Transformational year for Galapagos
Strong balance sheet for continued
growth
Key 2019 events:
- Unique R&D agreement signed with collaboration partner
Gilead
- Applications for approval of selective JAK1 inhibitor
filgotinib in rheumatoid arthritis (RA) in the U.S., Europe and
Japan by Gilead, with priority review submitted in the U.S.
- FINCH 1 and 3 Phase 3 trials with filgotinib in RA met primary
endpoints with consistent tolerability, supporting potential
best-in-class profile
- Recruitment completed in NOVESA Phase 2a trial with GLPG1690 in
systemic sclerosis (SSc)
- Recruitment completed in ROCCELLA Phase 2b trial with GLPG1972
in osteoarthritis (OA)
- First-in-human Phase 1 trials with TOLEDO compounds GLPG3312
and GLPG3970 initiated
Financial results:
- Group revenues & other income of €896 million, compared to
€318 million in 2018
- Net profit of €150 million, compared to a net loss of €29
million in 2018
- Operational cash burn¡, excluding the Gilead transaction, of
€334 million, within the guided range
- Strong balance sheet with cash and current financial
investments of €5.8 billion and €3 billion in deferred
revenues
Webcast presentation tomorrow, 21
February 2020 at 14.00 CET/8 AM ET, +32 (0)2 404 0659,
www.glpg.com
Mechelen, Belgium; 20 February 2020,
22.01 CET, regulated information – Galapagos NV (Euronext
& NASDAQ: GLPG) presents financial results and highlights the
key events for the full year 2019.
“2019 was our 20th anniversary year, and what a
year it was! We are very proud of the R&D deal with our
collaboration partner Gilead that we announced in July. We are
convinced that it offers us the opportunity to accelerate and
maximize our potential, to the benefit of all stakeholders,
including shareholders and patients. With our independence secured
for a period of 10 years, and the capital in place to boost our
unique research engine and build out our commercial presence, the
collaboration creates the right conditions to realize our ambition
to become one of the largest biopharma companies,” said Onno van de
Stolpe, CEO of Galapagos.
“At the same time, our pipeline made significant
progress in 2019. For the first time in our history, with
filgotinib in RA, we have a product candidate under regulatory
review for approval in the U.S., Europe, and Japan. Pending
potential approval, we are rapidly gearing up to commercialize
filgotinib in RA in Europe, hand in hand with our collaboration
partner Gilead. Moreover, we expect five topline readouts from
Phase 3 and Phase 2 trials this year. Importantly, to ensure
long-term value creation, we are dedicated to maintaining an active
and growing early-stage portfolio. We currently have 30 programs
running, and while the focus remains on our key franchises in
inflammation and fibrosis, we also have promising programs in
additional indications with high unmet medical needs. We
undoubtedly had a transformational year in 2019, but firmly believe
that this is just the beginning.”
Bart Filius, COO and CFO of Galapagos, added:
“We ended 2019 with a very strong balance sheet, providing us with
the capital to expand and accelerate our R&D engine to execute
on our novel target based programs. Our revenues more than doubled
in 2019, and while spending more on R&D, we recorded a
profitable year. Moreover, our balance sheet holds in excess of €3
billion in deferred revenues that will be recognized in revenues
over the next 10 years. We remain focused on investing in our
maturing clinical pipeline of novel mechanism of action candidates,
and expect to run over 80 clinical trials this year. We will also
expand our commercial organization further as we gear up for a
potential market launch of filgotinib in RA in the second half of
2020. All this will contribute to our financial guidance for
operational cash burni between €420 and €450 million, including
milestone income from Gilead for potential regulatory approvals of
filgotinib in RA, for full year 2020.”
Key figures (consolidated)(€ millions, except
basic & diluted income/loss (-) per share)
|
31 Dec 2019 Group total |
31 Dec 2018 Group total |
Revenues
and other income |
895.9 |
317.8 |
R&D
expenditure |
-427.3 |
-322.8 |
G&Aii and
S&M expensesiii |
-98.3 |
-39.8 |
Operating
profit / loss (-) |
370.3 |
-44.8 |
Fair value
re-measurement of financial instruments |
-181.6 |
|
Other financial
result |
-38.6 |
15.6 |
Income taxes |
-0.2 |
-0.1 |
Net
result for the period |
149.8 |
-29.3 |
Basic
income / loss (-) per share (€) Diluted income /
loss (-) per share (€) |
2.60
2.49 |
-0.56
-0.56 |
Current
financial investments and cash and cash equivalents at
year-end |
5,780.8 |
1,290.8 |
Details of the financial
results
Revenues and other incomeRevenues and other
income for 2019 significantly increased to €895.9 million, compared
to €317.8 million in 2018. The impact of the Gilead collaboration
on our revenues is €657.9 million, which is mainly related
to (i) the GLPG1690 program (€667.0 million) and (ii) the
access and option rights to our drug discovery platform (€80.9
million), offset by (iii) a negative impact on filgotinib revenue
recognition when compared to the original filgotinib agreement
(-€91.7 million).
