CORRECTION: Galapagos reports record revenues in 2012, increasing momentum in clinical pipeline
March 8, 2013 - Mechelen, Belgium
This is a correction of the announcementfrom 07:30 08.03.2013 CET. Reason forthe correction is replacement of language version:
· Group revenues EUR153 M (+36%) versus guidance of EUR150 M
· Group operating loss before exceptional items EUR2.1 M dueto EUR10 Mpulled-forward investment on '634, while total budget for external spendingonthis program remains unchanged
· Year-end cash EUR94.7 M, excluding EUR20.7 M in milestonereceivables for2012 revenues and EUR25 M guaranteed and due under the CIR program of theFrenchgovernment
· Service division external revenues +10% to EUR65.8 M,segment profit forrunning business EUR9.1 M, in line with 2011
· 2012 AbbVie partnering deal for GLPG0634, total value of upto $1.35 Bplus double digit royalties
· Three Phase 2 and multiple Phase 1 programs in promisingclinicalpipeline by end 2013
· 2013 guidance for Group revenues of EUR160 M
Live audio webcast presentation at 10.00 CET, call number +32-2290-1608,www.glpg.com
Galapagos NV (Euronext: GLPG) presents auditedfinancial results, highlights the key events for the full year 2012 andprovidesan outlook for 2013.
"In 2012, Galapagos claimed leadership in the JAK1 inflammatory space," CEOOnnovan de Stolpe commented. "The global collaboration agreement withAbbVie onGLPG0634 and the in-licensing of another JAK1 molecule by GSKprovide twoopportunities towards success with Galapagos-discovered selectivemolecules inthree inflammation indications with high medical need. The R&Ddivisioncontinues to deliver milestones in its alliances with pharma companies,whileachieving progress in our cystic fibrosis and other proprietary programs.Theservice division realized a solid 2012, with external revenuesgrowth andprofitability in line with 2011. By the end of 2013, Galapagos will havethreePhase 2 programs in four indications, multiple Phase 1 studies, andpre-clinical candidates in the alliances and our internal programs,highlighting a broad andmaturing pipeline."
"Galapagos' business model generates considerable revenues fromlicensing,alliances, and fee-for-service activities. Group revenues were fuelled byEUR37.2million in revenue recognition of the $150 million upfront payment receivedfromAbbVie. R&D productivity was reflected further by EUR50.2 million inalliance andother R&D revenues. BioFocus and Argenta both showed goodperformances in2012. The service division achieved 10% organic growth of externalrevenues,making strides toward independence from internal revenues and helping tofundour R&D pipeline. Taken together, these factors resulted in the Groupreportingrecord revenues. Our liquid assets position shows EUR115.4 million, andreflectsa EUR10 million pulled-forward investment in 2012 for the Phase 2bstudies withGLPG0634, while the total budget for external spending on this programremainsunchanged at EUR70 million. Furthermore, Galapagos holdsunrestricted andunconditional receivables from the French government (CIR) of EUR25million, forwhich the first tranche will be payable in early 2014," said GuillaumeJetten,CFO of Galapagos.
Key figures (consolidated)(EUR millions, except basic result per share)
|Continuing Operations|Continuing Operations
| 31 Dec 2012 | 31 Dec 2011¹
| |
-------------------------------+---------------------+---------------------
Revenues | 153.0 | 112.9
-------------------------------+---------------------+---------------------
Services cost of sales | -48.2 | -39.1
-------------------------------+---------------------+---------------------
R&D expenditure | -80.3 | -84.5
-------------------------------+---------------------+---------------------
General & administrative | -24.5 | -22.1
-------------------------------+---------------------+---------------------
Sales & marketing | -2.1 | -2.3
-------------------------------+---------------------+---------------------
Operating result before | -2.1 | -35.1
exceptional items | |
-------------------------------+---------------------+---------------------
Restructuring & integration | -2.5 | -
-------------------------------+---------------------+---------------------
Result on divestment | -2.0 | 5.2
-------------------------------+---------------------+---------------------
Operating result | -6.6 | -29.9
-------------------------------+---------------------+---------------------
Net result for the period | -5.7 | -30.1
-------------------------------+---------------------+---------------------
Basic result per share (EUR) | -0.22 | -1.13
-------------------------------+---------------------+---------------------
Cash and cash | |
equivalents²/³ | 94.7 | 32.6
Notes:
1) 2011 figures are for continuing operations, with minimaldifferences foraccounting comparison to 2012
2) Cash on 31 December 2012 did not include EUR20.7 million inreceivables forrevenues recognized in 2012
3) Liquid assets position includes cash and milestone receivables
Details of the financial results
Revenues
Galapagos' revenues for the full year 2012 amounted to EUR153 million, anincreaseof 36% compared to 2011. The service division focused efforts on growingtheirexternal business in 2012, with external revenues of EUR65.8 milliongrowing +10%over 2011, despite closure of BioFocus' Basel operations and theresultingtransfer of the high-throughput screening activities to Chesterford Park.TheR&D division reported total revenues of EUR87.2 million, reflectingconsiderablemilestone achievements in the alliances and EUR37.2 million in revenuerecognitionfrom the $150 million AbbVie payment.
