On October 30, 2024 Galapagos NV (Euronext & NASDAQ: GLPG) reported financial results for the first nine months of 2024 and provided a business update (Press release, Galapagos, OCT 30, 2024, View Source [SID1234647601]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"I am proud of our team’s commitment in executing our Forward, Faster strategy," said Paul Stoffels1, MD, Galapagos’ CEO and Chair of the Board of Directors. "The FDA’s clearance of the ATALANTA-1 study of GLPG5101, produced on our decentralized manufacturing platform in patients with relapsed/refractory non-Hodgkin lymphoma, marks a pivotal step towards realizing our vision of transforming patient outcomes through life-changing science and innovation. This is the first-ever FDA clearance for a clinical study in the U.S. with a fresh CAR-T product candidate delivered in a median vein-to-vein time of seven days. We remain focused on advancing our clinical pipeline in 11 indications and our potential best-in-class early-stage programs across multiple modalities and indications."
"With more than 20 active cell therapy and small molecule programs in oncology and immunology, we are accelerating our internal pipeline while we continue to assess business development opportunities. We reaffirm our 2024 cash burn guidance in the range of €370-410 million," Thad Huston, Galapagos’ CFO and COO, added.
Third quarter and recent business highlights and anticipated milestones
Regulatory and pipeline:
The investigational new drug (IND) application for the Phase 1/2 ATALANTA-1 study of our CD19 candidate, GLPG5101, in R/R NHL has been cleared by the U.S. Food and Drug Administration (FDA) and our goal is to activate clinical study sites and start enrolling patients in the U.S. before the end of 2024.
We expect to submit an IND in early 2025 for the Phase 1/2 EUPLAGIA-1 study in relapsed/refractory chronic lymphocytic leukemia (R/R CLL) and Richter transformation (RT) of our CD19 CAR-T candidate, GLPG5201.
Following the submission of a Clinical Trial Application (CTA) to the European Medicines Agency (EMA) for the Phase 2 dose expansion study of GLPG5201 in R/R CLL and RT, we aim to start enrolling patients in 2025.
We resumed enrolment in the Phase 1/2 PAPILIO-1 study of our BCMA CAR-T candidate, GLPG5301, in R/R MM.
We will present new data from the ATALANTA-1 and EUPLAGIA-1 studies along with pre-clinical data for uza-cel, our TCR-T cell therapy candidate produced on our decentralized manufacturing platform in collaboration with Adaptimmune, at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in December.
We continued enrolling patients in the ongoing Phase 2 GALARISSO study in dermatomyositis (DM) and the Phase 2 GALACELA study in systemic lupus erythematosus (SLE) with our oral small molecule TYK2 inhibitor, GLPG3667.
We further advanced our early-stage proprietary pipeline and progressed a next-generation armed, bispecific CAR-T candidate in hemato-oncology and a potential best-in-class small molecule candidate in immunology into IND-enabling studies, targeting clinical development in 2025-2026.
We are accelerating our early-stage pipeline of more than 15 programs in oncology and immunology with the objective of launching at least four IND/CTA-enabling studies in 2025 across different modalities and indications. From 2026 onward, our ambition is to fuel the clinical pipeline with at least two new clinical assets annually in various indications and across our cell therapy and small molecule portfolio.
Operational:
As part of our collaboration agreement with Blood Centers of America (BCA), we selected Excellos in the San Diego area as the first decentralized manufacturing unit (DMU) within BCA’s nationwide network to manufacture GLPG5101 for the ATALANTA-1 study sites in the region.
We continue to expand our DMU network in Europe and the U.S. to manufacture our cell therapy candidates for clinical development and to support pivotal and commercial readiness.
External innovation:
We are exploring strategic partnerships, early-stage research collaborations, licensing, and bolt-on acquisitions in areas of high unmet medical need to accelerate our cell therapy and small molecule pipeline in oncology and immunology.
Corporate:
The Board of Directors appointed Mr. Oleg Nodelman as Non-Executive Non-Independent Director by way of co-optation effective October 7, 2024, replacing Dr. Dan Baker who stepped down on October 6, 2024.
