Good day, welcome to the Galapagos H1 Reporting Webcast. Today's webcast is being recorded. At this time, I would like to turn the webcast over to Ms. Elizabeth Goodwin. Please go ahead, ma'am.
Thank you, welcome all to the audio webcast of Galapagos's first half 2017 results. I'm Elizabeth Goodwin, investor relations, and I'll be hosting today's event. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today. That your questions can be included, we request that you call in to the following telephone number. That's 32 for Belgium, 2-400-6926, and the code is 465-9682. I'd like to remind everyone that 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's actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Onno van de Stolpe, CEO; Piet Wigerinck, CSO; and Bart Filius, CFO.
Onno and Piet will go through the operational highlights. Bart will explain the financial results and the 2017 guidance. Onno will close with the expectations for this year. You'll see a PowerPoint presentation on screen while they're talking. We estimate that the presentation will take about 20 minutes, and this will be followed by a Q&A session. At this point, I'd like to hand over to Onno to start the presentation.
Thank you, Elizabeth. A pleasure here to kick off the half-year presentation. Clearly, we had a very solid year with a lot of results, both on the financial side as well on the R&D side. Highlighted with filgotinib that clearly moves forward in the clinical programs. We showed the long-term extension study, DARWIN 3, in rheumatoid arthritis, which was very consistent with regard to the previous results. Piet will provide you more color on this data set later in this presentation. We haven't stopped there. Apart from the IBD programs, filgotinib is now rolled out in multiple phase II studies and more to come. Some are being executed by Galapagos, some are executed by our partner, Gilead. Clearly, we are blanketing the whole market here as broadly as possible to look at all possible indications for this remarkable molecule.
In CF, we're making very nice progress with our various components of the triple combination study. All phase I have been completed. We're now moving forward with preparations for the start of the triple combo phase II study. In IPF, idiopathic pulmonary fibrosis, we are shortly expecting to show the data on 1690, the FLORA study. We also had an orphan status given to Galapagos for this program, so we're looking forward to progressing this program very rapidly. In osteoarthritis, we start the first dosing in patients in the U.S. with 1972. Today we announced that Servier has executed its opt-in and has now licensed this program everywhere outside the U.S. The research group has also come up with some remarkable results. We have now three more PCCs, preclinical candidates, which brings the total of proprietary assets in our pipeline to seven.
Clearly you see a transition from a very partnered development pipeline to a more proprietary one. That together with the very successful offering on Nasdaq, we now have EUR 1.3 billion in cash. We're well-funded for the future, both on our internal activities as well as potential acquisitions or licensing. Also very pleased that we can announce that Michele Manto has joined us as a Senior VP Commercial Operations. He's quite an extraordinary person. Was with AbbVie before where he was responsible for the global marketing of HUMIRA, the largest-selling drug in the world, and also responsible for the preparation of the launch of ABT-494, the competitor product for filgotinib. If you can go to the next slide, I'll give you some color on the opt-in by Servier of the 1972 molecule. With this opt-in, Servier gains worldwide commercial rights in all indications except for the United States.
There, Galapagos has the sole rights to commercialize and develop this molecule. Of course, with the license, they also have an obligation to further develop this. We're getting a EUR 6 million license fee, which might look quite modest, but please remember that this deal was signed in 2010 when we had only targets and no molecules, so a very early-stage partnership with Servier. At that time, this milestone was very appropriate. We're getting more milestones down the road on this program. We have future milestones on 1972 of EUR 200 million. Far more important, of course, are the U.S. commercial rights that we have and the royalties that we're getting on all sales outside the U.S. We're very excited about this program, as we have reported previously.
This opt-in by Servier is a sign of confidence that we have a partner that truly believes that this molecule has great opportunity in osteoarthritis. With that, I would like to hand it over to Piet, who will give you much more details on all these programs.
Thank you, Onno. Let me start with filgotinib, where as you all know, we have three phase III ongoing. We've commented on those sufficiently in the past. But over Q2 as well, we have started five new phase II studies, starting on this slide with the Sjögren's for the first study we started in Q2 over ankylosing spondylitis, psoriatic arthritis, a lupus study, and an uveitis study. This is only part of the total program we plan, but this plan clearly shows that together with partner Gilead, we are extremely ambitious in exploring filgotinib to the maximum extent in a variety of inflammatory diseases. More studies will come over the coming quarters, and we will update you as soon as those studies come on clinicaltrials.gov.
