Good day, welcome to the Galapagos Q1 Results Webcast. At this time, I would like to turn the conference over to Elizabeth Goodwin. Please go ahead.
Thank you, welcome all to our audio webcast. I'm Elizabeth Goodwin, Investor Relations at Galapagos. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today. Your questions can be included, we kindly request you call in to one of the telephone numbers given in last night's press release. I'm going to give you the one for Belgium right now. That's 32-24-04-0659, our conference code is 1452466. I'd like to remind everyone we will be making forward-looking statements during today's webcast. These forward-looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environment. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements.
Today's speakers will be Onno van de Stolpe, CEO, and Bart Filius, COO and CFO. Onno will go through the operational highlights, Bart will explain the financial results. Bart will go into the guidance, Onno will close with the late-stage clinical news flow we expect this year. You'll see a PowerPoint presentation on screen. We expect this will take about 10 to 15 minutes, that'll be followed by a Q&A session with the executive committee members joining. I'd like to hand over now to Onno for the presentation. Go ahead, Onno.
Thank you, Elizabeth. We are very, very pleased with the FINCH data that we reported this quarter. We reported the FINCH-1 and the FINCH-3 data, they confirmed what we had seen previously in the other trials that we have run, FINCH-2, as well as the DARWIN trials, that filgotinib is doing everything that we expected it to do, both on the efficacy as well as on the safety. We had excellent efficacy data on all the clinical meaningful endpoints being ACR50, ACR70 on the DAS remission as well as on the radiographic progression. Really, this is a super moment for Galapagos that after 20 years, we now have completed the Week 24 phase III program for filgotinib in RA. Clearly in RA, the differentiator is going to be the safety profile in combination, of course, with efficacy, the safety data were absolutely excellent.
We saw very low rates of serious infections, low rates of DVTs, MACE, of death. We saw, again, improvement of hemoglobin and the lipid profile, we saw, again, a decrease in platelets. All in all, confirming what we have seen in the previous trials, altogether making this clearly in the league of the best-in-class for the treatment of RA. It bodes well for filgotinib going forward. Very interesting is that we saw a nice dose response with regard to efficacy, we didn't see any dose-dependent difference on the safety side, which is really good news. We anticipate that we'll get registration both for the 100 milligram as well as the 200 milligram doses, that bodes well for the marketing of this drug because the other JAKs are likely to only have one dosage approved.
Doctors apparently want to see a clear differentiation with a possibility to subscribe a low and a high dose. We hope to have a marketing advantage from that point of view. A hallmark program, a landmark for Galapagos, we're very pleased that we could share that with everybody in this quarter. If we go to the next slide, the FINCH data also bring us closer to Galapagos stepping into the commercial space. We will be marketing filgotinib in our home territory, being in the Benelux, Holland, Belgium, and Luxembourg. We plan to initiate that when filgotinib gets approved in Europe next year, where we start booking the sales and marketing the drug in 2020.
The next step will then be to expand our commercial operations into the big countries in Europe, where we will start marketing filgotinib in IBD, Crohn's and UC, two of the phase III trials that are currently underway. From 2022 and onwards, we anticipate to expand our geographic reach in commercialization, where we anticipate that 1690 could be launched in idiopathic pulmonary fibrosis. We also are planning to enter the United States as a marketing territory. Clearly, our mission is to establish a global biopharma company. We do it step by step. It's difficult to establish the commercial footprint, the way we have planned it, we believe we can do it and be successful in bringing these products to the market.
If we go to the next slide, let's look back on the clinical delivery in the quarter. Of course, filgotinib with FINCH-1 and FINCH-3 complementing the FINCH-2 data of last year. That was not the only news on filgotinib . We completed the recruitment for the SELECTION study, which is the phase III in ulcerative colitis. We also finished recruiting in Sjögren's and in Lupus. We're actually expecting the data of these two phase II studies this year. That are new indications for filgotinib in these diseases. Together with Gilead, we're building the commercial organization worldwide. Well, for us now in the Benelux, Gilead clearly the rest of the world. In IPF, we are fully going ahead with the recruitment in the ISABELA 1690 study, where actually we are ahead of planning.
The recruitment is going faster than we had anticipated, which is very good news. We also started the second trial with GLPG1690 in systemic sclerosis, the NOVESA trial. That's underway. We expanded our pipeline in IPF with compounds that we in-licensed from Fibrocor and Evotec. We really want to build a big franchise here, and we believe that we should look at a number of different mechanisms to target this disease. In GLPG1972, in osteoarthritis, we saw a very strong recruitment in the ROCCELLA trial, which is a phase II-B trial together with Servier, where we're clearly substantially ahead of the original planning. Which is good news, because we will be fully recruited in the next quarter. With the collaboration with MorphoSys, we are moving forward in atopic dermatitis, the program that we partnered with Novartis.
