Lakefront Biotherapeutics NV (LKFT) September 2026 Conference Transcript

Good afternoon, everyone. Welcome to the final fireside of day two at Morgan Stanley's Global Healthcare Conference. I'm Judah Frommer, one of the Smith biotech analysts here. We're very excited to have Henry, Aaron, and Eric representing Lakefront. Let me just get through a quick disclosure before we get started. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morgansanley.com forward slash research disclosures. All right, With that, the team's been leading Lakefront through quite a transformation. So before we dive in, maybe give the audience an intro to the company and your focus since taking the helm last summer.

Great. Well, we're delighted to be here, and thanks for hosting us. So we're a clinical stage biopharmaceutical company now with a very exciting portfolio of T-cell engagers with a lead program that is going to start registration studies next year. in four programs in total, and it was quite a journey to get here. So we started about 18 months ago. The company at that time, named Galapagos, had a portfolio that was built in ex vivo cart T, and we spent a couple months analyzing that portfolio and went through a very thorough process analyzing strategic alternatives and ultimately determined that those programs were not commercially viable. We then negotiated with works councils and unions in Europe to get clearance to unwind that portfolio, which we did. So we had over 650 employees and about $300 million annual spend, and we began winding all that down this January, which was obviously quite a complex process, which is now almost complete. And in parallel to that, we pursued business development. So we had about 3 billion euros in capital, and we looked at a very long list of opportunities without necessarily honing in on just oncology or just autoimmune programs. But when we saw the initial data from Aura Medicines just about a year ago, actually, sort of September, October last year, we were just blown away with what we saw on the lead program's diligence and the more work we did the more we were convinced that this was a very unique opportunity and one that we were a very good ultimately renegotiated our historical deal with Gilead to where they contributed to that deal and ended up paying half the deal consideration and we ultimately prevailed in a competitive process to secure that asset in March. And for the last six months, we've been, you know, heads down executing on that program. It's going quite well. The studies are, you know, enrolling well and progressing nicely, and we're quite excited to unveil some data, you know, toward the end of this year and then start registration studies next year.

Okay, great. And we'll spend most of our time on GEMCRA to make on that acquisition. But maybe just further set the stage on that Gilead relationship. There's obviously, like you said, a history of collaboration between the two companies even before the acquisition. So maybe just a little more context around the relationship, how it stands for that.

Yes, so we inherited a relationship with Gilead, who entered into this broad strategic alliance with then-Galapagos in 2019. It was a 10-year agreement, so we've got another three years running on that agreement. And as part of that agreement, they put about $5 billion into the company, and so that is where a good chunk of the cash comes from. And that agreement allowed them to opt into any program we have at the company at POC stage and to opt in for a pretty small amount, $150 million U.S. dollars, for commercial rights ex-Europe. So, of course, when we got involved, and frankly following some discussions even before we took our roles, it was very clear that Gilead was highly motivated to, through us, find a way to deploy that capital very effectively, but to also reimagine that historical deal. And so as part of the negotiation with Oro, we also in parallel negotiated with our partners at Gilead to where ultimately, again, they put up half the money to do this transaction and we're splitting operational responsibilities. They will ultimately commercialize the lead program and we will take a royalty. And I think it shows that on a combined basis, we can very effectively pursue business development. So we're very pleased with the engagement. We're operating at a very senior level at Gilead. They talked about it in their fireside chat today. So this is a program that gets a lot of attention. And we're pleased with how the two companies are collaborating to really broaden this program and accelerate the program and hopefully bring it to patients in the not-too-distant future. Okay, great.

And maybe just a bit of background on how that Oro transaction came together. I know you and Gilead had a focus on certain therapeutic areas, but broader than just Galapagos was focusing on. So maybe a bit about the funnel of opportunities you considered, what interested you specifically about Oro and Gamgordomeg, and then the terms of the deal.

