Please ensure Javascript is enabled for purposes of website accessibility

Why Galapagos NV's Shares Bolted Higher in 2015

By George Budwell - Jan 14, 2016 at 8:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Galapagos NV's shares rose by nearly 25% last year due to the steady progress of its lead experimental candidate filgotinib.

GLPG Chart

What: Over the course of 2015, the Belgian biotech Galapagos NV (GLPG -0.98%) reported that its lead experimental candidate, filgotinib, was making major strides in its clinical development as an oral treatment for both rheumatoid arthritis and Crohn's disease. Based on these promising results, Galapagos decided to perform an IPO on the Nasdaq to raise money, and investors were apparently more than happy to gobble up the biotech's shares. According to data provided by S&P Capital IQ, Galapagos' share price appreciated by more than 24% from the time of its IPO until the end of 2015.  

So what: Galapagos is currently in the process of advancing filgotinib into a late-stage trial for rheumatoid arthritis, and it looks like the drug could also enter a pivotal-stage study for Crohn's disease before the end of 2016. .

Put simply, filgotinib is targeting some of the very same territory occupied by AbbVie's (ABBV -0.46%) Humira, one of the best-selling drugs in the world over the last couple of years. That's why AbbVie was previously interested in co-developing  filgotinib with Galapagos -- until AbbVie decided to go with its own orally-administered experimental candidate, ABT-494, last September. 

After AbbVie exited its partnership with Galapagos last year, Gilead Sciences (GILD 0.37%) decided to enter the picture by inking a roughly $2 billion agreement with Galapagos to develop filgotinib across a wide diversity of inflammatory conditions.

Now what: While Gilead is undoubtedly a force to be reckoned with when it comes to picking top-flight experimental-stage drugs, investors should bear in mind that inflammatory diseases in general are a hotbed of research activity in the pharma industry right now due to their enormous market sizes. Taken together, the rheumatoid arthritis and Crohn's disease drug markets already sport a $20 billion valuation, as just one example. 

Strong clinical results for any experimental-stage inflammatory drug therefore may not be enough to achieve commercial success for what is quickly becoming a rather crowded market. That's why I'm willing to hold off on buying this mid-cap biotech for the moment. 

George Budwell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Galapagos Stock Quote
$54.09 (-0.98%) $0.54
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$66.57 (0.37%) $0.24
AbbVie Inc. Stock Quote
AbbVie Inc.
$141.89 (-0.46%) $0.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.