We just announced yesterday the start of the GECKO phase II trial, together with MorphoSys and Novartis. Earlier in the inflammation space, we started our first phase I trial with GLPG3312, which is the first generation of our Toledo program, and we expect the second one to start actually this summer. We're putting a lot of efforts on that, as I've indicated before. We also started a phase I trial with a JAK1/TYK2, molecule GLPG3121. Two phase I trials added to the pipeline. With that, I would like to hand it over to Bart Filius to give us the financial highlights.
Thank you, Onno, and good morning everyone in the U.S., good afternoon in Europe. Let me take you through two slides on the financials for the first quarter of 2019, and I'll finish off with saying a few words about the expected news flow for the rest of the year. First slide on cash. We are landing the end of the quarter at more than EUR 1.2 billion of cash. The cash position is still very strong for the company. In the quarter, we have spent EUR 76 million on operating cash burn. We've also generated a little bit of money from warrant exercises, EUR 3.5 million. There's always a currency translation effect in our cash balance because we keep part of our cash in dollars. This year, there's been a favorable translation effect of EUR 5 million.
The EUR 76 million, just to put that in perspective our full year guidance for this year is between EUR 320 million and EUR 340 million, and we are retaining that guidance for the full year. We're on track to be there, and EUR 76 million is representing a little less than one quarter of that number with some quarterly fluctuations that's perfectly in line with expectations. Good cash position and in line with guidance, that's the key message on the financials. On the next slide, a couple of quick words on the P&L. Revenues have been EUR 41 million for the quarter, slightly lower than the first quarter of 2018. We had some revenue recognition for cystic fibrosis still in the first quarter of 2018, and as a result of the transaction with AbbVie, where we've handed back the rights on the CF molecules there is a significantly lower revenue recognition.
We are a little bit lower for the quarter, it is all accounting-wise on revenues. On operating costs, we are higher by EUR 70 million compared to the same quarter of last year, that is mainly driven by cost for mid- and late-stage development. Within there, it is clearly GLPG1690, where we are now fully on track in our ISABELA trials, that was not yet alive in the first quarter of 2018. A bit higher in terms of operating costs. There is also a bit of influence, which is also accounting on cost allocations for the warrants. As the share price of Galapagos has performed nicely over the quarter, we are also accruing for higher costs for warrants that are outstanding.
That leads to the net results, which is EUR 49 million negative, which is a bit worse than the first quarter of 2018 for the reasons I just described on revenues and operating costs and partly offset by a EUR 5 million positive currency translation effects. That is it for the financials. I will stick to that. I invite everyone who is interested in further detail about split by program, et cetera, to look at our quarterly report, which is an online report available on our website. Let me finish off the initial remarks with the expected news flow for 2019. You can see that on this slide. The first half and the orange tick marks are the news that has already reached the market. A big chunk of the news flow for the first half that we had promised and anticipated is with you all in the public domain.
For the second half, there are some very interesting data sets still to come. Onno mentioned it just now. We have data sets about Sjögren's and lupus for filgotinib, which could be an additional two indications that we will be further investigating together with our partner, Gilead. We will also be starting the psoriatic arthritis trial together with Gilead in phase III for filgotinib. A lot of movements around this molecule. A bit further down on the slides, on MOR106, there we anticipate to be able to share some data on the bridging study later this year. We have extended the timeline for the news flow on the IGUANA trial, as we have increased the number of patients that are included in that trial.
We now anticipate that the primary analysis will be in the first half of 2020 rather than our previous guidance, second half of 2019. Finally, on the earlier programs, so the phase I programs, there are three phase I readouts to be expected. GLPG3312, GLPG3121, sort of Toledo and the JAK1/TYK2, one further compound of which we have not yet disclosed the targets. We will also be seeing phase I data later on this year. We will start a second Toledo compound, GLPG3970, in phase I, we hope to start also a proof of concept with our first Toledo compound in an IBD indication in the second half of this year. A lot of news flow to come still for Galapagos in the rest of the year. With that, I will suggest I stop the initial remarks.
Hand it back over to Elizabeth and the operator for further Q&A, for which we have Walid and Piet also available. Thank you all.
Thanks very much, Bart and Onno, for those prepared remarks. I'd now like to ask the operator, Savannah, to connect us to any callers with questions for the executives at Galapagos.
