Galapagos N.V. (GLPG) Q1 2021 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Galapagos Financial Results Q1 2021 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] 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 and our company and possible changes in the industry and competitive environment. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Onno Van De Stolpe, CEO; and Bart Filius, President and COO. Onno will reflect on the operational highlights, and then Bart will go over the financial results and 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. And then we'll open up with the Q&A with Bart and Onno joined by the rest of our Management Board. And 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 Jyseleca in the United States. So 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 sole 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. And we have taken a number of actions that I will highlight that we believe is improving the risk balance. This gives us a better chance of bringing new world vaccines 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. And so Galapagos by the end of the year will be the only one marketing filgotinib in Europe, Jyseleca. And 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 lag in the pipeline between -- 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. And we would like to fill that with getting a product into in-licensing or through an acquisition. So that is one of the objectives for this year. And then on the financial side, we decided to rightsize the company with a reorganization around 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. So we let go some of the disease areas that we were having activities in. We prioritized projects, and we also put additional resources on certain candidates, product candidates where we believe has the highest chance of reaching the clinical phases and potential make the difference in certain diseases. So I think we did a very good analysis of our R&D pipeline. If we go to the next slide. If you look at the pipeline, it's quite differentiated and quite diverse still after the reanalysis of that pipeline with filgotinib still in on 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 another program in the JAK class 555, which is in an exploratory study in osteoarthritis. And then, of course, we have the whole Toledo franchise that I won't go through in detail, but we have a number of molecules moving forward with 3970 our most advanced in 5 different proof-of-concept studies. So a very big part of our research and early development pipeline at the moment. We have our TYK2 in psoriasis in a proof-of-concept study, then we have another -- a range of other programs in various stages that are moving forward. So a pipeline that we heavily focused on inflammation and fibrosis. So we are focused, but still have a lot of different mechanisms in the various disease areas. If we 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-licensed molecule to move into Phase II in IPF unfortunate, but we believe it's the best decision. Also based on the information we learned from the ziritaxestat failure in Phase II. Then we have stopped all activities in metabolic disease, which is, of course, disappointing, but I think the right thing to do for Galapagos. It's a difficult disease area, and it's clearly not our core expertise. And we also decided to stop early discovery work in osteoarthritis. We had started that 2 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. So we decided to stop that part and 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 in -- together with Gilead in small bowel Crohn's disease as well as in Fistulizing Crohn's disease. And you see that in both studies, the 200-milligram 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. So 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. So it's taken a long time to find the patients for that big study, but at least these data give us confidence that we're on the right track. And 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, and 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. So that applies to Germany, that applies to the U.K. And 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 -- and you see in those markets, some transitions are taking place. So roughly 80% of the market potential is now, let's say, managed directly by us. And before the end of the year, we will still also take over the Nordics, Austria, Switzerland and Ireland. And 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 will 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. So good progress here. For the avoidance of doubt, we're 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 6 months of this year and probably during Q3, we'll make that transition. A 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. But 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 Xeljanz and Olumiant have in this market. So 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 then we will need to review that, obviously, once that's submitted, but we'll launch on a female only basis in France. And 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 and in the course of the third quarter, we anticipate this to also go to patients in those countries in a reimbursed fashion and the same applies for the rest of Europe, reimbursement discussions on track for finalization by the end of the year. Then skipping on the commercial going to the organizational and financial parts of this presentation and Onno mentioned that already, we have refocused our clinical efforts on the programs that were described before. We've also applied and I think the current portfolio you 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 and we also make sure that the portfolio approach is appropriate in terms of misbalance across different stages and across different therapy areas. All this leads to a very meaningful savings program, and we are planning to take out €150 million of expenses on a full year basis. And that €150 million represents roughly let's say between 20% and 25% of our cash burn. We had previously indicated that our cash burn for the year would be about -- around €670 million. We're now guiding for a midpoint of €600 million, a range between €580 million and €620 million. And that reflects that we anticipate that roughly half of the savings will be materialized in 2021, and then we'll have a full year savings effect in the calendar year 2022. Then a bit on the financials for the first quarter itself. First, on cash. Cash position still at €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 €30 million. We had a positive currency quarter. That's obviously 1 quarter is up other quarter is down. We had a positive currency quarter, and that leads to a translation effect of about €40 million positive. And our cash burn operationally is a negative €128 million. And for clarity, that includes first income, cash income of €35 million from Gilead, that was part of the agreement that we signed in December. So then you can do the math on the quarterly to the full year cash burn as well, which we then, as I have said before, anticipate to be between €580 million and €620 million. Then on the P&L, a quick word on revenues, in costs and in this case, profits. 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 €124 million for revenues. Costs are up a bit, and actually, revenues and costs are up by approximately the same amount to about €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 profit this quarter, 2 big drivers thereof. One is the same effect in terms of cash 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 €22 million in the quarter. And as a result, we are €9 million positive on net results. Then 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 3666, our TYK2 in psoriasis patients. And 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. And then 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 time line and the 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. And now I'd like to ask our operator, Lin, to remind us how callers can post questions. Go ahead, Lin.