Primarily as a result of the upfront payment
received from Gilead, on 31 December 2019 our deferred income
includes €2.2 billion allocated to our drug discovery platform that
will be recognized linearly over 10 years, and €0.8 billion
allocated to filgotinib (2015 filgotinib contract and recent
revised collaboration combined) that will be recognized over a
period of 4 to 5 years.
Operating resultThe Group realized a net
operating profit in 2019 of €370.3 million, compared to a net
operating loss of €44.8 million in 2018.
R&D expenses for the group in 2019 increased
by 32% to €427.3 million compared to €322.8 million in
2018. This was due to an increase of €52.3 million in
subcontracting costs primarily related to our IPF program,
filgotinib and other programs. Furthermore, personnel costs
increased, explained by a planned headcount increase following the
growth in our R&D investments. These factors also contributed
to the increase in our G&A and S&M expenses which rose to
€98.3 million in 2019, compared to €39.8 million in 2018.
We reported a non-cash fair value loss amounting
to €181.6 million resulting from the re-measurement of derivative
financial instruments triggered by the share subscription agreement
with Gilead and the warrants granted to Gilead, primarily due to
the increase in the Galapagos share price.
Net other financial loss in 2019 amounted to
€38.6 million, compared to net other financial income of €15.6
million in 2018, which was primarily attributable to €34.9 million
realized exchange loss on the U.S. dollars upfront payment from
Gilead, and €10.6 million of unrealized exchange loss on our cash
position in U.S. dollars (compared to €10.1 million of unrealized
exchange gain on our cash position in U.S. dollars in 2018).
Net resultThe Group realized a net profit in
2019 of €149.8 million, compared to a net loss of €29.3 million in
2018.
Cash positionCurrent financial investments and
cash and cash equivalents totaled €5,780.8 million on 31 December
2019, as compared to €1,290.8 million on 31 December 2018.
Total net increase in current financial
investments and cash and cash equivalents amounted to €4,490.0
million, compared to an increase of €139.6 million in 2018.
The net increase comprises (i) €3,162.8 million of operational cash
flow, of which €3,497.1 million net operational cash proceeds from
the Gilead collaboration, and €334.3 million of operational cash
burn, within the guided range, (ii) €955.6 million net cash
proceeds related to the share subscription by Gilead and €368.0
million cash proceeds related to the exercise of Warrant A by
Gilead, (iii) €17.2 million of cash proceeds from capital and share
premium increase from the exercise of warrants in 2019, (iii) €13.7
million of negative fair value and currency translation
effects.
Furthermore, Galapagos’ balance sheet holds a
receivable from the French government (Crédit d’Impôt Rechercheiv)
and a receivable from the Belgian Government for R&D
incentives, for a total of both receivables of €115.4 million.
Outlook 2020After a historic
2019, 2020 promises to be a particularly eventful and exciting year
for Galapagos.
First of all, we and our collaboration partner
Gilead expect approval of our first product candidate, filgotinib,
in RA in the U.S., Europe, and Japan, with subsequently the first
Galapagos commercial sales later this year. We also expect Gilead
to report Phase 3 data of filgotinib in ulcerative colitis (UC) in
the second quarter of this year. Moreover, Gilead and we plan to
start the Phase 3 program with filgotinib in ankylosing spondylitis
(AS) in the half of 2020 – a potential additional indication for
our growing filgotinib franchise.
Besides the filgotinib UC read-out, we expect to
report data from four Phase 2 clinical trials.
Within our fibrosis portfolio, we anticipate
reporting topline data from the PINTA Phase 2 trial with GLPG1205
in IPF and, together with collaboration partner Gilead, from the
NOVESA Phase 2a trial with GLPG1690 in SSc.
We also plan to report topline data from the
ROCCELLA Phase 2b study of GLPG1972 in OA, together with our
collaboration partner Servier. Following the results, Gilead will
have the option to inlicense GLPG1972 for the U.S. market.
We will continue to execute on our accelerated
development plan for TOLEDO, our next generation inflammation
program. We expect to launch multiple proof-of-concept patient
trials in the second half of the year and expect to report topline
data from our first patient study towards the end of the year.