If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star 1 to ask a question, and we will take our first question from Wimal Kapadia with Bernstein. Please go ahead.
Hi. Thanks very much for taking my questions. Wimal Kapadia from Bernstein. Just a couple, please. First, I'd like to get your thoughts on the lack of superiority in the FINCH studies versus HUMIRA. I appreciate that you guys have demonstrated superiority, but that it won't be a specific claim on the label. I guess I just wanted to get your thoughts on whether you thought this would have an impact on penetration, particularly within the first-line setting. Secondly, just on MANTA, can you provide any updates post the trial expansion into the additional indications? Finally, given that the recruitment of the IPF trials is going extremely well, is it possible for us to see an interim of either PINTA or ISABELA in 1H 2020? Thank you.
This is Walid. I will take your questions. First, regarding the superiority in HUMIRA for FINCH-1, I think one of the things that you've seen in that trial is that once you use the sort of lower-level type of efficacy endpoints, like ACR20 or low disease activity for the DAS28, you see that the effects that we've seen with HUMIRA, particularly ACR20, for example, in that trial, at 12 weeks, you've seen a good 70%, which has not seen in any of the previous trials, when they used it as an active comparator in the UPA trial, also with the TOFA and with the BARI trial. I think on that level, the direct comparison on the low disease activity, which was the pre-specified endpoint, just missed superiority.
Once you go on higher degree of clinical rigor, looking at clinical remission with DAS28 less than 2.6, there we do show superiority. Since it was lower in the hierarchy, it's nominal superiority because it was not alpha protective. To be clear, there was no expectation that you would get a superiority claim on the label with one trial demonstrating superiority. The regulatory authorities are clear on that. That was not part of the expectations going forward. Again, I think here you see it's an artifact of having a higher response than expected, but then when you increase the threshold for more meaningful endpoints, I think you still see the same type of differentiation we expect from a JAK1 inhibitor like filgotinib. For the MANTA, I think the MANTA is sort of talking about the expansion to an additional indication.
It's part of our discussion with the FDA to try and essentially broaden the inclusion criteria to allow recruitment of the patient population. Often these studies are designed using inclusion criteria based on WHO standards
For usually healthy men. When we look at individuals who suffer from chronic inflammatory conditions, whether it be inflammatory bowel disease or rheumatoid arthritis or other rheumatic diseases, it becomes a bit difficult to find patients who will meet the criteria set forth or defined in the healthy subject population. In discussion with the FDA, we agreed to broaden the inclusion/exclusion criteria, one of which is essentially broadening into the rheumatic disease indications. Because obviously, the protocol and the sites to conduct those studies are quite different than the ones for IBD, we created essentially an identical protocol called MANTA-Ray, that will expand to the rheumatic disease indications. Actually, the data will be pulled from both studies, to have a combined total of 200 patients having completed the 13 weeks of treatment for primary endpoint. I think it should be viewed that way.
The third point about getting results a bit earlier, I think it's a bit early to tell. I think by the end of the summer, around September, we will be in a much better place for ISABELA to be able to give some guidance as to how well we're moving forward with recruitment. The early days are looking good, and we're very happy with the way we're progressing and the excitement and the interest that we're seeing from various sites. We still haven't activated the majority of our sites, and we should wait until that so that we can better inform. For the PINTA, we are recruiting on target right now, and we're still expecting to have results in the second half of next year.
Great. Thank you very much.
If I answered all that come along. Thank you.
Thank you.
Our next question will come from Eliana Merle with Cantor Fitzgerald. Please go ahead.
Hey, guys. Thanks so much for taking the question, and also let me offer my congratulations on the truly impressive FINCH data stats. In terms of atopic dermatitis, where you're not currently studying filgotinib, just given that there are many JAKs in development for AD that have shown activity, I guess, what are your thoughts around potentially studying filgotinib in AD? Do you think the mechanism of JAK1 makes sense in this indication? Thanks.
Thanks, Ellie. Yeah, I think atopic dermatitis has been on our radar screen for some time. Frankly, we look at this in the context of the big program with filgotinib. If you recall, we are after a number of indications right now with RA, UC, Crohn's, but also ankylosing spondylitis and psoriatic arthritis, most likely now heading towards confirmatory trials. We have also Sjögren's syndrome and lupus. We're going to read out at the end of the year. As we were evaluating the totality of the data, atopic dermatitis, for a variety of reasons, fell below the threshold to engage further. As you can imagine, this is always a space that is in flux. We will always reevaluate and reconsider. For the time being, we don't have any concrete plans to move forward with AD.
