On May 4, 2023 Galapagos NV (Euronext & NASDAQ: GLPG) reported its first quarter 2023 financial results, a year-to-date business update and its outlook for the remainder of 2023 (Press release, Galapagos, MAY 5, 2023, View Source [SID1234631094]).
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"The first months of the year mark an eventful period for our company across all areas of our business. Within our pipeline, we presented encouraging initial Phase 1/2 results with GLPG5201, our CD19 CAR-T candidate in chronic lymphocytic leukemia. Our later-stage immunology programs made further progress with the initiation of the Phase 3 study with filgotinib in patients with AxSpA and the opening of clinical sites to enroll patients in a Phase 2 study with our TYK2 inhibitor product candidate, GLPG3667, in DM.
Looking ahead, we aim to bring in additional assets in our strategic therapeutic areas and to further expand our proprietary oncology pipeline and CAR-T point-of-care network. We expect multiple catalysts over the next few months, including the topline results from two Phase 1/2 studies with our CD19 CAR-T candidates GLPG5101 and GLPG5201 manufactured at point-of-care. We are confident that through our R&D and business development strategy in our areas of growth in immunology and oncology, we can deliver long-term value and transform the lives of patients across the globe," said Dr. Paul Stoffels1, CEO and Chairman of Galapagos.
Bart Filius, President, COO and CFO of Galapagos added: "The first quarter of the year was challenging for Jyseleca, with the disappointing outcome of the Phase 3 study in Crohn’s disease and the impact on the JAK class of the adoption by the European Commission of PRAC’s recommended safety measures. In the first quarter of this year, Jyseleca achieved €26.7 million in net sales in rheumatoid arthritis (RA) and ulcerative colitis (UC). We continue to gain further insights into the market dynamics for the JAK class and we intend to revisit our 2023 net sales guidance at the next financial update in August. With a strong balance sheet of €4.0 billion in cash, we reiterate our full year 2023 cash burni guidance in the range of €380 to €420 million."
Year-to-date operational performance
Immunology portfolio
Jyseleca (filgotinib) (JAK1)
We continued rolling out Jyseleca in Europe in RA and UC. The medicine is now available to more than 18,000 patients and reimbursed for RA and UC in 16 countries. Sobi, our distribution and commercialization partner in Eastern and Central Europe, Portugal, Greece, and the Baltic countries, launched Jyseleca in RA in Czech Republic and Portugal, and in UC in Czech Republic.
The European Commission approved the recommendation of the Pharmaceutical Risk Assessment Committee (PRAC) to add measures to minimize risks of serious side effects with all JAK inhibitors used for chronic inflammatory disorders.
We presented new, encouraging data from the SELECTION long-term extension study (SELECTION LTE) in UC which showed that filgotinib 200mg maintained symptomatic remission and health-related quality of life for up to approximately four years. In SELECTION LTE, filgotinib 200mg was well-tolerated and the safety profile was generally consistent with the safety profile observed in previous studies.
Based on the topline results from the Phase 3 DIVERSITY study of filgotinib in Crohn’s disease (CD), we decided not to submit a Marketing Authorization Application in Europe in this indication.
Supported by solid efficacy and safety results from the Phase 2 TORTUGA study in patients with AxSpA, we recently dosed the first patients in the pivotal Phase 3 OLINGUITO study in AxSpA. The study is expected to enroll 476 patients across clinical centers in Europe and Asia, with topline results anticipated in the second half of 2025.
Other pipeline assets
We continued to advance the development program with oral, selective tyrosine kinase 2 (TYK2) inhibitor, GLPG3667: we opened clinical sites to start enrolling patients in the Phase 2 GALARISSO study in patients with DM, and further progressed preparations to start the Phase 2 GALACELA study in patients with systemic lupus erythematosus (SLE).
As part of our expansion beyond small molecules, we further advanced the preparations to start the Phase 1b program with CD19 CAR-T candidate, GLPG5101, manufactured at point-of-care, in patients with refractory SLE (rSLE). The first patients are expected to be enrolled before year-end.
CAR-T oncology portfolio
Point-of-care network for decentralized CAR-T manufacturing
We continue to expand our point-of-care network for the decentralized production of our CAR-T clinical candidates. As of 31 March 2023, five centers in Europe are actively recruiting patients in two clinical trials in hemato-oncology, and we plan to add more sites to the network throughout the year.
