Full Press Release Details
Galapagos announces strategy to accelerate innovation and reports strong third quarter
R&D and Strategy Webcast presentation at R&D Update tomorrow
in New York, 4 November 2022, 13.00 15.30 CET / 8 am 10.30 am EDT, www.glpg.com
Mechelen, Belgium; 3 November
2022, 21.01 CET; regulated information Galapagos NV (Euronext & NASDAQ: GLPG) today announced its strategy for accelerated growth and value creation, its financial results for the first nine months of 2022, and the outlook for the
remainder of 2022. The results are further detailed in the Q3 2022 financial report available on the financial reports section of the website.
Forward, Faster strategy to accelerate innovation
Guided by our purpose to bring transformational medicines to patients around the world to help them live longer and healthier lives, we today announce
our Forward, Faster strategy to accelerate growth and value creation by reshaping the way we innovate and operate. This strategy provides a clear path forward based on three key pillars. First, we will shift from novel target-based discovery
to patient-centric medical need research and development with a focus on our key therapeutic areas of immunology and oncology. Second, we will build on our current capabilities and derisk R&D through multiple drug modalities, including CAR-T, and by focusing on best-in-disease validated targets in our strategic therapeutic areas with shorter time-to-patient potential. Third, we will increase our business development efforts to complement our pipeline and continue to work with our collaboration partner Gilead to
bring more medicines to patients worldwide, said Dr. Paul Stoffels1, CEO and Chairman of the Board of Directors of Galapagos.
Our new fit-for-purpose organizational structure and operating model
will focus on accelerating our pipeline in immunology and oncology, supported by externally sourced opportunities, and we will discontinue our activities in fibrosis and kidney disease2.
As a result of our new strategic direction, we intend to reduce our workforce by approximately 200 positions across our sites in Europe to create room to
reinvest in new capabilities and programs in our oncology franchise. This is a difficult but necessary decision, and we will follow all applicable processes with respect for our people.
Third quarter financial performance
Jyseleca continues to perform very well with a growing European base and a solid 60.5 million in net sales as of 30 September. As a result, we
further increase our 2022 net sales guidance to 80- 90 million from our initial guidance of 65- 75 million. We ended the third
quarter of the year with a strong balance sheet of 4.4 billion in cash and current financial investments, which provides us with the necessary means to invest in immunology and oncology and execute on smart business development. We
reiterate our cash burni guidance of 480- 520 million for the full year 2022, added Bart Filius, President, COO and CFO
Q3 2022 operational review and recent events
Jyseleca commercial & regulatory progress
Financial highlights for the first nine months of 2022 (unaudited)
( millions, except basic & diluted loss per share)
| 30 September 2022 group total | 30 September 2021 group total | Variance | ||||||||||
| Product net sales | 60.5 | 6.1 | 54.3 | |||||||||
| Collaboration revenues | 349.7 | 311.7 | 38.0 | |||||||||
| Total net revenues | 410.2 | 317.9 | 92.3 | |||||||||
| Cost of sales | (7.9 | ) | (0.7 | ) | (7.3 | ) | ||||||
| R&D expenditure | (364.1 | ) | (378.0 | ) | 14.0 | |||||||
| G&A ii and S&M iii expenses | (202.7 | ) | (151.3 | ) | (51.4 | ) | ||||||
| Other operating income | 29.5 | 36.3 | (6.9 | ) | ||||||||
| Operating loss | (135.1 | ) | (175.7 | ) | 40.7 | |||||||
| Net financial result | 127.5 | 33.6 | 93.8 | |||||||||
| Income taxes | (3.2 | ) | 0.3 | (3.5 | ) | |||||||
| Net loss from continuing operations | (10.8 | ) | (141.8 | ) | 131.0 | |||||||
| Net profit from discontinued operations | 22.2 | (22.2 | ) | |||||||||
| Net loss of the period | (10.8 | ) | (119.6 | ) | 108.8 | |||||||
| Basic and diluted loss per share ( ) | (0.16 | ) | (1.83 | ) | ||||||||
| Basic and diluted loss per share from continuing operations ( ) | (0.16 | ) | (2.16 | ) | ||||||||
| Current financial investments and cash and cash equivalents | 4,362.1 | 4,874.2 |
Q3 2022 financial results
We reported product net sales of Jyseleca in Europe for the first nine months of 2022 amounting to 60.5 million ( 6.1 million in the first
nine months of 2021). Our counterparties for the sales of Jyseleca were mainly hospitals and wholesalers located across Europe.