Financial performance
Key figures for the first nine months of 2024 (consolidated)
(€ millions, except basic & diluted earnings per share)
Nine months ended September 30 % Change
2024 2023
Supply revenues 19.1 -
Collaboration revenues 181.0 179.8 +1%
Total net revenues 200.1 179.8 +11%
Cost of sales (19.1) -
R&D expenses (238.2) (167.2) +42%
G&Aii and S&Miii expenses (93.2) (87.4) +7%
Other operating income 24.8 32.9 -25%
Operating loss (125.6) (41.9)
Fair value adjustments and net exchange differences 31.8 36.3 -12%
Net other financial result 71.7 54.0 +33%
Income taxes 1.7 (12.2)
Net profit/loss (-) from continuing operations (20.4) 36.2
Net profit from discontinued operations, net of tax 69.2 17.9
Net profit of the period 48.8 54.1
Basic and diluted earnings per share (€) 0.7 0.8
Current financial investments, cash & cash equivalents 3,338.8 3,811.7
DETAILS OF THE FINANCIAL RESULTS FOR THE FIRST NINE MONTHS OF 2024
As a consequence of the transfer of our Jyseleca business to Alfasigma, the revenues and costs related to Jyseleca for the first nine months of 2024 are presented separately from the results of our continuing operations in the line ‘Net profit from discontinued operations, net of tax’ in our consolidated income statement. The comparative first nine months of 2023 have been restated accordingly for the presentation of the results related to the Jyseleca business.
Results from our continuing operations
Total operating loss from continuing operations for the nine months ended September 30, 2024, was €125.6 million, compared to an operating loss of €41.9 million for the nine months ended September 30, 2023.
Total net revenues for the nine months ended September 30, 2024, amounted to €200.1 million, compared to €179.8 million for the nine months ended September 30, 2023. The revenue recognition related to the exclusive access rights granted to Gilead for our drug discovery platform amounted to €172.7 million for the first nine months of both 2024 and 2023. Our deferred income balance on September 30, 2024, includes €1.1 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration.
Cost of sales for the nine months ended September 30, 2024, amounted to €19.1 million and related to the supply of Jyseleca to Alfasigma under the transition agreement. The related revenues are reported in total net revenues.
R&D expenses in the first nine months of 2024 amounted to €238.2 million, compared to €167.2 million for the first nine months of 2023. This increase was primarily explained by higher costs for cell therapy and small molecule programs in oncology.
G&A and S&M expenses amounted to €93.2 million in the first nine months of 2024, compared to €87.4 million in the first nine months of 2023. This increase was primarily due to an increase in legal and professional fees, mainly related to business development activities and due to an increase in S&M expenses due to investments in strategic marketing for oncology. Both increases were partly offset by a decrease in G&A personnel expenses, mainly due to a decreased cost for our subscription rights plans.
Other operating income amounted to €24.8 million in the first nine months of 2024, compared to €32.9 million for the same period last year. This decrease is mainly driven by lower grants and R&D incentives.
Net financial income in the first nine months of 2024 amounted to €103.5 million, compared to net financial income of €90.3 million for the first nine months of 2023.
Fair value adjustments and net currency exchange results in the first nine months of 2024 amounted to €31.8 million, compared to fair value adjustments and net currency exchange gains of €36.3 million for the first nine months of 2023, and were primarily attributable to €3.1 million of unrealized currency exchange losses on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars, and to €35.7 million of positive changes in fair value of current financial investments.
Net other financial income in the first nine months of 2024 amounted to €71.7 million, compared to net other financial income of €54.0 million for the first nine months of 2023, and was primarily attributable to €70.6 million of interest income, which increased significantly due to the increase in interest rates.
Net tax income in the first nine months of 2024 amounted to €1.7 million, compared to net tax expenses of €12.2 million for the first nine months of 2023. The net tax expenses in 2023 were primarily due to the re-assessment of net deferred tax liabilities and corporate income tax payables as a result of a one-off intercompany transaction.
Net loss from continuing operations for the first nine months of 2024 was €20.4 million, compared to a net profit from continuing operations of €36.2 million for the first nine months of 2023.
Results from discontinued operations
(€ millions)
Nine months ended September 30 % Change
2024 2023
Product net sales 11.4 82.1 -86%
Collaboration revenues 26.0 187.0 -86%
Total net revenues 37.4 269.1 -86%
Cost of sales (2.2) (13.5) -84%
R&D expenses (13.6) (145.0) -91%
G&A and S&M expenses (10.8) (94.7) -89%
Other operating income 55.2 7.1
Operating profit 66.0 23.0
Net financial result 3.3 (3.7)
Income taxes (0.1) (1.4)
Net profit from discontinued operations 69.2 17.9
Total operating profit from discontinued operations amounted to €66.0 million in the first nine months of 2024, compared to an operating profit of €23.0 million in the same period last year.
