Galapagos reports Q3 2020 results
- First nine months 2020 financial results:
- Group revenues and other income of €368.6
million
- Operating loss of €163.2 million
- Net loss of €247.6 million
- Cash and current financial investments of €5.3 billion
on 30 September 2020
- Approval for filgotinib in rheumatoid arthritis (RA) in
Europe and Japan, Complete Response Letter (CRL) received in the
U.S.
- Positive topline results with ziritaxestat in systemic
sclerosis
- No signal observed with GLPG1972 in
osteoarthritis
- First dosing of patients with Toledo compound
GLPG3970
Webcast presentation tomorrow, 06 November
2020, at 14.00 CET / 8 AM ET, www.glpg.com, +32 2
793 38 47, code 8542327
Mechelen, Belgium; 5 November 2020,
22.01 CET; regulated information – Galapagos NV (Euronext &
NASDAQ: GLPG) announces its unaudited Q3 results and operational
highlights, which are further detailed in its Q3 2020 report
available on the Galapagos website, www.glpg.com.
“We closed a turbulent third quarter with an
approved first drug in Europe and Japan, but also a CRL in the U.S.
As we work with Gilead to adequately address the CRL, we stand
ready for commercial launch in our co-promotion countries in
Europe. We continue to work through the clinical programs from our
pipeline, as we execute on our strategy to develop a portfolio of
novel mechanism therapies in inflammation and fibrosis,” said Onno
van de Stolpe, CEO of Galapagos.
Bart Filius, COO and CFO added, “We ended the
third quarter with a strong cash balance, positioning us well to
further grow our pipeline and deliver on the anticipated commercial
launch of filgotinib. We maintain our 2020 operational cash burn
guidance of €490-€520 million.”
Key figures third quarter report 2020
(unaudited)(€ millions, except basic & diluted
gain/loss (-) per share)
|
30 September 2020 group total |
30 September 2019 group total |
Revenues and other income |
368.6 |
752.5 |
R&D expenditure |
(398.1) |
(298.2) |
S&Mi expenses |
(44.1) |
(9.7) |
G&Aii expenses |
(89.5) |
(51.5) |
Operating loss (-)/operating profit |
(163.2) |
393.0 |
Fair value re-measurement of share subscription agreement and
warrants |
(8.1) |
(142.3) |
Net other financial result |
(75.2) |
(2.1) |
Taxes |
(1.1) |
16.7 |
Net result for the period |
(247.6) |
265.3 |
Basic loss (-)/ gain per share (€) |
(3.81) |
4.77 |
Diluted loss (-)/gain per share (€) |
(3.81) |
4.59 |
Current financial investments and cash and cash
equivalents |
5,308.6 |
5,599.8 |
Revenues and other
income
Revenues and other income for the first nine
months of 2020 decreased to €368.6 million compared to €752.5
million in the first nine months of 2019, due to one-time
recognition in revenue in the first nine months of 2019 of the
upfront payment received from Gilead related to ziritaxestat for
€667.0 million. The revenues from the Gilead collaboration in the
first nine months of 2020 amount to €316.6 million and consist of
(i) the access and option rights to our drug discovery platform
(€170.7 million), and (ii) the filgotinib revenue recognition
(€145.9 million).
Due to the approval of filgotinib by both the
Japanese and European authorities on 25 September 2020, we achieved
a total milestone of $105.0 million (€90.2 million) from Gilead
that will be recognized in revenue over time until the end of the
development plan.
As a result of the upfront payment received from
Gilead in the third quarter of 2019, our deferred income on 30
September 2020 includes €2.0 billion allocated to our drug
discovery platform that is recognized linearly over 10 years, and
€0.7 billion allocated to filgotinib (2015 filgotinib contract and
recent revised collaboration combined, and additional milestones)
that is recognized over a period of 4 to 5 years.
Results
We realized a net loss of €247.6 million
for the first nine months of 2020, compared to a net profit of
€265.3 million for the first nine months of 2019.
We reported an operating loss amounting to
€163.2 million for the first nine months of 2020, compared to
an operating profit of €393.0 million for the first nine
months of 2019.
The net profit and operating profit for the
first nine months of 2019 was mainly due to one-time recognition in
revenue in the first nine months of 2019 of the upfront payment
received from Gilead related to ziritaxestat for €667.0
million.
Our R&D expenditure in the first nine months
of 2020 amounted to €398.1 million, compared to
€298.2 million for the first nine months of 2019. This planned
increase was mainly due to an increase in subcontracting costs
primarily related to our filgotinib program, our Toledo program and
other clinical programs. Furthermore, personnel costs increased
explained by a planned headcount increase following the growth in
our R&D investments, and increased cost of the subscription
right plans. This factor, and the increased cost of the commercial
launch of filgotinib in Europe, contributed to the increase in our
S&M and G&A expenses, which were respectively €44.1 million
and €89.5 million in the first nine months of 2020, compared
to respectively €9.7 million and €51.5 million in the first
nine months of 2019.