So, again, we didn't specifically target, you know, autoimmune diseases or opportunities. We didn't specifically target, you know, one therapeutic area. We really looked very broadly across the biotech landscape, but we specifically wanted opportunities that had very clear clinical proof of concept. So ultimately with Oro, we saw more than 60 patients' worth of, you know, efficacy and safety data. So that was, you know, as I said, quite compelling. we wanted to be in a place where we are the rightful owner for an asset so I didn't want to be somewhere where I knew every pharma company was focused today and likely reviewing every asset this is a set of orphan diseases which we think are quite significant, multi-billion dollars each in terms of commercial potential but where I think many folks at pharma don't have that on their list of strategic priorities at this point because some of these diseases aren't well commercially understood at this point. There haven't been effective medicines, and we have a chance to be first in class in many of these indications. So it's important to find something where we have a real angle in terms of us being first and us having a good competitive position. and so again at the end of the day this aligned well with where we were interested strategically and where Gilead was willing to put up half the money to participate and so it's sort of a win-win across all of that and again ultimately being first in class in the new exciting area was a really compelling component of this And then we can talk, of course, about, you know, the specific clinical profile and all of that good stuff, but more at a high level, let's sort of reframe it.

Okay, great. So maybe let's get a little bit deeper into the data package we have for example at this point. So what indications has it been studied in? How many patients do we have data for in autoimmune indications specifically?

Yes, so the focus of the program to date has been in a few diseases that are mediated by autoantibodies. The most mature data in terms of studies that have been done both in China and outside of China, Australia, U.S., would be the autoimmune cytopenias, so ITP and hemolytic anemia. There was also an initial focus in the clinical trials in China on Pemphigus vulgaris, which is an autoimmune skin disease. And so those are the three indications where the most data exists. There's another ongoing trial outside of China investigating some other autoimmune diseases, Sjogren's disease, myositis, confirmatory experience in pepagus that's ongoing. And I think, you know, ultimately the list of diseases that are amenable to this type of therapy is actually quite large. And part of our plan over the next year is to expand the number of proof of concept studies to start addressing that larger set of diseases.

Okay, great. And I think you might have investigated again, Gertemegin, in multiple myeloma. So obviously the focus for you guys is on autoimmune, but any data in that indication that was helpful in framing the profile here?

Yeah, I think, you know, in terms of the myeloma data, as you know, I think, you know, a lot of people know, you know, this is a class B CMA-directed T-cell engagers and CAR-T therapies, you know, established target in myeloma. They're marketed drugs being used. The experience with Gamgertamig in myeloma, which is our partner, KeyMed, who has rights to the drug in China, is developing in myeloma. I think one of the things that was interesting about that experience is that they were able to show in their myeloma data that the rate of cytokine release syndrome, which is one of the key safety considerations here, seemed appreciably lower than what was observed with teclistamab. And we think that that's due to the fact that this antibody has been engineered so it has a lower affinity for CD3, so it's less prone to cause T-cell overactivation. And I think that was one, you know, sort of aspect of the myeloma data that, you know, interested us, in addition to the fact that it's been studied in well over 100 patients with myeloma. So just the breadth of the experience was important for us to see as well.

Okay, great. And maybe just on the competitive landscape across BCMA T-cell engagers, so not long after, you know, you guys announced your acquisition, Candid was acquired by UCB, I believe. You have Cullinan out there. So maybe talk about some of the properties of GAMGertemig and how do you think GAMGertemig is differentiated versus those other programs. Presumably you did due diligence across many BCMA TESOL engagers.

Yeah, I mean, once we found ORO, as I said, about a year ago, we, of course, did a pretty thorough assessment of other, not just BCMA-directed TESOL engagers, but we looked at some CD19 programs as well. So we have a pretty good sense of how everybody stacks up. And what we liked about Oro, well, of course, the data sort of spoke for itself. But it was an indication, as I said, that Oro had very smartly picked where to develop this program. And so we now have a two-plus-year advantage over, you know, the next competitor. And so that is quite helpful, of course. um secondly uh the data we saw was already in a sub-q format and at at a dosing regimen that is one that um we think makes sense to use for registration studies um and so again a lot of a lot of this space is really working through finding that optimal dose where you have uh you know, a benign safety profile and efficacy, and that's not trivial, and so ORA had already achieved that, which was very, very attractive. So all of that gives us a really nice timing advantage and a really nice platform to go into other diseases, and so, yes, it's a competitive space. I mean, we're, as I said, we're, you know, fully focused on maintaining and hopefully even, you know, accelerating our timeline advantage, but, you know, these are large enough markets that at the end of the day, somebody else comes in the market, you know, it's still a, you know, very large opportunity. So it's not necessarily a winner-take-all type market. But, you know, as I said, as I keep saying, it's important. It's nice to be first. And we intend to keep that advantage. Okay.

