JAK inhibitors in Rheumatoid Arthritis - A Cross-Trial Competitor Analysis

JAK inhibitors in Rheumatoid Arthritis - A Cross-Trial Competitor Analysis (12-week EFFICACY with background DMARD) Galapagos/Abbvie Filgotinib Pfizer - Tofacitinib Incyte/Eli Lilly Baricitinib Vertex- Decernotinib Astellas - Peficitinib

Executive summary More than 23 million people worldwide suffer from RA of which more than 5 million in the major advanced economies. GBI research suggests that the market for disease-modifying RA therapeutics is set to increase to more than $80 billion by 2020, with an annual growth rate of 5%. JAK-inhibitors are a new class of drugs in RA that can be taken orally rather than through injections. They are set to grab a substantial market share. Tofacitinib launch in 2012 has been somewhat disappointing due to safety concerns, low dosing and premium pricing. The secondgeneration JAK-inhibitors with enhanced safety and efficacy profiles are now in late-stage clinical development and could come to market in the next few years. This development provides great opportunities for patients, payers and investors. While the market opportunity for the JAK inhibitors is obvious, the key question for investors is which of drug is most likely to take the bulk of the market. No comparative studies of the novel JAK inhibitors are available. This report fills this void. It compares efficacy results of key clinical trials of the main JAK-inhibitor competitors in the field of Rheumatoid Arthritis (RA) using SNJ-Biostoxx proprietary database. Three of four second-generation for which Phase 2b data is available outperform Tofacitinib on efficacy in the most-likely relevant doses (Baricitinib, Filgotinib, Decernotinib). Only Peficitinib underperforms. Based on the 2014 phase 2b results, Peficitinib efficacy is clearly inferior to its competitors. Its highest doses show lower efficacy results than the lowest doses of e.g. Baricitinib across primary measures. It cannot be attributed to a placebo sampling anomaly as also headline efficacy results underperform across dosing groups. This weakness versus competitors may explain the Janssen Pharmaceutica decision to end the collaboration with Astellas on the drug development. Barring a statistically unlikely change in future studies, Peficitinib seems to be out of the horse-race for a substantial market share in the RA market for JAKs. Baricitinib, Decernotinib and Filgotinib seem on track to blockbuster status. If the safety data do not constrain Galapagos/Abbvie to pursue the highest Filgotinib dose (200 mg twice daily), they may be the strongest contenders in the horse race to become the biggest selling oral RA drug considering the outstanding efficacy results. The current net present value of Filgotinib to Galapagos can easily be a multiple of its current stock market value of $ 0,7 bn. The relative edge of the remaining three contenders will depend on safety and pricing. Filgotinib scores very strong on ACR50 and ACR70 at the highest dose (200 mg) when administered twicedaily. On lower doses it does not outperform competitors. The relative efficacy advantage of Filgotinib may be reduced in Phase 3 in which only one dose between 100 en 200 mg per day will be applied. Decernotinib scores very well on DAS28-CRP across doses. Baricitinib may have an edge due to high efficacy on daily and limited dosing. Baricitinib shows very strong results in several studies and safety concerns in terms of adverse events have allegedly been limited despite its JAK2 inhibition. Selective JAK1 (Filgotinib) or JAK3 (Decernotinib) inhibition has a potential to

outperform on (long-term) safety. Still also for these JAKs safety concerns can plan an important role. As safety and eventual approved dosing will be key determinants of eventual market shares, safety issues will need to be closely watched in the run-up to market approval. For long-term safety profiles to be established we will need to wait for results of longer-term safety studies in coming years. Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study has an index ja preceding the legend. The composite index is constructed by aggregating standardised scores from each individual indicator subtracting means and dividing by standard-deviations. More detail on the individual components of the composite index can be found in the individual measure comparison graphs. The correlation coefficient across the individual measures is elevated but not prohibitively high and rather homogenous across pairs (50-80%) such that the composite indicator is a useful measure.

1. Inhoud Executive summary... 2 1. Why comparing clinical trials of oral RA drugs?... 5 2. Description of JAKs... 6 3. Market share for JAK-inhibitors... 7 4. The six leading JAKs and their state of play... 9 1.1 Tofacitinib... 10 1.2 Baricitinib... 10 1.3 Decernotinib... 10 1.4 Peficitinib... 11 1.5 Filgotinib... 11 1.6 ABT-494... 12 5. Methodology... 12 6. Results of the comparative analysis... 14 7. Conclusion... 25 8. Annex - Measure Description... 26 1.7 ACR20... 26 1.8 ACR50... 26 1.9 ACR70... 26 1.10 DAS28-4 [ESR] score (change from baseline)... 26 1.1. DAS28-4 [ESR] (% remission <2.6)... 27 1.11 DAS28-4 [CRP] score (change from baseline)... 27 1.12 DAS28-4 [CRP] (% remission <2.6)... 27 1.13 HAQ-DI (Change From Baseline)... 27 1.14 Safety DEFINITIONS... 28