Whether it makes sense for the JAKs or not, I think you've seen some of the data which look interesting in terms of efficacy. To me, the key question is where is the unmet medical need and does a JAK inhibitor, which could lead to a potentially higher level of immunosuppression than you would expect from other treatments that are now available for atopic dermatitis, whether it makes sense. It's ironic that the most safe and efficacious so far, data-wise, from the JAKs is the only one that's not pursuing atopic dermatitis. I think it's something that we will be continuing to monitor and see whether it makes sense to go in that direction or not.
We will move on to our next question from Emily Field with Barclays. Please go ahead.
Hi, thank you. I was just wondering, given the safety profile that you've seen from the FINCH trials thus far and that you're running the MANTA study, do you think that there would be any potential to avoid a box warning on the U.S. label, or does that remain sort of a baseline expectation? The control arm response rates on ACR20 seem to be much higher in the FINCH trials versus the SELECT trials, and I was just wondering if you had any thoughts on that. Thank you.
May I ask clarification, the box warning, can you say specifically on what specifically box warning you're talking about?
I was wondering, given the safety profile that you've seen thus far across thrombotic events and then also infections, if it's your baseline expectation that you will have a box warning on the U.S. label, or do you think that that could be avoided?
Yeah. I think it's premature to be able to say this with any level of confidence, but I would imagine that there's a general box warning around risk of infection and malignancies that probably all JAKs will have to have that. With regard to the thrombotic events, I think our data so far are quite differentiating, and I would expect that we should avoid having any labeling in that respect. We will see how the agency will look at this. We will have a glimpse as to how they think about it when they'll have discussion around the upadacitinib, which should be coming up in the next few months. It is my expectations that filgotinib will be positively differentiated in that space.
Talking about the placebo response rate and active control response rate in our FINCH program, I cannot give you more than speculation at this point because we haven't yet done the additional sub-analyses, which I would imagine that would be part of an upcoming scientific presentation. We will have maybe more chance to discuss this. I think at this point, if we look at the FINCH 1 and 3, we tended to have a little bit more patients probably from Eastern European or maybe countries like India in the trial, more so than FINCH 2, for example, that could potentially explain this. Sometimes these trials also have a condition that if patients actually worsen during the trial, they will have to exit the trial and be treated with the standard of care. In some of those countries, standard of care is not really that great.
It's kind of an incentive for patients to "do better," quote-unquote, and stay in the trial. I don't know if those actually played a factor in it, those are kind of speculation on my part without really having any of the analyses and the data to back it up. Wait and see for more analyses when we disclose further the data.
Great. Thank you very much.
Okay.
Our next question comes from Debjit Chattopadhyay with H.C. Wainwright. Please go ahead.
Hey. Thank you. Good morning and good afternoon. I've got a couple of questions. First one on GLPG1690. Could you walk us through the year-end go, no-go decision on GLPG1690 from a study powering perspective, and especially how much alpha spend is associated with the interim look and the final P value assumptions, assuming the trial moves forward?
Yeah. It's not in the year-end. Just to be clear, the timelines are not year-end. Maybe I can take a step back and explain a little bit. The program includes two identical studies, each one with 750 patients, 250 per arm. It has 90% power to detect a difference of one dose versus placebo of more than 80 ml difference in FVC. We use the rate of decline analysis in those trials. Our plan is to conduct a futility analysis once 25% of the patients combined from both trials, 1,500, 25%, so 375 patients would have crossed the one-year line. At which point we take all the data, those for whom we have data more than one year, those for whom we have data less than one year, and take the totality of the data to calculate the rate of decline in FVC.
If there's a low chance that we will be able to differentiate from placebo, then on both doses. Neither dose will have differentiation from placebo. At that point, we will stop. I don't have more details on this right now as to what that number specifically is, because we still have to discuss it with the health authorities and come to an agreement with. That's the general framework of how we are approaching it.
Yeah. Got it. Just to clarify, is it one 8 ml or 80 ml?
80.
Thank you. Just one more follow-up question. From filgotinib, as you think about going commercial, is this now a game of rapid market share gains with pricing as a key metric, or will it play out on the safety front with the two-dose flexibility that filgotinib offers? Thank you so much.
Bart, would you like to take this, or do you want me to take it?
No, I'll take it, Walid. I think generally, Debjit, it's a bit early to tell because we first want to see exactly what the label is going to look like and also what the competitive situation is going to be in the marketplace once we are ready for launch. Together with our partner, Gilead, we'll establish what the appropriate strategy into that market. No further details really on our launch strategy at this moment in time.
Thank you so much. Good luck.