During Q2 as well, at the occasion of EULAR, we for the first time have shown both efficacy and additional safety data from DARWIN 3. DARWIN 3, as a reminder, is an open-label safety study. Almost all patients coming out of DARWIN 1 and DARWIN 2 got the invitation and wanted to participate in the long-term follow-up study. On this slide, we start with the efficacy. We were extremely pleased to see that we already, at the end of DARWIN, had high ACR 50 scores, that those ACR 50 scores further increased up to close to 70%. More importantly as well, these data show on the left that our choice to go for once a day for phase III was very valid, as you can see on the left graph here that both BID and QD give you essentially the same efficacy outcome as part of DARWIN 3.
On the right as well, output I would like to illustrate is the fact that as part of DARWIN 3, we have both patients coming from the monotherapy study, DARWIN 2, as those coming from the add-on to methotrexate study, DARWIN 1. We've compared them on this slide in terms of clinical efficacy, again, ACR 50, and there again, you don't see any difference. This will not influence our phase III program, but clearly illustrate that with filgotinib as a selective JAK1 inhibitor, later in the market, it could excellently play as a monotherapy for all patients failing on methotrexate. I'm very pleased with this efficacy that's also show over time there is no decrease of the efficacy effect. This is a sustainable efficacy, both as a monotherapy and as an add-on to methotrexate. A few highlights on the safety.
Filgotinib is the first and the only really selective JAK1 inhibitor in the field. It is quite nicely illustrated by what is, in fact, the return to the midpoint of the normal values in hemoglobin. This slide both illustrates the speed of that return as the extent of the return of the hemoglobin values, which are low because of the disease at start, and they return quickly to the midpoint of the normal values. Another illustration of the safety of filgotinib as part of DARWIN 3 are the platelets. As with most of the RA drugs on the market, also filgotinib shows, in fact, an return to the normal values. As patients have high values, you see a quick drop during the first 12 weeks.
As part of DARWIN 3, as some of the placebos after 24 weeks go inactive, you see, in fact, from week 48 onwards, a stable value of platelets over time. This is a classic picture you see with most of the RA drugs on the market. The only exception to this is baricitinib, which in fact shows an increase in these patients. That concludes for me the update as part of this presentation on filgotinib. Let's now look to the rest of the clinical pipeline. In the CF field, nothing has changed. We have three potentiators in the game, and clearly for triple we are focused on GLPG2451 and GLPG3067. I've clearly highlighted that as part of the R&D update in June.
Our C2 GLPG2222 is well advanced in phase II, both as a monotherapy and as an add-on to ORKAMBI, and we expect to read out the first data this year. We have two C2 molecules in the game, one in phase I, GLPG2737, which will move into triple patients during this year, and then a second one, GLPG3121, which will move into healthy volunteers this year, and then in patients next year. On the IPF line, in fact, we have replaced the previous new PCC, GLPG2938, by GLPG3499. This molecule is from the same family, acts on the same target, but it has really shown us much better in vivo efficacy data in the animal model. We decided to start off the development of GLPG3499 as a second mechanism of action in the IPF field.
For GPR84 and GLPG1205, we are looking for a second indication and hope to announce as well before end of this year what the second indication is. We will bring this molecule or test this molecule in the clinic. The rest of the slide in the middle there did not change, but at the bottom, we have added a new PCC in the inflammation area, an undisclosed novel target GLPG3312. We as well have a new mechanism of action in pain, which is number GLPG3535. That's a molecule we will explore in the field of pain. Our ambition is there to see whether we can add anything to filgotinib or eventually an OA drug, as pain is one of the most remaining complaints that patients currently have when treated with the OA drugs. Over to CF now.
This is the same slide as at the R&D update. We are progressing three triple combos and plan to put them into the clinic over the coming 12 months. The first that will enter is GLPG2222, GLPG2737, GLPG2451, planned to go into phase I in patients this year. What on this slide as well is remarkably depicted on the left in gray, our dual platform, GLPG2222 plus GLPG2451 in these predictive HBE cells, outperforms in a consistent way the Vertex dual platform, the tezacaftor/ivacaftor combination. We expect to start from a more solid dual basis to show the additional benefit of our C2s as part of the triple combination. Really there, we are looking forward to both gather dual and triple data over the coming year.