Result
The Group incurred a net loss for the full year 2012 of EUR5.7 million,or EUR0.22loss per share, compared to a loss of EUR30.1 million, or EUR1.13 loss pershare in2011.
The R&D division incurred a segment loss of EUR3.5 million in 2012,compared toEUR40.5 million last year. R&D expenses were EUR80.3 million, comparedto EUR84.5million last year.
The BioFocus and Argenta Service division reported a gross margin of 33.7%('11:31.7%) on external revenues and a segment result of EUR8.2 million,compared toEUR9.0 million last year. Included in the reported segment result for2012 wereone-off investments to build up the high-throughput screening businessin theUK, following the transfer from Basel. Corrected for thesefactors, theprofitability of the running business in 2012 was in line with 2011.
General and administrative costs from continuing operations increased toEUR24.5million, reflecting expenses related to the now-completed implementationof acompany-wide ERP system to achieve better cost control andpurchasingefficiencies of scale and one-off payroll expenses related to closing theAbbViedeal. General and administrative expenses as a share of grouprevenuesdecreased to 16.0% compared to 19.6% in 2011
Restructuring and integration expenses of EUR2.5 million relate to theclosure ofBasel and reorganization costs. Result on divestment of EUR2 million isthe netof the liquidation costs of dormant legal entities and an earnoutpaymentreceived from Evotec connected with the sale of Compound Focus in 2011.
Liquid assets position
Cash on balance was EUR94.7 million on 31 December 2012. The Company'sliquidasset position of EUR115.4 million at year end 2012 (EUR48.5 million atyear end2011) included EUR20.7 million in alliance related receivables for whichrevenueswere recorded in 2012 and payment is expected in Q1 2013. The liquidassetposition was negatively impacted by pulled-forward preparations for thePhase2b study with GLPG0634, amounting to EUR10 million spending earlier thanplannedin 2012, while total external spend expected for the Phase 2studies inrheumatoid arthritis remains unchanged. In addition, Galapagos' balancesheetholds an unconditional and unrestricted receivable from the Frenchgovernment(Crédit d'Impôt Recherche)[1] amounting to EUR25 million,payable in three yearlytranches starting in early 2014. A significant portion of this receivablecouldbe transferred into cash if needed.
Operational highlights
On 29 February 2012, Galapagos and Abbott (now AbbVie) announced aglobalcollaboration to develop and commercialize GLPG0634 to treatautoimmunediseases. Under the terms of the agreement, AbbVie made an upfrontpayment of$150 million for rights related to the global collaboration. Thisupfrontpayment will be recognized over 30 months and will contribute toGalapagos'revenues over the coming three years. Upon successful completionof therheumatoid arthritis Phase 2 studies by Galapagos, AbbVie willlicense theprogram for a one-time fee of $200 million. AbbVie will assumesoleresponsibility for Phase 3 clinical development and will haveglobalmanufacturing rights. Pending achievement of certain developmental,regulatory,commercial and sales-based milestones, Galapagos will be eligible toreceiveadditional milestone payments from AbbVie, potentially amounting to $1billion,in addition to tiered double-digit royalties on net salesuponcommercialization. Furthermore, Galapagos retains co-promotion rightsin theBenelux.
R&D operations
Galapagos increased the momentum of its R&D pipeline by the end of 2012,endingthe year with 4 clinical, 6 pre-clinical, and more than 30 discoveryprograms.Galapagos is on track to have a mature pipeline of three programs inPhase 2studies and multiple Phase 1 programs by end 2013.