[Operator Instructions]

All right. Our first question comes from Peter Welford of Jefferies.

I'll start with just two, and I'll come back with one. So firstly, just with regards to the business development. You say in the statement a transformative business development. I guess curious to hear 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 2 here? Is there something bigger picture that you'd like to do? And 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? Or is there potentially a wider remit with regards to business development? And then the second question is just with regards to the JAK1 0555, 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, if something were to happen to it provide you fistulize sooner? Or is this still potentially something that you could consider moving forward further in osteoarthritis, given obviously that thesis to be a focus area?

Yes, Peter, I'll take the first question, and Walid can do the second. Yes, we won a transformative BD deal with the idea to fill the gap in the pipeline. And it's clear that we now with JV in 1972 falling away, we have a disbalance with regard to early versus commercial. So that's something we would like to fill in. And for the moment, we're thinking about one product that will come in the 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. But we're also interested in seeing if we can get certain commercial rights for Europe alone to supplement the Jyseleca franchise that we have, so that the sales organization has more in their bucket than just Jyseleca. So actually, we got 2 different objectives here.

Piet, are you tackling 555 or should I do it?

Yes. You can do it also, too.

Well, so the 555 we're actually did this as an [HI] particular injection that we are testing in Phase I. So we are doing a series of doses that we're going to be evaluating over time. But our series of endpoint that we're going to be looking at mostly fiberco dynamic, but also safety and PK. And actually, based on these data, we will then 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 is. But 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 that will be fixed then. Thank you.

Okay. Our next question comes from Jason Gerberry from Bank of America Merrill Lynch.

Thanks, Elizabeth. Maybe just for me, just on your selective TYK2. Can you talk a little bit about how you see the molecule differently than in Bristol's TYK2? And any important pharmacologic attributes of the molecule you think help differentiate and when we might get some more early-stage data on that molecule. And then 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 2 questions. So our molecule as a domain kinase inhibitor versus the messages in arsenic modulator. How will that translate in the clinic? Really is the big question, and for us, that's really where the money is at the end of the day. Preclinically, our molecule is selective and they're highly selective actually. And based on that, that's why we advanced it in development. In the clinical data and 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 have confirmed what we have seen preclinically. And there's been no changes. As you know, we monitor these very carefully. We're quite similar with the JAK and mature in that space, changes in sort of lipid profile or changes in life of cells, so on and so forth. We have not seen anything with our compound again still within a Phase I healthy volunteer setting, but still, 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, 2 doses versus placebo in a 1-1-1 ratio. 4 weeks. This will give us a sense of how the compound is performing. But honestly, if you ask me what is the best way to compare it to Deucravacitinib is to run a rightsized Phase IIb trial similar to what they've done in psoriasis, most likely psoriatic arthritis but I think psoriasis would the one -- the area that's more validated or we have much more data, and then we can truly compare like-for-like both drug arms. So as to sharing the data, we look forward to doing that at the earliest possibility and regarding mechanism of action, our target would be the upcoming hematology conference. I cannot promise 100% because I cannot promise that they will accept but that is our target. And the -- for the psoriasis data will be the first dermatology conference that will be coming up and we'd be talking at that. Regarding the consultive question, Onno, do you want to take that? Or do you want me to -- yes, Michele is going to that.

Yes, I can. Yes. This is detail here, so I'll take France. So just to refocus the situation there is relative to reimbursement. So it has nothing to do with label, which is European label and male and female populations are both approved for the European label. And actually, we see that in different geographies, there is different sensitivity in the reimbursement evaluation so that we got positive NICE even for moderate patients and the G-BA in Germany also gave an additional benefit on broad indicators. So in France, there is normal 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. So without -- before the readout of market, as we communicated recently. So we are now seeking to submit demand the MANTA data to the French authorities for reimbursement to revise their decision as soon as possible and also considering the procedure that we have for the UC approval and with that we are confident that we will get back that final reimbursement in the next period.

