Good day and thank you for standing by. Welcome to the Galapagos Financial Results Q1 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, Elizabeth Goodwin. Please go ahead.
Thank you, all, and welcome to our call today. I'm Elizabeth Goodwin, investor relations, and the webcast that we're recording is going to be accessible via the Galapagos website homepage, and will be available for download and replay later on today. I'd like to remind everyone that we'll be making forward-looking statements during today's webcast. These forward-looking statements include remarks concerning future developments of the pipeline in 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, and Bart Filius, President and COO. Onno will reflect on the operational highlights, Bart will go over the financial results, and end with expected news flow for the year. You'll see a PowerPoint presentation on screen. We estimate that their prepared remarks will take about 10 minutes, and then we'll open up with the Q&A with Bart and Onno, joined by the rest of our management board. With that, I would now like to hand over to Onno.
Thank you, Elizabeth, and welcome everybody to this webcast. We have clearly had a tough 12 months behind us. A lot of confidence was lost. We had a dramatic drop in stock price, caused by a number of events, including failures in our late-stage pipeline with 1972 and ziritaxestat, and of course, the CRL with regard to filgotinib in the U.S. Very disappointing, but clearly we are ready to go forward with confidence to regain the trust of the investors and regain the excitement around the company that was with us for a very long period of time.
We have done a soul searching and analyzed our R&D portfolio and our organization and see what we can do to optimize and balance the risk better than we have been doing. We have done a complete portfolio review in the research pipeline. We have taken a number of actions that I will highlight that we believe is improving the risk balance, which gives us a better chance of bringing new modes of action to the patients.
On the commercial side, we are full in the launch of Jyseleca in Europe for rheumatoid arthritis. We have taken over many of the European countries from our partner, Gilead. Galapagos, by the end of the year, will be the only one marketing filgotinib in Europe, Jyseleca. That is, of course, fantastic for Galapagos to be in that position after many years of development of filgotinib to now bring the drugs to patients. We have said that we are stepping up to the plate with regard to our business development.
We have a gap in the pipeline between Jyseleca on the market and the earlier-stage programs with the TYK2 and Toledo that are in proof of concept studies. We would like to fill that with getting a product in through in-licensing or through an acquisition. That is one of the objectives for this year. On the financial side, we decided to rightsize the company with a reorganization round, with substantial savings that Bart will highlight later in this presentation. If we go to the next slide, I can show you the priorities that we have in R&D. We decided to focus on the core indications, we let go of some of the disease areas that we were having activities in.
We prioritized projects. We also put additional resources on certain product candidates that we believe have the highest chance of reaching the clinical phases and potentially make the difference in certain diseases. I think we did a very good analysis of our R&D pipeline. If you go to the next slide. If you look at the pipeline, it's quite differentiated and quite diverse still after the re-analysis of that pipeline with filgotinib still in one late-stage, phase III study in Crohn's disease.
Of course, RA on the market. You see it in filing. We expect the EMA approval in the second half of this year. We have other programs in the JAK class, 505, which is in an exploratory study in osteoarthritis. Of course, we have the whole Toledo franchise that I won't go to in detail. We have a number of molecules moving forward with 3097, our most advanced in five different proof of concept studies. A very big part of our research and early development pipeline at the moment.
You have our TYK2 in psoriasis and in the proof of concept study. We have another range of other programs in various stages that are moving forward. A pipeline that we heavily focus on inflammation and fibrosis. We are focused, but still have a lot of different mechanisms in the various disease areas. If you go to the next slide, you see the discontinued programs as a consequence of the analysis, where we decided to stop our molecule 1205 in fibrosis, and selected actually an in-license molecule to move into phase II in IPF.
Unfortunate. We believe it's the best decision also based on the information we learned from the ziritaxestat failure in phase III. We have stopped all activities in metabolic disease, which is, of course, disappointing. I think the right thing to do for Galapagos. It's a difficult disease area. It's clearly not our core expertise. We also decided to stop early discovery work in osteoarthritis. We had started that two years ago with the idea to come up with new targets.
OA is a very difficult disease area to bring products to the patient, especially because the phase III criteria, registration criteria are not clear. There's still discussion between the FDA and other authorities. We decided to stop that part. We put our resources to work in areas where we believe we have a better chance and a risk-balance profile.
In the next slide, you see some exciting data in exploratory Crohn's disease studies. We had a small study together with Gilead in small bowel Crohn's disease, as well as in fistulizing Crohn's disease. You see that in both studies, the 200 mg performed really, really well. We are very pleased with this data set, and maybe in the Q&A you can ask questions to Walid to talk more about this data set.