The second triple which is planned to move into patients is the one with the other potentiator 3067, then the same C1 2222 and 2737. By mid of next year, we as well hope to bring the next C2 3221 into patients as planned. That is in fact another mechanism of action and consistently shows somewhat a higher efficacy in vitro. We are clearly pushing forward every C2 we have in hand and which we believe is a valid clinical candidate. In terms of patient studies on CF, that is a question we get frequently. The first study to read out and from which we will report our data this year is the ALBATROSS study. Is a dual therapy of 2222 in the G551D patients.
We have the second study we'll be reading out early next year is the FLAMINGO study. Is the C1 corrector 2222 as a monotherapy in homozygous delta F508 patients. We shift to the triple study. We will start soon a triple study where we add 2737 to ORKAMBI patients in the homozygous Class 2 patients. Later we'll start our first patient study with the internal triple base 2451, 2222 and 2737. We are well on track with the plan we announced in June. We have submitted to the U.K. regulatory authorities the questions we have, we will meet with them over the coming months to finalize the design and to kick off that triple study in patients. Early next year, you see the 3067 triple study in patients, then by mid, the 3221 triple study also in patients.
We as well using here in the project, whatever triple we believe can make it and can make a difference for patients to bring that to patients and to test it in patients. That's so far for this year, but we'll probably get more questions during the Q&A. On FLORA, during Q2, we've completed the collection of all data, locked the database, we now daily get pieces of the total package in, and we are analyzing. You can expect us to read out over the coming weeks and to tell to you how GLPG1690 performed in this 12-week study. We did a 12-week study in IPF patients, where we did our best to do a study according to current standards with a centrally confirmed diagnosis. Those patients, this is a monotherapy study.
Those patients either did not have access to pirfenidone or nintedanib or were in Western Europe waiting before they could get on the treatment. It's a study with about 20 patients, we will read out both on biomarkers and on the number of secondary endpoints like FVC and others when we report the data. In the OA field. Today we announced that Servier has taken the option they had to the ex-U.S. rights. We have the option to do both studies and to market the drug in the U.S. As part of those rights, we have started the phase I study, which we discussed with Servier and agreed, in which we both extend the dose range and the age range of patients. These are OA patients.
We've started our first study there and have included patients where we will dose them for a month. We will follow, most importantly, PK safety, but as well as the biomarker, and then have a first exploratory look to some of the clinical endpoints. In the meanwhile, together with Servier, we are discussing how the phase II will look like and how we will execute that study. This can be still one or two separate studies. That is under discussion with them. The next readout of data we expect soon is in fact on MOR106, and with soon, I mean during Q3 this year. This is the first time it will be the readout of both the single ascending dose in healthy volunteers, but more interestingly, the multiple ascending dose we've been performing in patients.
We are still collecting the last data, you can expect the data of this study by end of Q3, in fact. There we will look as well safety PK, but as well have measured and followed up the classic scores in atopic dermatitis field, and we will report out on how MOR106 performed over time versus those scores. That's, I think, for the research, the highlights of the Q2. Bart.
Thank you, Piet. Good afternoon, everyone, or good morning if you're in the U.S. My name is Bart Filius, Chief Financial Officer, and I'll take you through the numbers of the second quarter or the first half of 2017. Firstly, as always, I'll start with our cash position, which is at the end of June, EUR 1.25 billion, a healthy increase from where we were at the end of 2016, which was a little less than EUR 1 billion. As you know, we've done an equity offering in the U.S. in April, which has netted EUR 350 million of proceeds, which is the big driver for this increase in the first six months of this year. Taking you through the bridge, which is on this slide. You see a EUR 17 million negative, which is a translation effect.
Maybe to clarify this a bit further, we keep most of our cash in euros, but we have a portion also in dollars. This portion is roughly $250 million, which is to basically give a natural hedge to the expenses that we have in dollars over the next couple of years around the filgotinib program. As we report, obviously, in euro currency, we get a translation effect. This is not an expense, but it's really a translation of that dollar position into euros as a result of the decline of the dollar against the euro. Maybe more interestingly, getting to the cash burn. I've split it out in two categories. One is cash income from milestones, EUR 25 million over the first six months.
On the other hand, basically the cash expense, which is a net of some income, but mostly relates to R&D expenses of a negative EUR 80 million, bringing us to a total cash burn over the first six months of a little over EUR 50 million. We retain our cash guidance in the bracket between EUR 135 million and EUR 155 million, as I pointed out when we announced our 2016 annual results. We retain that guidance, which means that there's actually going to be a larger cash spend in the second half of this year, driven by two facts. On one hand, the milestones that we expect are a bit lower than the ones in the first half of the year, but more importantly, cash expenses will go up in the second half of this year as the filgotinib program matures and the recruitments accelerates.