We reported a non-cash fair value loss from the
re-measurement of initial warrant B issued to Gilead, amounting to
€8.1 million, as result of the increased implied volatility of the
Galapagos share price and its evolution between 31 December 2019
and 30 September 2020.
Net other financial loss in the first nine
months of 2020 amounted to €75.2 million, compared to net
other financial loss of €2.1 million for the first nine months
of 2019, which was primarily attributable to €51.2 million of
unrealized exchange loss on our cash and cash equivalents and
current financial investments in U.S. dollars, and to €13.3 million
of negative changes in (fair) value of current financial
investments.
Cash
position
Current financial investments and cash and cash
equivalents totaled €5,308.6 million on 30 September 2020.
A total net decrease of €472.2 million in cash
and cash equivalents and current financial investments was recorded
during the first nine months of 2020, compared to a net increase of
€4,309.0 million during the first nine months of 2019. This net
decrease was composed of (i) €433.3 million of operational cash
burniii, (ii) offset by €25.7 million of cash proceeds from capital
and share premium increase from exercise of subscription rights in
the first nine months of 2020, and (iii) €13.3 million negative
changes in (fair) value of current financial investments and €51.3
million of unrealized negative exchange rate differences.
Finally, our balance sheet on 30 September 2020
held 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 €122.9
million.
Outlook 2020
Our collaboration partner Gilead is in direct
dialogue with the Food and Drug Administration on filgotinib's new
drug application following receipt of the CRL for filgotinib in RA
in the U.S., and we expect more clarity in the coming months. With
the MANTA and MANTA-RAy studies fully recruited, we expect to have
key results available in the first half of 2021.
In the fourth quarter we expect to report
topline data from the PINTA Phase 2 study with GLPG1205 in IPF.
Furthermore there have been over 1,200 patients recruited in our
global landmark ISABELA Phase 3 program with ziritaxestat in IPF.
We remain on track to announce the futility analysis in the first
half of 2021.
To further evaluate the broad potential of our
most advanced Toledo compound, SIK2/3 inhibitor GLPG3970, in
inflammatory diseases, we anticipate first dosing in the LADYBUG
(RA) and SEA TURTLE (UC) proof-of-concept studies.
We retain our operational cash burn guidance of
€490 to €520 million for full year 2020.
Third quarter report 2020
Galapagos’ financial report for the first nine
months ended 30 September 2020, including details of the unaudited
consolidated results, is accessible via
www.glpg.com/financial-reports.
Conference call and webcast
presentation
Galapagos will conduct a conference call open to
the public tomorrow, 06 November 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 commencement:
CODE: 8542327
Standard International: |
+44
(0) 2071 928338 |
USA: |
+1
646 741 3167 |
UK: |
+44
844 481 9752 |
Netherlands: |
+31
207 95 66 14 |
France: |
+33
1 70 70 0781 |
Belgium: |
+32
2 793 38 47 |
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
18 February
2021
Full year 2020 results (webcast 19 February 2021)
About Galapagos Galapagos NV discovers and
develops small molecule medicines with novel modes of action,
several of which show promising patient results and are currently
in late-stage development in multiple diseases. Our pipeline
comprises discovery through Phase 3 programs in inflammation,
fibrosis 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.
Except for filgotinib’s approval for the treatment of rheumatoid
arthritis by the European Commission and Japanese Ministry of
Health, Labour and Welfare, our drug candidates are
investigational; their efficacy and safety have not been fully
evaluated by any regulatory authority.
Contact Investors:Elizabeth
GoodwinVP Investor Relations +1 781 460 1784
Sofie Van GijselSenior Director Investor Relations+32 485 19 14
15ir@glpg.com
Media:Carmen VroonenGlobal Head of
Communications & Public Affairs+32 473 824 874
Anna GibbinsSenior Communications Director -
Therapeutic Areas+44 7717 801900communications@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 milestones, 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 2020), financial results, timing
and/or results of clinical trials, mechanisms of action and
potential commercialization of our product candidates, interaction
with regulators, the timing or likelihood of additional regulatory
authorities’ approval of marketing authorization for filgotinib,
such additional regulatory authorities requiring additional
studies, statements relating to the build-up of our
commercial organization for filgotinib, the expected impact of
COVID-19, and our strategy, business plans and focus. 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 the risk that data from Galapagos’ ongoing and planned
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 and
ziritaxestat, Gilead, and our collaboration partner for GLPG1972,
Servier), and estimating the commercial potential of our product
candidates and the uncertainties relating to the impact of the
COVID-19 pandemic. 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 Sales and marketing
ii General and administrative
iii 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:
- the net proceeds, if any, from share capital and share premium
increases included in the net cash flows generated / used (–) in
financing activities
- 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. The operational cash burn for the nine months ended 30
September 2020 amounted to €433.3 million and can be reconciled to
our cash flow statement by considering the increase in cash and
cash equivalents of €262.1 million, adjusted by (i) the cash
proceeds from capital and share premium increase from the exercise
of subscription rights by employees for €25.7 million and (ii) the
net sale of current financial investments amounting to €669.7
million.
iv Crédit d’Impôt Recherche refers to an innovation incentive
system underwritten by the French government
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