On August 4, 2022 Galapagos NV (Euronext & NASDAQ: GLPG) reported its first half-year 2022 financial results, a year-to-date business update and its outlook for the remainder of 2022 (Press release, FierceBiotech, AUG 4, 2022, https://www.fiercebiotech.com/biotech/galapagos-sends-another-4-programs-extinction-pivot-car-t-continues [SID1234617693]). The results are further detailed in the H1 2022 financial report available on the financial reports section of the website.

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!

"This quarter, we took a first key step in our strategic transformation by entering the field of oncology with the acquisitions of CellPoint and AboundBio. The combined transactions offer the potential for a paradigm shift in CAR-T1 therapy through CellPoint’s breakthrough, decentralized point-of-care supply model, developed in a global strategic collaboration with Lonza, and AboundBio’s cutting-edge fully human antibody-based capabilities to design next-generation CAR-Ts. Patient enrolment in the ongoing Phase 1/2a trials in rrNHL and rrCLL2 is progressing well, and we expect topline results in the first half of next year. Our near-term goal is to bring three additional differentiated, next-generation CAR-T candidates in the clinic over the next three years," said Dr. Paul Stoffels3, CEO and chairman of the board of directors of Galapagos. "We strongly believe that we are taking the right steps in our transformation to accelerate value creation, and we look forward to presenting an in-depth update on our strategy later this year."

"Our Jyseleca franchise is performing very well with robust sales momentum, supported by the regulatory approvals in ulcerative colitis (UC) in Great Britain and Japan earlier this year. The adoption of Jyseleca is strong across Europe with reimbursement for rheumatoid arthritis (RA) in 15 and for UC in 6 countries," added Bart Filius, President, COO and CFO of Galapagos. "Following the acquisitions of CellPoint and AboundBio, we expect that second half operating expenses will increase by approximately €30 million. Therefore, we revised our cash burni guidance of €450-€490 million for the full year 2022 to €480-€520 million. As a result of the strong Jyseleca performance, we increase our full-year net sales guidance of €65-€75 million to €75-€85 million."

Year-to-date operational overview
Commercial & regulatory progress:

Strong adoption across Europe with reimbursement for RA in 15 countries and for UC in 6 countries
Sobi, our distribution and commercialization partner in Eastern and Central Europe, Portugal, Greece, and the Baltic countries, launched Jyseleca in RA in the Czech Republic and Portugal, resulting in €2 million milestone payments to Galapagos in H1
Filed a type II variation for the label update for Jyseleca based on data from the MANTA and MANTA-RAy studies
At the EULAR4 2022 European Congress of Rheumatology, Galapagos hosted several expert sessions and presented 11 abstracts, further establishing us as a key player in RA
Article 20 pharmacovigilance procedure ongoing by the European Medicines Agency’s (EMA) Pharmacovigilance Risk Assessment Committee (PRAC), investigating the safety data of all JAK inhibitors for the treatment of certain chronic inflammatory disorders
Pipeline update:

Decided to move forward with GLPG3667 (TYK2 inhibitor) in dermatomyositis with the aim to start a Phase 2 study before year-end
Discontinued development of 4 early-stage programs as part of ongoing scientific and strategic exercise: GLPG3121, a local release formulation JAK1/TYK2 inhibitor with potential in inflammatory diseases; GLPG0555, a JAK1 inhibitor evaluated in osteoarthritis; GLPG4586, a compound with undisclosed mode of action directed toward fibrosis; and GLPG4716, a chitinase inhibitor directed toward idiopathic pulmonary fibrosis
Corporate update:

Entered the field of oncology through the combined acquisitions of CellPoint and AboundBio in all-cash transactions
Received a transparency notification from FMR LLC in Q2 indicating that its shareholding in Galapagos increased and crossed the 5% threshold, to 5.04% of the current outstanding Galapagos shares
Raised €3.6 million through the exercise of subscription rights
Created new subscription rights plans, offering all Galapagos employees the opportunity to participate
All proposed resolutions regarding the extraordinary and annual shareholders’ meetings were adopted by Galapagos’ shareholders on 26 April 2022

H1 2022 financial results
We reported product net sales of Jyseleca in Europe for the first six months of 2022 amounting to €35.4 million (€0.5 million in the first six months of 2021). Our counterparties for the sales of Jyseleca were mainly hospitals and wholesalers located in Belgium, the Netherlands, France, Italy, Spain, Germany, Great Britain, Ireland, Austria, Norway, Sweden and Finland.

Cost of sales related to Jyseleca net sales in the first six months of 2022 amounted to €5.5 million.

Collaboration revenues amounted to €238.6 million for the first six months of 2022, compared to €253.2 million for the first six months of 2021.

Revenues recognized related to the collaboration agreement with Gilead for the filgotinib development were €115.3 million in the first six months of 2022 compared to €136.1 million for the same period last year. This decrease was due to a lower increase in the percentage of completion, partly offset by a higher revenue recognition of milestone payments, strongly influenced by the milestone achieved related to the regulatory approval in Japan for UC in the first half-year of 2022. The revenue recognition related to the exclusive access rights for Gilead to our drug discovery platform amounted to €114.9 million for the first six months of 2022 (€115.7 million for the same period last year).

We have recognized royalty income from Gilead for Jyseleca for €6.3 million in the first six months of 2022 (compared to €1.4 million in the same period last year) of which €3.6 million royalties on milestone income for UC approval in Japan.

Additionally, we recorded milestones of €2.0 million triggered by the first sale of Jyseleca in the Czech Republic and Portugal by our distribution and commercialization partner Sobi, in the first half-year of 2022.

Our deferred income balance on 30 June 2022 includes €1.6 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration, and €0.5 billion allocated to the filgotinib development that is recognized over time until the end of the development period.