All in all, healthy position on the balance sheet, EUR 1.25 billion, and that's not even taking into account, which is in the footnotes, a little over EUR 70 million of receivable from the Belgian and French governments, which are going to pay out over the next four or five years, which are actually tax incentives. Onto the P&L. First revenues, healthy increase of revenues of 50% from the first half of 2016 to the first half of 2017. Two big drivers therein. First of all, an accounting driver, which is non-cash, which is the recognition of deferred revenues.
This applies to our upfront license that we've received for filgotinib in early 2016 from Gilead, which we've not recognized in full, but which we actually recognize in our P&L in proportion to the expenses that we make on the program, which means that this will be recognized over a, roughly, let's say, four-year period, and which obviously increases versus last year as the expenses have also gone up. The other driver is that we've slightly higher milestones in the first half of the year, mostly around CF, where we've started multiple extra trials in the first six months of this year. Going to expenses, operating expenses going up as well, mostly on developments. That development expense is driven by, I'll repeat myself, filgotinib on one hand and CF on the other hand, where the program, as Piet was explaining it, is getting broader and broader.
The total of the two of revenues and operating expenses both increasing leads us to a widening of our operating loss of EUR 8.6 million. If you look at our net results, that gap versus first half of last year is obviously much bigger because there's a couple of extraordinary events in there. First of all, in the first month of 2016, we have recognized EUR 57.5 million positive in our P&L as a one-off accounting entry as a result of the Gilead transaction. That is not recurring, obviously, again in 2017, so we need to rebase our net results to take that into account.
The other driver is a 15.5 million difference in foreign exchange of other financial income, which is the translation effect that I explained before, combined with a little bit of interest revenue and expense. That translation effect also leads to a negative P&L impact there. The real underlying evolution in our P&L is a negative 8 on operations, which again, is a combination of increasing revenues against increasing expenses, bringing our first half year results to negative EUR 50 million. Far on the financials. I'll hand it back to Onno for the outlook.
Thank you, Bart. Thank you, Piet. Before we go into the questions, an outlook for the remainder of the year. Clearly, filgotinib will continue in phase III, in RA, in Crohn's disease, and ulcerative colitis. Of course, also continuing in all the phase II and more to come in the second half in other disease indications. We'll also see the start of the triple combo in patients in cystic fibrosis, something the market and ourselves and the patients are looking forward to. Hopefully, we will be able to generate as positive data or better data than our colleagues at Vertex. We are going to show data from patients in IPF and atopic dermatitis in the coming weeks and months. We're looking forward to present those data to you.
All in the backlight of having a growing number of proprietary clinical programs with our research organization continuing to come up with novel candidates that we move into development. With Michele, we have started to build the commercial organization to commercialize filgotinib in the big five EU countries and the Benelux, Belgium and Holland. That will be the basis of further commercialization efforts by Galapagos for our proprietary programs in the future. Our balance sheet, as Bart has shown, is very solid. We can continue to fund our own products, our own programs, and we have more than enough financial leverage to actually look at potential acquisitions or licensing that can strengthen our portfolio. With that, I would like to hand it back to Elizabeth, and we can start the Q&A.
All right. Thank you very much. This concludes the presentation portion of the call. I'd like to ask the operator, Ebony, to connect us to any callers who may have questions for our executives. Go ahead.
Absolutely. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. Our first question will come from Debjit Chattopadhyay with Janney. Please go ahead.
Hey, good morning. Can you hear me? Hello?
Yeah, we hear you fine.
Can you hear me?
Debjit, we hear you fine.
Great. Thanks. Just start off at IPF. Given the relatively small number of patients in the study, would you expect to see a stat sig benefit in FVC? And what is your internal hurdle in moving the program forward?
Debjit, thanks for the question. Indeed, it's a very small study. As we said, we had in phase I, a plasma biomarker. You want to see that confirmed. We've put in a number of exploratory biomarkers in the BALF, but most importantly, I think we will look to the respiratory parameters and hope to see that the active is at least as good and hopefully a bit better than the placebo. And finally, we don't want to see extreme drops in the active group that would highlight that maybe some patients might improve, but others are at risk of worsening of the disease. It's going to be looking to the means, but also the extremes of what we see in the patient population, which clearly that this study is not powered to show any difference between the active and the placebo.
