Galapagos NV Reports 2014 Financial Results
Robust clinical programs in inflammation and cystic fibrosis supported by a strong financial position
Key 2014 results:
• Group revenues €108m, including €18m from discontinued operations
• Group net profit €33m resulting from divestment of service operations
• Year-end cash €198m, including €11m in restricted cash
• Filgotinib: recruitment completed for phase 2B studies DARWIN 1 and 2; 98% of eligible patients enrolled in long term extension DARWIN 3
• Cystic fibrosis program in the clinic
• GLPG1205 in Phase 2A study for ulcerative colitis
Management guidance for 2015:
• All Phase 2B studies with filgotinib in RA completed, AbbVie licensing decision expected following DARWIN 24-week readouts
• Cystic fibrosis program in Phase 2; all molecules of a triple-combo therapy in development by end of H1
• Cash burn €110 - €130m, excluding cash income from milestones and licenses
• Cash reserves expected to yield runway until end 2016
Live audio webcast presentation at 14.00 CET, www.glpg.com, call numbers:
Local Belgium, also outside Belgium: +32(0)2 402 3092
Toll free in Belgium: 0800 58033
Local Netherlands, also outside Netherlands: +31(0)20 716 8295
Toll free in the Netherlands: 0800 020 2576
Mechelen, Belgium; 6 March 2015 - Galapagos NV (Euronext: GLPG) presents financial results and highlights the key events for the full year 2014.
"With the sale last year of BioFocus and Argenta to Charles River Laboratories, Galapagos made the transition from a hybrid service and pipeline company into a clinical stage R&D biotech that develops drugs with novel modes of action for high unmet medical needs. Our priority is to execute on our current clinical programs, and use our unique target discovery platform to deliver new innovative programs in the future. In 2014 we greatly expanded our clinical pipeline", CEO Onno van de Stolpe commented. Galapagos completed recruitment for the global DARWIN Phase 2B program with filgotinib in rheumatoid arthritis; we expect to report topline results for 12 weeks of treatment in DARWIN 1 (mid-April) and DARWIN 2 (early-May). Our cystic fibrosis program entered the clinic, and we are close to candidate nomination for our third molecule to complement our triple combination therapy for the main cystic fibrosis mutation. In addition to filgotinib and cystic fibrosis, the Company has '1205 (ulcerative colitis) and '1690 (pulmonary disease) in clinical development and 25 programs in earlier stages. Management expects 2015 to exceed 2014 in the number and breadth of clinical readouts, while also delivering Phase 1 and novel pre-clinical candidates."
"Galapagos exceeded guidance for full year revenues, achieving €108 million including €18 million in services revenues from the first quarter. The Company is well-positioned to create significant value from its R&D assets, with nearly €200 million in cash on the balance sheet, the largest year end cash position ever for Galapagos" said Bart Filius, CFO of Galapagos. "Management will put considerable R&D investments to work to progress the Company's mid stage clinical and other programs and deliver extensive news flow in 2015. Guidance for cash burn is therefore between €110 - 130 million for 2015, excluding cash from milestones and licensing. Excluding income from a $200 million license of filgotinib by AbbVie, we have a runway until the end of 2016."
Key figures (consolidated)
(€ millions, except basic income/loss per share)
Notes:
1) Galapagos sold its service operations to Charles River Laboratories Inc. on 1 April 2014. As a result of this sale, the service operations are reported as discontinued operations. Group results include both continuing and discontinued operations.
2) including €10.7 million of restricted cash
3) including €3.3 million of restricted cash
Details of the financial results
Revenues
Galapagos' revenues for 2014 amounted to €108.2 million, which includes €18.2 million of revenues from discontinued service operations, sold to Charles River Laboratories on 1 April 2014. Revenues from continuing operations of €90.0 million represent a decrease of 7% compared to 2013, reflecting lower recognition of deferred revenues from upfront payments, as a result of the longer duration of the filgotinib program. Income from milestones, grants and R&D incentives was in line with 2013.