Thanks.
Our next question comes from James Quigley with JPMorgan.
Hello. Thank you for taking my questions. Just a couple from me. The JAK1/TYK2, which inflammation indications do you intend to focus on? In terms of the preclinical data, how does it compare in inflammation disease models compared to filgotinib and also the Toledo assets? Sort of what are the additional benefits of targeting JAK1 and TYK2 as opposed to targeting one or the other on its own? The second question on MANTA-Ray. Currently, there is only one center that is listed on the clinical trials record. How quickly can you add additional centers? What are the challenges in order to get those centers added, and are they going to be mainly in Europe or in the U.S.? Thirdly, a question on modeling. What should we expect in terms of the phasing of the deferred income?
I know it is non-cash, but in terms of the AbbVie upfront, I think at the end of last year, there was sort of EUR 3 million left to amortize. Only EUR 400 million was amortized in Q1. Similarly, with Gilead, what should we expect in terms of phasing? Thanks.
Okay, Piet, yes. Thanks for the question. I will start on the combined JAK1/TYK2. When we decide to take that one forward, it is clear that was based on data where in a number of preclinical animal models, we have seen that the combined inhibition of those two targets gives us really hope that for the first time in the more serious diseases like lupus, we can make a difference. It is clearly we have been evaluating our JAK1 as well. The clinical study is ongoing. If you compare there a JAK with a combined JAK1/TYK2, the combination really performs much stronger. Next, there is also good rationale to go to the IBD models, and indeed, the JAK1/TYK2 performs better there as well than our selective JAK1 inhibitors. Looking to the broader picture, the Toledo really clearly outperforms any other mechanism of action that we ever have seen in the IBD model.
There is a rationale to go for a combined JAK1/TYK2, our bigger hope there remains the Toledo. That is as far as I want to answer on the JAK1/TYK2. Walid, over to you.
Yeah. For MANTA-Ray, I am not sure. I have not really looked specifically on clinicaltrials.gov what is out there. Clearly we have many more sites being planned. Definitely more than 100. Those will be mostly in Europe, but also in India as well. We are quite active moving that forward. Definitely much more than one site is what you will be seeing. Bart, I guess the last one is for you.
Yeah, I will take the last one on the deferred income, James. It is indeed AbbVie's deferred income and Gilead's deferred income, which was still on the balance sheet at the end of December last year. For AbbVie, this is all connected to finishing off all the transfer of activities to AbbVie, and you should assume this to be fully depleted from our balance sheet, probably by the first half of this year. On the Gilead deferred income, this is related to mostly the upfront that was paid in January 2016. We anticipate this also to be fully depleted by the end of this year.
Excellent. Thanks very much.
Our next question comes from Christopher Marai from Nomura. Please go ahead.
Thank you for taking the questions. Congratulations on the progress. First, just maybe touching upon your pre-NDA meeting with the FDA, I was wondering if you could provide an update on that timing. Has that occurred or is that still pending? I know it should be in the next month or two. On that point, is there any updated thoughts that you could share regarding MANTA or MANTA-Ray data in terms of their requirement for the submission? Do you expect that data to be required at the time of submission or that it may be possible to submit it just prior to approval? I have a follow-up. Thank you.
Thanks. Thanks, Chris. Walid. I think we've discussed this kind of strategy before, and Gilead has also discussed this. That once we have the FINCH data, which has occurred, we will ask to have a discussion with the FDA based on the known risk/benefit that we've seen so far in the FINCH program and discuss with them the filing strategy and that's the pre-NDA meeting I think you're referring to. We would expect that to happen in the next few months, but we're not guiding on a specific date. Although there could be more information that will be shared by Gilead, I believe, next Thursday. May 2nd will be their earnings call, and I direct you guys to follow up there because there might be more information at that point.
In terms of whether or not the data from the MANTA program will be needed for filing or not, again, that's going to be the crux of the discussion. At this point, it really becomes an opinion that I would have on this, I think it's better for me not to speculate on it. I think we have concrete data right now that we have in the FINCH program, we have clear progress that we've made with the MANTA program and clear commitment that we're doing these studies. Those will form the basis of the discussion with the FDA, we'll see based on that, what the outcome will be.
Okay. Thank you, Walid. Then just a follow-up. I'm thinking about the FINCH-1, FINCH-3 patient populations. I know you noticed that versus prior trials, there were differences across geographies. I was wondering, it seems to have impacted, obviously, placebo rates. Do you have any expectation or reason to believe that this could also impact your PE DVT rates observed or lack thereof in your trials? Because perhaps they were somehow less severe or had other lack of comorbidities or otherwise. Thank you.