1. Why comparing clinical trials of oral RA drugs? A Cross-Trial Competitor Analysis of Rheumatoid arthritis (RA) is a chronic autoimmune disease characterized by inflammation and progressive destruction of joints. About 1 in 100 people develops RA at some stage in their life. RA develops at any age, but most commonly starts between the ages of 40 and 60. It is about three times more common in women than in men. Currently, more than 23 million people worldwide suffer from RA of which more than 5 million in the major advanced economies. Market Research expects the market for disease-modifying RA therapeutics to increase from $56.6 billion in 2013 to $80.7 billion in 2020, with an annual growth rate of 5.2%. For many years, the treatment of RA has mainly relied on the use of so-called classic DMARDs (disease-modifying anti-rheumatic drugs), of which methotrexate (MTX) mostly used. Nowadays, the RA-market is dominated by the injectable biological therapeutics: tumor necrosis factor (TNF) inhibitors. The introduction of this treatment has made it possible to substantially slow or arrest disease progression in many patients. Five of these agents have been approved in the United States. 1 However, these treatments suppress the immune system and can increase vulnerability to infection. It has long been considered that there is a need for additional oral DMARDs, which offer better tolerated alternatives or more convenient treatments than the injected biologicals. Patients and physicians indicate there remains an important opportunity to improve patient care. There is also hope that such new agents might prove effective in patients who do not respond to methotrexate. In recent years, there has been increased focus on drugs targeting protein molecules, called Janus Kinases (JAKs), for exploiting new, oral, high-efficiency drugs with low toxicity. Inhibition of JAKs provides a new approach to the treatment of RA. Treatment in oral form could also be a solution for many people with RA who resist getting injections -- the only way that biologics are available. The oral JAK therapy is very attractive to patients compared to regular injections of biological DMARDs and as such has enormous potential. Moreover, as the production and application of pills is much cheaper than that of the biologicals, they have the potential to overhaul the competition landscape in RA. A first JAK inhibitor has been approved for the treatment of RA in the US in 2012: Pfizer s Tofacitinib (Xeljanz). However, these first generation JAK inhibitors have failed to meet expectations due to dose-limiting tolerability and safety issues (as well as pricing at a premium to the biologicals). The JAK inhibitors currently in clinical development encompass multiple selectivity profiles and could therefore be safer and offer better efficacy. This report looks into the relative efficacy performance of these other leading (second generation) JAK inhibitors versus Tofacitinib. To compare the relative performance of competing drugs, the ideal clinical trial would compare the medications head-to-head. Unfortunately, head-to-head trials are seldom done. Having an active 1 Infliximab, adalimumab, certolizumab pegol, etanercept and golimumab.

agent against a comparator would require many more patients in order to be able to get clear signals of the safety and effectiveness of new agents, thus increasing costs and duration. Therefore, we know little about the effectiveness of JAKs beyond comparison to a placebo. To get insights in the potential market share of each of the JAK-competitors, this report compares efficacy clinical trial data of the five most advanced novel oral drugs in RA based on JAK inhibitors. We aim to provide an accurate comparison across the different (candidate) drugs. This is however not a scientific paper. Comparing results across clinical trials is subject to several caveats. 2 While evidence from indirect comparisons across trials is weaker than evidence from direct randomized head-to-head trials, it does provide stock analysts and investors with a useful tool to assess the potential impact on the stock market value of the companies concerned. 2. Description of JAKs The Janus Kinases (JAKs) are an important class of non-receptor protein tyrosine kinases, relatively large molecules. JAKs transmit extracellular stimuli through signals that are generated by the relevant receptors. These signaling pathways regulate important physiological processes. Unusual signaling of the JAK kinases are thought to lead to numerous diseases, including hematological malignancies, allergies asthma and rheumatoid arthritis. The JAK family consists of four members: JAK1, JAK2, JAK3 and TYK2. Each of these four JAKs regulates signaling for different, but overlapping sets of cytokines. JAK1, JAK2, and TYK2 are expressed ubiquitously, but JAK 3 is limited to lymphoid tissues. The role of JAKs in mediating inflammation and autoimmunity makes them interesting targets for intervention in rheumatoid arthritis (RA). JAK inhibitors are a type of medication that functions by 2 Note that several simulation studies have shown that the naive method of comparing trials can be liable to bias. Indirect comparisons involve creating a comparison between drugs A and B when there are two placebo controlled trials: A v. placebo and B v. placebo. Biases may arise due to differences in methodology, outcome measurement, or the populations included in studies of the two drugs. The best information will come from large, properly constructed randomized trials, using valid outcomes, and done in a way that is meaningful to clinical practice. Sufficient numbers of patients and events are required to overcome any random effects. In general four times as many similarly sized trials are needed for the indirect ( comparison across randomized clinical trial results ) approach to have the same power as directly randomized comparisons of head-to-head trials. What is indirect comparison? presents an overview of caveats of the indirect comparison methodology and provides some other methodologies. Useful scientific papers on indirect comparison issues are e.g. here and here. An excellent scientific indirect comparison article comparing biologics as monotherapy or in combination with methotrexate (MTX) in terms of patient reported outcomes (PROs) in RA patients with an inadequate response to conventional DMARDs (DMARD- IR) combines results of 17 clinical trials by means of Bayesian network meta-analyses. No comparative studies of the novel JAK inhibitors are available.

