial readouts for a couple of new drug candidates in phase 1 studies. Disappointing results from the company's Toledo program pushed the stock 13.1% lower as of 3:52 p.m. EDT on Thursday.

So what 

Following the implosion of Jyseleca in the U.S., Galapagos has leaned on its early clinical-stage pipeline to get attention from investors. The company has invested heavily in the Toledo program, which is a series of new drug candidates that target salt inducible kinases.

Investor looking at stock charts.

Image source: Getty Images.

Galapagos stock is sliding today because the company reported disappointing data for the first clinical-stage candidate to emerge from the Toledo program. After six weeks of treatment, rheumatoid arthritis patients randomized to receive GLPG3970 weren't any better off than the placebo group.

Ulcerative colitis patients who received GLPG3970 improved their Mayo Clinic Score, a measurement of disease severity, by 2.7 points on average. Unfortunately, the placebo group's score improved by 2.6 points.

If there's a future for GLPG3970 it's as a treatment for psoriasis. Four out of 13 psoriasis patients treated with GLPG3970 showed an improvement of 50% or better compared to none of the patients who received a placebo.

Galapagos also reported top-line results from a psoriasis study with GLPG3667, a selective TYK compound. After four weeks, treatment with GLPG3667 led to a 50% improvement or better for four out of 10 patients given a high dosage. None of the patients in the low-dose cohort achieved a 50% improvement.

Now what

Fairly positive psoriasis data is better than nothing, but neither of these new drug candidates looks like they have what it takes to eventually succeed in a commercial setting. Skyrizi, a successful psoriasis treatment AbbVie launched in 2019 led to 90% improvements for 75% of patients treated in clinical trials leading to its approval.

After watching Galapagos stock lose about 70% of its value over the past year, contrarian investors might be thinking about catching this falling knife. Considering the number of disappointments this company has already delivered, it's probably best to watch its story play out from a safe distance.