Gilead guts its filgotinib plans, dealing a blow to O'Day's diversification dream

Gilead Sign
Gilead has scrapped most of its Galapagos deal specific to rheumatoid arthritis drug Jyseleca, better known as filgotinib, after seeing no "viable path" for an FDA approval. (Gilead Sciences)

After smashing into an FDA roadblock, Gilead Sciences has decided to cut its losses on filgotinib, once a blockbuster hopeful and the poster child of the Big Biotech’s early effort to diversify from its core antiviral portfolio.

Gilead has scrapped most of its Galapagos collaboration specific to rheumatoid arthritis med Jyseleca, better known as filgotinib, the California company said Tuesday. The JAK inhibitor has been approved in Japan and Europe but was previously rejected by the FDA.

To industry watchers, the development wasn’t unexpected, given how the drug has struggled with the FDA; apparently, a recent meeting with the agency on the drug’s path forward hammered the final nail in the coffin.

Specifically, Gilead said it would give up on a U.S. approval for filgotinib in rheumatoid arthritis, pay Galapagos €160 million to take over most ongoing clinical trials and return responsibility for the drug in Europe.

That leaves only nominal rights for Gilead in the U.S., SVB Leerink analyst Geoffrey Porges said in a Wednesday note. And RBC Capital Markets analyst Brian Abrahams, in a Tuesday note, labeled the deal adjustment as “an effective, albeit unsurprising, end to the high-opportunity promise the agent once had.”

Gilead still retains Jyseleca rights in Crohn’s disease, but Porges suggests that the company won’t proceed with that indication either, given the drug’s modest showing in clinical trials in another inflammatory bowel disease, ulcerative colitis. “Gilead shared with us that they would not proceed with commercializing the drug in CD unless they see best-in-class data,” Porges said.

RELATED: Gilead's rheumatoid arthritis med filgotinib, after cold shoulder from FDA, wins global-first nod in Japan

In August, the FDA rejected Jyseleca in arthritis over testicular toxicity linked to the high, 200-mg dose and demanded related data from the ongoing Manta and Manta-RAy trials. In Tuesday’s announcement, Gilead disclosed that the FDA has requested up to 52 weeks of follow-up data from the trials for patients who suffered a decrease in semen of more than 50% by the 26-week mark.

Gilead believes the high dose is required for Jyseleca to be competitive in the U.S. rheumatoid arthritis market, but an approval is unlikely without conducting “substantial additional clinical studies,” Gilead said.

After talking to the FDA, Gilead management realized the FDA simply doesn’t believe the high dose has a favorable benefit-to-risk profile to justify an approval given the large number of existing treatments in rheumatoid arthritis, Porges noted after talking to the team.

After the complete response letter, Gilead and Galapagos halted enrollment in trials of psoriatic arthritis, ankylosing spondylitis and uveitis patients. Now, those trials will be officially stopped over the coming months.

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Gilead struck its original Jyseleca deal with Galapagos, worth up to $2 billion, back in 2015, before Daniel O’Day became CEO. But it was O’Day who expanded the pact into a full-on, 10-year collaboration and highlighted the drug as a key component in his diversification plan for the company.

“While we believe that the clinical profile of Jyseleca could help many patients living with RA, we no longer see a viable path to U.S. approval in this indication,” O’Day said in a Tuesday statement.

Although the current Jyseleca adjustment doesn’t affect the rest of the Galapagos pact, Porges suspects it marks a first step in Gilead “gradually disengaging” from the investment.  

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Ironically, Gilead’s retreat from Jyseleca came as AbbVie dialed up its expectations for its new immunology stars— rheumatoid arthritis drug Rinvoq and psoriasis therapy Skyrizi—to $15 billion in peak sales, up from the previous $10 billion.

Both Jyseleca and Rinvoq are specific JAK1 inhibitors. It was AbbVie—an experienced immunology player—which five years ago dumped its opt-in rights to Jyseleca, a then-controversial move that now looks smart.

“This is yet another example of the perils and pitfalls of large biopharma capital allocation strategies, particularly for relatively inexperienced management teams,” Porges said of Gilead and Jyseleca in his note.