On November 4, 2021 Galapagos NV (Euronext & NASDAQ: GLPG) reported on its commercial launch of filgotinib in Europe (Press release, Galapagos, NOV 4, 2021, View Source [SID1234594786]). The company is moving forward with its revised R&D strategy and operational restructuring announced in May, resulting in a downward adjustment of the cash burn by €50 million. The unaudited Q3 financial and operational results are further detailed in the Q3 2021 report available on the website, www.glpg.com.
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 achieved key steps in our growing commercial business in Europe, while moving earlier-stage R&D programs forward. We continue to deliver on our revised strategy, accelerating the savings program announced at the first quarter results. We are focused on nominating a successor to lead our company going forward following my eventual retirement as CEO," said Onno van de Stolpe, CEO of Galapagos. "Supported by our strong balance sheet and long-term R&D collaboration with Gilead, we believe that Galapagos remains well-positioned for future growth."
"After years of hard work by so many, we are very excited to bring Jyseleca to market as a new treatment option for people living with rheumatoid arthritis (RA). As per 30 September 2021, we booked €6.1 million in net sales for Jyseleca, for a total of €15.8 million together with Gilead. Encouraged by these sales of our first commercial product and its positioning in the growing JAK market in Europe, we are confident in the commercial potential of our Jyseleca franchise in Europe. Following the positive CHMP opinion for filgotinib for the treatment of patients with ulcerative colitis (UC), we expect a decision by the European Commission (EC) before year-end, and if granted, we are ready to go full steam ahead with the commercial roll-out in a second indication," added Bart Filius, President and COO of Galapagos. "Following our strategic operational review in March 2021, we implemented a cost savings program of €150 million on a full year basis. As a result of an acceleration of this program, we revise our guidance for full year 2021 operational cash burni from €580 to €620 million to €530 to €570 million."
Details of the financial results
Due to the sale of our fee-for-service business (Fidelta) to Selvita on 4 January 2021 for a total consideration of €37.1 million (including customary adjustments for net cash and working capital), the results of Fidelta are presented as "Net profit from discontinued operations" in our unaudited condensed consolidated income statements for the nine months ended 30 September 2021 and 30 September 2020.
Revenues from continuing operations
Our revenues from continuing operations for the first nine months of 2021 amounted to €317.9 million compared to €321.9 million in the first nine months of 2020.
We reported net sales of Jyseleca for the first nine months of 2021 amounting to €6.1 million (€5.7 million in the third quarter of 2021), which reflects the sales booked by Galapagos after the transition from Gilead. Total sales of Jyseleca in Europe by both companies for the first nine months of 2021 is €15.8 million.
2
LOGO
Collaboration revenues amounted to €311.7 million for the first nine months of 2021, compared to €321.9 million for the same period last year. This was mainly driven by the recognition of upfront consideration and milestone payments received in the scope of the collaboration with Gilead for filgotinib, amounting to €136.4 million for the first nine months of 2021 (€145.9 million for the same period last year). The decrease in revenue recognition was primarily due to a negative cumulative catch up of revenue triggered by the recent agreement under which Galapagos will assume operational and financial responsibility for the ongoing DIVERSITY clinical study. This decrease was partly compensated by additional consideration from Gilead related to the renegotiated collaboration, when compared to the same period last year. The revenue recognition related to the exclusive access rights for Gilead to our drug discovery platform amounted to €173.3 million for the first nine months of 2021 (€170.7 million for the same period last year).
Our deferred income balance on 30 September 2021 includes €1.8 billion allocated to our drug discovery platform that is recognized linearly over 10 years, and €0.7 billion allocated to the filgotinib development that is recognized over time until the end of the development period.
Results from continuing operations
We realized a net loss from continuing operations of €141.8 million for the first nine months of 2021, compared to a net loss of €251.8 million for the first nine months of 2020.
We reported an operating loss amounting to €175.7 million for the first nine months of 2021, compared to an operating loss of €167.7 million for the same period last year.
Cost of sales related to Jyseleca net sales in the first nine months of 2021 amounted to €0.7 million.
Our R&D expenditure in the first nine months of 2021 amounted to €378.0 million, compared to €392.2 million for the first nine months of 2020. This decrease was primarily explained by winding down of our ziritaxestat (IPF), MOR106 (atopic dermatitis), and GLPG1972 (OA) programs and by reduced spend on our other programs. This was partly offset by costs increases for our filgotinib and Toledo (SIKi) programs, on a nine months comparison basis. Personnel costs increased primarily because of an increased average headcount compared to the same period last year, and increased costs of our subscription right plans.