Great. On the osteoarthritis drug, as you start thinking about the patient studies, are you considering excluding the KL 3 and 4 OA patients primarily because the disease is probably so advanced in these and there are probably morphological changes to the bone alignment, so maybe they don't have cartilage or even if there is any cartilage, the rescue may not be enough therapeutically beneficial. Just wondering how we should think about what kind of OA patients are most likely going to be in the study.
On the OA study design, indeed, we have a mechanism of action that is blocking the degradation of cartilage. It's important that we include patients that still have cartilage, and that will indeed lead to a limitation of which patients will go into the study. Whether it is now exactly only KL 2 and not 3 or different, I will not highlight today, but it's clear as one of the key points in the design of our study that we have the right patients there. It's not going to be an all-comer study where we are at risk of having too much patients that probably can't show any benefit.
If you could stratify the OA market, then what percent of the OA patients are scale 1 and 2 versus 3 and 4? Clearly, for this drug to be a blockbuster, there's got to be some sort of a biomarker screening of patients much earlier on than that is currently used.
Debjit, thanks for the question. Well, with this drug, we first want to show that it's working and showing benefit. I'm not too worried about how big the market is. Honestly, there are way sufficient patients that even if you only take part of the market, it's going to be a fantastic drug. This is a field where not a single drug has been approved over the past 15 years. There are really no disease-modifying drugs in this field. Whether in the end we will only have the patients early in disease, mid, or end, I'm not too worried. I can't give you those numbers, but you can find them clearly elsewhere, published by other groups.
Just one last question. The testicular safety study, which is underway, in terms of timing and when we should expect a readout. Do you think that would finish early enough for you to recruit younger male patients in the U.S. in the GI studies? It doesn't really matter because you have plenty more patients ex-U.S. from a labeling perspective. Thank you so much for taking my questions.
The safety study in the U.S. will help us at a certain moment to extend the age range. We have tested as part of the healthy volunteers up to 55, and now we are extending up to 75. As you know, most of the OA patients are more in the elderly section of the population. We can start this study earlier, and as soon as we have those data, expand the inclusion criteria. There is no limitation there. That is for the safety study, OA-9072. Maybe there was a question on the safety study on filgotinib. That study has kicked off and will not allow typically to expand the inclusion. There we have a safety study as agreed with FDA. The plan is that reads out in parallel and together with the efficacy studies that we have running at the moment.
Thank you.
Our next question will come from Dameon with BPIG. Please go ahead.
Hi. Thank you for taking the questions. I wanted to ask, and apologies if I missed this, is GLPG3499 an autotaxin?
No. This is.
The same mechanism of action as GLPG1690.
Yeah. On the pipeline slide, on the line for IPF, we have the autotaxin, and then the second compound is a novel mechanism of action different from autotaxin. In that program, we have replaced GLPG2938 by a new compound, which has shown far superior in vivo efficacy. Thanks for the question, because it allows me to clarify that indeed, this is a new mechanism of action different from the autotaxin.
Do you have a timeline in terms of when you might be able to characterize it a little bit more for us?
This now start preclinical development, give us 15 months to bring it to phase I. To disclose the target, we typically wait until we bring this to patients. This could take a while before we're going to disclose a target of this novel approach in IPF. Thank you.
Okay. I guess switching over to atopic dermatitis. As you move, we'll see the top-line data of a healthy study in, I guess, this quarter. Going forward, what do you think the realistic challenges are for running a larger atopic dermatitis study in the moderate to severe population now that Dupixent's on the market? I would assume eventually you would have to run part of the study in the U.S. Do you foresee any challenges? Would you think that you would be looking post someone coming off of Dupixent therapy, or does it not matter given that you're looking at IL-17C?
Thanks again for the excellent question, which is how we will design or what types of patients we're going to include in atopic dermatitis phase II study, which, if the phase I-B is successful, is the logic next step. It will all depend a bit on the risk-benefit outcome, how much efficacy do we see. From a scientific point of view, IL-17C is independent of the IL-4 pathway of the Regeneron drug. There is no reason why we would have ourselves scientifically oriented on that program. Of course, if you look forward five years from here, there's going to be a market of patients that did not respond, patients that have a moderate response. You could think about an add-on design. You could think about a design where you focus on the failures. I guess the first study will be rather looking to a monotherapy.
