On August 1, 2024 Galapagos NV (Euronext & NASDAQ: GLPG) reported its half-year 2024 financial results and provided a second quarter and post-period update and the outlook for the remainder of 2024 (Press release, Galapagos, AUG 1, 2024, View Source [SID1234645301]). The results are further detailed in the H1 2024 financial report available on the financial reports section of the corporate website.
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"We are very pleased with the progress we have made in delivering on our Forward, Faster strategy," said Dr. Paul Stoffels1, Galapagos’ CEO and Chairman of the Board of Directors. "We are on track with key regulatory milestones, having submitted the IND for our Phase 1/2 study of GLPG5101 in the U.S., and the CTA for the Phase 2 study of GLPG5201 in Europe, with plans for an upcoming IND filing in the U.S. for GLPG5201. With these submissions, Galapagos is pioneering innovative approaches in cell therapy with the potential to administer fresh, fit CAR-T cells within a vein-to-vein time of just seven days – critical for patients with rapidly advancing cancers. Our innovation strategy, powered by our unique technology platforms and value-enriching collaborations has significantly expanded our pipeline. With over 15 ongoing preclinical programs in oncology and immunology, our ambition to initiate at least one first-in-human study in 2025 and introduce at least two new clinical candidates annually starting in 2026, positions us strongly for sustained value creation."
Throughout this press release, ‘Dr. Paul Stoffels’ should be read as ‘Dr. Paul Stoffels, acting via Stoffels IMC BV’.
Thad Huston, Galapagos’ CFO and COO, added: "Strengthened by our newest collaboration with Blood Centers of America to expand our cell therapy manufacturing network across the U.S, we are gearing up for our pivotal CAR-T studies and commercial readiness. We continue to evaluate business development opportunities and were happy to announce a clinical collaboration with an option to exclusively license Adaptimmune’s next-generation TCR T-cell therapy, uza-cel. This aligns well with our strategy to advance novel cell therapies and enables us to expand our portfolio to include treatments for solid tumors. We reaffirm our 2024 outlook, with key pipeline catalysts on track and cash burn guidance, excluding business development, in the range of €280-320 million."
HALF-YEAR 2024 AND POST-PERIOD BUSINESS UPDATE
Regulatory, clinical, and manufacturing progress with CD19 CAR-T candidates, GLPG5101 in relapsed/refractory non-Hodgkin lymphoma (R/R NHL) and GLPG5201 in chronic lymphocytic leukemia (R/R CLL) & Richter transformation (RT), and submitted protocol amendment for BCMA CAR-T candidate, GLPG5301, in relapsed/refractory multiple myeloma (R/R MM).
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Submitted Investigational New Drug (IND) application for ATALANTA-1 Phase 1/2 study of GLPG5101 to the U.S. Food and Drug Administration (FDA). Clinical Trial Application (CTA) for Phase 2 dose expansion study of GLPG5201 submitted to the European Medicines Agency (EMA) and IND for EUPLAGIA-1 Phase 1/2 study on track for filing in Q4 2024.
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Presented additional encouraging safety, efficacy and translational Phase 1/2 data for GLPG5101 and GLPG5201 at scientific conferences2,3,4 demonstrating feasibility of Galapagos’ innovative cell therapy manufacturing platform to address unmet needs of high-risk patients with median seven-day vein-to-vein delivery of fresh, fit CAR-T cells.
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Temporarily paused patient enrolment in the Phase 1/2 PAPILIO-1 study of GLPG5301 in R/R MM and submitted a protocol amendment to the EMA following one observed case of Parkinsonism. We anticipate resuming recruitment in the coming months.
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Established strategic collaboration with Blood Centers of America, significantly advancing Galapagos’ U.S. expansion strategy. This collaboration complements our existing collaborations with Landmark Bio and Thermo Fisher Scientific, and supports upcoming pivotal studies and potential future commercial manufacturing of cell therapies near cancer treatment centers, aiming to deliver more and faster access to potentially life-saving treatments across the U.S.
Continued to execute on innovation strategy with license agreements and research collaborations in small molecules and cell therapies in solid tumor indications.
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Signed clinical collaboration agreement with an option to exclusively license Adaptimmune’s next-generation TCR T-cell therapy (uza-cel) targeting MAGE-A4 for head & neck cancer and potential future solid tumor indications, using Galapagos’ cell therapy manufacturing platform. Adaptimmune to receive initial payments totaling $100 million, option exercise fees of up to $100 million, additional development and sales milestone payments of up to a maximum of $465 million, plus tiered royalties on net sales.
2
EHA 2024, 13-16 June, Madrid, Spain. Kersten MJ, et al.
3
EBMT-EHA 2024, 15-17 February, Valencia, Spain. Blum S, et al.; Tovar N, et al.; Kersten MJ, et al.
4
EBMT 2024, 14–17 April, Glasgow, UK. Hoefsmit E, et al.; Ortiz-Maldonado V, et al.; Kersten MJ, et al.
