Solid third quarter 2019 performance with strong balance sheet for
continued R&D growth
- First nine month financial results:
- Group revenues of €752.5 million
- Operating profit of €393.0 million
- Net profit of €265.3 million
- Cash and cash equivalents on 30 Sept 2019 of €5.6
billion
- Established unique collaboration with Gilead, securing
capital and anchoring independent R&D for years to
come
- Filgotinib submitted by Gilead for approval in RA in Europe
and Japan
Webcast presentation tomorrow, 25 October 2019, at 14.00
CET/8 AM ET, www.glpg.com, +32 2 404 0659, code
6653712
Mechelen, Belgium; 24 October 2019, 22.01
CET; regulated information – Galapagos NV (Euronext & NASDAQ:
GLPG) announces its unaudited Q3 results, which are further
detailed in its Q3 2019 report available on the Galapagos
website, www.glpg.com.
“There is no question that the third quarter of
2019 was defined by the unique and landmark deal with our long-time
collaboration partner Gilead, announced mid-July. This 10-year
research collaboration is about maximizing innovation based on the
identification and development of new mode of action medicines.
Thanks to the upfront payment of $3.95 billion and a
$1.1 billion equity investment by Gilead, this deal gives us
the financial strength – and the independence – to greatly expand
our research engine and build a broader pipeline of new mode of
action medicines. Gilead will have option rights on our programs
outside of Europe, and as part of the agreement, they have
already executed that right for our late-stage IPF compound,
GLPG1690. We will benefit greatly from Gilead’s science expertise
and infrastructure,” said Onno van de Stolpe, CEO of Galapagos.
“Thanks to the progress made with filgotinib this past quarter, we
and Gilead are on track for potential new drug approvals as of the
second half of 2020, and we are very excited by the prospect of
bringing filgotinib as a new treatment option to RA patients.”
Bart Filius, COO and CFO added, “Following the
upfront payment of $3.95 billion and a $1.1 billion equity
investment received in the Gilead transaction, we have an
exceptionally strong balance sheet. As we continue to expand our
organization to support our broad pipeline and build a commercial
organization for potential launch of filgotinib in Europe next
year, our financial guidance for full year 2019 operational cash
burn1 between €320 and €340 million is unchanged,
excluding the impact from our new collaboration agreement with
Gilead.”
Outlook 2019Following on regulatory
submissions in Europe and Japan, Gilead remains on track to submit
filgotinib for approval in RA the US before year-end.
We will continue recruitment in our proprietary ISABELA, NOVESA
and PINTA trials, and plan to provide an update on recruitment
timelines for the ISABELA program in H2 2019. Together with our
collaboration partner Servier, we continue towards completion of
the ROCCELLA trial in osteoarthritis, on track for topline results
in the second half of next year. For MOR106, together with our
collaboration partners MorphoSys and Novartis, we continue
executing the Phase 1 and 2 trials currently ongoing.
We continue to execute on our Toledo program in
order to deliver Phase 1 results and plan to start several Phase 2a
trials in 2020.
Key figures third quarter report 2019
(unaudited)(€ millions, except basic & diluted gain /
loss (-) per share)
|
30 Sept 2019 group total |
30 Sept 2018 group total |
Revenues |
752.5 |
205.1 |
R&D expenditure |
(298.2) |
(231.8) |
G&A and S&M expenses |
(61.2) |
(26.8) |
Operating profit / loss (-) |
393.0 |
(53.5) |
Fair value re-measurement of share subscription agreement |
(142.3) |
|
Net other financial result |
(2.1) |
9.0 |
Taxes |
16.7 |
0.3 |
Net result for the period |
265.3 |
(44.2) |
Basic gain / loss (-) per share (€) |
4.77 |
(0.86) |
Diluted gain / loss (-) per share (€) |
4.59 |
(0.86) |
Cash and cash equivalents |
5,599.8 |
1,343.7 |
Revenues and other income
Our revenues and other income for the first nine
months of 2019 amounted to €752.5 million. The impact of the
Gilead collaboration on our revenues is €596.4 million, which is
related to (i) the GLPG1690 program (€667.0 million) and (ii)
the access and option rights to our drug discovery platform (€23.9
million), offset by (iii) a negative impact on filgotinib revenue
recognition when compared to the original filgotinib agreement
(-€94.0 million).
