Gilead, Galapagos Slide After FDA Rejects Filgotinib Over Toxicity Concerns

Shares of Gilead (GILD) and partner Galapagos (GLPG) are under pressure on Wednesday after the companies received a Complete Response Letter from the Food and Drug Administration for its filgotinib in moderately to severely active rheumatoid arthritis, requesting more data and expressing concerns about the treatment. Commenting on the news, JPMorgan analyst Cory Kasimov told investors that the CRL by the FDA for filgotinib is a "shock" and looks like a "near worst case scenario." Voicing a similar opinion, his peer at Credit Suisse called it "a major setback" for the filgotinib program.

FILGOTINIB CRL: Gilead Sciences announced that the Food and Drug Administration has issued a complete response letter for the New Drug Application for filgotinib, an investigational treatment for moderately to severely active rheumatoid arthritis. The FDA has requested data from the MANTA and MANTA-RAy studies before completing its review of the NDA. The MANTA and MANTA-RAy studies are designed to assess whether filgotinib has an impact on sperm parameters. The FDA also has expressed concerns regarding the overall benefit/risk profile of the filgotinib 200 mg dose.

"We are disappointed in this outcome and will evaluate the points raised in the CRL for discussion with the FDA. We continue to believe in the benefit/risk profile of filgotinib in RA, which has been demonstrated in the FINCH Phase 3 clinical program," said Merdad Parsey, Chief Medical Officer of Gilead Sciences.

'NEAR WORST CASE SCENARIO': In a research note to investors, JPMorgan analyst Cory Kasimov said the Complete Response Letter by the FDA for Gilead Sciences' filgotinib is a "shock" and looks like a "near worst-case scenario." Not only will the MANTA studies delay a potential approval by at least one year, the potential lack of dosing flexibility could impact filgotinib's competitive profile, he contended. Further, Kasimov believes Gilead's ability to grow sales over the next couple years is now under even more pressure. He kept a Neutral rating on the shares.

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