All right. So our next question comes from Graig Suvannavejh from Goldman Sachs.

Thanks, Elizabeth. I've got one primarily related to filgotinib. I 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? And if not, if there's any visibility on when that might be? And I was just also curious if Galapagos had a view on kind of the multiple PDUFA extensions that we've seen across multiple approved Jackson also next-generation JAKs. And then 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.

Thank you, Graig. I'll take the filgotinib and then I'll pass it on to Piet to talk about the kidney disease. So the -- as you know, we have shared with you the top line or actually limited top line on the primary endpoint at 13 weeks of the MANTA and MANTA-RAy and 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. And as such, we are limited in how much we can talk about it. However, we've provided the information to the European Health Authority and to the Japanese health authorities, which are more comprehensive than we were able to share to with you publicly. With regard to the FDA, the FDA indicated that their interest to receive the data as well, but it's not as a way of formal response or submission. So as such, they received the data, but we haven't had any return from them nothing that we can share with you at this point. Regarding your question about the FDA and the PDUFA extensions. I really it's speculation on this part, I'll give you my opinion for whatever it's worth. I think I view them personally as in 2 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. And in the case of the hematology division, I wonder -- and again, I don't have that information to what would be the submission included 2 doses instead just 1 dose of Deucravacitinib, which was -- which were the basis for approval for hematology. So I wonder whether that is the area of concern that the FDA has had. And 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 that there's a concern about a class effect. That's all information I can share with you comfortably. On [CEP]?

Thank you, Walid. Thanks for the question on 2737. So 2737 is indeed the first compound we put into a kidney disease, polycystic kidney disease, and that's a 1-year study. So this is a first entry for us in the large space of kidney diseases. So the broader program behind is not limited to polycystic kidney disease only. So it's broader. But data we've made the choice to focus on those diseases where clinical trials and endpoints would be in the range from 3 to 6 months. So we will not step in at the beginning into diseases where long-term studies are needed to come to clinical endpoints. So there early, we will not disclose the specific compounds needed diseases at this moment.

All right. So the next question comes from Laerke Engkilde from JPMorgan.

Just one left from me actually, just a quick modeling question. With the potential €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?

Yes. Let me take that question, Laerke, it's Bart speaking. So obviously, it's way too early to give the guidance on '22. But indicatively, we are clearly planning to materialize all of the €150 million on a full year basis next year. So that will give us a new starting point for our expenses in research and development and also in G&A. And 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's hard to decide and such the data, and there's some very important data readouts still to come in the next 6 months for us that will ultimately determine that. But the envelope would really be to take into account that full year saving of €150 million. On the commercial side, there is one technicality that I need to make you aware of or I think you are aware, but I want to emphasize is that in 2022, we are shifting our agreements with Gilead from a 50-50 cost share to a 100% cost borne by Galapagos. So 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. So this will not all fall to the -- to our cash burn, but there will be some variability on the commercial side and probably some increase in costs in 2022.

Our next question comes from Wimal Kapadia from Bernstein.

Thanks, Elizabeth. Can I just ask one question, please. Just on the R&D strategy. So clearly, you're taking a much more focused and controlled approach moving forward. But 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. So how will Galapagos approach these assets in a scenario where they could be considered a little bit more me-too?

Piet?

Well, I'll start on Toledo. For the Toledo, we are in a phase where we are doing 5 single seeking PoC studies. And the outcome of those PoC studies will determine what disease areas to focus on. So -- and this is another 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. Clearly, this means as well that we need to come with data that makes a difference for patients versus all approved drugs. With clearly, on a direct competitor of this drug, we don't see many around. Walid, for TYK2?

Yes, I mean, I mentioned that before. I think for the TYK2, we're going to be first step will be to look at the data from the small psoriasis study, the Phase Ib that is going to read out shortly. And 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 see benchmark against 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. And those are the criteria that we will be using to determine whether we will pursue going forward with it or not. But we're going to definitely be very deliberate in our assessment of this before we jump forward in subsequent development. That will be costly.

Okay. Our next question comes from Rosie Turner from Barclays.

Thanks, Elizabeth. So I think just one left for me actually. So 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. And when do we expect that approval to come through in terms of using now that it's been submitted? And are there any numbers that you can give us in terms of kind of peak royalty estimates or something like that?