That's not saying that that's the final place in the market, but where we'll try to get an idea in terms of efficacy, how the risk-benefit looks with this novel mechanism of action in atopic dermatitis.
The last one for me is GLPG2534 also an IL-17 targeted drug, or is it a different mechanism of action?
Bart, thanks as well for allowing me to clarify a bit our early pipeline. This is a small molecule, a novel mechanism of action, which we've been working on for a while, but have shown now, and we've looked in preclinical models into a number of inflammatory indication. Really, in terms of efficacy in the animal models, atopic derm was the best we've seen. So it's going to be a small molecule, novel target program that we started there. Thank you.
Thank you for the questions.
Once again, ladies and gentlemen, it is star one to ask the question, and we'll move next to Matthew Harrison with Morgan Stanley. Please go ahead.
Great. Thanks very much. Good afternoon. 2 CF questions, if I may, from me. I was wondering first if you could just comment on your views on the recent Vertex data and how you see that. What the implications are to your program from that data. Secondly, any updates on timing from when you expect to sort of finish receiving scientific advice from the U.K. and when you might be able to communicate what the program looks like after that advice. Thanks very much.
Thank you, Matthew, for the questions. First of all, let me say we were pleased with the Vertex data. I'm pleased for a number of reasons. First of all, pleased for the many patients in the CF field for which we had no clinical data that supported our ambition to bring effective treatments to them. I think with those new Vertex data in the het/min population, that dream of bringing treatment for more than 90% of the CF patients is coming much closer now. That's very good. Secondly, we are pleased as well because it completely validates as well our approach that the triple therapy is the way for in the future to treat both homozygous and the het/min patients. We saw it a nice validation of our platform as well.
Finally, it takes us way as well a number of worries when doing the CF studies. There is a clear sweat signal. There is a clear FEV signal. In terms of studies we need to do early on to evaluate whether we have an effective and competitive treatment by using both sweat and FEV, even with small numbers of patients and trials ranging from 1-3 months, we should get a good view on that. That as well helps us early on to assess well the competitive value of our different triples. Finally, in terms of timelines, we've been watching the Vertex program for a while. It's all coming very concrete, but the timing they've indicated coincides with what we had in terms of planning for when we want to start the late-stage clinical studies for CF. I hope I covered most of your questions.
Our scientific advice timing,
Yes
We've submitted the questions. We are on track there that we expect to file and to start patient inclusions the second half of this year. No, we are completely on track of what we told at the R&D day. Thanks for asking.
Perfect. Thank you very much.
Our next question will come from Stéphanie Put with Degroof Petercam. Please go ahead.
Hi. Good afternoon. Thank you for taking my questions. First on osteoarthritis, with following the in-licensing by Servier, how do you see the path going forward, specifically for the U.S. going towards phase II, phase III studies? Will this be split up? Will you look for a partner eventually in the U.S.? Can you shed some light on that? On the CF, will you present the phase I data in healthy volunteers of the different components at any scientific conferences? Lastly, a small detail question concerning the recently announced tax reform in Belgium. Do you have any idea if this might affect the patent income deduction regime or the innovation deduction regime that is called now? Thank you.
I'll start with the first question on the Servier collaboration and the U.S./non-U.S. situation. We have all rights in the U.S. We can execute the phase II in the U.S. independent of Servier. At the moment, we are discussing how we're going to move forward with our partner here. That might result in a separate phase II or actually a combined phase II. That's still under discussion. We'll inform the market as soon as that has cleared up. On the tax reforms, Bart Filius?
Yeah, let me take the question, Stéphanie , on the tax reforms, because indeed that's one that has major impacts
On the company. First of all, for those that are less familiar with the Belgian situation, there's a ruling where we are allowed under a regime called PID. It's actually a patent box regime, where we are allowed to deduct 80% of our income from IP, from our taxable base. As a result, we're only taxed on the remaining 20% of that income. There's a new ruling in Belgium, where there's a new system called IID, which effectively comes to sort of the same outcome. It's slightly different. I won't go into those details there, but it's, if anything, a slight improvement over the old regime. Thirdly, there's also some plans around Belgian tax reform, around Belgian corporate tax rates. It's a bit too early to comment, but it looks like the direction is down, meaning the tax rates are going to go down meaningfully.
While the IID regime after 2020 will be protected and sustained. If anything, again, too early to comment in details, but if anything, it will be a beneficial outcome for us, for future income coming out of IP-related assets such as filgotinib and CF and any other programs we're developing. For CF, Piet Wigerinck, I'll leave it to you, please.