It's clearly very encouraging and hopefully bodes well for the Crohn's disease data, the big study that is currently ongoing, that we anticipate to be fully recruited this year. It's taken a long time to find the patients for that big study. At least these data give us confidence that we're on the right track. Clearly the fistulizing Crohn's disease data were met with incredible enthusiasm also by our partner, Gilead. With that, I would like to hand it over to Bart to continue with the commercial part. Bart.
Yes. Thank you, Onno, good afternoon everyone in Europe. Good morning, everyone calling in from the U.S. Great to say a few words about the progress also on the commercial front and before I dive into the financial details for the quarter, and Michele Manto, our Chief Commercial Officer, is also available for the Q&A later on for any further updates on launch progress in Europe. On this chart of Europe, you see where we are with the operational transition. Transition on track.
Actually, in the biggest markets, the transition has been completed with regard to the commercial teams. That applies to Germany, that applies to the U.K. Employees from Gilead has moved over to Galapagos. France, Italy and Spain, as you all know, were already our primary focus to begin with, especially in rheumatoid arthritis, but also you see in those markets, some transitions are taking place.
Roughly 80% of the market potential is now, let's say, managed directly by us. Before the end of the year, we will still also take over the Nordics, Austria, Switzerland and Ireland. As we have also said before, we are not planning to be ourselves active in the other, let's say, dark gray markets here on the chart, the rest of Europe. We'll work through a third party, and we'll update you as this year progresses as to how we are planning to execute on that one. Good progress here. For the avoidance of doubt, we are not yet booking the sales in Germany and in the U.K.
That's connected to the actual physical supply of goods, and that will happen in the second half of this year, hence you will not have seen any, let's say, top line revenues yet in our financials either for those markets as they are still covered by Gilead, at least for the first six months of this year. Probably during Q3, we'll make that transition. Quick word on reimbursement on the next slide.
Some interesting updates actually here. Germany especially fully reimbursed already since Q4 of last year, as it's always the case in Germany that you can launch the product immediately after approval. We now also have received the verdicts from the Federal Joint Committee, the G-BA, and they've given us an additional benefit qualification, which is, we think a big plus.
It's a similar qualification that RINVOQ has in this market, but a better one than Jyseleca and Olumiant have in this market. That, we think, bodes well for the Germany launch progression. In France, we anticipate to launch actually in this second quarter. There, the authorities have let us know that they want to see the MANTA data to be included before they allow us to launch in male patients, and they will need to review that obviously once that's submitted.
We'll launch on a female-only basis in France. In the U.K., and this is what we communicated already before. We're proud to tell you that actually, through a recommendation by NICE, we will be the first advanced therapy that is going to be recommended by NICE for the moderate and severe RA patients, and the moderate patient population is the novelty here.
Spain and Italy reimbursement progressing as planned. In the course of the third quarter, we anticipate this to also go to patients in those countries in a reimbursed fashion. The same applies for the rest of Europe. Reimbursement discussions on track for finalization by the end of the year. Skipping on the commercial, going to the organizational and financial parts of this presentation.
Although I mentioned that already, we've refocused our clinical efforts on the programs that were described before. We've also applied, I think the current portfolio review is a good example of that, some more stringent stage-gating work, making sure that we really progress the best opportunities to next stages, that we also make sure that the portfolio approach is appropriate in terms of risk balance across different stages and across different therapy areas.
All this leads to a very meaningful savings program. We are planning to take out EUR 150 million of expenses on a full-year basis, and that EUR 150 million represents roughly, let's say, between 20%-25% of our cash burn. We had previously indicated that our cash burn for the year would be about EUR 670. We're now guiding for a midpoint of EUR 600, range between EUR 580-EUR 620. That reflects that we anticipate that roughly half of the savings will be materialized in 2021. We'll have a full-year savings effect in the calendar year 2022.
A bit on the financials for the first quarter itself. First, on cash. Cash position still at EUR 5.1 billion, in a very healthy place. There's always a couple of exceptional items, as you know, in every quarter that we do not include in our operating cash burn. Those are proceeds from warrant exercises. In this quarter, specifically worthwhile to highlight that we have divested Fidelta, our CRO in Croatia. That generates a net cash proceeds of a little less than EUR 30 million. We had a positive currency quarter.