Result
The Group realized a net profit in 2014 of €33.2 million, or €1.10 income per share, compared to a net loss of €8.1 million, or €0.28 loss per share in 2013.
Net loss from continuing operations amounted to €37.3 million. Operating expenses from continuing operations at €126.6 million were 11.6% (€13.2 million) higher than in 2013. This increase is principally the result of higher investments in the development of our mid-stage product candidates filgotinib, GLPG1205, and GLPG1690, and increased spending to accelerate the cystic fibrosis program with AbbVie. This planned increase was driven by the maturing R&D pipeline and the resulting costs of clinical trials.
Cash position
Cash, cash equivalents and restricted cash totaled €198.4 million on 31 December 2014, which is the highest year-end cash balance the Company has ever reported. Restricted cash of €10.7 million includes a bank guarantee on real estate lease obligations and an escrow account connected to the sale of the service operations. €10.4 million of this restricted cash is expected to be released by mid-2015. Net cash proceeds from the sale of the service operations amounted to €130.8 million. In addition, Galapagos' balance sheet holds R&D incentives receivables from the French and Belgian governments amounting to €51.3 million, of which €7.4 million will be collected in 2015.
Operational highlights
R&D operations
• In the field of inflammation:
º Completed recruitment of Phase 2B DARWIN program with filgotinib in patients with moderate to severe RA who do not respond to methotrexate (MTX). DARWIN 1: dose-range finding in 599 patients on background treatment with MTX. DARWIN 2: dose-range finding in 287 patients without MTX. Both studies are placebo controlled for the first 12 weeks, plus 12 more weeks' treatment for longer term safety data. DARWIN 3: long term extension study. º 98% of eligible patients (434 patients as of end of February) enrolled in DARWIN 3 º Presented a clean drug-drug interaction profile with filgotinib º Continued enrollment in 180-patient Phase 2 Crohn's study with filgotinib º Reported lack of efficacy in Proof of Concept study with GLPG0974 in ulcerative colitis º Disclosed novel target GPR84 and positive Phase 1 data for GLPG1205, prepared for Phase 2 study in ulcerative colitis with GLPG1205, which initiated in early 2015 º Nominated pre-clinical candidate antibody MOR106 in inflammation in alliance with MorphoSys
• In cystic fibrosis:
º Reported restoration of up to 60% healthy CFTR function in pre-clinical evaluations of Galapagos combination therapy compounds for class II mutation º Initiated Phase 1 study with potentiator GLPG1837, topline results expected Q3 2015 º Nominated corrector GLPG2222 as a pre-clinical candidate, Phase 1 start expected before end 2015
• In osteoarthritis:
º Delivered pre-clinical candidate GLPG1972 in the alliance with Servier, Phase 1 start expected before end 2015
• In pulmonary disease:
º Initiated Phase 1 study with GLPG1690 in the alliance with Janssen Pharmaceutica NV, reported positive topline results in Q1 2015
• Grants for research:
º Flemish agency for Innovation by Science and Technology (IWT) grants: €2.9 million for cystic fibrosis and €2.3 million for fibrosis
Service operations
• Sold the service operations to Charles River Laboratories in April 2014
Corporate
• Average daily trading volumes and value were 69k shares / €1.0 million
• Warrant exercises raised €4.4 million
• Bart Filius joined as CFO
• Vicki Sato resigned from the Galapagos Board of Directors
Outlook 2015
The Phase 2B clinical program for filgotinib in RA is expected to deliver the 12-week topline efficacy and safety data for DARWIN 1 by mid-April, with 12 week topline results for DARWIN 2 in early May. 24-week results from both studies are expected in July. The 10-week results from filgotinib in Crohn's disease (FITZROY) are expected in the second half of 2015. Subsequent to DARWIN 24-week results becoming available, a licensing decision by AbbVie is expected.