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Expanded the strategic collaboration and licensing agreement with BridGene Biosciences, which was announced early 2024, to include the discovery of a highly selective oral SMARCA2 small molecule proteolysis targeting chimera (PROTAC5) in precision oncology. This combines Galapagos’ expertise in selective ATPase small molecules with BridGene’s PROTAC discovery engine. The collaboration intends to advance the molecule into a preclinical candidate, with Galapagos holding exclusive global rights for further development and commercialization of the product candidates developed under the agreement. Under the terms of the agreement, BridGene is eligible to potentially receive up to $159 million in total payments plus tiered royalties on net sales.
Progressed proprietary R&D pipeline of >20 clinical and preclinical small molecule and cell therapy programs in oncology and immunology.
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Focused on biologically validated targets to develop potential best-in-class therapeutics in areas of high unmet medical needs.
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Accelerating early-stage preclinical pipeline in oncology and immunology with the goal to initiate at least four IND/CTA enabling studies and at least one first-in-human study in 2025.
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From 2026 onwards, aiming to fuel the clinical pipeline with at least two new clinical candidates annually across cell therapies and small molecules and various indications.
At the Annual and Extraordinary Shareholders’ Meetings held on 30 April 2024, all proposed resolutions were approved.
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Approved resolutions include the revised 2024 Remuneration Policy and 2023 Remuneration Report.
FINANCIAL PERFORMANCE
First half-year 2024 key figures (consolidated)
(€ millions, except basic & diluted earnings per share)
Six months ended
30 June % Change
2024 2023
Supply revenues
19.1 —
Collaboration revenues
121.2 118.6 +2 %
Total net revenues
140.3 118.6 +18 %
Cost of sales
(19.1 ) —
R&D expenses
(145.2 ) (108.7 ) +34 %
G&Aii and S&Miii expenses
(63.9 ) (57.9 ) +10 %
Other operating income
16.6 20.3 -18 %
Operating loss
(71.3 ) (27.7 )
Fair value adjustments and net exchange differences
49.5 0.2
Net other financial result
48.9 32.9
Income taxes
1.1 (12.7 )
Net profit/loss (-) from continuing operations
28.2 (7.3 )
Net profit from discontinued operations, net of tax
71.0 35.6
Net profit of the period
99.2 28.3
Basic and diluted earnings per share (€)
1.51 0.43
Current financial investments, cash & cash equivalents
3,430.4 3,901.5 (*)
(*)
Including €26.6 million of net accrued interest income
5
A proteolysis-targeting chimera (PROTAC) is a hetero-bifunctional molecule containing two small molecule-binding ligands joined together by a linker.
DETAILS OF THE FINANCIAL RESULTS OF THE FIRST HALF YEAR OF 2024
As a consequence of the transfer of our Jyseleca business to Alfasigma, the results related to Jyseleca for the first half-year 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 half-year of 2023 has 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 six months ended 30 June 2024 was €71.3 million, compared to an operating loss of €27.7 million for the six months ended 30 June 2023.
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Total net revenues for the six months ended 30 June 2024 amounted to €140.3 million, compared to €118.6 million for the six months ended 30 June 2023. The revenue recognition related to the exclusive access rights granted to Gilead for our drug discovery platform amounted to €115.1 million for the first six months of both 2024 and 2023. Our deferred income balance at 30 June 2024 includes €1.2 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration.
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Cost of sales for the six months ended 30 June 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.
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R&D expenses in the first six months of 2024 amounted to €145.2 million, compared to €108.7 million for the first six months of 2023. This increase was primarily explained by higher costs for cell therapy and small molecule programs in oncology.
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G&A and S&M expenses amounted to €63.9 million in the first six months of 2024, compared to €57.9 million in the first six months of 2023. This was predominantly due to an increase in S&M expenses due to investments in strategic marketing for oncology.
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Other operating income amounted to €16.6 million in the first six months of 2024, compared to €20.3 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 six months of 2024 amounted to €98.4 million, compared to net financial income of €33.1 million for the first six months of 2023.
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Fair value adjustments and net currency exchange gains in the first six months of 2024 amounted to €49.5 million, compared to fair value adjustments and net currency exchange differences of €0.2 million for the first six months of 2023, and were primarily attributable to €18.2 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 €31.2 million of positive changes in fair value of current financial investments.
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Net other financial income in the first six months of 2024 amounted to €48.9 million, compared to net other financial income of €32.9 million for the first six months of 2023, and was primarily attributable to €49.4 million of interest income, which increased significantly due to the increase in interest rates.
Net profit from continuing operations for the first six months of 2024 was €28.2 million, compared to a net loss from continuing operations of €7.3 million for the first six months of 2023.
Results from discontinued operations
(€ millions)
Six months ended
30 June % Change
2024 2023
Product net sales
11.3 54.3 -79 %
Collaboration revenues
26.0 155.9 -83 %
Total net revenues
37.3 210.2 -82 %
Cost of sales
(2.0 ) (7.8 ) -74 %
R&D expenses
(11.3 ) (103.1 ) -89 %
G&A and S&M expenses
(10.3 ) (63.7 ) -84 %
Other operating income
54.6 3.4
Operating profit
68.3 39.0 +75 %
Net financial result
2.8 (2.5 )
Income taxes
(0.1 ) (0.9 )
Net profit from discontinued operations
71.0 35.6
Total operating profit from discontinued operations amounted to €68.3 million in the first six months of 2024, compared to an operating profit of €39.0 million in the same period last year.