That's obviously one quarter is up, other quarter is down. We had a positive currency quarter, that leads to a translation effect of about EUR 40 million positive. Our cash burn operationally is a EUR -128 million. For clarity, that includes a first cash income of EUR 35 million from Gilead. That was part of the agreement that we signed in December. You can do the math on the quarterly to the full-year cash burn as well, which we, as I said before, anticipate to be between EUR 580 million and EUR 620 million.
On the P&L, a quick word on revenues, costs and, in this case, profit. Revenues are up and driven by revenue recognition on filgotinib and the platform. These are the deferred revenue or the deferred income positions in our balance sheet that we accrue, or that we have accrued that we recognize every quarter.
A total of EUR 124 million for revenues. Costs are up a bit, and actually, revenues and costs are up by approximately the same amount to about EUR 175 million, and the drivers here are filgotinib, our Toledo program, and the cost for SG&A in terms of commercial expansion as well as some items in support costs. On a net basis, we're actually in a profit this quarter. Two big drivers thereof.
One is the same effect in terms of cash, or that I mentioned in cash, which is currency translation working in our favor, but also the disposal of Fidelta leads to an accounting profit of EUR 22 million in the quarter. As a result, we are EUR +9 million on net results. Last words before we go over to the Q&A on the outlook for the remainder of the year. Still quite a lot ahead of us. In terms of data, we have, let's say, in summertime, data to be expected for 3667, our TYK2 in psoriasis patients. Also during summer, we anticipate to give clarity and see ourselves data from the studies with our first Toledo compound in psoriasis, RA, and ulcerative colitis.
On the filgotinib front, we anticipate an approval decision in UC in the second half of the year and our study in Crohn's disease, Diversity, will be fully recruited in the second half of the year as well, which gives us a timeline and a perspective on when we're going to see that data, hopefully by the end of 2022. With that, I'll leave it with regard to the prepared comments and slides and hand it back to Elizabeth for the Q&A. Thank you.
Thank you, Onno and Bart. That concludes the presentation portion indeed. Now I'd like to ask our operator, Lynn, to remind us how callers can pose questions. Go ahead, Lynn.
Thank you. We will now begin the question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question please press the pound key.
All right. Our first question comes from Peter Welford of Jefferies. Go ahead, Peter.
Hi. Thanks so much for taking my questions. I'll start with just two, and I'll come back. Firstly, just with regards to the business development, you say in the statement, transformative business development. I guess curious to know what you're thinking when you say behind the word transformative. Should we be thinking that you're looking to do more than just bring in an asset or two here?
Is there something bigger picture that you'd like to do? Is this also going to focus on the same core areas that your internal R&D is now focusing on, i.e., I think inflammation, fibrosis, and kidney disease o r is there potentially a wider remit with regards to business development? The second question is just with regards to the GLPG0555, I think it's 555. That's still obviously in osteoarthritis with data, I think, due.
Curious how you should think about that. Is this an asset that could potentially then be, I guess, something to happen to it, value crystallized sooner? Is this still potentially something that you could consider moving forward further in osteoarthritis, given obviously that ceases to be a focus area? Thank you.
Peter, I'll take the first question, and Walid can do the second. We want a transformative BD deal, with the idea to fill the gap in the pipeline. It's clear that we now, with [inaudible] and GLPG1972 falling away, we have a disbalance with regard to early versus commercial. That's something we would like to fill in. For the moment, we're thinking about one product that will come in that pipeline.
Late phase II would be ideal or just before starting phase III. That's one option. The other one is that we're interested to bring more, and that would be in the therapeutic areas most likely that we currently are in. We're also interested in seeing if we can get certain commercial rights for Europe alone to supplement the Jyseleca franchise that we have. That the sales organization has more in their bucket than just Jyseleca. Actually, we got two different objectives here.
Peter, are you tackling 555 , or should I do it?
Yes. You can do it as well.
The 555, this is an intra-articular injection that we are testing in phase I. We are doing a series of doses that we're going to be evaluating over time. There are a series of endpoints that we're going to be looking at, mostly pharmacodynamic, also safety and PK. Actually, based on these data, we will decide what would be the most appropriate next step. As you imagine, we have some questions about the regulatory path going forward and the way the risk balance of our portfolio. At the end of the day, we will evaluate the data and see what is the most appropriate step going forward, taking into consideration our current R&D spend and our criteria for moving things forward. Thank you.
Okay. Our next question comes from Jason Gerberry from Bank of America Merrill Lynch. Go ahead, Jason.
Thanks, Elizabeth. Hey, guys. Maybe just for me, just on your selective TYK2, can you talk a little bit about how you see the molecule differently than Bristol's TYK2, and any important pharmacologic attributes of the molecule you think help differentiate? When we might get some more early-stage data on that molecule?