Stephanie, thanks for the question. As a company fact, and it allows me to remind most people on the call, we have a policy that we publish all the phase I data that we generate. Every clinical study we execute, we publish those data either at a conference, either as part of a manuscript. For those that have followed us in the CF field, they know that we've been quite well present at every CF conference. We have a continuous flow of novel data. You will see a next flow early November at the North American Cystic Fibrosis Conference, and then the next flow will then come early 2018 at the European CF Conference.
Every phase I, and as well for sure, the phase II studies which we execute, as soon as we have the data, we will publish them and comment on them at our conferences. I hope I answered your question.
Yes, very clear. Thank you.
Our next question will come from Christopher Marai with Nomura Instinet. Please go ahead.
Hi. Good morning, everybody. Thank you. Good afternoon. Thank you for taking the question. Number 1, I was just wondering if you could further clarify perhaps some of the potentiator metabolite half-life questions you may have received from regulators in any discussions that you may have had. Secondarily, maybe remind us, is there a path forward to use currently approved potentiators and just have your correctors on top of those should the small molecules be trickier than we all anticipated to move forward? Thank you.
Okay, Chris. Thank you for the questions. The interaction with the authorities is ongoing, we never comment on ongoing regulatory interactions. What I can say is that we feel very comfortable that all of the data we've generated shows that GLPG2451 and its active metabolite is going to be an effective and safe chronic treatment for the CF patients, and this will be as part of a triple therapy. We are very comforted with all of the data we had generated and we have been generating over the past months. We never comment, in fact, on an ongoing regulatory interaction. We'll not do that today. The second question, what can we combine with an approved potentiator? In theory, you can. The other hand, there is quite a restriction on the availability of the approved potentiator.
If we would try to execute that theory that we can buy in the free market sufficient of Kalydeco to combine, I think we would immediately run simply as part of the clinical studies in a logistic nightmare because there's not that much available. That would immediately give us a very slow program to execute. We've, from day 1, more or less excluded that option. Finally, as well, if you combine with compound from the competitors for the final pricing, there is a nice discussion to have, and you might need a license for that. Don't forget that some of the combo treatments that have been brought to the market have required licenses from the company that has brought it to the market. There is not an easy executable way of developing our own C1s and C2s, and it's not part of our plans.
Thank you.
Okay. Thank you. That's helpful. If I may, one follow-up. Just again, sort of thinking about your compounds and the data you've seen in your own labs versus the competitor compounds in terms of just the triple. Could you perhaps comment on why you believe that you may have a potentially equal or better opportunity once you're in patient given the data that we saw this quarter? Thank you.
Thank you for the question. During this call, as well as during the R&D day I shown some data that compare our dual platform and that then 2451-2222 or 3672222 because we get in vitro exactly the same data. Systematically both validated internally and with many external labs, really in vitro outperforms the Vertex dual platform. We believe we will have an excellent dual basis to start from. The whole team have included, we believe that the dual platform is better than the Vertex platform. We have a better launching platform for the triple therapies. Quite honestly, we don't know how the chemical structure is of the Vertex C2, so we can't do or perform any competitive studies in vitro currently in-house. I can't comment on experiment we can't do.
What we can do is compare on published data, there, we feel very comfortable that in terms of fold increases we see from starting our dual is quite similar of what Vertex shows, what they see as terms of increases starting from their dual platform. If you start from a higher base, we will obviously see the same fold increases. We are hopeful that we will end up with higher FEV values, but it needs to be proven in clinic. That's clear. Thank you.
Once again, it is star one to ask a question. We'll move next to Tim Wood with Goldman Sachs. Please go ahead.
Hi. Thank you very much for taking my questions. Just to stay on the cystic fibrosis topic. I think a couple of the patients on the Vertex side had elevated liver enzymes in those phase II studies. Is that something that you've seen in your own early work, and is there a mechanistic reason that you're aware of that a triple combination therapy could lead to elevated liver enzymes? A second question, if I may. It feels like you've waited on the cystic fibrosis program for drugs and data to come through so that you can pursue a once-daily dosing strategy. Versus Vertex have been using twice-daily dosing. As you see it, how relevant is that advantage of once-daily dosing versus twice daily? Thanks very much.