Primarily as a result of the upfront received
from Gilead, on 30 September 2019 our deferred income balance
includes €2.3 billion allocated to our drug discovery platform that
will be recognized linearly over 10 years, and €0.80 billion
allocated to filgotinib (2015 filgotinib contract and recent
revised collaboration combined) that will be recognized over a
period of 4 to 5 years.
Results
We realized a net profit of €265.3 million
for the first nine months of 2019, compared to a net loss of
€44.2 million for the first nine months of 2018.
We reported an operating profit amounting to
€393.0 million for the first nine months of 2019, compared to
an operating loss of €53.5 million for the first nine months
of 2018.
Our R&D expenditure in the first nine months
of 2019 amounted to €298.2 million, compared to
€231.8 million for the first nine months of 2018. This planned
increase was mainly due to an increase of €29.1 million in
subcontracting costs primarily related to our IPF program,
filgotinib and other programs. Furthermore, personnel costs
increased explained by a planned headcount increase and higher
costs related to bonuses and the warrant plans as a result of the
increase in the Galapagos share price. These factors also
contributed to the increase in our G&A and S&M expenses,
which were €61.2 million in the first nine months of 2019,
compared to €26.8 million in the first nine months of
2018.
We reported a non-cash fair value loss from the
re-measurement of a derivative financial instrument triggered by
the share subscription agreement with Gilead between signing and
closing of the agreement amounting to €142.3 million. Such amount
reflects the increase in the Galapagos share price between signing
and closing of the Gilead agreement.
Net other financial loss in the first nine
months of 2019 amounted to €2.0 million, compared to net other
financial income of €9.0 million for the first nine months of
2018, which was primarily attributable to €34.9 million realized
exchange loss on the U.S. dollars upfront payment from Gilead,
which was partly compensated by a €32.4 million of unrealized
exchange gain on our cash position in U.S. dollars (compared to
€6.6 million of unrealized exchange gain on our cash position
in U.S. dollars in the first nine months of 2018).
We reported a tax income amounting to €16.7
million primarily from the recognition of deferred tax assets as a
consequence of the deal with Gilead.
Third quarter report 2019
Galapagos’ financial report for the first nine
months ended September 2019, including new accounting policies as a
result of recent transactions and details of the unaudited
consolidated results, is accessible via
www.glpg.com/financial-reports.
Results of special and extraordinary shareholders'
meetings
Following the collaboration with Gilead
Sciences, Inc., Gilead Biopharmaceutics Ireland UC, and Gilead
Therapeutics A1 Unlimited Company announced on 14 July 2019,
Galapagos held special and extraordinary shareholders' meetings on
Tuesday 22 October 2019.
At these meetings, all proposed resolutions were
approved, including the appointment of Mr. Daniel O'Day and Dr.
Linda Higgins as non-independent directors of Galapagos and the
approval of the issuance of two warrants for the benefit of Gilead
Therapeutics A1 Unlimited Company.
All documents relating to the shareholders’
meetings will be posted on our website at
https://www.glpg.com/shareholders-meetings.
Conference call and webcast presentation
Galapagos will conduct a conference call open to
the public tomorrow, 25 October at
14:00 CET / 8 AM ET, which will also be
webcast. To participate in the conference call, please call one of
the following numbers ten minutes prior to commencement:
CODE: 6653712
USA: |
+1
323 701 0225 |
UK: |
+44
330 336 9105 |
Netherlands: |
+31
20 721 9251 |
France: |
+33
1 76 77 2274 |
Belgium: |
+32
2 404 0659 |
A question and answer session will follow the
presentation of the results. Go to www.glpg.com to access the live
audio webcast. The archived webcast will also be available for
replay shortly after the close of the call.