Our S&M and G&A expenses were respectively €46.6 million and €104.7 million in the first nine months of 2021, compared to respectively €44.1 million and €88.3 million in the first nine months of 2020. This increase was primarily due to an increase in personnel costs and other operating expenses mainly driven by the commercial launch of filgotinib in Europe. This increase was partly compensated by higher cost recharges from us to Gilead in the scope of our commercial cost sharing for filgotinib in Europe.
Other income (€36.3 million vs €35.0 million for the same period last year) increased, mainly driven by higher grant income.
We reported a non-cash fair value gain from the re-measurement of initial warrant B issued to Gilead, amounting to €3.0 million, mainly due to the decreased implied volatility of the Galapagos share price and its evolution between 31 December 2020 and 30 September 2021.
Net other financial income in the first nine months of 2021 amounted to €30.6 million, compared to net other financial loss of €75.3 million for the first nine months of 2020, which was primarily attributable to €54.9 million of currency exchange gain on our cash and cash equivalents and current financial investments in U.S. dollars, to €10.1 million of negative changes in (fair) value of current financial investments and financial assets and to €8.5 million of interest expenses. The other financial expenses also contained the effect of discounting our long term deferred income of €7.2 million.
3
LOGO
Results from discontinued operations
The net profit from discontinued operations for the nine months ended 30 September 2021 consisted of the gain on the sale of Fidelta, our fee-for-services business, for €22.2 million.
Group net results
We reported a group net loss for the first nine months of 2021 of €119.6 million, compared to a group net loss of €247.6 million for the first nine months of 2020.
Cash position
Current financial investments and cash and cash equivalents totaled €4,874.2 million on 30 September 2021, as compared to €5,169.3 million on 31 December 2020.
Total net decrease in cash and cash equivalents and current financial investments amounted to €295.2 million during the first nine months of 2021, compared to a net decrease of €472.2 million during the first nine months of 2020. This net decrease was composed of (i) €376.7 million of operational cash burn, (ii) offset by €2.7 million of cash proceeds from capital and share premium increase from exercise of subscription rights in the first nine months of 2021, (iii) €7.2 million negative changes in (fair) value of current financial investments and €57.3 million of mainly positive exchange rate differences, (iv) €28.7 million cash in from disposal of subsidiaries, net of cash disposed.
Our balance sheet on 30 September 2021 also held a receivable from the French government (Crédit d’Impôt Rechercheiv) and a receivable from the Belgian Government for R&D incentives, for a total of both receivables of €149.3 million.
Outlook 2021
Going forward, we continue to build our filgotinib franchise throughout Europe, and remain on track to complete the transition of the full European commercial operations for filgotinib from our collaboration partner Gilead to us by year-end. We anticipate an approval decision from the EC and Great Britain’s Medicines and Healthcare products Regulatory Agency (MHRA) for filgotinib for the treatment of UC, which, if approved, would add a second indication to our growing commercial footprint in Europe.
Following the positive topline Phase 1b data from our TYK2 inhibitor GLPG3667, we are running an extended dose escalation study in healthy volunteers, and we are preparing to launch a Phase 2b trial in Psoriasis and a Phase 2 trial in UC in 2022.
We are advancing our SIK3 inhibitor GLPG4399 in healthy volunteers this year, and we aim to move a follow-up SIK2/3 preclinical candidate into the clinic in 2022.
By year-end we also intend to finalize recruitment into the GLPG2737 Phase 2a trial in autosomal dominant polycystic kidney disease (ADPKD), an indication with important unmet medical need.
Meanwhile we continue to apply lessons learned from the strategic exercise announced at Q1 to the development of our deep pipeline, and we diligently evaluate business development opportunities in our core therapeutic areas of inflammation and fibrosis.
Following our strategic review of operations in March 2021, we implemented a cost savings program of €150 million on a full year basis. As a result of an acceleration of this program, we revise our guidance for full year 2021 operational cash burn from €580 to €620 million to €530 to €570 million.
Third quarter report 2021
Galapagos’ financial report for the first nine months ended 30 September 2021, including details of the unaudited consolidated results, is accessible via www.glpg.com/financial-reports.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public tomorrow, 5 November 2021, at 13:00 CET / 8 AM ET, which will also be webcasted. To participate in the conference call, please call one of the following numbers ten minutes prior to commencement:
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
24 February 2022 Full year 2021 results (webcast 25 February 2022)