inhibiting the activity of one or more of the Janus kinase family of enzymes, thereby interfering the JAK-STAT signaling pathway. JAK inhibitors can be divided into three categories. The first is a pan- JAK inhibitor, which has a similar degree of inhibition to JAK1, JAK2 and JAK3. The second is a selective inhibitor targeting JAK2 protein and is mainly used for anti-tumor therapy. The third is a selective inhibitor which is targeted to the JAK3 protein, and is most commonly used for antiinflammatory and immunosuppressive therapy. JAK inhibitors are often referred to as oral biologics. The word biologic is misleading, however, because JAK inhibitors work in a different way than the traditional RA biologics. JAK inhibitors work deep inside the cells to disrupt the pathways that play a role in the inflammation associated with RA. Traditional biologics such as Etanercept (Enbrel), Adalimumab (Humira), Abatacept (Orencia) and Infliximab (Remicade) block pro-inflammatory cytokines from outside. Traditional biologics are given through infusions or injections. JAK drugs are taken orally. The potential use of these oral rather than injectable therapies is substantial. 3. Market share for JAK-inhibitors The market for RA is huge. Currently, the rheumatoid arthritis market is dominated by injections with TNF-α inhibitors. In 2014, the big 3 in RA (Humira, Enbrel and Remicade) alone yielded annual sales of more than $30 billion dollars (of which more than half in RA. Projections for the ability of oral medications based on JAK inhibitors and other novel technologies to take market share away from TNF injections differ widely. Several analyst reports project hard times for JAKs to gain substantial market share on TNFs and biosimilars. The convenience benefit of an oral treatment may not easily outweigh e.g. Humira's alleged safety and efficacy record. While not immaculate, health risks are known and recorded. TNF-alpha inhibitors allegedly are deeply entrenched as first-line biologics in the RA treatment algorithm, as rheumatologists remain relatively satisfied with their efficacy and are comfortable with their long-term safety profiles. It will be important to build up an acceptable post-marketing safety profile, most likely after two to three years on the market. Moreover, the uptake of biosimilars of TNF-alpha inhibitors will limit the market share of JAK inhibitors, as low-cost biosimilars of major TNF-alpha inhibitors (Remicade, Enbrel and Humira) are being launched from 2015 due to the expiration of patents. Initially, the JAKs are likely to take market share of RA patients that fail to respond to first-line treatment. Estimates of biologic-treated RA patients that do not respond to the currently marketed biologics are in the range of 15 to 40 percent. However, some drawbacks of TNF-alpha inhibitor treatment may contribute to a higher pick-up of JAKs than many analysts expect if the JAKs efficacy and safety profile is enhanced compared to Xeljanz. While currently approved TNF-α inhibitors and biosimilars offer a robust and rapid response, efficacy tends to dissipate over time. One factor contributing to the loss of TNF response over time is the development of antidrug antibodies. In addition, there have been concerns that anti-tnf antibodies can lead to cancer in children and adolescents. On the Humira.com

Homepage a prominent safety warning stresses that "serious infections have happened in people taking HUMIRA. These serious infections include tuberculosis (TB) and infections caused by viruses, fungi, or bacteria that have spread throughout the body. Some people have died from these infections. HUMIRA may increase the chance of getting lymphoma, including a rare kind, or other cancers. HUMIRA can cause serious side effects including hepatitis B infection in carriers of the virus, allergic reactions, nervous system problems, blood problems, heart failure, certain immune reactions including a lupus-like syndrome, liver problems, and new or worsening psoriasis." Moreover, lower (production) costs of JAKs may give them a competitive edge over the expensive biologicals. 3 Pricing will be important though. Although TNF-α blockers dominate revenue in the treatment of RA, the corresponding results for market share are much less dominant. TNF-α blockers had a combined market share of just 29% in the US despite their much better efficacy profile compared to other treatments. This indicates significant price-elasticity in the RA market. Given that JAK inhibitors have demonstrated a comparable efficacy to the TNF-α inhibitors, a significant price discount would allow taking a much larger market share with increased volume compensating for lower pricing, even more if safety concerns of second generation JAKinhibitors are limited. Concluding, safe and effective JAKs should be able to grab a substantial market share, but they face some headwinds in the short run, and need to establish a long-term safety and efficacy record. Based on these broad considerations and analysis, sales for all JAK-inhibitors in RA could easily exceed $ 10 billion by 2023. That could reflect $ 20,000 per annum for 500,000 patients (i.e. less than 10% of the RA market in major advanced economies), or $ 10,000 per annum for 1,000,000 patients (i.e. 15-20% of the RA market). While Pfizer decided to price Tofacitinib at a premium versus the biologics ($25,000) considering the convenience of oral drugs and with the intention of not jeopardising its Enbrel revenues, Eli Lilly and Vertex are likely to engage in more aggressive pricing when their JAK-inhibitors enter the market as they do not have conflicting interests. This could provide great benefits to patients and payers. The net present value of a successful, effective oral drug in RA could easily be in the double-digit billion dollars and importantly affect market value of the companies. With total sales reaching peak at around $ 10 billion for all the JAK-inhibitors combined by 2023, it would put current (2015) net present value at $25-35 billion (assuming discount rates in the range of 10-15% and manufacturing, 3 Using US-managed care drug use data, Bonafede et al (2012) find that the mean annual TNF-blocker cost per treated patient was more than $15,000 for etanercept (Enbrel), $18,000 for adalimumab (Humira), and $24,000 for infliximab (Remicade). Over a patient s lifetime, TNF inhibitors cost on average 143,500 (Tanaka (2014)).