Good question, Chris. I don't see that. When we look at the actual patient demographics and stuff like that, I don't think we see much of a difference. Again, the location or demographic changes that we talked about in terms of location, geographic location are speculation on my part. I think it has more to do with the incentive to stay in a trial as a result of the alternative being center of care, which probably is not as good as it would be in more Western countries like EU and the U.S. But in terms of comorbidity and things like that, we haven't seen anything that was different based on an evaluation of the data right now. I cannot imagine that that will explain the low rate of DVTs and PEs.
As a matter of fact, FINCH-2 actually had no DVTs or PEs in it either.
Great. Thank you very much.
Our next question comes from Adam Walsh with Stifel. Please go ahead.
Hey, good morning. Thanks for taking my questions. First one on filgotinib. Beyond RA, could you give us an update on filgotinib and other indications, namely in Crohn's and ulcerative colitis, just how the enrollment is going there and when you feel like the next data points will be revealed? A second question. Walid, if MANTA turns out to be gating for the filing, when would the M ANTA program be complete as it's currently laid out with the current program structure? I have a follow-up. Thank you.
Thanks, Adam. Beyond RA, I think, for UC, the program has finished recruitment a couple of months ago, I think, or a month ago. This is an induction followed by a maintenance study. The in-life phase of the study is one year long. I would imagine by this time next year, we should have results from the UC program, and that should enable us to then proceed to filing in that indication. Crohn's disease, I think our best guess at this point is about a year behind UC. That's our best guess at this point. Regarding M ANTA , we've been very careful in discussion with our partners, Gilead, about what to say and how much to guide on this, because until we know whether M ANTA is gating, information about how well it's progressing and so on and so forth is not material.
There's also a spectrum. The FDA could agree that there's no need to have MANTA as part of the package, and it will be a post-approval or whenever the data are available. It could be that there's a certain number that you must have by a certain time to be able to file. Since this has a spectrum of different dates, Gilead has not been wanting to share any more information until we have clarity. I'd imagine after we have the meeting with the FDA and we have clarity on the filing strategy, Gilead, actually, you would hear from them first about what were the results, and as a result, what does that mean for filing. If MANTA is on the critical path or partly on the critical path, they will guide about the timing for the MANTA program.
That's really helpful. Just one on MOR106. The GECKO phase II trial with the sub-Q formulation was just initiated, and you have a phase I-B bridging study still ongoing with the sub-Q formulation. Can you talk about the relationship between those two on the sub-Q formulation and where you are in development with that formulation, and is there any connection between those two studies? How do we think about the IV and sub-Q dosing regimen in terms of frequency and dosing, and what have we learned so far? Thanks.
Thanks for the MOR106 questions. With the GECKO, we turn a new page in the program. One hand side is the first time we bring the program to the U.S., that's an important one to validate that all we've been doing is done according to how FDA expected. The second big step we took is indeed is the first time we do a sub-Q study only, and the plan is that from now onwards, all studies will be sub-Q only. We have the dose ranger IGUANA ongoing. That the big study that will give us the right dose for phase III. When we filed GECKO, indeed, we had high hopes that the bioavailability we've observed in the IV sub-Q study is good enough to allow us to do sub-Q dosing in the future only. So that IV sub-Q bridging study is still ongoing.
The multiple dose studies in the patient is still ongoing, the single dose data we have on file and made us confident to initiate a sub-Q study only. Thank you.
Thank you.
Our next question comes from Matthew Harrison with Morgan Stanley.
Hi, this is Vikram on for Matthew. We just had one quick follow-up on the Crohn's program. The diversion
Matthew, your line cut out. Can you please repeat the question?
Sorry, I'm not sure where I cut out, but I was just saying that the phase III Crohn's study, that started around the same time, based on clinicaltrials.gov as phase III SELECTION study. As far as we're seeing now, the primary completion is around the same date. I know that it was just mentioned that Crohn's is roughly a year behind UC, so we're just curious about what was happening with that trial, what might have caused the delay based on the dates we're seeing on ct.gov.
Yeah. In Crohn's disease programs, I don't know if you followed, and a number of different companies have been facing some significant delays because of a lot of competition. When we look at how things are progressing, we estimate that it's going to be probably about a year behind Crohn's disease. I think, we'll have a discussion with our partner to see what kind of updates we'll need to make it to clinicaltrials.gov. This space is highly competitive. I think if you look at number of different companies, they've been delayed by a significant amount of time from what they originally set out to do.
Understood. Thanks.