GLPG5101 (CD19 CAR-T) in non-Hodgkin lymphoma (NHL)
We continued to advance the ATALANTA-1 Phase 1/2 study in refractory/relapsed NHL (rrNHL) patients with GLPG5101 manufactured at point-of-care.
GLPG5201 (CD19 CAR-T) in chronic lymphocytic leukemia (CLL), with or without Richter’s transformation (RT)
We announced initial encouraging safety and efficacy interim results (cut-off date: 9 January 2023) from the ongoing EUPLAGIA-1 Phase 1/2 study with GLPG5201, manufactured at point-of-care, in patients with refractory/relapsed CLL (rrCLL) with or without RT. All seven out of seven eligible rrCLL patients, including four patients with RT, responded to treatment (Objective Response Rate of 100%), and GLPG5201 showed an acceptable safety profile with no cytokine release syndrome (CRS) higher than grade 2, and no immune effector cell-associated neurotoxicity syndrome (ICAN) observed.
Corporate update
We entered into an integrated drug discovery collaboration with NovAliX, a drug-discovery contract research organization (CRO) based in Strasbourg, France. Under the terms of the agreement, Galapagos’ drug discovery and research activities conducted in Romainville, France and Galapagos’ employees in Romainville, which are exclusively dedicated to the operation of these activities, will be transferred to NoValiX who is dedicated to assuming all ongoing research and discovery activities in Romainville. In return, Galapagos is committed to utilizing the research capabilities and expertise of NovAliX through a five year-collaboration and within the context of the company’s R&D portfolio. This transaction is subject to customary closing conditions and is anticipated to close in July 2023.
At the Annual General Meeting held on 25 April 2023, all proposed resolutions were approved, including the re-appointment of the following Board members: Mr. Peter Guenter as non-executive independent director for a period of four years, and Mr. Daniel O’Day and Dr. Linda Higgins as non-executive non-independent directors for a period of four years; and the appointment of BDO Bedrijfsrevisoren BV, permanently represented by Ms. Ellen Lombaerts, as the company’s new statutory auditor for a period of three years.
Raised €1.8 million through the exercise of subscription rights.
We announced the departure of Bart Filius, President, Chief Operating Officer and Chief Financial Officer. Bart will leave the company as per 30 June 2023. Recruitment efforts to appoint a successor are actively ongoing.
First quarter 2023 financial highlights (unaudited)
(€ millions, except basic & diluted income/loss (-) per share)
Three months ended 31 March Change
2023 2022
Product net sales 26.7 14.4 +85%
Collaboration revenues 152.2 121.9 +25%
Total net revenues 178.9 136.3 +31%
Cost of sales (3.6) (2.9) +23%
R&D expenditure (103.5) (99.9) +4%
G&Aii and S&Miii expenses (58.1) (62.3) -7%
Other operating income 8.3 7.7 +8%
Operating profit/loss (-) 22.0 (21.1)
Fair value adjustments and net currency exchange differences (9.7) 13.1
Net other financial result 11.2 (3.5)
Income taxes (0.3) (1.7)
Net profit/loss (-) of the period 23.2 (13.3)
Basic and diluted income/loss (-) per share (€) 0.4 (0.2)
Current financial investments and cash and cash equivalents 3,990.1 4,643.4
Details of the first quarter 2023 financial results
Total net revenues for the three months ended 31 March 2023 was €178.9 million, compared to €136.3 million for the three months ended 31 March 2022, and consisted of:
Product net sales of Jyseleca in Europe for the first three months of 2023 amounting to €26.7 million (€14.4 million in the first quarter of 2022).
Collaboration revenues of €152.2 million for the first three months of 2023, compared to €121.9 million for the first three months of 2022.
Collaboration revenues increased mainly due to revenue recognition related to the collaboration agreement with Gilead for the filgotinib development amounting to €93.6 million in the first three months of 2023 compared to €59.0 million for the same period last year. This increase is primarily driven by a positive catch up of revenue explained by a decrease in the total estimated remaining costs to complete the filgotinib development. This was a consequence of the topline results from Phase 3 DIVERSITY trial of filgotinib in CD and our decision not to submit a Marketing Authorization Application in Europe.
Our deferred income balance on 31 March 2023 includes €1.5 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration, and €0.4 billion allocated to the filgotinib development that is recognized over time until the end of the development period.