marketing and taxation offset at 50-60%). Lower discount rates or higher sales are not unthinkable and would result in even higher figures. This market value can be attributed to the companies that develop the JAKs depending on their expected share of the future cake. The comparative efficacy analysis in this report helps assigning odds which drug takes the bulk of the future revenues. The table below shows current market values, indicating relative importance of the JAK in RA under development for stock price movements. The lower the current stock market capitalization, the higher the potential price impact. Company SYMBOL Market cap in USD (10 April 2015) Abbvie ABBV 96 Astellas ALPMY 36 Eli Lilly LLY 80 Galapagos 1 GLPG.AS GLPGF 0.7 Incyte 2 INCY 16 Vertex VRTX 30 1. If successful Galapagos will receive $1 bn+ milestone payments and tiered up-to double-digit royalties on global commercial sales of Filgotinib 2. Incyte will be eligible for tiered royalties on Baricitinib sales up to 20%+. 4. The six leading JAKs and their state of play Only one JAK inhibitor (Tofacitinib) is currently available on the market. This report looks into the relative performance of the other leading JAK inhibitors versus Tofacitinib and each other. They are expected to have better safety profiles due to better targeting of specific JAKs. A future report will assess relative safety data from clinical trials of these JAKs. Five JAK inhibitors are in advanced clinical development for the treatment of RA, meaning they are either in Phase II or III of the clinical trials. These are: - Baricitinib (Incyte/Eli Lilly) - Decernotinib (Vertex) - Peficitinib (Astellas) - Filgotinib (Galapagos, AbbVie) - ABT-494 (AbbVie)

Another JAK inhibitor initially seemed promising for the treatment of RA as well, Incyte s INCB- 047986. However, this study has been terminated in 2014 and appears no longer in Incyte s pipeline overview for RA. 1.1 Tofacitinib In November 2012, Tofacitinib (Xeljanz), developed by Pfizer, became the first JAK inhibitor to be approved for the treatment of RA. Tofacitinib is a pan-jak inhibitor, indicating that it inhibits, principally JAK3, but also JAK1, JAK2 and TYK. Tofacitinib was shown to be effective in a series of Phase II and III studies, using doses of 5 15 mg twice daily (b.i.d.) over periods of 6 48 weeks. Both 5 and 10 mg doses were shown to be efficacious but the use of this medicine appears to have as a side-effect the increased risk of developing infections, which was more pronounced in patients receiving the higher dose. The European Medicines Agency did not approve Tofacitinib. It considered that the JAK-inhibitor did not show a sufficiently consistent reduction in disease activity and structural damage to joints. It noted considerable and unresolved safety concerns and risk of serious side effects, such as liver damage, problems with increased lipid blood levels, certain cancers, and gastro-intestinal perforations. The FDA concluded, however, that there was evidence of therapeutic benefit although its concerns about the risk-benefit ratio led to its approving for use only in patients with moderately severe disease who do not respond adequately to methotrexate and only at a 5 mg dose while not approving a 10 mg dose. 1.2 Baricitinib Baricitinib (INCB-28050, LY3009104,9), was co-developed by Incyte and Eli Lilly. It can be a treatment for rheumatoid arthritis, inflammatory diseases and cancer. Incyte has been one of the pioneers in developing JAK inhibitors focusing on selectivity for JAK1 (and JAK2). In 2009, when Baricitinib was already progressed to dose-finding Phase II studies, they struck a deal with Eli Lilly, granting the latter a worldwide license and certain follow ups. Baricitinib has since then progressed to Phase III. Baricitinib is a once daily, oral, selective JAK1 and JAK2 inhibitor. Baricitinib demonstrates approximately 100-fold greater potency of inhibition against JAK1 and JAK2 than JAK 3 in kinase assays. The clinical programme for Baricitinib comprises four Phase III efficacy studies plus an extension study. The most common adverse events observed with Baricitinib were headache, upper respiratory tract infection and nasopharyngitis. Discontinuation rates due to adverse events were similar between treatment groups. A large majority of patients completing this 6-month trial opted to participate in a long-term extension study. 1.3 Decernotinib Vertex Decernotinib (VX-509) started Phase I studies in 2008 and successfully completed Phase IIb studies by 2013. Decernotinib is the only selective JAK3 inhibitor in advanced clinical development. In autoimmune diseases, JAK3 is an essential component of the signaling cascade that contributes