Just on the situation with France and the female-only label, is that unique to France? I guess if something were surprising to happen that was discordant with the 13-week results, just wondering if a female-only label is something that you view as a plausible label for the drug if something, again, discordant with the 13-week results were to pop up.
Okay. This is Walid. I'll take the TYK2 question. Our molecule is a domain kinase inhibitor versus the BMS, which is an allosteric modulator. How will that translate in the clinic really is the big question. For us, that's really where the money is at the end of the day. Pre-clinically, our molecule is selective and highly selective, actually. Based on that's why we advanced it in development. In the clinical data in healthy subjects, we've had very good data from PK, compatible with once-a-day dosing.
In addition, we've had some very good pharmacodynamic activity as well, which has confirmed what we have seen pre-clinically. There's been no changes. As you know, we monitor these very carefully with questioning or with the JAK signature in that space, changes in sort of lipid profile or changes in white blood cells, so on and so forth.
We have not seen anything with our compound. Again, still within a phase I healthy volunteer setting, we can make healthy comparisons to our other molecules. We are eagerly awaiting our phase Ib study, which is again, a small study, about 30 patients, two doses versus placebo in a one-to-one-to-one ratio, four weeks. This will give us a sense of how the compound is performing.
Honestly, if you ask me what is the best way to compare it to deucravacitinib, it's to run a right-size phase II-B trial similar to what they've done in psoriasis, most likely, or psoriatic arthritis. I think psoriasis would be the area that's more validated, where we have much more data, and then we can truly compare like for like both compounds. As to sharing the data, we look forward to doing that at the earliest possibility.
Regarding mechanism action, our target would be the upcoming rheumatology conference. I cannot promise 100% because I cannot promise what they will accept, but that is our target. For the psoriasis data, it will be the first dermatology conference that we'll be talking about that. Regarding the filgotinib question, Michele, do you want to take that? Yeah, Michele, you can take it.
Yes, I can. Yeah. This is Michele here. I take France. Just to refocus the situation there is relative to reimbursement, it has nothing to do with label, which is a European label, and male and female populations are both approved for the European label. Actually, we see that in different geographies, there is different sensitivity in the reimbursement evaluation that we got positive NICE even for moderate patients, and the G-BA in Germany also gave an additional benefit and brought indicator.
In France, there is normally a tendency to be more cautious on safety, and the authorities there then look at it that way without considering our MANTA data because the procedure started at the moment of the approval end of 2020. Before the readout of MANTA that we communicated recently. We are now seeking to submit the MANTA data to the French authorities for reimbursement to revise that decision as soon as possible and also considering the procedure that we have for the UC approval. With that, we are confident that we will get that filgotinib reimbursement in the next period.
Okay, thanks.
All right. Our next question comes from Graig Suvannavejh from Goldman Sachs. Go ahead, Graig.
Yeah. Thanks, Elizabeth, and thanks for taking my questions. I've got one primarily related to filgotinib. Just wanted to get an update on kind of what the path forward has the MANTA, Manta Ray safety data been presented yet to FDA. If not, if there's any visibility on when that might be. Was just also curious if Galapagos had a view on kind of the multiple PDUFA extensions that we've seen across multiple approved JAKs and also next generation JAKs.
Just a quick question on kidney disease. I know you've got 2737 in kidney disease, but is your interest in kidney disease just beyond 2737? I'm just curious if you've got other assets that might be earlier stage and what is the opportunity in kidney disease specifically that excites Galapagos. Thanks.
Thank you, Graig. I'll take the filgotinib, and then I'll pass it on to Piet to talk about the kidney disease. As you know, we've shared with you the top line, or actually limited top line on the primary endpoint at 13 weeks of the MANTA and Manta Ray. The reason for that was because the FDA is asking to keep the study blinded until the reversibility data up to 52 weeks can be put together. As such, we are limited in how much we can talk about it.
However, we've provided the information to the European health authorities and to the Japanese health authorities which are more comprehensive than what we're able to share with you publicly. With regard to the FDA, the FDA indicated they're interested to receive the data as well, but it's not as a way of formal response or submission. As such, they received the data, but we haven't had any returns from them that we can share with you at this point.
Regarding your question about the FDA and the PDUFA extensions, it's really speculation on this part. I'll give you my opinion for whatever it's worth. I view them personally as in two buckets. There's the derm division and the question about the risk-benefit of JAKs in dermatology in these indications, which usually the safety bar is much higher than other places.