In cystic fibrosis, Galapagos expects to nominate a second corrector in the first half of 2015. Galapagos will report topline Phase 1 results with GLPG1837 and initiate a Phase 2 study in class III cystic fibrosis patients in the second half of 2015.
The Company expects to make significant progress in both partnered and non-partnered R&D programs as the pipeline continues to mature across a broad range of therapeutic areas, resulting in multiple additional clinical and pre-clinical stage programs by end 2015.
The Company expects an operational use of cash of €110 - 130 million during 2015, excluding milestone payments and a potential $200 million license fee from our partner AbbVie for filgotinib. Excluding income from a license of filgotinib by AbbVie, Galapagos has a runway until the end of 2016.
Annual Financial Report 2014
Galapagos is currently finalizing its financial statements for the year ended 31 December 2014. 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 Financial Report for the full year 2014 on or around 27 March 2015.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public today at 14:00 Central European Time (CET), which will also be webcast. To participate in the conference call, please call one of the following numbers ten minutes prior to commencement:
Local Belgium, also outside Belgium: +32(0)2 402 3092
Toll free in Belgium: 0800 58033
Local Netherlands, also outside Netherlands: +31(0)20 716 8295
Toll free in the Netherlands: 0800 020 2576
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
28 April 2015 Annual General Meeting of Shareholders in Mechelen
7 August 2015 First Half 2015 Results
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Key 2014 results:
• Group revenues €108m, including €18m from discontinued operations
• Group net profit €33m resulting from divestment of service operations
• Year-end cash €198m, including €11m in restricted cash
• Filgotinib: recruitment completed for phase 2B studies DARWIN 1 and 2; 98% of eligible patients enrolled in long term extension DARWIN 3
• Cystic fibrosis program in the clinic
• GLPG1205 in Phase 2A study for ulcerative colitis
Management guidance for 2015:
• All Phase 2B studies with filgotinib in RA completed, AbbVie licensing decision expected following DARWIN 24-week readouts
• Cystic fibrosis program in Phase 2; all molecules of a triple-combo therapy in development by end of H1
• Cash burn €110 - €130m, excluding cash income from milestones and licenses
• Cash reserves expected to yield runway until end 2016
Live audio webcast presentation at 14.00 CET, www.glpg.com, call numbers:
Local Belgium, also outside Belgium: +32(0)2 402 3092
Toll free in Belgium: 0800 58033
Local Netherlands, also outside Netherlands: +31(0)20 716 8295
Toll free in the Netherlands: 0800 020 2576
Mechelen, Belgium; 6 March 2015 - Galapagos NV (Euronext: GLPG) presents financial results and highlights the key events for the full year 2014.
"With the sale last year of BioFocus and Argenta to Charles River Laboratories, Galapagos made the transition from a hybrid service and pipeline company into a clinical stage R&D biotech that develops drugs with novel modes of action for high unmet medical needs. Our priority is to execute on our current clinical programs, and use our unique target discovery platform to deliver new innovative programs in the future. In 2014 we greatly expanded our clinical pipeline", CEO Onno van de Stolpe commented. Galapagos completed recruitment for the global DARWIN Phase 2B program with filgotinib in rheumatoid arthritis; we expect to report topline results for 12 weeks of treatment in DARWIN 1 (mid-April) and DARWIN 2 (early-May). Our cystic fibrosis program entered the clinic, and we are close to candidate nomination for our third molecule to complement our triple combination therapy for the main cystic fibrosis mutation. In addition to filgotinib and cystic fibrosis, the Company has '1205 (ulcerative colitis) and '1690 (pulmonary disease) in clinical development and 25 programs in earlier stages. Management expects 2015 to exceed 2014 in the number and breadth of clinical readouts, while also delivering Phase 1 and novel pre-clinical candidates."