to the abnormal immune response that results in chronic inflammation and, in the case of RA, irreversible damage to cartilage and bones. The studies show that Decernotinib is an effective oral medication. Decernotinib was associated with small increases in adverse reactions rates, serious infections, and mostly minor laboratory abnormalities. 1.4 Peficitinib Peficitinib (ASP-015K), developed by Astellas, started Phase I studies in December 2009. In October 2012, Janssen Biotech (a Johnson and Johnson subsidiary) acquired the worldwide development and commercialization rights outside Japan following the successful completion of a Phase II study in psoriatic patients. An extensive Phase II program has evaluated the efficacy of this once daily treatment, as a monotherapy, in RA, with three primary studies being completed by February 2014. Two extension studies are ongoing in some of these patients. Peficitinib is described as a JAK1/JAK3 selective drug. It was shown to be 14-fold selective for JAK1 and JAk3 relative to JAK2 in erythropoietin-induced leukaemia cell proliferation assays but was less selective in isolated kinase assays. In December 2014 Astellas announced that Janssen Biotech had exercised its right to terminate the license agreement by January 2015. Astellas regained all rights granted to Janssen and says it is considering the future plan for ASP015K outside Japan. While allegedly showing promise in phase IIb studies, Janssen was apparently not impressed enough to continue the agreement. Our comparative analysis provides insights in the reasons for Janssens decision as Peficitinib seems to underperform in efficacy versus the competitors. 1.5 Filgotinib Filgotinib (or GLPG-0634) is being developed by the Belgian company Galapagos. Galapagos has focused its efforts on identifying JAK1 selective inhibitors and successfully identified two clinical candidates. One of them, Filgotinib has been developed for the treatment of RA and is processed to Phase II. In February 2012 Galapagos has licensed Filgotinib to AbbVie for development for autoimmune diseases (e.g. Crohn s disease and RA). Although based on tests with very low patient numbers, Phase IIa data suggested a better efficacy and safety profile than other JAK inhibitors currently in development. Abbvie won a bidding process that included most of the key players in the market. Despite the low patient numbers in the 2 tests, AbbVie was willing to pay a high price (upfront, milestones and royalties) for a GLPG-0364 deal. This could be a strong indicator for the alleged promises of the drug. GLPG0634 is different from other JAK inhibitors in development that it specifically targets JAK1, a strategy that may result in a better efficacy and safety profile. The fact that GLPG0634 only focuses on JAK1 and avoids inhibition of JAK2 is a unique advantage as inhibition of JAK2 has shown anemia and reduced formation of blood cells in trials, side effects that have been highlighted in the EMA rejection of Xeljanz. If AbbVie takes GLPG0634 forward, it is a strong confirmation that prospects for substantial market share are very good. Payment of the license fee, costs of Phase III studies and expenses towards FDA approval and commercialization are likely exceeding $ 0,6 billion. Proceeding with it would reflect trust of AbbVie in a blockbuster success.

1.6 ABT-494 We include ABT494 in this overview despite lack of data. AbbVie s second JAK inhibitor in RA in development, ABT-494, completed multiple-dose Phase I studies in 2013. A phase II study, evaluating ABT-494 for 12 weeks, at four different doses twice daily, started in October 2013. Results are expected in Autumn 2015. ABT-494 has been engineered to enhance selectivity for JAK1. It was 74-fold selective for JAK1 over JAK2. 5. Methodology We have built a clinical trial database by gathering information from public clinical trial databases, company reports, press releases, webpages of the companies considered, scientific articles and other sources. The clinical trials considered in the 12-week efficacy comparison in this report are all phase 2b or phase 3 trials. We selected from our clinical trial results database of JAKs in RA studies with the following characteristics: Randomized, double blind, placebo-controlled Patient population with Moderate to Severe Rheumatoid Arthritis with inadequate response to Methotrexate or other non-biological DMARDs. Provision of drugs with background DMARDs Published 12-week results for at least ACR20-50-70 and DAS28-CRP Based on these selection criteria, we compare the following studies: 4 Pfizer NCT00853385 Phase 3 Randomized, Double-Blind, Active Comparator, Placebo-Controlled Study Of The Efficacy And Safety Of 2 Doses Of CP 690,550 In Patients With Active Rheumatoid Arthritis On Background Methotrexate (717 patients) Pfizer NCT00856544 Phase 3, Randomized, Double Blind, Placebo Controlled Study Of The Safety And Efficacy Of 2 Doses Of CP 690,550 In Patients With Active Rheumatoid Arthritis On Background DMARDS (797 patients) 4 We have not included the Pfizer NCT00960440 Phase 3, Randomized, Double-Blind, Placebo-Controlled Study Of The Safety And Efficacy Of 2 Doses Of CP-690,550 In Patients With Active Rheumatoid Arthritis On Background Methotrexate With Inadequate Response To TNF Inhibitors (499 patients) in our comparator sample, as we consider its patient population to differ too much from the other studies.