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Product net sales of Jyseleca in Europe were €11.3 million for the first six months of 2024 consisting of sales to customers in January 2024. Product net sales to customers for the first six months of 2023 amounted to €54.3 million. As from 1 February 2024, all economics linked to the sales of Jyseleca in Europe are for the account of Alfasigma.
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Collaboration revenues for the development of filgotinib with Gilead amounted to €26.0 million for the first six months of 2024, compared to €155.9 million for the same period last year. The sale of the Jyseleca business to Alfasigma on 31 January 2024 led to the full recognition by us in revenue of the remaining deferred income related to filgotinib.
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Cost of sales related to Jyseleca net sales were €2.0 million for the first six months of 2024. Cost of sales related to Jyseleca net sales for the first six months of 2023 amounted to €7.8 million.
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R&D expenses for the development of filgotinib for the first six months of 2024 amounted to €11.3 million, compared to €103.1 million in the first six months of 2023. As from 1 February 2024, all filgotinib development expenses still incurred during the transition period are recharged to Alfasigma.
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G&A and S&M expenses related to the Jyseleca business amounted to €10.3 million in the first six months of 2024, compared to €63.7 million in the first six months of 2023. As from 1 February 2024, all remaining G&A and S&M expenses relating to Jyseleca are recharged to Alfasigma.
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Other operating income for the first six months of 2024 amounted to €54.6 million (€3.4 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 30 June 2024 of the transaction is considering the following elements:
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€50.0 million of upfront payment received at closing of the transaction of which €40.0 million was paid into an escrow account. This amount will be kept in escrow for a period of one year after the closing date of 31 January 2024. We gave customary representations and warranties which are capped and limited in time (at 30 June 2024, this €40.0 million is presented as "Escrow account" in our statement of financial position).
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€9.8 million of cash received from Alfasigma related to the closing of the transaction as well as €0.9 million of accrued negative adjustment for the settlement of net cash and working capital.
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€47.0 million of fair value on 31 January 2024 of the future earn-outs payable by Alfasigma to us (the fair value of these future earn-outs at 30 June 2024 is presented on the lines "Non-current contingent consideration receivable" and "Trade and other receivables"). As from 1 February 2024, we are entitled to receive royalties on net sales of Jyseleca in Europe from Alfasigma.
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€40.0 million of liability towards Alfasigma on 31 January 2024 for R&D cost contributions of which €10.0 million was paid in the first half-year of 2024 (at 30 June 2024, €30.0 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 €71.0 million for the first six months of 2024, compared to a net profit amounting to €35.6 million for the first six months of 2023.
Cash, cash equivalents and current financial investments totaled €3,430.4 million as of 30 June 2024, as compared to €3,684.5 million as of 31 December 2023. Total net decrease in cash and cash equivalents and current financial investments amounted to €254.1 million during the first six months of 2024, compared to a net decrease of €192.5 million during the first six months of 2023. This net decrease was composed of (i) €250.0 million of operational cash burn including €78.6 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) €31.2 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) €41.6 million of positive exchange rate differences, positive changes in fair value of current financial investments and variation in accrued interest income.
OUTLOOK 2024
Financial outlook
The cash burn guidance for full year 2024, not including business development, is confirmed in the range of €280 million to €320 million. Our cash burn guidance for 2024 including business development to date is €370 million to €410 million.
Advancing current pipeline and strengthening capabilities
We continue to strengthen our capabilities in cell therapy and small molecules internally and through strategic business development and are advancing multiple clinical and preclinical candidates across various indications and modalities. Before year-end, we anticipate:
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Progress in patient recruitment in ongoing Phase 1/2 studies with CD19 CAR-T candidates, GLPG5101 and GLPG5201.
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Presentation of additional safety, efficacy, translational and durability data from ongoing Phase 1/2 studies with CD19 CAR-T candidates, GLPG5101 in R/R NHL and GLPG5201 in R/R CLL with or without RT.
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Submission of IND to the FDA for Phase 1/2 EUPLAGIA-1 study of GLPG5201.
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Resume study enrollment of Phase 1/2 PAPILIO-1 study of GLPG5301 in R/R MM in the coming months.
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Further upscaling of cell therapy manufacturing network in the U.S. and Europe for the manufacturing of fresh cell therapies with a median vein-to-vein time of seven days.
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Progress in patient recruitment in ongoing dermatomyositis (DM) and systemic lupus erythematosus (SLE) Phase 2 studies with TYK2 inhibitor, GLPG3667.
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Acceleration of the pipeline through strategic partnerships, early-stage research collaborations, licensing or acquisitions in areas of high unmet medical needs.
CONFERENCE CALL AND WEBCAST PRESENTATION
We will host a conference call and webcast presentation on 2 August 2024, at 14:00 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.