* In the field of inflammation:
* reported confirmation of the efficacy and safety profile ofGLPG0634 in a multi-center, dose-range finding clinical study in 90 rheumatoid arthritis patients
* opened an IND for GLPG0634 in the United States
* GSK exercised in February 2012 the exclusive option to licenseGLPG0555 and GLPG0778 and recently announced the initiation of Phase 2studies with GLPG0778 in psoriasis and lupus
* reported excellent pharmacokinetics and up to 90% inhibition of a biomarker in the Phase 1 First-In-Human clinical study withGLPG0974
* initiated a second, multiple ascending dose Phase 1 study withGLPG0974
* delivered a drug candidate in the osteoarthritis alliance withServier, two drug candidates in the alliance with Janssen Pharmaceutica, anda fifth candidate in the alliance with GSK
* In the field of oncology:
* completed a Phase 1b clinical study including cancer patients for metastasis candidate drug GLPG0187
* In the field of anti-infectives:
* nominated a pre-clinical candidate against Methicillin-Resistant Staphylococcus Aureus
* In orphan diseases:
* discovered a potentiator in the cystic fibrosis program
* In other areas:
* terminated GLPG0492 in cachexia
* progressed 30 discovery programs, including antibody programs with MorphoSys
* received from the Flemish government agency IWT a three-year grantto discover new antibiotic treatments and a 2.5-year grant to identifynew therapeutic compounds for future treatment of Inflammatory BowelDisease patients
Service operations
* BioFocus
* Drug discovery collaboration between Argenta, BioFocus andAstraZeneca in respiratory and inflammatory disease
* Target discovery agreement with Ono Pharma in the field of allergic disease
* Drug discovery agreement with Ono Pharma in the field of CNSdisorders
* Milestone achievement in its drug discovery collaboration with UCB
* Argenta
* Collaboration with the University of Cambridge to seek noveltreatments for pain * Drug discovery agreement with ANTABIO in anti-infectives
Corporate
* Average daily trading volumes and values in 2012 were 79,815shares/EUR1.4 million
* Galapagos won the European Mediscience Awards for CEO and forTransaction of the Year
Outlook 2013
The Phase 2b clinical study for GLPG0634 will start in the secondquarter of2013, on track to delivering the full Phase 2 package to Abbott in late2014.The Company expects to make significant progress in both partnered andnon-partnered R&D programs as the pipeline continues to mature across abroad rangeof therapeutic areas, resulting in three Phase 2 and multiple Phase 1programsby end 2013. Management guides for EUR160 million in Group revenues in2013.
Annual Financial Report 2012
Galapagos is currently finalizing its financial statements for the yearended31 December 2012. The auditor has confirmed that his audit procedures,whichare substantially completed, have not revealed any material correctionsrequiredto be made to the financial information included in this press release.Shouldany material changes arise during the audit finalization, an additionalpressrelease will be issued. Galapagos expects to be able to publish itsfullyaudited Annual Financial Report for the full year 2012 on or around 29March2013.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public today at10:00Central European Time (CET), which will also be webcast. To participatein theconference call, please call +32-2290-1608 ten minutes prior tocommencement. Aquestion and answer session will follow the presentation of the results.Go towww.glpg.com to access the live audio webcast. The archived webcast willalsobe available for replay shortly after the close of the call.
Financial calendar27 March 2013 R&D Update in New York, USA30 April 2013 Annual General Meeting of Shareholders in Mechelen17 May 2013 First Quarter 2013 Business Update9 Augustus 2013 First Half 2013 Results15 November 2013 Third Quarter 2013 Business Update7 March 2014 Full Year 2013 Results
About Galapagos
Galapagos (Euronext: GLPG; OTC: GLPYY) is specialized in novelmodes-of-action,with a large pipeline of four clinical, six pre-clinical, and 30discoverysmall-molecule and antibody programs in cystic fibrosis,inflammation,antibiotics, metabolic disease, and other indications.GLPG0634 is an orally-available, selective inhibitor of JAK1 for thetreatmentof rheumatoid arthritis and potentially other inflammatory diseases,about toenter Phase 2b studies. AbbVie and Galapagos signed a worldwidelicenseagreement whereby AbbVie will be responsible for furtherdevelopment andcommercialization after Phase 2b. Galapagos has another selectiveJAK1inhibitor in Phase 2 in lupus and psoriasis, GSK2586184 (formerlyGLPG0778,in-licensed by GlaxoSmithKline in 2012). GLPG0187 is a novel integrinreceptorantagonist currently in a Phase 1b patient study in metastasis. GLPG0974is thefirst inhibitor of GPR43 to be evaluated clinically for the treatment ofIBD;this program will start a Proof of Concept Phase 2 study in Q2 2013.The Galapagos Group, including fee-for-service companies BioFocus,Argenta andFidelta, has over 800 employees and operates facilities in five countries,withglobal headquarters in Mechelen, Belgium. Further information at:www.glpg.com
This release may contain forward-looking statements, including,withoutlimitation, statements containing the words "believes,""anticipates,""expects," "intends," "plans," "seeks," "estimates," "may," "will,""could,""stands to," and "continues," as well as similar expressions. Suchforward-looking statements may involve known and unknown risks,uncertainties and otherfactors which might cause the actual results, financial condition,performanceor achievements of Galapagos, or industry results, to be materiallydifferentfrom any historic or future results, financial conditions,performance orachievements expressed or implied by such forward-looking statements.Giventhese uncertainties, the reader is advised not to place any unduereliance onsuch forward-looking statements. These forward-looking statements speakonly asof the date of publication of this document. Galapagos expresslydisclaims anyobligation to update any such forward-looking statements in thisdocument toreflect any change in its expectations with regard thereto or anychange inevents, conditions or circumstances on which any such statement is based,unlessrequired by law or regulation.
[1] Crédit d'Impôt Recherche refers to an innovation incentivesystemunderwritten by the French government
Financial tables 2012:http://hugin.info/133350/R/1683950/551253.pdf
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