PharmaTelevision - Galapagos: Technology Platforms and Future Plans

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Video title: Galapagos: Technology Platforms and Future Plans

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In this episode of PharmaTelevision News Review, Fintan Walton talks with Onno Van de Stolpe, CEO at Galapagos.

Filmed at BioBusiness 2010 in London, England, they discuss:

• How Galapagos has handled the credit crunch

• Galapagos' move into drug-making

• Milestone payment models and how they work in Biotech companies

• The technology platform within the firm

• Galapagos' plans for its orphan disease programmes

• Long-term strategies producing greater rewards

How Galapagos has handled the credit crunch.

Fintan Walton:

Hello and welcome to PharmaTelevision News Review here at BioBusiness in London. On this show I have Onno Van de Stolpe, who is the CEO of Galapagos, welcome to the show.

Onno Van de Stolpe:

Good afternoon.

Fintan Walton:

Onno, you've been on our television program before and you are an interesting company with a model, a business model that has both the service side to it but also a major discovery side to it, you build that discovery side to it which undergoes collaborations with other major pharmaceutical companies, so particularly in the last two or three years and the last two or three-years have been tough for biotech companies and even tough for pharma companies, how is it been for you?

Onno Van de Stolpe:

Well we, every year we've had a record year and 2009 has been absolutely fabulous, we came in within a tough revenue goal and that's said we were we do a 100 million in revenues which is really a stick in the sand but we have reactivated that guidance until the end, so it's really been an excellent year for us. We signed three alliances with Merck [PharmaDeals ID = 33149] [PharmaDeals ID = 32125] [PharmaDeals ID = 31679] and well we've recently signed a major alliance with [PharmaDeals ID = 34558]Roche, so the whole strategy for Galapagos to build the company through alliances with big pharma companies is working very well. On top of that BioFocus [PharmaDeals ID = 21837] has done extremely well, as well they are profitable and they are doing good, so basically Galapagos in all aspects had a superb year.

Galapagos move into drug-making, Milestone payment models and how they work in Biotech companies.

Fintan Walton:

So let's go back to the original business model the company itself was founded as a joint venture between Crucell and Tibotec [PharmaDeals ID = 4473] and then it developed over that back in 1999, one of the key things was within this acquisition of BioFocus how important was the BioFocus acquisition to the Galapagos story?

Onno Van de Stolpe:

Well crucial, we were we started obviously as genomics company to find new target and so this was actually before the human genome was unraveled so we were kind of an early genomic company with clearly, purely as a target discovery company there was no sustainable future as a standard alone, so we needed to not only find targets but to develop drugs and that's where BioFocus came in, BioFocus was a chemistry service provider and that, after we acquired it we could use both as a service division with also use for our internal programs. And it you know clearly has changed the future of the company because suddenly we were able to go to big pharma and say okay we cannot only identify novel targets for you, but we can actually make drugs against those and that is where pharma got really interest because pharma does not now how to handle novel targets, although they want to go for a new innovative drugs, new motive actions first in class the whole system within the discovery and pharma is not set to move novel targets forward because the risk is too high. When we had our first discussion with GSK in 2006 [PharmaDeals ID = 24397] we were able to offer them that whole integrated platform and GSK was extremely interested in the area of osteoarthritis because they didn't need to license in targets or leads, we actually said we'll bring the programs into the clinic and through proof of concept and then you can opt and in license it and that was what they were really looking for. And they didn't have to pay us funding for the research, they just have to pay us milestone along the way until they opt in and afterwards we get milestones and royalties and that more all be then taken on board and replicated a number of times with J&J [PharmaDeals ID = 28683], and Merck, and Roche, and Lilly [PharmaDeals ID = 29312].

Fintan Walton:

So, well could you do that could you have that model in a different type of biotech company which didn't doesn't have the structure that you have?

Onno Van de Stolpe:

Well I think it is more difficult because companies might have all the biology and not the chemistry, or the chemistry and not the biology, it's the combination that makes it really attractive. And but I strongly believe that biotech should try to model itself more towards the discovery engine of the pharma companies. Pharma is clearly moving back, moving out of the early discovery themselves because they are not innovative enough, they are not geared towards novelty, but they need it because they need to fill their pipelines.

The technology platform within the firm.

Fintan Walton:

But then how can that make you know therefore Galapagos is not a it has to it can't just stand still either it's got to move fast, it's got to bring in additional technologies?

Onno Van de Stolpe:

Well we don't that's an interesting point because when we developed our platform to find novel targets which was between 2000 or 2001 and 2002, 2003 we thought the technology would be on top state of the art may be four, five maximum six-years. I mean, I'm talking in 2010 and there is nothing on the horizon that rivals our platform and if it if there was something then clearly we wouldn't get the deals from pharma because they know exactly what's out there. So it's not that all technologies become obsolete after relatively short life span. So we don't really need to change our technology platform although we're always scouting for other technologies that could add or improve the current one, but our SilenceSelect platform for now really stands out. On the other side of the equation the chemistry side is not so much innovation or intellectual property it is the knowhow and the expertise that the people that work on the chemistry bring in, we have number of chemists in the company both in our service arm at BioFocus as well as in Galapagos they all have their backgrounds with the big pharma companies. And when Merck closed their major centre here in the UK we were able to recruit a number of their top chemist into the company and that makes a big difference if you are developing drugs. That is not something that people out of the academics can easily do you need to have done that for many years and you have to basically feel a sniff to see if your molecule is the right one to bring it to become a new drug and that combination the proprietary technology to find novel targets and then the expertise and knowhow of the chemistry that makes a success for Galapagos.