In the case of the dermatology division, I wonder, and again, I don't have that information to what degree the submission included two doses instead of just one dose of tofacitinib which formed the basis for approval for dermatology. I wonder whether that is the area of concern that the FDA might have. Again, those are nothing more than speculation on my part, and I have no more visibility on this.
What I can tell you for sure is that we haven't received any request from the FDA or any other health authority regarding any safety questions or concerns about the JAKs or providing them with any data as one would expect when there's a concern about a class effect. That's all information I could share with you comfortably. On to you, Piet.
Thank you, Walid. Thanks for the question on GLPG2737. GLPG2737 is indeed the first compound we put into the polycystic kidney disease, and that's a one-year study. This is a first entry for us in the large space of kidney diseases. The broader program behind is not limited to polycystic kidney disease only. It's broader. There we've made a choice to focus on those diseases where clinical trials and endpoints would be in the range from 3 -6 months. We will not step in at the beginning into diseases where long-term studies are needed to come to clinical endpoints. Well, they're early. We will not disclose the specific compounds needed diseases at this moment.
All right. The next question comes from Larka and Kilda from JP Morgan. Go ahead, Larka.
Hi, everyone. Thanks so much for taking my questions. Just one left from me, actually. Just a quick modeling question. With the potential EUR 150 million of OpEx savings on a full year basis, could you please elaborate on how we should think about the level of OpEx in 2022 versus 2021? Thank you.
Yeah, let me take that question, Larka. It's Bart speaking. Obviously it's way too early to give guidance on 2022, but indicatively, we are clearly planning to materialize all of the EUR 150 on a full year basis next year. That will give us a new starting point for our expenses in research and development and also in G&A. Normally we should be able to leave it at that. I always keep a caveat because if there is, let's say, a scientific very compelling reason to change that number, that obviously is the key driver.
It starts with the science, it starts with the data, and there's some very important data readouts still to come in the next six months for us that will ultimately determine that. The envelope would really be to take into account that full-year saving of EUR 150. On the commercial side, there is one technicality that I need to make you aware of, or I think you are aware, but I'd want to emphasize, is that in 2022, we are shifting our agreement with Gilead from a 50/50 cost share to a 100% cost borne by Galapagos.
As a result, the investments that we're making this year in commercial are still, if I would say, subsidized by Gilead, and that will no longer be the case for that 50% next year. On the offsetting side, we will have product sales, clearly. This will not all fall to our cash burn, but there will be some variability on the commercial side and probably some increase in costs in 2022.
Thank you, Bart.
Our next question comes from Wimal Kapadia from Bernstein. Go ahead, Wimal.
Cool. Great. Thanks for taking my question. Thanks, Elizabeth. Can I start one question, please? Just on the R&D strategy. Clearly you're taking a much more focused and controlled approach moving forward. How should we think about the evolution of the Toledo assets and TYK2 if the early data suggests more questionable differentiation versus the current offering? How will Galapagos approach these assets in a scenario where they could be considered a little bit more me too? Thank you.
[inaudible]. Well, I'll start on the Toledo. For the Toledo, we are in a space where we are doing five signal-seeking PoC studies, and the outcome of those PoC studies will determine what disease areas to focus on. As this is a novel mechanism of action, and it's in fact the first drug we know that would play at both ends of the immune balance. We don't see really a lot of competition out there at this moment for this mechanism of action. This means as well that we need to come with data that makes a difference for patients versus all approved drugs. Clearly, on a direct competitor of this drug, we don't see many around. Walid for TYK2?
Yeah. I mean, I mentioned that before. I think for the TYK2, first step will be to look at the data from the small psoriasis study, the phase Ib, that is going to read out shortly. With that we'll have an initial indication. I strongly doubt that this will be very informative directionally, and it will require a next study that we can truly benchmark against the deucravacitinib going forward. Of course, before we make any subsequent investment, we will survey the space.
We will be watching very carefully how the FDA and the field is actually evaluating the deucravacitinib data, and to see whether this space is actually competitive enough, and then we need to see whether our compound is competitive enough. Those are the criteria that we will be using to determine whether we will pursue going forward with it or not. We're going to definitely be very deliberate in our assessment of this before we jump forward in subsequent development. That will be costly.
Great. Thank you very much.
Okay, our next question comes from Rosie Turner from Barclays. Go ahead, Rosie.