Our next question will come from Patrick Trucchio with Berenberg Capital Markets. Go ahead.
Thanks. Thank you. Good morning and good afternoon. My follow-up is on MOR106. First, can you discuss IL-17C and its role in the pathogenesis of atopic dermatitis? Secondly, atopic derm is getting crowded with DUPIXENT on the market, multiple JAKs, and IL-13 in development. I'm wondering where you see MOR106 in the treatment paradigm in the IV formulation, and how this may change if or when MOR106 is approved in a subcu formulation. Thank you.
Okay, thanks for the MOR106 question. Let me start with IL-17C. IL-17C is what we call an amplifier of the inflammation locally, and its expression is restricted to epithelia only. In that sense, its mechanism of action, when we block it, we don't expect any systemic side effects, and it's been by many companies flagged as one of the ideal targets if you want to treat skin diseases. In that sense, IL-17C stands out as a unique target. Second, on the competitive placement. The plan is to do in phase III only subcu, we will not do IV further. We're doing it those range of IV to get the dose.
As I said on the previous question as well, we have high hope that our subcu, as it has been performing and will perform, will allow us to do an once every other week, once every month dosing subcu. Then, with a unique target, with a unique safety profile, we believe it's going to be a competitive drug in this space. Thank you for the question.
We will take our next question from Vamil Divan with Credit Suisse. Please go ahead.
Hi, great. Thanks so much for taking the questions, most of mine have been asked. Just a couple follow-ups. One, just again, on MOR106. You mentioned the increase in the number of patients in Tijuana , can you just comment on what sort of drove that decision? What have you seen that led you to increase the number? Separate topic, actually, on your cash. You mentioned the EUR 1.2 billion. Just curious, obviously, very healthy balance sheet along with investing in the business, are there any sort of thoughts or opportunities you see in terms of external opportunities for business development? Thanks so much.
Okay, I'll start with the MOR106 question. The decision to increase the number of patients is to allow us a very smooth transition from phase II-B to phase III. We have designed our program. We discussed with Novartis. They saw the different studies, the IV subcu bridging, the GECKO study. They said, "Well, if we want to be sure that we can very smoothly, as soon as we have the phase II-B data, go into phase III, we would like to see a bit of more data." That's what has driven this too, to be sure that that step into phase III can be taken very smoothly. Thank you. Bart, for you the cash or-
I'll take the question there on Vamil. Bart speaking. Indeed, healthy cash balance. The primary purpose really of that cash balance is to fund the broad pipeline that we're running at Galapagos. Basically, we have, at any moment in time, more than 20 programs in discovery. We have 10 molecules that are in pre-clinical or in phase I stages. We have the four bigger ones that are in phase II or phase III. There's an enormously broad pipeline at Galapagos that we want to fund. That's the primary purpose. We never rule out, I don't think any company should, that we do something also externally. We're always on the lookout to see if there's great science in other places also beyond our company. We did actually do two smaller in-licensing transactions in December last year.
Those will not make a dent into the cash balance, because they were relatively early-stage assets, both in the discovery phase. Just to highlight that we have a very active team looking at the external world as well, we'll put our cash to use if we see a good opportunity there.
Okay. Thank you.
Our next question will come from Graig Suvannavejh with Goldman Sachs.
Thank you very much. Good afternoon and good morning. Congrats on the FINCH data. I just want to say that again. My question, I've got two. My first is around filgotinib and beyond rheumatoid arthritis. Given the JAK1 selectivity and given that you're evaluating filgotinib across 11 total indications, is there anything about JAK1 or just JAK biology that gives you a sense that as you look at the other indications, that there might be, at least on an indication-specific basis, a higher or lower probability of success? Meaning, are there certain indications that you feel that you're more confident in, versus others, where just based on the biology, it might be a little more challenging? Any sense of that would be helpful. Second is really more around modeling.
As we look at the first quarter results, that cash burn of EUR 76 million, I think is tracking nicely with your guidance for the year. I think it does leave about 5%-10% or so increase, to achieve that guidance over the next three quarters. I'm wondering if you could help us think about how the quarterly evolution of your, whether it's revenue or OpEx, might be over the next three quarters. That'd be helpful too. Thank you.
I'll start with the filgotinib question. So far, I think the data that we've seen so far for at least RA, the story is very clear. In our hands, also continuing with rheumatic diseases, for psoriatic arthritis, the results that we've seen in our phase II study were outstanding in terms of efficacy. That also tells us the story that actually JAK1 is what we need and is supporting our pre-clinical data that indicated that's all we need in terms of efficacy in that space. Ankylosing spondylitis gives you also the same story. From the IBD program, I think we have very good data with FITZROY in Crohn's disease.