And I guess I would add to what Henry said. You know, there were two main targets in the space CD19 BCMA. BCMA was previously thought to be largely restricted to plasma cells and plasma blast. We think those cell populations are important. Those are the ones that are producing the autoantibodies. But we also recognize it's important to address the B cell compartment as well. And I think what is being observed now through gamgrotamig studies, through studies that Candid's doing, through studies of teclistimab in these diseases is you actually get a much broader range of cellular depletion than what you would have originally thought. So BCMA is expressed in sufficient amounts, even in naive B cells. And so you get the sort of depletion pattern you would expect with CD19, which is restricted to B cells, but you also address the plasma cell component. and we believe in some of these or many of these autoantibody-driven diseases, that's going to be an important thing to address. Okay.

Great. That makes sense. And you touched on it a bit earlier specific to the CRS, but I guess what have we seen clinically that suggests gamgertamide can induce that immune reset with better safety?

Yeah. What I would say, you know, we haven't commented specifically on the incidence or severity of CRS that we're seeing. In the studies, what I would say, you know, Henry mentioned this is a subcutaneously administered drug. In all the trials to date, it's been administered as an outpatient therapy. Obviously, if you were seeing something of concern with CRS, you might rethink whether that would be the right way to administer the drug. We've seen nothing in the studies so far that would make us think that this is not going to be an outpatient administered drug in a self-reformulation. So we're comfortable with what we're seeing as far as the CRS profile.

Just touching on kind of the initial indications that you'll be going into, you know, clearly you've prioritized, you know, registrational development in some rare autoimmune indications. Maybe tell us a bit about those indications, the rationale behind pursuing those first, and if you could give us an idea for how big those opportunities could be. Yeah, I can start.

But, you know, one of the appealing aspects of starting with diseases like ITP, hemolycanemia, pemphigus, is that the proof of concept is very clear, right? If your platelet counts go up, your platelet counts go up. If your hemoglobin goes up, it goes up. If your skin lesions go away, they go away. So there were three diseases where it was very easy to interpret proof of concept and the effect size was very clear. So I think, you know, as a way to establish proof of concept in this set of diseases, they picked the right three diseases. You know, Henry also mentioned the aspects of, you know, the fact that these are diseases with well-established regulatory precedents. And so we think that there's a very clear path from proof of concept stage right into phase three.

Yeah, and from a commercial perspective, I mean, you know, while these are orphaned and we've obtained orphan designation from FDA for all three of them, you know, they're pretty sizable populations and there really isn't anything effective out there today. These patients are really, you know, very sick. It can be deadly. They are basically, you know, sidelined. They're in these chronic therapies. They're, you know, heavily on steroids and other, you know, immunosuppressants. And, you know, we think, as I said earlier, you know, these are all multibillion-dollar commercial opportunities easily. And I think they would be really elevating the existing standard of care, very significantly, and so that's what gets us excited.

You've talked about more data program during being shared later this year. Maybe give us a sense of what might come with that update, which indications could it include, how many patients, length of follow-up, anything you can share on.

Yeah, the key focus is the cytopenia set of studies that we've talked about. So we're talking ITP and AI, and as I said, We had about 60 patients when we entered into the deal in March. So since then, these studies have been enrolling in the U.S. and Australia very attractively. So we have many more patients now. So we know response rates. We know how many of these patients saw their B cells being depleted. We, of course, are seeing safety since that generally happens right around dosing. So, you know, we know that. So that's all very good. What we want to demonstrate, though, is whether we're truly achieving immune reset. So that means the B-sols get depleted, and then after some period of time, they come back, and they come back healthy, and patients, you know, stay without disease for some meaningful period of time. And so essentially that's just a question of time. We saw a few patients when we did the original deal, you know, back on the earlier data set that had already achieved that, but we want to get it to a meaningful number where we believe it would be, you know, interesting to share that with the market and kind of demonstrate that this is an immune reset therapy. So that's the goal, and we think by around your end, we'll have enough patients that have been on therapy long enough to sort of adequately describe that drug profile.