Galapagos plans for its orphan disease programmes.

Fintan Walton:

So clearly you are still able to do deals with pharmaceutical companies, you have done an a number of deals just in the last year, where do that where does that place is there are there more potential deals for you to deal with your current technology, so what are the next steps for Galapagos?

Onno Van de Stolpe:

Yeah. Well clearly we think we will continue to leverage that technology platform that makes sense for us, go to other disease areas find novel targets there bring into the clinic again, at the same time we're also developing a number of internal programs. We just announced today a successful Phase I study with our Integrin-receptor-antagonist for metastasis some oncology program and we are developing a number of programs at the moment in the clinic at our own cost and risk. At some point we are going to partner those as well, because they are in areas where Galapagos wouldn't be able to fund the Phase III trials because they are massively large, but in the interim we are looking at orphan disease areas where we already have identified a number of targets through patient foundations and selecting one or couple of these areas where we're actually going to bring drugs all the way to the patient and have that marketed under the Galapagos labels of course it's a long-term strategy, because it's going to take years before we get there, but we believe that with the cash flow that we are generating from the service division and from the alliances we can actually fund these internal programs internally and still generate a profit going forward for the company.

Fintan Walton:

And would you take those programs forward in Europe and US or just Europe and are you gonna be exclusive for those programs worldwide?

Onno Van de Stolpe:

Well the interesting aspect of orphan disease programs is that often the patient foundations have all the patients in their database and have contact with them, so you can actually have in their worldwide sales team serving those patients so we would go for an worldwide presence of Galapagos in those areas. We haven't decided and communicated the disease area we are gonna hopefully do that in the next six-months and then we'll actually have an area where we will not be interested in discussing any partnership because we will move go all the way on our own. And that's of course different in the current internal programs we have a program in rheumatoid arthritis, we have the Integrin-receptor-antagonist, we have a program in cachexia with all those areas we ultimately will need to partner although the further we can bring it if we can get it to a proof of concept and then of course the value goes up dramatically, so if we can afford it we'll move it over later.

Fintan Walton:

So the business model going forward is that you have BioFocus a service base company, you'll continue to do collaborations based on and your platform technology and there is specific programs that you may take forward which are around the orphan status et cetera?

Onno Van de Stolpe:

That's correct.

Long-term strategies producing greater rewards.

Fintan Walton:

Okay. And so where do you see the business then in about five-year time, is it through very much along the lines which it is now or would you've taken an orphan drug and taken it to the market?

Onno Van de Stolpe:

Well we won't be there because it will be based on novel targets that we have identified, so it's going to take longer than that

Fintan Walton:

So it's not you are not going to in license potential orphan products?

Onno Van de Stolpe:

It's unlikely, Galapagos is very much novel target new motive action company, we like to continue that also for our internal pipeline and therefore focus on targets that we discover with our platform and develop drugs against that. It's a longer-term strategy to get actually to the market but we believe that ultimately when you get there the rewards gonna be bigger really disease notifying drugs which especially for orphan diseases are very much in need. The nice part of the Galapagos story I think is that we can we are now building a company that is moving towards profitability as we speak and at the same time has this massive potential revenues and royalties when products move forward into the market in partnered areas because all these alliances have royalities in the order of 10%. So when the blockbuster drug in these large areas like rheumatoid arthritis or metabolic diseases actually makes it to the market by the partner we get in a very serious revenue stream from that. And the fact that these alliances are so broad they are all based on about 12 targets that we start with, which gives us a very good chance that at least one product will make it through the phase III that's the kind of temptation.

Fintan Walton:

Your portfolio is broad enough to give you chances?

Onno Van de Stolpe:

Yeah, yeah. So it's not a hit and miss strategy, this is really a pharma size approach to a disease area that ultimately has a good chance of delivering a drug to the market and there by generating a very nice cash flow for the company.

Fintan Walton:

Onno Van de Stolpe, thank you very much indeed for coming on the show.

Onno Van de Stolpe:

My pleasure. Thanks.

Onno Van de Stolpe

Chief Executive Officer

Mr. Van de Stolpe founded Galapagos in 1999 while he was Managing Director Genomics at Introgene (now Crucell). Prior to joining Introgene in 1998, he was Managing Director of Molecular Probes Europe. He established this European headquarters after joining Molecular Probes in the US. Previously, he worked for the Netherlands Foreign Investment Agency in California, where he was responsible for recruiting biotech and medical device companies to locate in the Netherlands. Mr. Van de Stolpe started his career as Manager Business Development at MOGEN in Leiden. He received a MSc degree from the Agricultural University in Wageningen.

Galapagos

Galapagos has developed a target discovery platform that provides novel starting points for drug and antibody therapies, thereby addressing the industry's need for innovative, disease-modifying medicines. Galapagos is exploiting this platform in disease areas for which there is a clear need for better medicines. The Company's product portfolio consists mainly of new mode-of-action drugs in bone and joint diseases as well as programs in cancer metastasis, cachexia and orphan diseases. To enable the progression of a broad portfolio of programs, Galapagos has established risk sharing alliances with big pharma companies in specific disease areas. Through an alliance with MorphoSys, Galapagos is also developing new antibody therapies in bone and joint diseases.