Our R&D expenditure in the first six months of 2022 amounted to €249.5 million, compared to €268.8 million for the first six months of 2021. This decrease was primarily explained by a decrease in subcontracting costs from €139.2 million in the first six months of 2021 to €104.1 million in the first six months of 2022, primarily due to the winding down of the ziritaxestat (IPF) program and reduced spend on our Toledo (SIKi) and TYK2 programs. This was partly offset by cost increases for our filgotinib program, on a six month basis compared to the same period in 2021. Personnel costs decreased from €94.2 million in the first half of 2021 to €86.0 million for the same period this year mainly due to a lower number of FTEs as well as lower costs for our subscription right plans. Depreciation and impairment amounted to €32.6 million for the first six months of 2022 (€8.1 million for the same period last year). This increase was primarily due to an impairment of €26.7 million of previously capitalized upfront fees related to our collaboration with Molecure on the dual chitinase inhibitor OATD-01 (GLPG4716). As part of an ongoing strategic exercise to renew and accelerate our portfolio, we decided to return all rights to OATD-01 to Molecure.

Our G&A and S&M expenses amounted to €134.0 million in the first six months of 2022, compared to €105.8 million in the first six months of 2021. This increase was primarily due to the termination of our 50/50 filgotinib co-commercialization cost sharing agreement with Gilead for filgotinib in 2022. The cost increase was also explained by an increase in personnel costs for the first six months of 2022 compared to the same period last year explained by an increase in the commercial work force driven by the commercial launch of filgotinib in Europe.

Other operating income (€17.6 million vs €23.6 million for the same period last year) decreased, mainly driven by lower grant and R&D incentives income.

Net financial income in the first six months of 2022 amounted to €67.7 million, compared to net financial income of €19.9 million for the first six months of 2021. Net financial income in the first six months of 2022 was primarily attributable to €57.4 million of unrealized currency exchange gains on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars, and to €11.8 million of positive changes in (fair) value of current financial investments. The financial expenses also contained the effect of discounting our long term deferred income of €3.8 million.

We realized a net loss from continuing operations of €32.3 million for the first six months of 2022, compared to a net loss of €77.2 million for the first six months of 2021.

The net profit from discontinued operations for the six months ended 30 June 2021 consisted of the gain on the sale of Fidelta, our fee-for-services business, for €22.2 million.

We reported a group net loss for the first six months of 2022 of €32.3 million, compared to a group net loss of €55.0 million for the first six months of 2021.

Cash position
Current financial investments and cash and cash equivalents totaled €4,429.0 million on 30 June 2022, as compared to €4,703.2 million on 31 December 2021.

Total net decrease in cash and cash equivalents and current financial investments amounted to €274.2 million during the first six months of 2022, compared to a net decrease of €162.7 million during the first six months of 2021. This net decrease was composed of (i) €217.1 million of operational cash burn, (ii) offset by €3.6 million of cash proceeds from capital and share premium increase from exercise of subscription rights in the first six months of 2022, (iii) €11.8 million positive changes in (fair) value of current financial investments and €60.4 million of mainly positive exchange rate differences, and (iv) the cash out from the acquisitions of CellPoint and AboundBio, net of cash acquired, of €132.9 million.

Acquisitions of CellPoint and AboundBio
The preliminary accounting of the acquisitions of CellPoint and AboundBio are included in our H1 2022 condensed consolidated financial statements. To date, we have performed a preliminary fair value analysis of the business combinations. We expect the provisional amount of goodwill to change significantly upon the completion of the purchase price allocation, resulting from the valuation of the different assets and liabilities acquired.

Outlook 2022
Financial guidance:
Following the acquisitions of CellPoint and AboundBio, we revised our cash burn guidance for full year 2022 from €450-€490 million to €480-€520 million. Additionally, we increased our anticipated net sales guidance for Jyseleca from €65-€75 million to between €75 and €85 million.

Expected regulatory events:
We anticipate a Committee for Medicinal Products for Human Use (CHMP) opinion on the type II variation for the Jyseleca label, based on the data from the MANTA and MANTA-RAy studies around year-end. We also expect reimbursement decisions in most key European markets in UC and anticipate that Sobi will further progress with reimbursement discussions in RA and UC in Eastern and Central Europe, Greece, and the Baltic countries. As part of the ongoing article 20 pharmacovigilance procedure on all JAK inhibitors approved in Europe, we expect a CHMP opinion by the end of the year, followed by an adoption by the European Commission shortly afterwards.

Anticipated R&D milestones:
Patient enrolment in the Phase 1/2a trials in rrNHL and rrCLL is progressing well and we anticipate that additional clinical sites will be active by year-end. We are on track to report topline results of both trials in the first half of next year.
We plan to progress TYK2 inhibitor GLPG3667 into a Phase 2 program in dermatomyositis with first patients potentially recruited around year-end.

We continue to explore additional business development opportunities to further leverage our internal capabilities and renew our portfolio, and we look forward to presenting an in-depth update on our corporate strategy later this year.

First half-year 2022 financial report

Galapagos’ financial report for the first six months ended 30 June 2022, including details of the unaudited consolidated results, is accessible on the financial reports section of our website.

Conference call and webcast presentation

Management will host a conference call and webcast presentation followed by Q&A tomorrow 5 August 2022, at 14:00 CET / 8 AM ET. To participate in the conference call, please register in advance using this link. Upon registration, the dial-in numbers will be provided. The conference call can be accessed 10 minutes prior to the start time by using the conference access information provided in the e-mail received at the point of registering, or by selecting the call me feature.

The live webcast can be accessed on the investors section of the Galapagos website, and a replay will be made available shortly after the close of the call.