And maybe just a bit more on dosing. You know, what doses have been explored thus far? Do you think we'll have go-forward dose with this update? You know, how should we think about, you know, dose selection?

Yeah, so we haven't disclosed the exact dose and dose regimen, but what we have said is that even the data we saw back in March, a good chunk of those 60 patients were at doses or close to doses that we think would be what the registration studies would be. So now we, of course, have much more of that. What we've also said is that what's very commercially attractive is, and, frankly, very, you know, important when you think about what this means for patients and quality of life and so forth, that this is a very short initial course of dosing, and then that's it. So these patients ideally go through that pretty quickly, you know, get monitored for a very short period of time, and then essentially go back to, you know, to normal life. That's, you know, that's the ambition. and that's the profile we're seeing and again it would be an exciting step forward for patients in these diseases and that's what we hope to demonstrate when we roll out the data by the end of the year.

And I would maybe add to that another aspect of the oral program that was attractive to us at the time that we were doing diligence is that the very first experiences with the drug and autoimmune disease in China were conducted at doses that were much higher and longer in duration than what we're using in the clinic now. And even at those doses, you achieve the reset profile, and the safety profile was acceptable, probably not optimized, but acceptable. So we're really in the position where the dose ranging work, dose de-escalation, where we have this sort of efficacy safety profile that we think will be attractive to go forward, and that's a much easier proposition than starting from zero and building up. So that was an appealing part of the program.

Okay, great. And you talked about starting registrational trials next year. So what can you tell us about potential first indications, maybe high-level thoughts on trial design, just any details or timing around when you could share details on those trial designs?

Yeah, at this point, what we can say is that, again, the focus is on the cytopenia. So, you know, ITP and AHA will be the first two registration studies kicking off next year. You know, we have to have further discussions with the regulators around exactly what the design is and exactly the number of patients, you know, we need ultimately for approval. I think there's a good precedent, as Eric talked about, in terms of the regulatory pathway in ITP, and that is really more based on a relatively shorter-term platelet count-type endpoint. So at the end of the day, we want to design a trial that doesn't just achieve that primary endpoint, but again, really also demonstrates this immune reset and quality of life for patients. therefore and so what exactly that looks like i think we look forward to sharing more on that when we sort of fully align on that with uh with fda so that's at some point next year but you know what's attractive is we don't envision you know very large studies we do think they're probably going to be controlled studies but again these are orphan diseases and this is a very profound impact so you don't sort of need to you know squint to see the two lines you know, separate, and therefore we don't think these are going to be, you know, very large studies and therefore not super long.

Okay, great. And maybe just last question, aren't going to go to make, but you've talked about proof-of-concept basket studies, you know, any additional autoimmune indications, anything you'd share there or just kind of stay tuned?

Yeah, at this point, so we spent some good time with, you know, our collaborators at Gilead, and we have pretty pretty developed plans now for additional basket studies. So the plan is to start two basket studies early next year. They will cover kind of clusters of diseases and again for each individual disease, I mean this drug makes such an impact that for each disease we need you know a strong handful or low double digit kind of numbers of patients we think to have proof of concept in those diseases so basket studies are a pretty efficient way both from a time and a capital perspective to really you know very quickly accelerate it so again we'll roll it out early next year we'll share more with the market then as to you know what the indications are but again just to kind of come one more time back to what we like so much about the opportunity to begin with given that it's already sub-q and the dosing regimen is you know effectively established, you know, we can run pretty quickly and expand this. We don't have to, you know, go through a sort of extensive dose finding for other diseases, et cetera.