"Galapagos exceeded guidance for full year revenues, achieving €108 million including €18 million in services revenues from the first quarter. The Company is well-positioned to create significant value from its R&D assets, with nearly €200 million in cash on the balance sheet, the largest year end cash position ever for Galapagos" said Bart Filius, CFO of Galapagos. "Management will put considerable R&D investments to work to progress the Company's mid stage clinical and other programs and deliver extensive news flow in 2015. Guidance for cash burn is therefore between €110 - 130 million for 2015, excluding cash from milestones and licensing. Excluding income from a $200 million license of filgotinib by AbbVie, we have a runway until the end of 2016."
Key figures (consolidated)
(€ millions, except basic income/loss per share)
| 31 Dec 2014 Continuing Operations |
31 Dec 2013 Continuing Operations |
31 Dec 2014 Group Total1 |
31 Dec 2013 Group Total1 |
|
| Revenues | 90.0 | 96.6 | 108.2 | 159.5 |
| Services cost of sales | -11.3 | -41.3 | ||
| R&D expenditure | -111.1 | -99.4 | -111.1 | -99.4 |
| G&A and S&M expenses | -14.9 | -13.8 | -18.9 | -28.8 |
| Operating result before exceptional items | -36.0 | -16.6 | -33.1 | -10.0 |
| Restructuring & integration costs | -0.7 | -0.3 | -0.7 | -1.1 |
| Result on divestment | 67.5 | - | ||
| Operating result | -36.6 | -16.9 | 33.7 | -11.0 |
| Net result for the period | -37.3 | -16.8 | 33.2 | -8.1 |
| Basic income / Loss (-) per share (€) | -1.24 | -0.58 | 1.10 | -0.28 |
| Cash, Cash equivalents and Restricted cash³ at year-end | NA | NA | 198.4² | 141.5³ |
Notes:
1) Galapagos sold its service operations to Charles River Laboratories Inc. on 1 April 2014. As a result of this sale, the service operations are reported as discontinued operations. Group results include both continuing and discontinued operations.
2) including €10.7 million of restricted cash
3) including €3.3 million of restricted cash
Details of the financial results
Revenues
Galapagos' revenues for 2014 amounted to €108.2 million, which includes €18.2 million of revenues from discontinued service operations, sold to Charles River Laboratories on 1 April 2014. Revenues from continuing operations of €90.0 million represent a decrease of 7% compared to 2013, reflecting lower recognition of deferred revenues from upfront payments, as a result of the longer duration of the filgotinib program. Income from milestones, grants and R&D incentives was in line with 2013.
Result
The Group realized a net profit in 2014 of €33.2 million, or €1.10 income per share, compared to a net loss of €8.1 million, or €0.28 loss per share in 2013.
Net loss from continuing operations amounted to €37.3 million. Operating expenses from continuing operations at €126.6 million were 11.6% (€13.2 million) higher than in 2013. This increase is principally the result of higher investments in the development of our mid-stage product candidates filgotinib, GLPG1205, and GLPG1690, and increased spending to accelerate the cystic fibrosis program with AbbVie. This planned increase was driven by the maturing R&D pipeline and the resulting costs of clinical trials.
Cash position
Cash, cash equivalents and restricted cash totaled €198.4 million on 31 December 2014, which is the highest year-end cash balance the Company has ever reported. Restricted cash of €10.7 million includes a bank guarantee on real estate lease obligations and an escrow account connected to the sale of the service operations. €10.4 million of this restricted cash is expected to be released by mid-2015. Net cash proceeds from the sale of the service operations amounted to €130.8 million. In addition, Galapagos' balance sheet holds R&D incentives receivables from the French and Belgian governments amounting to €51.3 million, of which €7.4 million will be collected in 2015.
