Last time, we touched on why European biotech powerhouses could represent unique investment opportunities for long-term minded retail investors because the investor environment in Europe can be more receptive for management teams to truly make long-term oriented decisions, European institutions are more generalists in nature, and there is scarcity value of European biotech powerhouses (European institutional investors must invest in European stocks and these powerhouses represent relatively “low risk” approach for biotech exposure).
The two biotech powerhouses that I am focused on are Genmab (GMAB) and Galapagos (GLPG) – luckily for US investors, they both have ADRs for US investors!
Galapagos NV (GLPG)
Galapagos is unrivaled European powerhouse within immunology & inflammation (I&I) space (therapeutic area) and that position allows the company to attract the best research talent across the continent. It is also very well capitalized and that has also allowed them to bring in commercial / R&D expertise from I&I franchises of US and European large cap pharmaceutical companies. For example, Chief Commercial Offcer, Michele Manto, served most recently as a General Manager, Global Marketing Rheumatology – he is leading the European launch of filgotinib in rheumatology.
While there have been multiple set-backs recently, Galapagos remains a powerhouse in European biotech space for I&I space with track record of executing on a massive collaboration partnership with Gilead to support Galapagos’ deep bench of pipeline assets that effectively sets Galapagos as an outsourced I&I discovery engine for Gilead.
With strong research capability and capable management team, Galapagos is expected to continue to develop potential blockbuster drugs coming out of its prolific discovery platform.
Next break-through innovation program is Toledo program – also for I&I space and it will be completely revolutionary in I&I therapeutics if successful – completely changing the paradigm of treatment of I&I diseases, including ulcerative colitis, rheumatoid arthritis
Galapagos is now transforming from a R&D only shop into a regional biotech powerhouse with focus on I&I with commercial infrastructure as it launches filgotinib in Europe (Gilead owns the ex-US rights to filgotinib).
Genmab (GMAB)
Genmab is an unparalleled powerhouse in European oncology space and it has arguably one of the most prolific drug discovery platform in the world for oncology. Genmab has 21 year history of developing antibody-drugs for oncology and now is home to multiple multi-billion franchises that are licensed out to its partners.
Currently Genbam has three licensed products that are generating growing and recurring royalty revenues – Darzalex (JNJ), Ofatumumab (Novartis), and Tepezza (Horizon Therapeutics). The strong royalty flow support the base business with highly durable moat (the products are best-in-class, first-in-class, or the only game in town = monopoly), and Genmab has been reinvesting its earnings to make focused investments to further expand and develop its drug discovery platform and building out commercial organization to transform the equity story from a R&D-focused biotech company to a integrated, commercial global oncology company with strong development capability and commercialization capability.
Genmab also has near-term and mid-term pipeline assets with blockbuster potential. Tisotuzumab vedotin is partnered with Seattle Genetics (SGEN) and while the drug only has positive data in r/r ovarian cancer, the product targets tissue factor – a promising target with potential for use in multiple solid tumor types (including lung cancer). Recently, Genmab signed a very large oncology collaboration agreement with oncology powerhouse Abbvie (ABBV) for its epcoritamab program (a bispecific antibody). Oncology drug discovery platform remains highly promising for Genmab beyond epcoritamab.
Bispecific technology is very HOT in oncology drug development these days and Genmab is at the forefront of that innovation race – which would have been impossibly without long-term oriented investment in R&D program.
Genmab could be a powerful transformation story where the company is no longer a R&D shop with royalty stream, and the company is on its way to unlock / capture increasing portion of blockbuster products coming out of its platform with strong commercialization infrastructure.
Genmab and Galapagos are both transformative stories where each companies are evolving into a integrated research powerhouse with commercial / distribution capability. Transformation is challenging from execution point of view (hard to change the DNA of the company and neither company has institutional experience in selling therapeutics), but given that both companies are attracting a lot of very savvy and experienced executives with long-term vision, I believe that both represents interesting companies to follow.
Note: not investment advice.
cool thx