Okay, great. And maybe just another aspect of the RO acquisition, there were three preclinical assets you talked about in licensing. I'd imagine there's not a ton you can say about it right now, but maybe just level of excitement, you know, anything you can share around those or progress with those.

Yeah, no, we're actually quite excited about these three programs. And, you know, a little known fact about Oro is that Oro actually started with those programs and then GEMGURTEMIG came, so it isn't sort of something that, hey, we have GEMGURTEMIG and, you know, let's add some pipeline to it. No, no, they actually started with those programs they have, which we now have a really capable team that has proven that interesting mechanism we can, you know, create what looks to be a very effective program. So I'd say they're not, you know, too far away from IND, but we're going to share more next year as to exactly where they stand. Some of those will allow us to go into similar diseases as Gimgertamik. Some will even further expand the diseases we can address. So we think those really present additional upside that's quite attractive. Also, from a deal perspective, these are programs that we fully own at this point. Gilead has an opt-in right, but if they choose to opt in and pay us the opt-in fee, it would flip to a 50-50 profit share all the way through. So not this 50-50 followed by a royalty structure, but 50-50 all the way through. So, again, the focus today should be on Gambertamik, but I think these represent nice potential that we're quite excited about.

Maybe just spend a minute on, you know, the integration of the Oro team, you know, how has that come along? And could that potentially translate to future pipeline development?

Yeah, I mean, that's gone, you know, extremely well. You know, we think of it less as a sort of traditional integration. We think of it more as, again, even though the old Galapagos was, you know, big companies that had 600-plus people, the core of the new lakefront prior to Oro was actually more like 35 people. And so it's really more adding, you know, two equal pieces together. And, in fact, we're sort of really co-creating what we want the new lakefront to look like. And so it's a phenomenal team. It's a team that I think is, you know, quite excited about what we can build together. And, frankly, it's a team that is looking at Gemgertemik and saying, wow, this is, you know, this is an opportunity I want to be a part of. So at this point, we've, you know, barely lost anybody. I mean, it's, you know, having gone through hundreds of M&A deals, that's very, very rare. I mean, we even have the prior CO staying with us for, you know, six months. So very pleased with how that's going. And, you know, to your question, we have that early translation and clinical development capability now that, you know, we could deploy in different ways. The focus very much is GEMGURDEMIC and the portfolio, so we're no rush to do anything beyond that. but we do have that capability now, and that's, I think, strategically really valuable for us going forward as well.

I wanted to touch on some financial and capital allocation questions. So even after Oro, you know, clearly cash balance is still very healthy. Maybe just remind us how much is allotted to the broader collaboration with Gilead versus what can be used for other purposes.

Yeah, and what we said with our key terrains is we expect to end the year at 2 billion euros in cash. And we also gave a number related to what we expect to have following all related spend to Oro and our other operations through the first approval of GamGertamig. And that number was 1.6 billion. So you have basically the 400 there that we're implying can be fully deployed for GamGertamig in our preclinical portfolio and any milestones associated with that. And we see that $1.6 billion as kind of a minimum. There's upside there depending on interest income, royalties we receive, and things like that. In terms of Gilead specifically, with the Oro transaction, we were able to negotiate a $500 million bucket. With that, that would be completely independent of anything we may do in the future where Gilead doesn't have to be involved or Gilead doesn't have any opt-in rights. As part of that, we have a $150 million sublimit of that $500 where we can use for a share buyback, which we announced a 50 million euro share buyback in June that we expect to complete by year end. In terms of the other capital available, Obviously, with the $1.6 minus the $500, there's still that $1.1 billion. But, again, as we look at BD opportunities, we see a high bar to do another one with that capital.

Okay, great. And just on the wind down of the legacy cell therapy activities, any color on what's left to be done there?

So we're really largely wrapped up. We have the last wave of our team really kind of wrapping up the clinical study reports and so forth. So the spend is pretty modest at this point and, again, well within our estimates. That was actually one of the reasons we were able to keep our €2 billion guidance despite starting a $50 million share buyback. So that is really largely wrapped up. The team's done a phenomenal job under, you know, difficult circumstances to kind of wrap it all up in a, you know, in a good way. And, you know, kudos to all of our former colleagues. It's not easy to, you know, go through a process like that. So it's really taking, you know, less focus of us today relative to what it did over the past year.

