Galapagos is coming under additional pressure from investors. Having built a 9.9% stake in Galapagos, EcoR1 Capital is now planning to talk to the Belgian biotech about its performance and the composition of its board.
EcoR1 has been building a position in Galapagos for several years. By June 2023, the biotech-focused investment fund had accumulated a 9.87% stake in the company. At that time, EcoR1 filed the paperwork for investors that don’t want to change or influence the company's control. Now, EcoR1, which still owns just under 10% of Galapagos, has filed the paperwork for investors with control intent.
The submission provides details of how EcoR1 views Galapagos and how it plans to use its stake to try to shape the direction of the biotech, with the investor stating that the company’s shares are “deeply undervalued and represent an attractive investment opportunity.”
EcoR1 may have ideas about how to correct the perceived undervaluation of Galapagos’ share price. The investor said it plans to talk to Galapagos’ management and board about topics related to performance, business, operations, strategic opportunities and governance. The composition of the biotech’s board is among the topics EcoR1 wants to discuss.
Shares in Galapagos rose 11% after the market opened in Amsterdam, bringing the price of the stock up to almost 26 euros ($29). Even so, the stock remains well down from its earlier highs. Galapagos’ share price has fallen more than 25% over the past year, and the chart is even uglier over a longer time horizon. The biotech traded at almost 250 euros a share in February 2020.
Back then, Galapagos was still flying high in the aftermath of forming a 10-year collaboration with Gilead Sciences. The situation soured after the FDA rejected an application for approval of filgotinib, the JAK1 inhibitor that served as the centerpiece of the deal.
After a series of setbacks, a new-look Galapagos emerged under the leadership of Johnson & Johnson veteran Paul Stoffels, M.D. Now, Galapagos’ pipeline is led by a TYK2 inhibitor that is in development in indications including lupus and a CD19-directed CAR-T that the biotech is studying in non-Hodgkin lymphoma. Both candidates are in phase 2.
Galapagos ended June with 3.4 billion euros in cash to support the programs and its plans to add to the pipeline.