Product net sales of Jyseleca in Europe were €11.4 million for the first nine months of 2024 consisting of sales to customers in January 2024. Product net sales to customers for the first nine months of 2023 amounted to €82.1 million. As from February 1, 2024, all economics linked to the sales of Jyseleca in Europe are to the benefit of Alfasigma.
Collaboration revenues for the development of filgotinib with Gilead amounted to €26.0 million for the first nine months of 2024, compared to €187.0 million for the same period last year. The sale of the Jyseleca business to Alfasigma on January 31, 2024, led to the full recognition in revenue of the remaining deferred income related to filgotinib.
Cost of sales related to Jyseleca net sales were €2.2 million for the first nine months of 2024. Cost of sales related to Jyseleca net sales for the first nine months of 2023 amounted to €13.5 million.
R&D expenses for the development of filgotinib for the first nine months of 2024 amounted to €13.6 million, compared to €145.0 million in the first nine months of 2023. As from February 1, 2024, all filgotinib development expenses still incurred during the transition period are recharged to Alfasigma.
G&A and S&M expenses related to the Jyseleca business amounted to €10.8 million in the first nine months of 2024, compared to €94.7 million in the first nine months of 2023. As from February 1, 2024, all remaining G&A and S&M expenses relating to Jyseleca are recharged to Alfasigma.
Other operating income for the first nine months of 2024 amounted to €55.2 million (€7.1 million for the same period last year) and comprised €52.3 million related to the gain on the sale of the Jyseleca business to Alfasigma. This result as of September 30, 2024, of the transaction is considering the following elements:
€50.0 million of upfront payment received at closing of the transaction of which €40.0 million was paid on an escrow account. This amount will be kept in escrow for a period of one year after the closing date of January 31, 2024. We gave customary representations and warranties which are capped and limited in time (at September 30, 2024, this €40.0 million is presented as "Escrow account" in our statement of financial position).
€9.8 million of cash received from Alfasigma related to the closing the transaction as well as €0.9 million of accrued negative adjustment for the settlement of net cash and working capital.
€47.0 million of fair value on January 31, 2024, of the future earn-outs payable by Alfasigma to us (the fair value of these future earn-outs at September 30, 2024, is presented on the lines "Non-current contingent consideration receivable" and "Trade and other receivables"). As from February 1, 2024, we are entitled to receive royalties on net sales of Jyseleca in Europe from Alfasigma.
€40.0 million of liability towards Alfasigma on January 31, 2024, for R&D cost contributions of which €15.0 million was paid in the first nine months of 2024 (at September 30, 2024, €25.0 million of liabilities for R&D cost contribution is presented in our statement of financial position on the line "Trade and other liabilities").
Net profit from discontinued operations related to Jyseleca amounted to €69.2 million for the first nine months of 2024, compared to a net profit amounting to €17.9 million for the first nine months of 2023.
Cash, cash equivalents and current financial investments totaled €3,338.8 million as of September 30, 2024, as compared to €3,684.5 million as of December 31, 2023. Total net decrease in cash and cash equivalents and current financial investments amounted to €345.7 million during the first nine months of 2024, compared to a net decrease of €282.4 million during the first nine months of 2023. This net decrease was composed of (i) €321.3 million of operational cash burn including €80.4 million cash impact of business development activities, (ii) €36.9 million for the acquisition of financial assets held at fair value through other comprehensive income, (iii) €26.2 million of net cash in related to the sale of the Jyseleca business to Alfasigma of which €40.0 million has been transferred to an escrow account, offset by (iv) €26.3 million of negative exchange rate differences, positive changes in fair value of current financial investments and variation in accrued interest income.
Financial guidance
As of September 30, 2024, we have €3.3 billion in cash and current financial investments to continue to fund our proprietary pipeline and pursue select, value-enhancing deals. We reiterate our cash burn guidance, including business development year-to-date, for the full year 2024, which is expected to be in the range of €370 million to €410 million.
Conference call and webcast presentation
We will host a conference call and webcast presentation on October 31, 2024, at 13:00 CET / 8:00 am ET. To participate in the conference call, please register in advance using this link. Dial-in numbers will be provided upon registration. The conference call can be accessed 10 minutes prior to the start of the call by using the conference access information provided in the email received after registration, or by selecting the "call me" feature.
The live webcast is available on glpg.com or via the following link. The archived webcast will be available for replay shortly after the close of the call on the investor section of the website.