And then, you know, maybe just lastly, you know, other potential sources of cash, right? There's the interest income, you know, just remind us about expectations for Gisellica. I think there's still some potential cash inflow from that status of the TIK2 inhibitor.

Yeah, we really have some nice legacy assets here that generate some nice income for us. And in terms of royalties related to Gyselica, we receive royalties both from Gilead and Alpha Sigma, and that ranges in 15 to $20 million euros a year. And depending on the success of that product going forward, those could go higher. Interest income, obviously, a meaningful balance of cash, earning interest. We have made a concerted effort to shift a lot of that. I think last year when we came in, we were 80%, 90% euro-denominated. We've flipped that to more U.S. denominated to take advantage of these higher interest rate environment over here. So that could generate meaningful interest income on the $2 billion. If you get 3% to 4%, that's pretty meaningful. income coming in. We also have some legacy tax credit receivables. These are actual tax refunds that we get from various governments related to historical R&D activity. And at the end of Q2, we had about $125 million of those still to be received over the next several years. And we estimate that in the $20 to $35 million a year, million euros a year.

And then finally, You know, over the years, and again, Galapagos has been around for 27 years now, so there's actually been some equity investments made and there's been some historical out licensing, all of which could provide other upside from either downstream considerations or if some of these companies are going public or sold, et cetera. So, yeah, the legacy is rich, and it provides us with really a nice amount of value that in some ways, you know, should be added on top of our cash. And, you know, we're happy to have that as an additional, you know, stream of value creation for shareholders.

Okay, great. In the last minute, I'm just going to try to tick through a mini-survey. We're asking all the biotech management teams at the conference. So, first, I'm very curious to get your take here with the rise in Chinese biotech innovation. How are you thinking about competitive position? Does it influence R&D, business development, or both?

It does influence both. I mean, of course, our asset originated in China. And, you know, things are moving very quickly. So, I think there's a, you know, high premiums set probably three or four times during this talk. you know speed is key you know execution is key we have an advantage now we have to keep it but I think both from a BD and a you know R&D general execution perspective you have to stay very close and keep an eye on China what was very attractive about Oro was that while the asset originated in China and some of the initial data was China when we did the deal we actually, you know, saw both Chinese data and global data, you know, U.S. data and Australian data, and I think that gave us additional confidence, so we do think it's a theme to stay, it's here to stay, I mean, our team is active looking at, you know, other things from a, both from a competitive intelligence perspective and from a BD perspective, but as Aaron said, the bar for us to do another deal is extremely high, given how busy we are with the current portfolio and given how excited we are about it.

Great. Next is on AI impacts to your business and potential for it to be disruptive.

Yeah, we obviously use AI. It's kind of table stakes now in today's world. We use it throughout R&D, BD, competitive intelligence, things like that. It's obviously moving quickly and we'll continue to monitor how that evolves and how we can further use it to generate more efficiency in various areas of the organization. Great.

And then just lastly, on the regulatory front, anything in particular that you see being impactful to your business, whether changes at FDA, MFM pricing, tariffs, and anything else on the regulatory front that's most?

Yeah, I mean, I would say despite some of the things that are being written about FDA, I mean, we've been very, very pleased with the level of regulatory engagement. I mean, it's sort of shown up in, you know, orphan designation for all three of our indications. so we've been really, really pleased with their engagement and their kind of confidence as we approach discussions on ultimate registration studies. So, you know, maybe we're a bit more bullish on that than, you know, some of our peers. I think, of course, some of the other aspects you mentioned, MSN, IRA, et cetera, you know, we're monitoring all that, you know, very carefully. But, you know, we still, at this stage, I think the FDA interface is probably the most important theme, And, again, that is going extremely well. So, you know, we're not seeing the same clouds that some other companies are talking about.

Okay, great.

Well, with that, we're out of time. Thank you again for being here. Thanks again for hosting us.