Michele, are you going to take that?

Yes. I'm taking that. Yes. So on Japan, so we have, as you said, Gilead is running the launch and the information we have shared is that the launch is progressing in array with primary uptakes and typically, Japan has a lower uptake in the country because of the need to renew prescriptions few weeks. So -- but for that, so it seems happy with the progression of the launch there. So you see, 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.

Our next question comes from Brian Abrahams of RBC.

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? And then secondly, you announced the decision in IPF to prioritize 4617 over 1205, that you had generated some proof-of-concept signals for the latter. And 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.

Thank you, Brian. So the data in the 2 studies that we have, divergence 1 and divergence 2 in small bowel Crohn and Fistulizing Crohn. But we're actually 2 exploratory studies that we -- Gilead was conducting. And 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 diversity to drive it to fully recruitment. So as a result, or as a consequence, the confidence with which you can make conclusions and generalize ability 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 we talk about this respective diseases. You're talking about 25 per arm, or something like that. In a small bowel in Crohn's you -- when you look at the CDI and how that changes after 10 weeks so that we can compare that with fistulae, data seems to be quite consistent with what we've seen with fistulae although fistulae we want to invest 200 milligram, but it's 200 milligram data I seem quite consistent with that. That made us feel quite comfortable Fistulizing Crohn is a tough disease and the endpoints there are based on MRI. But the changes that we have seen over 24 weeks were quite impressive in the way the KOLs responded to it and also Onno mentioned this, the way our colleagues at Gilead has responded to it indicated that we do have activity at 200 milligrams. Again, how do you compare it to others? It's really difficult because, again, there's a lot of variability and an MRI as an endpoint is also something bit different than what others might have used. But overall, we think that the totality of the data indicates that when we added to fistulae that use the data consulting of our consistent, and that should bode well for our diversity side, which we're very excited that it's going to be fully recruited by year-end as Gilead has been guiding. And moving on to IPF. I think for 1205, we did have a proof of concept, and we did see an effect over placebo with 1205. However, the magnitude effect was of a size that probably would be better suited for a combination therapy as opposed to stand-alone therapy. And with [indiscernible] not being and running anymore and the combination with entailed, in particular, we saw a significant uptick in the adverse event profile, but also to a lower extent depending on that made the prospect or the target or profile that we're going to be going after with such a molecule, a bit more difficult. And as a result, we decided to target the investment somewhere else. On 2716, we're excited about the pharmacology, but at the same time, we're not jumping very quickly. We want to take the lessons going from [indiscernible]. As you said, we've generated a lot of data with us are, we still don't have all the data in-house by the way. And this is -- we're still gathering all the data and closing out the study. So 1,300 patients, many of them treated more than 6 months, many of them actually at more than 1 year. So we need to get all that data and try to understand whether there are lessons learned that would lead us to maybe stratify patients distend so on and so forth. There are some assumptions that we made when we designed the developed program. But when we look at the data, actually, are not 100% panning out, like those on no background therapy did not have a reduction over a year in LPC as they did in the pivotal trial for [indiscernible], actually, their drop was a bit less. And those who are on background treatment with [indiscernible] would not drop like the average of the Phase III program instead of the [indiscernible] they dropped more. Retrospectively, that makes sense because those who are on back on therapy and enter trial tend to be those who are not doing as well. And those are who are on no background therapy and choose to stay on mobile cell therapy when you have available therapies are the ones drugging the ones who are going to be advancing over time or progressing. But those are valuable lessons that we need to look at our data and pass them out. And based on that, come up with an informed design for our program going forward with the hardest.

Our next question comes from Phil Nadeau of Cowen.

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 5 trials? Do you need to see compelling clinical data the trials large enough to generate that? Or is it more about safety and biomarkers. And then 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 €79,000 in your report for commercial sales. I'm curious, were those filgotinib or are those some other products?

Bart, do you want me to start on Toledo?

Yes, Piet go ahead.

Yes. Okay. On the create proof of concept. So we, first of all, very pleased with the progress we made. So 3 of those studies are fully recruited. One is completed. And so 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. So if you would see a biomarker senior only, we would be disappointed here. So we really hope to see clinical effects in each of the studies. And then based on those determined what is the disease that is the most appropriate to take this program forward in. Bart, over to you.

Yes, Phil, we are booking a little bit of sales on filgo in one of the small countries in Holland in our own P&L. So that's what you're seeing there. It's a short period of time and early days, small markets. 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.