Incyte/Eli Lilly NCT01185353 - A Randomized, Double-Blind, Placebo-Controlled, Dose-Ranging, Parallel-Group, Phase 2b Study of LY3009104 in Patients With Active Rheumatoid Arthritis on Background Methotrexate Therapy (301 patients) Astellas NCT01554696 - A Phase 2b, Randomized, Double-Blind, Parallel-Group, Placebo-Controlled, Dose-Finding, Multi-Center Study to Evaluate the Safety and Efficacy of ASP015K in Moderate to Severe Rheumatoid Arthritis Subjects Who Have Had an Inadequate Response to Methotrexate (378 patients) Vertex NCT01590459 - A 24-week, Double-Blind, Randomized, Parallel Group, Placebo-Controlled, Phase 2 Study of Different Doses of VX-509 in Adult Subjects With Active Rheumatoid Arthritis on Stable Methotrexate Therapy (358 patients) Galapagos/Abbvie NCT01888874 - Randomized, Double-blind, Placebo-controlled, Multicenter, Phase IIb Dose Finding Study of GLPG0634 Administered for 24 Weeks in Combination With Methotrexate to Subjects With Moderately to Severely Active Rheumatoid Arthritis Who Have an Inadequate Response to Methotrexate Alone (599 patients) Incyte/Eli Lilly - Phase 2b Dose-Ranging Study Of Baricitinib In Japanese Patients with moderate to severe rheumatoid arthritis (RA) with inadequate response to methotrexate (MTX) On Background Methotrexate Therapy (145 patients) We compare efficacy for the primary outcomes measures for which results have been reported in all studies: ACR20, ACR50, ACR70, and DAS28-CRP. Data has also been assessed for measures for which not all studies have reported results (see Annex for an overview of the measures). These are not reported in graphs. All results are compared after correcting for placebo-scores. Headline results (not placebo-adjusted) are also reported. Composite indicators are constructed aggregating standardized scores for the individual measures. Individual results are standardized by subtracting from the individual results the mean results across the studies for all reported doses and dividing by the standard-deviations of results across all reported doses. For construction of the composite indicators correlation coefficients across pairs have been checked and found to be rather elevated especially for the ACR20 and ACR50 pair but not prohibitively high (50-80%).

6. Results of the comparative analysis Graph Composite indicator (ACR20-50-70 scores & DAS28- CRP, all placebo-adjusted) across doses Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study has an index ja preceding the legend. The composite indicator is constructed by aggregating standardized scores from each individual indicator subtracting means and dividing by standard-deviations. More detail on the individual components of the composite index can be found in the individual measure comparison graphs. The correlation coefficient across the individual measures is elevated but not prohibitively high and rather homogenous across pairs (50-80%) such that the composite indicator is a useful measure. The graph above summarizes the data from a complete analysis including all reported doses. It shows that three of the four second generation JAK inhibitors for RA outperform Tofacitinib on efficacy (Baricitinib, Filgotinib, Decernotinib) in the most likely relevant doses. Only Peficitinib underperforms. Based on the 2014 phase 2b results, Peficitinib efficacy is clearly inferior to its

competitors. Its highest doses show lower efficacy results than the lowest doses of e.g. Baricitinib. It cannot be attributed to a placebo sampling anomaly as the result is consistent with the headline efficacy results and across dosing groups. This may explain the Janssen Pharmaceutica decision in December 2014 to end the collaboration with Astellas on the drug development. Barring a statistically unlikely change in future studies, Peficitinib seems to be out of the horse-race for a substantial market share in the RA market for JAKs. Baricitinib, Decernotinib and Filgotinib seem all well-placed. Their relative edge will depend on safety and pricing. Baricitinib may have an additional edge due to high efficacy on daily and limited dosing. Baricitinib shows very strong results in several studies and safety concerns in terms of adverse events have allegedly been limited despite its JAK2 inhibition. Selective JAK1 (Filgotinib) or JAK3 (Decernotinib) inhibition has a potential to outperform on long-term safety. But also in these targeted JAK-inhibitors safety issues play a role. In the Filgotonib Darwin 1 trials, for instance, the FDA insisted on excluding the 200 mg Filgotinib daily dose for male subjects in the US based on safety margins. Safety - and relatedly dosing - are key determinant of eventual market shares. As Filgotinib performs particularly strong in the highest dose with substantially lower efficacy indicators at lower doses, good safety results of the highest doses are important for its success. Initial 12-weeks outcomes indicate a good safety-profile with 1.7% of patients stopping treatment during the study for safety reasons over all dose groups including placebo. Dose-specific safety data will be disclosed in July. Galapagos has indicated that in Phase 3 they likely will test a single dose between 100 and 200 mg Filgotinib. The relative loss of efficacy versus competitors due to lower dosing is uncertain.