Thanks, Tim, for the questions. On the elevated liver enzymes, if there is one thing everybody wants to avoid early on in the development program, it's really early liver enzyme increases because typically never gets better over time with longer dosing and more patients. If you would have seen elevated liver as part of the phase I, that would have been for us a reason not to progress molecules further. What I can say there as part of the portfolio, we haven't seen it, and we are not progressing compounds where we have seen liver enzyme increases. For the Vertex molecules, they have to judge themselves and see what is an effective and a safe dose and then take the decision what molecule at what dose in triple they will progress.
According to me, there is no mechanistic reason why a C2 should or might increase liver enzymes. On the QD dosing effect, you're pointing to what differentiators are there left in the CF market. I think that's the big question many people have after having seen the first efficacy data of the Vertex triples. I don't think it's any different towards any other program at this stage. Differentiation can happen either on an efficacy basis, either on a safety basis, either on a dosing or on a dose regimen basis. For patients that have to take medication every day, lifelong, QD makes a big difference for them.
Eventually, I think QD, if you would have the same risk-benefit profile, would for patients be a good reason to change because it really affects their life if they have to take drugs twice a day or only once a day. That is my answer to the QD dosing. Thanks for the question.
Thanks very much.
Our next question comes from Peter Welford with Jefferies. Please go ahead.
Hi. Yes, thanks for taking my questions. I think I've got four left. Firstly, just on the, sticking with cystic fibrosis. Is there any impact at all from the Vertex data on your choice of components within the triple, I guess, and which triple combination you perhaps preferentially would like to accelerate development of? I guess just trying to get a feel of whether or not you think that there's any differences between those that are worth pursuing more or less. Secondly just on filgotinib, I think it's been discussed with regards to the platelet levels. But I just wondered if you could clarify the patient that did in your studies have a thromboembolic event. On what dose that patient had that event in the phase II studies that have been conducted to date. Thirdly on 1972.
Is the plan to wait for the U.S. study that's ongoing before kick-starting phase II, or will a phase II start prior to those U.S. data? Finally, a bit of a pedantic question on the financials, but the EUR 6 million license fee, is that recognized in full or will that be deferred over the next coming period from Servier? Thank you.
All right, Peter, I'll take the last question maybe first, we can deal with that quite quickly. We'll recognize that in full in our P&L immediately. Then, Piet, I guess you'll take the other three questions on the science side.
Yeah. Let me start with Phil. Phil Nadeau, thanks for the question so I can clarify. As part of the placebo-controlled array studies where we had different dosages of filgotinib, we have seen no thromboembolic events. If you look to the placebo-controlled part in array, our count is zero there, that's in fact the number that if people want to compare to what Eli Lilly and Company is reporting, they've reported a number as part of the placebo-controlled trials. They've seen that as part of placebo-controlled array studies, we have had no thromboembolic events. That means that we've seen three cases up to now, one in the fibroid program where we've only dosed 200 mg, one in DARWIN 3 where we also have 200 mg, then one other in the phase II.
All of the events we've seen, Norbert really explained very well yesterday how unlikely it is that they are linked to filgotinib. All of them were up to 200 mg dose. I hope that answers on the platelet and the thromboembolic event. In terms of GLPG1972, that's an easy question. We plan to finalize the design earlier, the submissions as well, as soon as we then have the data from the phase I-B study, extend the age range in the planned phase II study. We will not wait for the outcome of those study to start the process to initiate and start the phase II studies of GLPG1972. On the CF field, did the Vertex Pharmaceuticals molecule have any influence on the choice of compounds?
As I said, we try to bring every triple therapy we believe based on all our data we have in terms of preclinical safety, phase I, and preclinical efficacy. Every competitive triple we will bring to patients. It's going to depend because timelines for the last one will need to be very fast there. That's going to depend a bit for when Vertex Pharmaceuticals plan to file for phase III. For the first two, there is no change there. We are exactly with our plans within the on track in terms of progression, we will start the pivotal study timely as we have said during the call. I hope this clarifies your questions.
Thank you.
All right. This is Elizabeth. I'm just going to intervene here. The time is up now, and I have the feeling there might be more questions. Paul van de Vusse in Europe and Elizabeth Goodwin will be available offline after this call to take your questions. You can best reach me via my email as I'm in Europe this week as well. This wraps up for today, and our next financial results webcast is expected on 27th of October when we present Q3. I want to thank all of those who dialed in and listened in today and wish you a great weekend. Goodbye.
This concludes today's call. Thank you for your participation. You may now disconnect.