Thanks, Elizabeth, and good afternoon, everybody. I think just one left for me, actually. I just wondered if you could talk a little bit more about the opportunity in Japan. Obviously, cognizant of that being run by Gilead, but there's quite a nice royalty stream set to come through to Galapagos. When do we expect that approval to come through in terms of UC, now that it's been submitted, and are there any numbers that you can give us in terms of a kind of peak royalty estimate or something like that? Thank you.
Manto, are you going to take that?
Yes, I'm taking that. Yes. On Japan, as you said, Gilead is running the launch and the information we assure is that the launch is progressing in RA with former uptakes, and typically Japan has a slower uptake as a country because of the need to renew prescriptions every few weeks. For that, Gilead seems happy with the progression of the launch there. For UC, of course, that's very important. Submission is done and, well, the approval should also come later this year, but we don't have more visibility on the perspective there.
Okay. Thank you very much.
All right. Our next question comes from Brian Abrahams of RBC.
Hey. Good morning. Good afternoon. Thanks for taking my questions. Two pipeline questions, if I could. First off, you discussed some data for filgotinib in small bowel and fistulizing Crohn's disease. I was wondering if you could maybe contextualize that in terms of how that compares to existing therapies and how generalizable that will be to the broader Crohn's population that you're studying.
Secondly, you announced the decision in IPF to prioritize 4617 over 1205, though you had generated some proof of concept signals for the latter. I'm just wondering if you could maybe talk a little bit more about the rationale for that and how you drew upon your extensive experience in IPF development to guide your evaluation of these candidates. Thanks.
Thank you, Brian. The data in the two studies that we have, Divergence 1 and Divergence 2 , in small bowel Crohn's and fistulizing Crohn's, were actually two exploratory studies that Gilead was conducting. Actually, both studies were stopped about 70% from full recruitment because they were taking a lot of time, and to some degree, were a bit distracting from the effort to put behind Divergence to drive it to fully recruitment.
As a result or as a consequence, the confidence with which you can make conclusions and generalizability and comparing to others is limited. Having said that, we were quite happy when we looked at the data in a very small number of patients, when you talk about this type of diseases. We're talking about 25 per arm, something like that.
In small bowel Crohn's disease, when you look at the CDAI and how that changes after 10 weeks so that we can compare that with FITZROY, the data seem to be quite consistent with what we've seen with FITZROY. Although with FITZROY, we only tested 200 mg, the 200 mg data seem quite consistent with that. That made us feel quite comfortable. Fistulizing Crohn's is a tough disease, the endpoints there are based on MRI.
The changes that we have seen over 24 weeks were quite impressive. The way the KOLs responded to it, and also Onno mentioned this, the way our colleagues at Gilead responded to it indicated that we do have activity at 200 mg. Again, how do you compare it to others? It's really difficult because there's a lot of liability and [inaudible] there's also some little bit difficulty, that is my view.
Overall, we think that the totality of the data indicates that, when you add it to FITZROY, that these data with filgotinib are consistent, and that should bode well for our Diversity trial, which we're very excited that it's going to be fully recruited by year-end, as Gilead has been guiding. Moving on to IPF. I think for 1205, we did have a proof of concept, and we did see an effect over a placebo with 1205. However, the magnitude of the effect was of a size that probably would be better suited for combination therapy as opposed to standalone therapy.
With ziritaxestat not being in the running anymore and the combination with an adenine in particular, we saw a significant uptick in the adverse event profile, but also to a lower extent with prednisone. That made the prospect or the target profile that we're going to be going after with such a molecule a bit more difficult. As a result, we decided to target the investment somewhere else.
On 4716, we're excited about the pharmacology, but at the same time, we're not jumping very quickly. We want to take the lessons learned from ISABELA. As you said, we've generated a lot of data with ISABELA. We still don't have all the data in-house, by the way. We're still gathering all the data and closing out the study. 1,300 patients, many of them treated more than six months, many of them actually more than one year.
We need to get all that data and start to understand w hether there are lessons learned that would lead us to really stratify patients differently and so on and so forth. There are some assumptions that we made when we designed the DEVELOP program, that when we look at the data, actually are not 100% panning out. Those on no background therapy did not have a reduction over a year in FVC as they did in the pivotal trial for nintedanib and rifampicin.
Actually, their drop was a bit less. Those who are on background treatment, nintedanib and rifampicin did not drop like the average of the phase III program, nintedanib and rifampicin, they dropped more. Retrospectively, that makes sense, because those who are on background therapy and enter your trial tends to be those who are not doing as well.
Those who are on no background therapy and choose to stay on no background therapy when you have available therapies are the ones probably who are not the ones who are going to be advancing over time or progressing. Those are valuable lessons that we need to look at our data and parse them out and based on that, come up with an informed design for our program going forward with the calculating. Thank you.