In the meantime, we continue recruitment in our
landmark Phase 3 ISABELA program with GLPG1690 in IPF, together
with Gilead. We are proud to report that over 600 patients were
recruited in 2019, and the futility analysis remains on track for
the first quarter of 2021.
In total, we expect to conduct over 80 clinical
trials in 2020, further expanding our broad clinical pipeline of
novel modes of action candidate medicines in indications with high
unmet medical needs.
Given the large number of maturing proprietary
clinical programs and the expansion of our R&D and commercial
teams, in 2020, we expect an operational cash burn between €420 and
€450 million, including milestone income from Gilead for potential
regulatory approvals of filgotinib in RA.
Annual report 2019Galapagos is
currently finalizing its financial statements for the year ended 31
December 2019. The auditor has confirmed that his audit procedures,
which are substantially completed, have not revealed any material
corrections required to be made to the financial information
included in this press release. Should any material changes arise
during the audit finalization, an additional press release will be
issued. Galapagos expects to be able to publish its fully audited
annual report for the full year 2019 on or around 27 March
2020.
Conference call and webcast
presentation
Galapagos will conduct a conference call open to
the public tomorrow, 21 February 2020, at 14:00 CET/8 AM ET, which
will also be webcasted. To participate in the conference call,
please call one of the following numbers, ten minutes prior to
scheduled start of the call:
Confirmation Code:
8371984
Belgium:
+32 2 404
0659France:
+33 1 76 77 22 74
Netherlands:
+31 20 721 9251United
Kingdom:
+44 330 336 9105 United
States:
+1 323 794 2423
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 calendar
27 March
2020
Publication Annual Report and 20-F 2019, AGM and EGM convocation28
April
2020
Annual Shareholders’ meeting in Mechelen, Belgium7 May
2020
First quarter 2020 results (webcast 8 May)6 August 2020
Half year 2020 results (webcast 7 August)5 November
2020 Third
quarter 2020 results (webcast 6 November)18 February
2021 Full
year 2020 results (webcast 19 February)
About Galapagos
Galapagos (Euronext & NASDAQ: GLPG)
discovers and develops small molecule medicines with novel modes of
action, several of which showed promising patient results and are
currently in late-stage development in multiple diseases.
Galapagos’ pipeline comprises discovery programs through Phase 3
programs in inflammation, fibrosis, osteoarthritis and other
indications. The Company’s ambition is to become a leading global
biopharmaceutical company focused on the discovery, development and
commercialization of innovative medicines.
All drug candidates mentioned in this press
release are investigational; their efficacy and safety are yet to
be established.
Contacts
Investors:
Elizabeth GoodwinVP Investor Relations+1 781 460
1784
Sofie Van GijselDirector Investor Relations+32
485 19 14 15ir@glpg.com
Media:
Carmen VroonenSenior Director Communications
& Public Affairs+32 473 82 48 74
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
guidance from management (including guidance regarding the expected
operational cash burn during financial year 2020), statements
regarding financial results, the timing of audited financial
results and annual report, mechanism of action and profile of,
timing and/or results of clinical trials with, and potential
commercialization of compounds coming out of our programs,
investment in our research engine and commercial capabilities,
potential option exercise by Gilead and interaction with
regulators, including the potential approval of our current or
future drug candidates. 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 2020 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, 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.
i 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 activitiesii.the net proceeds or
cash used, if any, in acquisitions or disposals of businesses; the
movement in restricted cash and movement in current financial
investments, 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. For the full year of 2018, the operational
cash burn represented €158.4 million.
The operational cash flow for 2019 amounted to
€3,162.8 million and can be reconciled to our cash flow statement
by considering the increase in cash and cash equivalent of €779.7
million, adjusted by (i) the net cash proceeds from capital and
share premium increase from the share subscription by Gilead of
€955.6 million, (ii) the cash proceeds from capital and share
premium increase from the exercise of warrant A by Gilead amounting
to €368.0 million, (iii) the cash proceeds from capital and share
premium increase from the exercise of warrants by employees for
€17.2 million and (iv) the net increase in current financial
investments amounting to €3,723.9 million.
The operational cash flow of €3,162.8 million
adjusted by the net operational cash proceeds from the transaction
with Gilead amounting to €3,497.1 million (upfront consideration
received less costs associated to the transaction) leads to an
operational cash burn of €334.3 million for the year 2019.
ii General and administrative
iii Sales and marketing
iv Crédit d’Impôt Recherche refers to an
innovation incentive system underwritten by the French
government.
- FY19 financial tables
- PDF version press release
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