* GSK stops project in ulcerative colitis and psoriasis
* Galapagos' main drug based on similar technology
* Shares fall to two-year low
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BRUSSELS, Aug 8 Belgian biotech group Galapagos
said its partner GlaxoSmithKline had stopped a
joint drug development project over concerns about adverse
effects, sending its shares to a two-year low.
Galapagos, which is developing several new drugs with large
pharmaceutical firms, said Britain's GSK had decided to end work
on its drug GSK2586184 for treatment of ulcerative colitis and
psoriasis after tests showed it did not combine well with
certain cholesterol drugs.
The Belgian firm said on Friday it could not comment on
GSK's study because it had not seen the full results of the
test. GSK said it was considering how to proceed with the
The end to this project prompted investors to worry about
similar drugs, so-called JAK1 inhibitors, in the company's
development portfolio such as its most-developed drug GLPG0634.
GLPG0634 is set to become a treatment for rheumatoid
arthritis which Galapagos researches jointly with U.S. group
"I think investors are now worried about the company's main
product which is a large part of its valuation," KBC Securities
analyst Jan De Kerpel said.
Galapagos said it had carried out tests in the lab with
GLPG0634 and had not found adverse effects related to drug
Its shares fell as much as 11 percent to their lowest level
since the third quarter of 2012, making them the worst performer
on Euronext Brussels on Friday.
Galapagos also said it expected to have more cash at the end
of 2014 than initially thought, following the sale of its
services division in the first half of the year.
It said its cash position at the end of the first half was
232 million euros ($309.93 million) and it expected to have 175
million euros of cash at the end of the year, just above its
original 170 million target.
Excluding the sale of its services unit, the group burned
through 15 million euros of cash in the first half, to fund its
various clinical studies and trials.
It lowered its revenue outlook for the year to 100 million
euros from the 180 million it had forecast in March, mainly
because of the timing of expected payments from drug development
Galapagos said it expected several test results to become
available in the next 18 months, typically a stronger trigger
for the shares than quarterly results.
(Reporting by Robert-Jan Bartunek; Editing by Erica Billingham)