Operational highlights
R&D operations
• In the field of inflammation:
º Completed recruitment of Phase 2B DARWIN program with filgotinib in patients with moderate to severe RA who do not respond to methotrexate (MTX). DARWIN 1: dose-range finding in 599 patients on background treatment with MTX. DARWIN 2: dose-range finding in 287 patients without MTX. Both studies are placebo controlled for the first 12 weeks, plus 12 more weeks' treatment for longer term safety data. DARWIN 3: long term extension study. º 98% of eligible patients (434 patients as of end of February) enrolled in DARWIN 3 º Presented a clean drug-drug interaction profile with filgotinib º Continued enrollment in 180-patient Phase 2 Crohn's study with filgotinib º Reported lack of efficacy in Proof of Concept study with GLPG0974 in ulcerative colitis º Disclosed novel target GPR84 and positive Phase 1 data for GLPG1205, prepared for Phase 2 study in ulcerative colitis with GLPG1205, which initiated in early 2015 º Nominated pre-clinical candidate antibody MOR106 in inflammation in alliance with MorphoSys
• In cystic fibrosis:
º Reported restoration of up to 60% healthy CFTR function in pre-clinical evaluations of Galapagos combination therapy compounds for class II mutation º Initiated Phase 1 study with potentiator GLPG1837, topline results expected Q3 2015 º Nominated corrector GLPG2222 as a pre-clinical candidate, Phase 1 start expected before end 2015
• In osteoarthritis:
º Delivered pre-clinical candidate GLPG1972 in the alliance with Servier, Phase 1 start expected before end 2015
• In pulmonary disease:
º Initiated Phase 1 study with GLPG1690 in the alliance with Janssen Pharmaceutica NV, reported positive topline results in Q1 2015
• Grants for research:
º Flemish agency for Innovation by Science and Technology (IWT) grants: €2.9 million for cystic fibrosis and €2.3 million for fibrosis
Service operations
• Sold the service operations to Charles River Laboratories in April 2014
Corporate
• Average daily trading volumes and value were 69k shares / €1.0 million
• Warrant exercises raised €4.4 million
• Bart Filius joined as CFO
• Vicki Sato resigned from the Galapagos Board of Directors
Outlook 2015
The Phase 2B clinical program for filgotinib in RA is expected to deliver the 12-week topline efficacy and safety data for DARWIN 1 by mid-April, with 12 week topline results for DARWIN 2 in early May. 24-week results from both studies are expected in July. The 10-week results from filgotinib in Crohn's disease (FITZROY) are expected in the second half of 2015. Subsequent to DARWIN 24-week results becoming available, a licensing decision by AbbVie is expected.
In cystic fibrosis, Galapagos expects to nominate a second corrector in the first half of 2015. Galapagos will report topline Phase 1 results with GLPG1837 and initiate a Phase 2 study in class III cystic fibrosis patients in the second half of 2015.
The Company expects to make significant progress in both partnered and non-partnered R&D programs as the pipeline continues to mature across a broad range of therapeutic areas, resulting in multiple additional clinical and pre-clinical stage programs by end 2015.
The Company expects an operational use of cash of €110 - 130 million during 2015, excluding milestone payments and a potential $200 million license fee from our partner AbbVie for filgotinib. Excluding income from a license of filgotinib by AbbVie, Galapagos has a runway until the end of 2016.
Annual Financial Report 2014
Galapagos is currently finalizing its financial statements for the year ended 31 December 2014. 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 Financial Report for the full year 2014 on or around 27 March 2015.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public today at 14:00 Central European Time (CET), which will also be webcast. To participate in the conference call, please call one of the following numbers ten minutes prior to commencement:
Local Belgium, also outside Belgium: +32(0)2 402 3092
Toll free in Belgium: 0800 58033
Local Netherlands, also outside Netherlands: +31(0)20 716 8295
Toll free in the Netherlands: 0800 020 2576
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
28 April 2015 Annual General Meeting of Shareholders in Mechelen
7 August 2015 First Half 2015 Results
Help employers find you! Check out all the jobs and post your resume.