Thanks so much. That is really helpful.
Our next question comes from Phil Nadeau of Cowen. Go ahead, Phil.
Morning. Thanks for taking our questions. Two from us. First, on the Toledo proof of concept studies, in light of your more conservative pipeline structure, can you give us a sense of what you would consider proof of concept in those five trials? Do you need to see compelling clinical data? Are the trials large enough to generate that, or is it more about safety and biomarkers?
Second, just a housekeeping question on the financials. It does look like most of the filgotinib revenue was from amortization of milestones and upfront payments. The rest EUR 79,000 in your report for commercial sales, I'm curious, were those filgotinib or those some other product? Thank you.
Bart, you want me to start on Toledo?
Yes, please. Go ahead.
Okay. On the Toledo proof of concept. We're, first of all, very pleased with the progress we made. Three of those studies are fully recruited, one is completed. We are pleased that over summer we can present to you all of the data. As I said before, as well, these trials are designed, while small, to generate clinical data that should allow us to estimate the magnitude of the clinical effect we can get with this compound and with this mechanism of action in these patients. If you would see a biomarker signal only, we would be disappointed here. We really hope to see clinical effects in each of the studies, and then based on those, determine what is the disease that is the most appropriate to take this program forward in. Bart, over to you.
Phil. We're booking a little bit of sales on Jyseleca in one of the small countries in Holland, in our own P&L. That's what you're seeing there. It's a short period of time and an early-day small market. As I said before, the bigger markets, Germany and the U.K., we'll start booking that sales in the second half of the year, and we'll start seeing that coming up in our P&L later on in the year.
Perfect. Thank you.
All right. Our next question comes from Laura Sutcliffe of UBS. Go ahead, Laura.
Hello. Thank you. I have a pipeline question. Do you view the internal pipeline prioritization exercise as complete for now, or is there still more to do? Maybe related on a BD note, is the idea of maybe collaborating with Gilead on their pipeline asset still a possibility? Secondly, could you describe what you've seen that gives you confidence in 4876? Given that both that and 3970 hit six and three, would you mind just highlighting for us the key differences between those two molecules? Thanks.
Let me take the part on Gilead assets. We're clearly in discussion with Gilead, how they could potentially help us fill in the gap, and we have a very good collaboration and interaction with Gilead. That's clearly a possibility that we would work together on one of the assets. It would be part of the current alliance that we have with Gilead. We would get ultimately European rights, and Gilead would keep the rest of the world. We think it's both for Gilead and us, a good opportunity to look into. The first question, was that for me or Bart?
For anyone. The question, the internal pipeline prioritization exercise is complete at this point, or is there more to do?
I think we finalized that prioritization. Of course, we will continuously look at the pipeline and see based on data and on competition and opportunity if this is the right balance. For now, we believe these were the decisions being taken. Projects have been stopped, resources have been reallocated, and we take it from here.
Okay. On 4876, the backup to 2.3. This is a compound with the same biological profile as 3970. As a backup, as we've advanced quite a bit in our medicinal chemistry knowledge on the target, it's a more potent compound. We believe that we can cover the target longer and better if needed. It will depend on the outcome also of the PoCs, whether we judge at that moment, if we need to give stronger ambition on the target, then that backup could deliver that. If out of the PoCs it's clear that we have then a competitive asset in hand, we can progress 3970 at that moment.
Thank you.
All right. Our next question comes from Lenny Van Steenhuyse from KBC Securities. Go ahead, Lenny.
Hi. Thanks for taking my question. More high-level question from my end. There is mention of a more general stringent stage gating process for R&D determination. I was wondering if you could elaborate on what that looks like in practice, what checks and balances may have changed or been implemented to determine what assets to progress and at what point in time. Thank you.
It's something that's undergoing in the company to see if we have the right checks and balances for the progression. Progressions, especially when you go from candidates to preclinical, as well as from phase I to phase II. Those are very important, and from phase II to phase III, very important decisions where of course we have checks and balances, and we have a review committee and everything in place. We are evaluating if we can increase the governance there so that we ultimately make better decisions for programs to progress.
All right. Thanks for that.
Now, Jason McCarthy from the Maxim Group. Your line is open.
Hey there. Thanks for taking the question. This is Mike Golemi on behalf of Jason. If I heard correctly, you mentioned that one of the Toledo programs has completed its proof of concept study, and data is coming out in the following week. Could you just provide a bit more granularity of the timing for the specific proof of concept readouts on the Toledo compound?
