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Morgan Stanley Expects Galapagos Shares To Rise 10%

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Morgan Stanley Expects Galapagos Shares To Rise 10%

The preliminary success of a drug designed to combat idiopathic pulmonary fibrosis could give Galapagos NV (ADR) (NASDAQ: GLPG) a 10-percent boost, according to Morgan Stanley.

A 23-person study of the drug GLPG1690, an autotaxin inhibitor, found that patients had better lung function than those taking a placebo over a 12-week period, equity analyst Matthew Harrison said in a Thursday note.

The drug compares favorably to competitors, Harrison said: Roche’s Esbriet and Boehringer Ingelheim’s Ofev. GLPG1690 improved forced vital capacity more so than the other two drugs, and is the only compound that appears to stabilize it as well. The study was conducted in Italy, the Ukraine and the U.K., according to Morgan Stanley. 

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Earlier this week, FibroGen Inc (NASDAQ: FGEN) saw a $1 billion increase in market cap after releasing positive results from a patient study of their IPF drug pamrevlumab, Harrison said. Morgan Stanley does not cover FibroGen.

“While that study was more robust, the GLPG1690 data are more compelling,” Harrison said.

Morgan Stanley has an Overweight on Galapagos NV and a $92 price target.

$352 Million In Potential? 

The Belgian pharmaceutical company’s study results also led to positive projections from Credit Suisse.

The research firm estimates a 40-percent probability of success for GLPG1690 with peak adjusted sales of $352 million, according to a Wednesday note.

Credit Suisse cautioned against reading too much into the results of a small study, but said GLPG1690 “appears to have prevented disease progression” based on the results.

The potential financial impact from sales of the drug is greater than for filgotinib — a rheumatoid arthritis drug on which Galapagos has partnered with Gilead Sciences, Inc. (NASDAQ: GILD) — or cystic fibrosis drugs on which the company has partnered with AbbVie Inc (NYSE: ABBV), said analyst Vamil Divan.

“Proof of concept from a second home-grown mechanism could also increase interest in [Galapagos] from larger pharma peers looking to acquire a drug discovery platform,” the analyst said (see Divan's track record here).

At last check, shares of Galapagos were up 8.45 percent at $79.35.

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Latest Ratings for GLPG

DateFirmActionFromTo
Aug 2020Morgan StanleyMaintainsEqual-Weight
Jul 2020Morgan StanleyMaintainsEqual-Weight
Jul 2020StifelDowngradesBuyHold

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