Financial calendar20 February
2020 Full
year 2019 results (webcast 21 February 2020)
Filgotinib and all other drug candidates mentioned in this
report are investigational; their efficacy and safety have not been
fully evaluated by any regulatory authority.
About Galapagos
Galapagos (Euronext & NASDAQ: GLPG)
discovers and develops small molecule medicines with novel modes of
action, three of which show promising patient results and are
currently in late-stage development in multiple diseases. Our
pipeline comprises Phase 3 through to discovery programs in
inflammation, fibrosis, osteoarthritis and other indications. Our
ambition is to become a leading global biopharmaceutical company
focused on the discovery, development and commercialization of
innovative medicines. More information at www.glpg.com.
Contacts
Investors:Elizabeth GoodwinVP Investor Relations +1 781
460 1784
Sofie Van GijselDirector IR+32 485 19 14 15ir@glpg.com
Media:Carmen VroonenSenior Director Communications &
Public Affairs+32 473 824 874
Evelyn FoxDirector Communications +31 6 53 591 999
communications@glpg.com
Forward-looking statements
This release may contain forward-looking
statements, including, among other things, statements regarding the
global R&D collaboration with Gilead, the amount and timing of
potential future milestone, opt-in and/or royalty payments by
Gilead, Galapagos’ strategic R&D ambitions, the guidance from
management (including guidance regarding the expected operational
cash burn during financial year 2019), financial results, timing
and/or results of clinical trials, mechanisms of action and
potential commercialization of our product candidates, interaction
with regulators, and build-up and development of commercial
operations. Galapagos cautions the reader that forward-looking
statements are not guarantees of future performance.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which might cause the actual
results, financial condition and liquidity, performance or
achievements of Galapagos, or industry results, to be materially
different from any historic or future results, financial conditions
and liquidity, performance or achievements expressed or implied by
such forward-looking statements. In addition, even if Galapagos’
results, performance, financial condition and liquidity, and the
development of the industry in which it operates are consistent
with such forward-looking statements, they may not be predictive of
results or developments in future periods. Among the factors that
may result in differences are that Galapagos’ expectations
regarding its 2019 operating expenses may be incorrect (including
because one or more of its assumptions underlying its expense
expectations may not be realized), Galapagos’ expectations
regarding its development programs may be incorrect, the inherent
uncertainties associated with competitive developments, clinical
trial and product development activities and regulatory approval
requirements (including that data from Galapagos’ ongoing clinical
research programs may not support registration or further
development of its product candidates due to safety, efficacy or
other reasons), Galapagos’ reliance on collaborations with third
parties (including our collaboration partner for filgotinib,
Gilead, our collaboration partner for GLPG1972, Servier and our
collaboration partners for MOR106, Novartis and MorphoSys), and
estimating the commercial potential of its development programs. A
further list and description of these risks, uncertainties and
other risks can be found in Galapagos’ Securities and Exchange
Commission (SEC) filings and reports, including in Galapagos’ most
recent annual report on Form 20-F filed with the SEC and other
filings and reports filed by Galapagos with the SEC. Given these
uncertainties, the reader is advised not to place any undue
reliance on such forward-looking statements. These forward-looking
statements speak only as of the date of publication of this
document. Galapagos expressly disclaims any obligation to update
any such forward-looking statements in this document to reflect any
change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based or that may affect the likelihood that actual results will
differ from those set forth in the forward-looking statements,
unless specifically required by law or regulation.
[1] The operational cash burn (or operational cash flow if this
performance measure is positive) is equal to the increase or
decrease in our cash and cash equivalents (excluding the effect of
exchange rate differences on cash and cash equivalents), minus :(i)
the net proceeds, if any, from share capital and share premium
increases included in the net cash flows generated / used (-) in
financing activities and;(ii) the net proceeds or cash used, if
any, in acquisitions or disposals of businesses; and the movement
in restricted cash, if any, included in the net cash flows
generated / used (-) in investing activities.This alternative
performance measure is in our view an important metric for a
biotech company in the development stage.
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