Graph ACR20 vs placebo-adjusted ACR20 across doses Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study has an index ja preceding the legend. Note that we include 10mg Tofacitinib in these comparative analysis even though it has not been FDA approved due to safety concerns. ACR20 scores are often the main primary outcome measures considered in the clinical trials. Placebo scores with background MTX are usually around 30%. ACR20 scores between 60% and 65% are in the range of the main TNF blockers. Above 70% (or 40% better than placebo) are outstanding results. Note that for the higher doses the second generation JAK-inhibitors outperform Humira (Adalimumab) and other TNF- blocker efficacy in RA on ACR20 and have comparable outcomes for ACR50 and ACR70 measures. This suggests that the second generation JAK inhibitors have the potential to eventually take a very sizeable share of the RA market,

especially considering the convenience benefit of oral drugs versus intravenous administration and lower production costs. The decisive factor will be the safety profile. Baricitinib (4 mg and 8 mg daily), Decernotinib (100 mg twice daily and 150 mg and 200 mg daily) and Filgotinib (200 mg, twice daily) score well on the ACR20. The Baricitinib Japan study scores particularly well (also on the other ACR measures), but may need to be given little weight in the overall assessment of efficacy considering the limited number of patients (145) and geographic specificities. In headline numbers Decernotinib scores somewhat lower than Baricitinib and Filgotinib, but placebo-adjusted they do better. All Peficitinib doses disappoint, both in headline and especially versus placebo.

Graph DAS28-CRP vs placebo-adjusted DAS28-CRP for all doses Notes: Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study is excluded for missing data. Note that we include 10mg Tofacitinib in these comparative analysis even though it has not been FDA approved due to safety concerns. On the DAS-28 CRP measure, Decernotinib is an outperformer with very strong improvements (also reflected in remissions) for all doses. Also both qd and bid 200mg Filgotinib score very strong. Pefictinib underperforms also on this measure.

Graph ACR50 vs placebo-adjusted ACR50 Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study has an index ja preceding the legend. Note that we include 10mg Tofacitinib in these comparative analysis even though it has not been FDA approved due to safety concerns.

Graph ACR70 vs placebo-adjusted ACR70 A Cross-Trial Competitor Analysis of Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd). The phase 3 Baricitinib Japan study has an index ja preceding the legend. Note that we include 10mg Tofacitinib in these comparative analysis even though it has not been FDA approved due to safety concerns. The ACR50 and ACR70 show a similar picture. Disregarding the Japanese Baricitinib phase 3 study, 200mg Filgotinib (bid) clearly outperforms both in absolute terms and versus placebo. Also Baricitinib scores well with several doses administered daily.

Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd).

Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd).

Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd).

Notes: 1. Scores are shown for dose-drug-frequency. Drugs are Filgotinib (Fil), Decernotinib (Dec), Peficitinib (Pef), Baricitinib (Bar), and Tofacitinib (Tof). Frequencies are twice-daily (bid) or daily (qd).

7. Conclusion Considering their strong efficacy profile versus the Tofacitinib (and Humira), Incyte/Eli Lilly and Vertex have a potential blockbuster in RA. The limited market cap of Incyte and Vertex also makes them interesting bets. The pricing of Baricitinib and Decernotinib will be closely watched by the whole RA market. Incyte and Eli Lilly have the opportunity to grab substantial market share with aggressive discounts to the biologicals. Galapagos/Abbvie is also a very strong contender. Galapagos/Abbvie have indicated that in Phase 3 they likely will test a single dose between 100 and 200 mg Filgotinib. The relative loss of efficacy versus competitors due to lower dosing is uncertain. If the safety data do not constrain Galapagos/Abbvie to pursue high Filgotinib dosing (at or close to 200 mg twice daily), they may be the strongest contenders in the horse race to become the biggest selling oral RA drug considering outstanding efficacy results. In that case the current net present value of Filgotinib to Galapagos can easily be a multiple of its stock market value of $ 0,7 bn.

8. Annex - Measure Description 1.7 ACR20 Percentage of Participants Achieving American College of Rheumatology 20% (ACR20) Response. ACR20 response: - greater than or equal to 20% improvement in tender joints count (TJC) / (SJC); and - greater than or equal to 20% improvement in at least 3 of 5 remaining ACR core measures: (i) participant assessment of pain; (ii) participant global assessment of disease activity; (iii) physician global assessment of disease activity; (iv) self-assessed disability (disability index of the Health Assessment Questionnaire [HAQ]); and (v) C-Reactive Protein (CRP). 1.8 ACR50 Percentage of Participants Achieving American College of Rheumatology 50% (ACR50) ACR50 response: - greater than or equal to 50% improvement in tender joints count (TJC) / (SJC); and - greater than or equal to 50% improvement in at least 3 of 5 remaining ACR core measures: (i) participant assessment of pain; (ii) participant global assessment of disease activity; (iii) physician global assessment of disease activity; (iv) self-assessed disability (disability index of the Health Assessment Questionnaire [HAQ]); and (v) C-Reactive Protein (CRP). 1.9 ACR70 Percentage of Participants Achieving American College of Rheumatology 70% (ACR20) ACR70 response: - greater than or equal to 70% improvement in tender joints count (TJC) / swollen joints count (SJC); and - greater than or equal to 70% improvement in at least 3 of 5 remaining ACR core measures: (i) participant assessment of pain; (ii) participant global assessment of disease activity; (iii) physician global assessment of disease activity; (iv) self-assessed disability (disability index of the Health Assessment Questionnaire [HAQ]); and (v) C-Reactive Protein (CRP). 1.10 DAS28-4 [ESR] score (change from baseline) Disease Activity Score Based on 28-Joints Count and Erythrocyte Sedimentation Rate (4 Variables) DAS28-4 (ESR) is calculated from SJC and TJC using 28 joints count, erythrocyte sedimentation rate (ESR)(millimeter/hour [mm/hour]) and patient's global assessment (PtGA) of disease activity

