On May 6, 2022 Galapagos NV (Euronext & NASDAQ: GLPG) reported its first quarter 2022 financial results, a year-to-date business update and its outlook for the remainder of 2022 (Press release, Galapagos, MAY 6, 2022, View Source [SID1234613786]). The results are further detailed in the Q1 2022 financial report available on the financial reports section of the website.
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"It is an honor to address you for the first time as CEO of Galapagos. I want to express my respect and appreciation to previous CEO and founder Onno van de Stolpe, who successfully built Galapagos from a start-up to an independent, established publicly listed company. Since I joined a few weeks ago, I have been working closely with the board and the teams across the entire organization to thoroughly review our R&D product portfolio, shape our business strategy and lay the foundations for accelerated growth," said Dr. Paul Stoffels, CEO of Galapagos. "Our mission is to bring novel medicines to patients around the world and to help them live longer, better lives by adding years of life and improving quality of life. We have the people, the science, the R&D capabilities, the commercial infrastructure, and financial resources to realize that ambition. There are exciting opportunities ahead of us and I look forward to sharing my vision and strategy for the future later this year."
"In the first quarter of this year, the launch of our Jyseleca franchise continued to gain momentum with robust sales growth," added Bart Filius, President, COO and CFO of Galapagos. "Following the recent approval of filgotinib in UC in Great Britain and Japan, we are very excited to also bring Jyseleca to patients in this indication, while further progressing our roll-out in RA and UC throughout the European Union. We continue to focus on operational excellence and reiterate our cash burnii guidance of €450-€490 million, including anticipated net sales for Jyseleca of €65-€75 million, compared to the cash burn of €564.8 million over the same period in 2021."
First quarter 2022 and recent business update
Commercial & regulatory progress with filgotinib in RA and UC:
Strong progress with the roll-out by our own commercial organization across Europe, with reimbursements in 15 countries and a fast uptake in RA and now in UC since the approval by EMA (European Medicines Agency) in November 2021
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, resulting in a €1 million milestone payment to Galapagos
The MHRA (Medicines and Healthcare products Regulatory Agency) in Great Britain and the MHLW (Ministry of Health, Labour and Welfare) in Japan approved filgotinib 200mg for the treatment of moderate to severe UC
Nine presentations at ECCO (European Crohn’s and Colitis Organisation), including 4 new analyses from the Phase 3 SELECTION and SELECTION long-term extension studies in UC. Initial results from European real-world survey demonstrated the importance of taking an innovative holistic approach to the management of UC
Article 20 pharmacovigilance procedure ongoing, investigating the safety data of all JAK inhibitors used to treat certain chronic inflammatory disorders
Pipeline and corporate update:
Multiple Phase 1 studies are being finalized with data read-outs expected before year-end
Dr. Paul Stoffelsi appointed as Chief Executive Officer, effective as of 1 April 2022
Third installment of €50 million received from Gilead in Q1 as part of the revised filgotinib agreement as announced in December 2020, following payments of earlier instalments totalling €110 million in 2021
Raised €2.2 million through the exercise of subscription rights
Received a transparency notification from EcoR1 Capital indicating that its shareholding in Galapagos increased and crossed the 5% threshold, to 5.2% of the current outstanding Galapagos shares
Created 2 new subscription rights plans within the framework of the authorized capital, intended for certain new members of the personnel of Galapagos or any of its subsidiaries
Post-period events:
Our distribution partner Sobi recently launched Jyseleca in RA in Portugal
AbbVie announced that a Phase 2 Proof-of-Concept study evaluating a triple combination therapy in cystic fibrosis (CF) did not meet the prespecified criteria. The company plans to start a Phase 2 study with a new triple combo, including the existing C1 corrector and potentiator licensed from Galapagos, early next year. In the event AbbVie receives regulatory approval and realizes commercial sales in CF, Galapagos is eligible to receive royalties ranging from single digit to low teens
All proposed resolutions regarding the extraordinary and annual shareholders’ meetings held on 26 April 2022 have been adopted by the shareholders, including the implementation of a one-tier governance structure in accordance with the Belgian Companies and Associations Code, the appointment of Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) as director and the appointments of Jérôme Contamine and Dr. Dan Baker as independent directors of the board. Subsequently, the (new) unitary board has appointed Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) as chair of the board of directors
First quarter 2022 financial highlights (unaudited)
Q1 2022 financial results
We reported product net sales of Jyseleca in Europe for the first three months of 2022 amounting to €14.4 million (€0.1 million in the first quarter of 2021). Our counterparties for the sales of Jyseleca were mainly hospitals and wholesalers located in Belgium, the Netherlands, France, Italy, Spain, Germany, the United Kingdom, Ireland, Austria, Norway, Sweden and Finland.
Cost of sales related to Jyseleca net sales in the first three months of 2022 amounted to €2.9 million.
Collaboration revenues amounted to €121.9 million for the first three months of 2022, compared to €113.8 million for the first three months of 2021.