All right. Our next question comes from Laura Sutcliffe of UBS.

Firstly, a line question. So do you view the internal pipeline prioritization exercise to complete for now? Or is there still more to do? And maybe related on a BD note, is the idea of maybe collaborating with Gilead, one of their pipeline assets still a possibility? And then secondly, could you discuss what you've seen that gives you confidence in 4876 given that both that 3970 hit 2 and 3, would you mind just highlighting for us the key differences between molecules.

Let me take the part on Gilead assets. We are clearly in discussion with Gilead, how they could potentially help us filling the gap, and we have a very good collaboration and interaction with Gilead. So that's clearly a possibility that we would work together on one of the assets. It's also -- it would be part of the current alliance that we have with Gilead, we would get ultimately European rights in it will keep the rest of the world. So we think it's both for Gilead and us and a good opportunity to look into. The first question, I -- was that for me or Bart?

For any one had the question part internal pipe prioritization expertises complete at this point? Or is there more to do?

No. 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. But for now, we believe this the decision being taken. projects have been stopped, resources that we allocated and we take it from here.

Okay. On 4876, the back of 2 to 3. So this is a compound with the same biological profile than 3970. But as a backup pass, we have advanced quite a bit in our ministry, knowledge on the target. It's a more potent compound. So we believe that we can cover the target longer and better, if needed. So it will depend on the outcome of the box, whether we just at that moment. If we need to give stronger initiation on the target, then that backup could deliver that. If out of the box, it's clear that we have in a competitive asset in hand, we can progress 3970 at that moment.

All right. Our next question comes from Lenny Van Steenhuyse from KBC Securities.

More a 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 then at what point in time?

It's something that's undergoing in the company to see if we have the right tax and balances for the progression. Of course, progression, 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. But we are evaluating if we can increase the governance there and so that we ultimately make better decisions for programs to progress.

And now Jason McCarthy from the Maxim Group.

This is Michael Okunewitch on behalf of Jason. So 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. So could you just provide a bit more granularity of the timing for the specific proof-of-concept readouts on the Toledo compound?

So as I think as we guided from the beginning of the year, we will gather the 3 first PoC series together and then bring the data of those 3 top stories at once. And this, I believe, we say today it's in the summertime. So we will get those data over the coming 2 months and then bring them all together and present.

All right. And then 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?

Yes, this is Michele. Thank you. So well, first is the evaluation after HBE modernized they did on the profile. So that's resonating on the combination of our efficacy repeater frequency and the safety profile. That's the first part. And then, of course, we had an access strategy, which then resulted in the balanced devaluation of the economics and the value of Seneca for the Q. So that resulted in that decision that, of course, bode us ahead of the competition there.

And now we have Peter Welford back for a follow-on.

Yes, very sure. Just on the 4876 because that's just follow-up what you mentioned with regards to 1205 curious have PK combo studies been done with the chinese inhibitor together with the senior and ornaments, I can't say that word. And whether or not you can tell us anything about what's been done either clinically or preclinically with regards to the PK profile of those combinations?

I think you mean the 4760 [indiscernible] inhibitor. Yes. So those trials are planned. So we haven't been executed yet. So I -- we will be able to tell you more about them later on soda. But those are planned for later this year.

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. Oh, I see we do have just one more question coming in. Matthew Harrison from Morgan Stanley.

This is Connor on for Matthew. So 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.

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 a basket than just Jyseleca.

And we have Dane Leone from Raymond James.

Thanks, Elizabeth. Sorry, somehow I got kicked out of the 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 products. Can you just remind us of 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, cilia would have automatic buying 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 for the questions. Very good questions. I start with the first one. It's indeed true that Gillette we do We'll have opening rights for products after Phase II for outside Europe. And that, of course, limits the amount we can spend on our own on a certain acquisition or licensing deal because it gets too big in numbers, we need to get Gilead along us at the table. And Gilles indicated that they're clearly interested to look at that and discuss that. So it's not excluded that we would actually do a deal with Gilead to finance part of the transaction for the exchange of the non-European rights. So 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. It's -- when we had areas like osteoarthritis with also the lives of [indiscernible] areas. You're talking about very long trials, live trials, which, of course, put an additional risk burden to the company. Of course, the -- 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 potential smaller market opportunity with a faster way to the market.

All right. Thank you. I think that's all we've got time for. So 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, and goodbye.