Total operating profit for the three months ended 31 March 2023 was €22.0 million, compared to total operating loss of €21.1 million for the first three months ended 31 March 2022.
Cost of sales related to Jyseleca net sales in the first three months of 2023 amounted to €3.6 million (€2.9 million in the first quarter of 2022).
R&D expenditure in the first three months of 2023 amounted to €103.5 million, compared to €99.9 million for the first three months of 2022. This slight increase was primarily explained by higher costs for CAR-T programs in oncology and filgotinib, partly offset by cost decrease in our SIKi program and other programs.
S&M and G&A expenses amounted to €58.1 million in the first three months of 2023, compared to €62.3 million in the first three months of 2022. This decrease was primarily due to a decrease in personnel costs.
Other operating income amounted to €8.3 million in the first three months of 2023, compared to €7.7 million for the same period last year.
Net financial income in the first three months of 2023 amounted to €1.5 million, compared to net financial income of €9.6 million for the first three months of 2022.
Fair value adjustments and net currency exchange losses in the first three months of 2023 amounted to €9.7 million, compared to fair value adjustments and net currency exchange gains of €13.1 million for the first three months of 2022, and were primarily attributable to €11.9 million of unrealized currency exchange losses on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars, partly offset by €2.9 million of positive changes in (fair) value of current financial investments.
Net other financial income in the first three months of 2023 amounted to €11.2 million, compared to net other financial expenses of €3.5 million for the first three months of 2022, and was primarily attributable to €13.2 million of interest income, which increased significantly due to the increase in interest rates.
We reported a group net profit for the first three months of 2023 of €23.2 million, compared to a group net loss of €13.3 million for the first three months of 2022.
Cash position
Current financial investments and cash and cash equivalents totaled €3,990.1 million on 31 March 2023, as compared to €4,094.1 million on 31 December 2022.
Total net decrease in cash and cash equivalents and current financial investments amounted to €104.0 million during the first three months of 2023, compared to a net decrease of €59.8 million during the first three months of 2022. This net decrease was composed of (i) €98.8 million of operational cash burn, (ii) €9.9 million of mainly negative exchange rate differences, offset by (iii) €1.8 million of cash proceeds from capital and share premium increase from exercise of subscription rights in the first three months of 2023, and (iv) €2.9 million positive changes in (fair) value of current financial investments.
Outlook 2023
Financial outlook
As we continue to gain further insights into the market dynamics for the JAK class, we intend to revisit our 2023 net sales guidance at the next financial update in August. We reiterate our full year 2023 cash burn guidance in the range of €380 and €420 million.
R&D outlook
Immunology portfolio
We anticipate that the first patients in the GALARISSO Phase 2 study with TYK2 inhibitor, GLPG3667, will be dosed in the coming weeks, and we are on track to start the Phase 2 GALACELA study in patients with SLE later this year. In addition, we expect to enroll the first patients in the Phase 1b study with CD19 CAR-T candidate, GLPG5101, in patients with refractory SLE before year-end.
CAR-T oncology portfolio
Mid-2023, we aim to announce topline results from the ATALANTA-1 and EUPLAGIA-1 Phase 1/2 studies with CD19 CAR-T candidates GLPG5101 and GLPG5201 in rrNHL and rrCLL (with or without RT) respectively, followed by the start of the dose-expansion cohorts in both studies. In addition, we expect to expand our point-of-care network throughout the year, and to submit an investigational new drug application (IND) in the US to start clinical development with our CD19 CAR-T candidate later this year. Finally, we aim to expand our CAR-T portfolio with the start of the Phase 1/2 PAPILIO-1 study in Europe with BCMA CAR-T candidate, GLPG5301, in patients with multiple myeloma (MM).
Conference call and webcast presentation
We will host a conference call and webcast presentation tomorrow 5 May 2023, at 14:00 CET / 8:00 am ET. To participate in the conference call, please register in advance using this link, after which the dial-in numbers will be provided. The conference call can be accessed 10 minutes prior to the start by using the conference access information provided in the email 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.
Financial calendar 2023
3 August 2023
2 November 2023
22 February 2024 Half year 2023 results
Third quarter 2023 results
Full year 2023 results (webcast 4 August 2023)
(webcast 3 November 2023)
(webcast 23 February 2024)