Although we don't have any data yet in ulcerative colitis, we feel pretty good about those having gone through the interim analysis and future data analysis movement officially into phase III, although we haven't seen the data, but I think that also bodes well. The remaining part, I think Lupus is the other disease where there's a large unmet medical need, but also this is a space that has been somehow tested to some degree with the JAK. Again, pre-clinical data support going forward with filgotinib and support the fact that JAK1 selectivity should do the trick. I think, again, I've said this many times, when you have selectivity for JAK1, it allows you to use doses that will maximize activity on JAK1 without having to worry about bleeding into other targets like JAK2 and JAK3 and buy you more liability than not.
I think the totality of the data so far has been supporting this hypothesis. We'll see what happens when we see data from Lupus. Sjögren's is the space probably where we haven't had any clinical data as far as I know, the JAK space. Again, I think in general, we feel quite confident with the data that we have seen so far. We're awaiting the results from Sjögren's and Lupus, which actually should be coming in the second half of this year. We will know quite soon where we stand. Bart, should I turn it over to you?
I'll take the rest of the question from Graig, which was around the modeling. Indeed, the EUR 76 million that we spent in the first quarter compares to. If you linearly take our guidance, the EUR 80 million to EUR 85 million that every quarter should take. In all fairness, I think this type of deviation is what you should expect from quarter to quarter, a little bit more, a little bit less. Clearly, there are some balance sheet positions moving at the same time. I think, frankly, for the rest of the year, it's pretty linear. Generally, our third quarter is a little bit slower in terms of cash burn, and our fourth quarter a little bit higher. Overall, our expectations is that the cash burn during this year, 2019, is going to be rather linear from quarter to quarter.
Bart, if I could follow up. The revenue that was in the first quarter, is that a good run rate to annualize for 2019?
Revenues, in all fairness, is a bit more specific, you really need to look at the underlying numbers. There's, again, some further details in the report. Goes a bit too far to get into that for the call here. I think on the previous question that I got from, I think it was James, around revenue recognition from the upfronts that we've received previously from Gilead, that, I think, helps answering that. There are some other elements in revenue which are quite linear from year to year. Revenues tend to fluctuate a bit more than the cash burn in 2019.
Thank you very much, congrats again on the progress.
Thank you.
Our next question comes from Brian Abrahams with RBC Capital Markets.
Hi, this is Bert on for Brian. Thank you for taking our question. I have one on filgotinib. Now that you have kind of the full phase III data in RA, which populations of RA patients do you think would benefit most from filgotinib? I guess alternatively, are there any populations where you think it might be more difficult to gain traction with?
Thanks, Bert. Well, I think the data with filgotinib has shown across all stages of RA that we have very strong efficacy across the board, and what promises to be best-in-class safety profile. I think the answer that I'm going to be giving you is a general answer in the field, not pertaining specifically to filgotinib, because I don't see any difference in terms of the performance of filgotinib in one group versus the other. Again, I see the data that are very solid across the board in phase III, which is the early RA, phase I, which is the methotrexate experience individuals who didn't have full response, and those who failed one or more biological in phase II.
I think in general, when you look at the field, you see clearly there's a greater interest now in thinking of the JAKs in terms of their efficacy being apparently superior to the TNF-α and the convenience of the oral administration and the lack of concern about losing effect over time that one encounters with biologics. There's going to be a faster uptake. I would imagine that as the field moves forward, it's going to become very clear that the JAKs will be used before the TNF-αs and other biologicals. That's how I would view things. Whether or not they will be used early on in the disease before methotrexate or not, I think that will be a little bit more further down the line. Methotrexate is a compound that actually works. The rheumatologists have been using it for decades, and I think it's very well-entrenched.
In addition to the cost, which is very low, I think it's going to be much more difficult to come ahead of methotrexate. I think it would be used early on probably in the disease. As we accumulate more and more data, especially with the second-generation JAK inhibitors like filgotinib, you gain more confidence in the efficacy, but also the safety of the compound, and you're going to start feeling more comfortable to use them early on. That's kind of my assessment of where this would go.
Great. Thanks a lot.
All right. I'm going to jump in here. This is Elizabeth. I just want to say that our time's up for today. We've had some really good questions, excellent dialogue here. If there's any question that you still want to ask, please reach out to either me or Sofie Van Gijsel in the IR team to get that handled. Our next scheduled call will be for the half-year 2019 results on the 26th of July. We look forward to speaking with you all, and thank you very much for your support and participation today. Goodbye