(participant rated arthritis activity assessment). Total score range: 0-9.4, higher score = more disease activity. DAS28-4 (ESR) <= 3.2 implies low disease activity and >3.2 to 5.1 implied moderate to high disease activity, and DAS28-4 (ESR) below 2.6 implies remission. 1.1. DAS28-4 [ESR] (% remission <2.6) Percentage of participants with Disease Activity Score Based on 28-Joint Count and Erythrocyte Sedimentation Rate (4 Variables) (DAS28-4 [ESR]) less than 2.6. DAS28-4 (ESR) is calculated from SJC and TJC using 28 joints count, erythrocyte sedimentation rate (ESR)(millimeter/hour [mm/hour]) and patient's global assessment (PtGA) of disease activity (participant rated arthritis activity assessment). Total score range: 0-9.4, higher score = more disease activity. DAS28-4 (ESR) less than 2.6 implies remission. 1.11 DAS28-4 [CRP] score (change from baseline) Disease Activity Score Based on 28-Joints Count and C-Reactive Protein (3 Variables) DAS28-3 (CRP) is calculated from the SJC and TJC using the 28 joints count and CRP (mg/l). Total score range: 0-9.4, higher score = more disease activity. DAS28-4 (CRP) <= 3.2 implies low disease activity and >3.2 to 5.1 implied moderate to high disease activity, and DAS28-4 (CRP) below 2.6 implies remission 1.12 DAS28-4 [CRP] (% remission <2.6) Percentage of Participants With Disease Activity Score Based on 28-Joints Count and C-Reactive Protein (3 Variables) (DAS28-4 [CRP]) less than 2.6. DAS28-4 (ESR) is calculated from SJC and TJC using 28 joints count, CRP (mg/l). Total score range: 0-9.4, higher score = more disease activity. DAS28-4 (CRP) less than 2.6 implies remission. 1.13 HAQ-DI (Change From Baseline) Health Assessment Questionnaire-Disability Index (HAQ-DI) Score: participant-reported assessment of ability to perform tasks in 8 categories of daily living activities over past week: dress/groom; arise; eat; walk; reach; grip; hygiene; common activities. Each item scored on 4-point scale from 0-3: 0=no difficulty; 1=some difficulty; 2=much difficulty; 3=unable to do. Overall score was computed as sum of domain scores and divided by number of domains answered. Total possible score range 0-3: 0=least difficulty and 3=extreme difficulty.

1.14 Safety DEFINITIONS Definitions are from the January 2007 OHRP Guidance on Reviewing and Reporting Unanticipated Problems Involving Risks to Subjects or Others and Adverse Events, OHRP Guidance, http://www.hhs.gov/ohrp/policy/advevntguid.html. Adverse Event (AE): Any untoward or unfavorable medical occurrence in a human study participant, including any abnormal sign (e.g. abnormal physical exam or laboratory finding), symptom, or disease, temporally associated with the participants involvement in the research, whether or not considered related to participation in the research. Serious Adverse Event (SAE): Any adverse event that: Results in death; Is life threatening, or places the participant at immediate risk of death from the event as it occurred; Requires or prolongs hospitalization; Causes persistent or significant disability or incapacity; Results in congenital anomalies or birth defects; Is another condition which investigators judge to represent significant hazards Unanticipated Problem: Any incident, experience, or outcome that meets all of the following criteria: unexpected, in terms of nature, severity, or frequency, given (a) the research procedures that are described in the protocol-related documents, such as the IRB-approved research protocol and informed consent document; and (b) the characteristics of the study population; related or possibly related to participation in the research (in this guidance document, possibly related means there is a reasonable possibility that the incident, experience, or outcome may have been caused by the procedures involved in the research); suggests that the research places participants or others at a greater risk of harm (including physical, psychological, economic, or social harm) than was previously known or recognized. Mild: Awareness of signs or symptoms, but easily tolerated and are of minor irritant type causing no loss of time from normal activities. Symptoms do not require therapy or a medical evaluation; signs and symptoms are transient. Moderate: Events introduce a low level of inconvenience or concern to the participant and may interfere with daily activities, but are usually improved by simple therapeutic measures; moderate experiences may cause some interference with functioning Severe: Events interrupt the participant s normal daily activities and generally require systemic drug therapy or other treatment; they are usually incapacitating Severity is not synonymous with seriousness. A severe rash is not likely to be an SAE. Likewise, a severe headache is not necessarily an SAE. However, mild chest pain may result in a day s hospitalization and thus is an SAE. AEs must be assessed as to whether they were expected to occur or unexpected, meaning not anticipated based on current knowledge found in the protocol, investigator brochure, product insert, or label. Categories are: Unexpected - nature or severity of the event is not consistent with information about the condition under study or intervention in the

protocol, consent form, product brochure, or investigator brochure; Expected - event is known to be associated with the intervention or condition under study.