As I think as we guided from the beginning of the year, we will gather the three first PoC studies together and then bring the data of those three PoC studies at once. This, I believe we say today it's in the summertime. We will get those data over the coming two months and then bring them all together and present.
All right. Thank you very much. As a follow-up, I just wanted to see if you could provide any color on the specific rationale for the U.K. recommending filgotinib as an advanced therapy for moderate patients as compared to the other drugs out there.
Yeah, this is Michele. Thank you. First is the evaluation that the HTA body NICE there did on the profile. That's resonating on the combination of our efficacy rate and sustainable efficacy and the safety profile. That's the first part. Of course, then we had an access strategy, which then resulted in the balanced evaluation of the economics and the value of Jyseleca for the U.K. That resulted in that decision that of course, brought us ahead of the competition there.
Thank you very much.
Now we have Peter Welford back for a follow-on. Go ahead, Peter.
Yeah. Hi. Apologies, this is very short. Just on GLPG4876, that's just follow up on what you mentioned with regards to GLPG1205. I'm curious, have PK combo studies been done with the chitinase inhibitor together with pirfenidone and/or nintedanib? I can't say that word. Whether or not you can tell us anything about what's been done either clinically or pre-clinically with regards to the PK profile of those combinations. Thank you.
I think you mean the 4716, the chitinase inhibitor.
Sorry, yeah.
Yeah. Those trials are planned. They haven't been executed yet. I will be able to tell you more about them later on once we have the data. Those are planned for later this year.
That's great. Thank you.
All right. That seems to be all the questions we have today. I just invite you to reach out to the IR team if there are any additional questions. I see we do have just one more question coming in. Matthew Harrison from Morgan Stanley. Go ahead.
Hi. Thanks for squeezing me in. This is Connor on for Matthew. Could we just get some additional comments on your biz dev plans? Do you plan to do both commercial and clinical deals, or do you have a priority for one of those? I know you gave some guidance on late phase II, but just wanted to hear your thoughts on commercial versus clinical. Thank you.
It's actually the plan to do both. We would like to have a product in to bridge the gap and then a commercial one to help the commercial group in Europe to have more in their basket than just Jyseleca.
Understood. Thanks.
We have Dane Leone from Raymond James. Go ahead, Dane. Your line's open.
Thanks, Elizabeth. Sorry, somehow I got kicked out of queue. Just two questions for me. The first one being, when you mentioned transformative BD earlier, which could kind of range from late-stage development assets to European rights for a commercial product or a near commercial product. Can you just remind us, if you were to embark on an acquisition that would obviously be fairly sizable from a monetary perspective, how that works with the Gilead partnership and partnership structure?
I think a number of us had thought that if you bought something, Gilead would have automatic buy-in rights, and so it wouldn't necessarily make financial sense to do something more sizable. The second question is more of a strategy question, just in terms of how you're continuing to think about the development pipeline.
A question we've kind of noticed when looking at the current pipeline is a lot of the indications that you're going after, which are ranging from phase I, II right now, are fairly large indications, which is good from a market opportunity perspective, but they also require multiple studies and fairly long studies. Given your breadth of your preclinical pipeline, do you think there's assets that you could bring forward that might be able to go into more targeted markets that might have a faster development strategy behind them? Thank you.
Thank you. Thank you for the questions. Very good questions. Start with the first one. It's indeed true that Gilead, for whatever we do, will have open-ended rights for products after phase II for outside Europe. That, of course, limits the amount we can spend on our own on a certain acquisition or licensing deal, because if it gets too big in numbers, we need to get Gilead along us at the table.
Gilead has indicated that they're clearly interested to look at that and discuss that. It's not excluded that we would actually do a deal where Gilead would finance part of the transaction for the exchange of the non-European rights. That's an answer to that question. With regard to indications, we are clearly looking at opportunities to come with indications in the inflammatory and fibrotic field where we would get a faster path towards approval. When we had areas like osteoarthritis, but also the large inflammatory areas, you are talking about very long trials, large trials, which of course, puts an additional risk burden to the company.
Of course, the payback in the end, if you get there, is also huge, but it would be good to have somewhat of a mix there, a balance, where we actually would have programs that have a potentially smaller market opportunity, but a faster way to the market.
Great. Thank you.
All right. Thank you. I think that's all we've got time for. Again, if you have any additional questions, please come to the IR team. Our next financial results call will be the first half results on the 6th of August. Thanks for participating today. Goodbye.