Cost of sales related to
Jyseleca net sales in the first nine months of 2022 amounted to 7.9 million.
Collaboration revenues amounted to 349.7 million for
the first nine months of 2022, compared to 311.7 million for the first nine months of 2021.
Revenues recognized related to the collaboration
agreement with Gilead for the filgotinib development were 166.8 million in the first nine months of 2022 compared to 136.4 million for the same period last year. This increase was due to a higher increase in the percentage of
completion, as well as a higher revenue recognition of milestone payments, strongly influenced by the milestone achieved related to the regulatory approval in Japan for UC in the first nine months of 2022. The revenue recognition related to the
exclusive access rights for Gilead to our drug discovery platform amounted to 172.6 million for the first nine months of 2022 ( 173.3 million for the same period last year).
We have recognized royalty income from Gilead for Jyseleca for 8.2 million in the first nine
months of 2022 (compared to 1.9 million in the same period last year) of which 3.6 million royalties on milestone income for UC approval in Japan.
Additionally, we recorded milestones of 2.0 million triggered by the first sales of Jyseleca in the Czech Republic and Portugal by our distribution
and commercialization partner Sobi, in the first nine months of 2022.
Our deferred income balance on 30 September 2022 includes
1.6 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration, and 0.5 billion allocated to the filgotinib
development that is recognized over time until the end of the development period.
Our R&D expenditure in the first nine months of 2022 amounted to
364.1 million, compared to 378.0 million for the first nine months of 2021. This decrease was primarily explained by a decrease in subcontracting costs from 189.1 million in the first nine months of 2021 to
158.5 million in the first nine months of 2022, primarily due to the winding down of the ziritaxestat (IPF) program and reduced spend on our SIKi and TYK2 programs. This was partly offset by cost increases for our filgotinib program, on a
nine month basis compared to the same period in 2021. Personnel costs decreased from 134.3 million in the first nine months of 2021 to 130.0 million for the same period this year. Depreciation and impairment amounted to
35.6 million for the first nine months of 2022 ( 14.1 million for the same period last year). This increase was primarily due to an impairment of 26.7 million of previously capitalized upfront fees related to our
collaboration with Molecure on the dual chitinase inhibitor OATD-01 (GLPG4716) recorded in Q2 2022.
and S&M expenses amounted to 202.7 million in the first nine months of 2022, compared to 151.3 million in the first nine months of 2021. This increase was primarily due to the termination of our 50/50 filgotinib co-commercialization cost sharing agreement with Gilead for filgotinib in 2022. The cost increase was also explained by an increase in personnel costs for the first nine months of 2022 compared to the same period
last year explained by an increase in the commercial work force driven by the commercial launch of filgotinib in Europe.
Other operating income
( 29.5 million vs 36.3 million for the same period last year) decreased, mainly driven by lower grant and R&D incentives income.
Net financial income in the first nine months of 2022 amounted to 127.5 million, compared to net financial income of 33.6 million for
the first nine months of 2021. Net financial income in the first nine months of 2022 was primarily attributable to 102.1 million of unrealized currency exchange gains on our cash and cash equivalents and current financial investments at
amortized cost in U.S. dollars, and to 26.0 million of positive changes in (fair) value of current financial investments. The financial expenses also contained the effect of discounting our long term deferred income of
We realized a net loss from continuing operations of 10.8 million for the first nine months of 2022, compared to a net
loss of 141.8 million for the first nine months of 2021.
The net profit from discontinued operations for the nine months ended
30 September 2021 consisted of the gain on the sale of Fidelta, our fee-for-services business, for 22.2 million.
We reported a group net loss for the first nine months of 2022 of 10.8 million, compared to a group net loss of 119.6 million for the
first nine months of 2021.