Revenues recognized related to the collaboration agreement with Gilead for the filgotinib development were €59.0 million in the first three months of 2022 compared to €55.3 million for the same period last year. This slight increase was mainly due to higher revenue recognition of milestone payments, strongly influenced by the milestone achieved related to the regulatory approval in Japan for UC in the first quarter of 2022. The revenue recognition related to the exclusive access rights for Gilead to our drug discovery platform amounted to €57.3 million for the first three months of 2022 (€57.8 million for the same period last year).
We have recognized royalty income from Gilead for Jyseleca for €4.6 million in the first three months of 2022 (compared to €0.7 million in the same period last year) of which €3.6 million royalties on milestone income for UC approval in Japan.
Additionally, we recorded a milestone of €1.0 million triggered by the first sale of Jyseleca in the Czech Republic by our distribution and commercialization partner Sobi, in the first quarter of 2022.
Our deferred income balance on 31 March 2022 includes €1.7 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10 year collaboration, and €0.6 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 three months of 2022 amounted to €99.9 million, compared to €130.0 million for the first three months of 2021. This decrease was primarily explained by a decrease in subcontracting costs from €73.0 million in the first quarter of 2021 to €41.7 million in the first quarter of 2022, primarily due to the winding down of the ziritaxestat (IPF) program and reduced spend on our Toledo (SIKi) and other programs. This was partly offset by cost increases for our filgotinib program, on a three months basis compared to the same period in 2021.
Our S&M and G&A expenses were respectively €29.0 million and €33.4 million in the first three months of 2022, compared to respectively €14.5 million and €30.4 million in the first three months of 2021. This increase was primarily due to an increase in personnel costs mainly driven by higher average FTEs on a three months comparison basis following the commercial launch of filgotinib in Europe, as well as higher costs for RSU plans. The increase was also explained by the termination of our 50/50 co-commercialization cost sharing agreement with Gilead for filgotinib in 2022, while in the first quarter of 2021 such costs were still shared with Gilead.
Other operating income (€7.7 million vs €10.3 million for the same period last year) decreased, mainly driven by lower grant and R&D incentives income.
Net other financial income in the first three months of 2022 amounted to €9.7 million, compared to net other financial income of €36.2 million for the first three months of 2021. Net other financial income in the first three months of 2022 was primarily attributable to €13.8 million of unrealized currency exchange gains on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars, to €0.2 million of negative changes in (fair) value of current financial investments and to €2.1 million of interest expenses. The other financial expenses also contained the effect of discounting our long term deferred income of €1.9 million.
We realized a net loss from continuing operations of €13.3 million for the first three months of 2022, compared to a net loss of €12.8 million for the first three months of 2021.
The net profit from discontinued operations for the three months ended 31 March 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 three months of 2022 of €13.3 million, compared to a group net profit of €9.4 million for the first three months of 2021.
Cash position
Current financial investments and cash and cash equivalents totaled €4,643.4 million on 31 March 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 €59.8 million during the first three months of 2022, compared to a net decrease of €54.6 million during the first three months of 2021. This net decrease was composed of (i) €77.4 million of operational cash burn, (ii) offset by €2.2 million of cash proceeds from capital and share premium increase from exercise of subscription rights in the first three months of 2022, and (iii) €0.2 million negative changes in (fair) value of current financial investments and €15.6 million of mainly positive exchange rate differences.
Outlook 2022
Financial guidance:
For 2022, we anticipate a significantly lower cash burn compared to 2021 of €450-€490 million, including anticipated net sales for Jyseleca between €65 and €75 million.
Expected regulatory events:
We expect reimbursement decisions in most key European markets for Jyseleca in UC this year and anticipate that Sobi will further progress with reimbursement discussions in RA and UC in Eastern and Central Europe, Greece, and the Baltic countries. Following the ongoing article 20 pharmacovigilance procedure on all JAK inhibitors, we expect that the EMA will give its opinion by end of September 2022.
Anticipated R&D milestones:
We expect the read out from a Phase 1b trial with JAK1 inhibitor GLPG0555 and a Phase 1 trial with JAK1/TYK2i GLPG3121 in healthy volunteers. In addition, we aim to progress TYK2 inhibitor GLPG3667 into a Phase 2 program, considering the current regulatory and competitive landscape for TYK2 as a class, and to advance selected compounds with optimized pharmacology and selectivity from our SIKi portfolio into the clinic. Furthermore, we are evaluating the start of a Phase 2 trial with chitinase inhibitor GLPG4716 in lung fibrosis.
While we push forward our internal programs and further roll-out Jyseleca in RA and UC, we continue to diligently scout for external opportunities. We are confident that in 2022 we will make significant progress to accelerate our innovative pipeline with the aim to address unmet medical needs, and we look forward to presenting an in-depth update on our future plans later this year.
First quarter 2022 financial report
Galapagos’ financial report for the first three months ended 31 March 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 with Q&A tomorrow 6 May 2022, at 14:00 CET / 8 AM ET. To participate in the conference call, please dial one of the following numbers ten minutes prior to the start:
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.