Current financial investments and cash and cash equivalents totaled 4,362.1 million on 30 September 2022, as compared to
4,703.2 million on 31 December 2021.
Total net decrease in cash and cash equivalents and current financial investments amounted to
341.1 million during the first nine months of 2022, compared to a net decrease of 295.2 million during the first nine months of 2021. This net decrease was composed of (i) 343.1 million of operational cash burn,
(ii) offset by 6.7 million of cash proceeds from capital and share premium increase from exercise of subscription rights in the first nine months of 2022, (iii) 26.0 million positive changes in (fair) value of current
financial investments and 105.6 million of mainly positive exchange rate differences, and (iv) the cash out from the acquisitions of CellPoint and AboundBio, net of cash acquired, of 136.4 million.
Acquisitions of CellPoint and AboundBio
accounting of the acquisitions of CellPoint and AboundBio are included in our Q3 2022 condensed consolidated financial statements. To date, we have performed a preliminary fair value analysis of the business combinations. We expect the provisional
amount of goodwill to change significantly upon the completion of the purchase price allocation, resulting from the valuation of the different assets and liabilities acquired.
Immunology an area in which
we have built deep scientific know-how and expertise since our founding
We expect reimbursement decisions in
most key European markets for Jyseleca in UC this year and anticipate that Sobi will further progress with reimbursement discussions in RA and UC in Eastern and Central Europe, Greece, and the Baltic countries. We also expect to report initial
results from the FILOSOPHY Real-World Evidence Phase 4 trial in RA later this year, and topline results from the DIVERSITY Phase 3 study in Crohn s disease (CD) in the first quarter of 2023. Before the end of this year, we anticipate a
CHMP opinion following the PRAC Article 20 recommendation issued on 28 October 2022.
We aim to recruit the first patients in a Phase 2 study of our
TYK2 inhibitor product candidate, GLPG3667, in dermatomyositis around year-end, and we intend to start a Phase 2 study in patients with Systemic Lupus Erythematosus (SLE) in 2023. Finally, we continue to
advance select compounds with optimized pharmacology and selectivity from our SIKi portfolio.
Oncology portfolio an area where we
will continue to grow and invest
We will present the initial data from the ATALANTA-1 Phase 1/2 study of the
CD19 CAR-T product candidate in patients with rrNHL at the annual ASH conference in December. The objectives of the ATALANTA-1 study are to evaluate the feasibility,
safety and efficacy of the CD19 CAR-T candidate manufactured at point-of-care and will provide initial clinical validation of the
CAR-T decentralized supply model.
The recruitment of the ongoing Phase 1/2 studies of the CD19 CAR-T candidate in patients with rrNHL (ATALANTA study) and relapsed/refractory Chronic Lymphocytic Leukemia (rrCLL) (EUPLAGIA study) is progressing well, and we are on track to report topline results of the dose
escalation cohorts in the first half of 2023, which will be followed by one or more dose expansion cohorts.
Financial guidance and Forward, Faster strategy presentation
For the full year 2022, we reiterate our net cash burn of 480- 520 million, including the acceleration
in oncology, and we further increase our net sales guidance for Jyseleca to 80- 90 million.
detailed update of the strategy, portfolio and pipeline goals and commercial progress will be presented by Galapagos management and key opinion leaders at the company s R&D Day 2022 which will be held tomorrow, Friday, 4 November 2022,
from 8:00 am to 10:30 am EDT (13:00 to 15:30 CET) in New York.
The event will include a live webcast on the Investors section of the company s
website and a replay will be available on the Galapagos website within 48 hours after the event. Presentations showcased during the event will be featured on the Presentations section of the company s website.
To participate in the conference call, please register in advance using this link. Upon registration, the dial-in
numbers will be provided. The conference call can be accessed 10 minutes prior to the start time by using the conference access information provided in the e-mail received at the point of registering, or by
selecting the call me feature.
Third quarter 2022 financial report
Galapagos financial report for the first nine months ended 30 September 2022, including details of the unaudited consolidated results, is accessible