Mechelen,
Belgium; 8 August 2008 – Galapagos NV (Euronext: GLPG)
announces its half year results and reiterates guidance
for the second half of 2008.
“In the first half of 2008, we delivered on the promises
of our R&D programs, announcing milestone achievements
in all three of our bone and joint alliances with big pharma
and advancing the pre-clinical development of our rheumatoid
arthritis and bone metastasis programs,” said Galapagos
CEO, Onno van de Stolpe. “This progress puts us in
a prime position to have these programs in the clinic early
next year. In addition, based on the data analysis from
the Nanocort clinical trial, we have decided to move forward
and start a large Phase II study for flares in rheumatoid
arthritis in 2009. Our pharma partnering strategy allows
us to largely offset our increased R&D investments with
milestones; as a result, we see no need to seek further
funding in 2008 and 2009.”
“The Galapagos Group delivered a solid first half
in 2008, by growing revenues and improving our cost base
while delivering on our strategic objectives. The recovery
of BioFocus DPI is well on track to full-year profitability,
with a strong pipeline and margin improvement in new contracts,”
noted Leo Steenbergen, Chief Financial Officer. “With
our R&D division ready to deliver a strong second half
performance, Galapagos retains full year guidance for revenues
of €75 – 80 M and a year end cash position of
€25 M.”
Key
figures half year 2008
(€ millions, except net loss per share)
Operational
overview
Product pipeline
In
April 2008, Galapagos in-licensed Nanocort, a product for
the treatment of acute flares in rheumatoid arthritis, with
possible further indications in irritable bowel disease
and multiple sclerosis. A 22-patient Phase I/II investigator-led
trial of Nanocort has been completed, and full analysis
of the trial data will be presented at a rheumatoid arthritis
conference later this year. Based on the data, Galapagos
will file an IND application later this year, with commencement
of a 240-patient Phase II trial in the first half of 2009.
Galapagos’
R&D division announced satisfactory progress in its
research programs, with plans to enter the clinic with its
bone metastasis and rheumatoid arthritis candidates in early
2009. Both the GT418 and bone metastasis programs are currently
in preclinical safety studies, and the outcome of these
will determine the further development route.
In its osteoarthritis program, Galapagos showed Proof of
Principle (reduction of disease markers) and Proof of Concept
(reduction of targeted symptoms) in pre-clinical models.
The Company expects to nominate a pre-clinical candidate
in its osteoarthritis program in 2008.
To
oversee the development of its maturing pipeline, Galapagos
appointed Piet Wigerinck, formerly VP discovery and Development
at Tibotec (a J&J company), as Senior Vice President
of Development.
Through
its alliance strategy, Galapagos is eligible to receive
in excess of €1.7 billion in success-dependent milestone
payments plus double-digit royalties on the worldwide sales
of medicines that result from these programs. In the first
half of 2008, Galapagos achieved €5.2 M in financial
milestones in its bone & joint disease alliances, for
a total of €18.3 M to date. Galapagos also was awarded
a €4.4 M grant through IWT from the Flemish Government
for its rheumatoid arthritis development program and it
signed a collaborative research agreement in eye diseases
with Bausch & Lomb.
BioFocus
DPI service division
The BioFocus DPI service division announced new agreements
this year with existing partners such as Janssen Pharmaceutica,
Lilly, the U.S. National Institutes of Health and Allergan
as well as collaborations with new partners such as the
University College London and Sepracor. Furthermore, the
service unit earned a milestone payment in its autoimmune
collaboration with Boehringer Ingelheim.
Corporate
developments
In June, Galapagos announced the appointment of Dr. William
Garth Rapeport to the Board of Directors. Galapagos cancelled
its listing on the Alternative Investment Market (AiM) of
the London Stock Exchange and launched a Level-1 American
Depositary Receipt (ADR) facility (ticker: GLPYY) for over-the-counter
trading in the United States.
ProStrakan
Group plc held 1,396,648 ordinary Galapagos shares from
the all-share offer for ProSkelia SASU in December 2006.
ProStrakan notified Galapagos that it has completed a successful
private placement of its holdings with institutional investors
via Fortis in July 2008 and no longer owns any Galapagos
shares.
Details of the financial results
Revenues
Galapagos’ revenues for the first half of 2008 amounted
to €33.6 M compared to €25.9 M recorded in the
same period of 2007. The R&D division is well on track
with revenues of €14.2 M compared to €5.8 M in
the same period last year (+ 145%). With revenues of €23.7
M, BioFocus DPI showed a 10% year-on-year growth in the
first half of 2008, excluding currency effects of 7.5%.
Results
The net loss for the first half-year of 2008 was €9.4
M, compared to the loss of €16.7 M for the first six
months of 2007. The R&D division reported a segment
loss of €3.9 M, a decrease of 62% compared to the first
six months of 2007, and in line with expectations. The segment
loss for BioFocus DPI over the first six months of the year
was €1.8 M, compared to €2.6 M in the same period
last year. This segment result is a 30% improvement over
the first half of 2007, in line with management expectations
and consistent with previous years, in which second half
performance historically has been stronger. Visibility in
the pipeline and the improved margins on newly closed contracts
give management confidence that BioFocus DPI will continue
this progress toward profitability in 2008, delivering a
positive result for the full year, in line with guidance
given to the markets.
R&D
expenses for the group in the first half-year of 2008 were
€18.0 M compared to €15.7 M in the same period
of 2007.
General
and administrative expenses for the group were €10.0
M in the first half of 2008, a 14% reduction compared to
the €11.7 M in the first six months of 2007. On a like-for-like
basis (excluding exceptional costs and some reporting changes)
the general and administrative expenses grew by 4% and reduced
as a percentage of revenues from 33% in 2007 to 28% in 2008.
Cash
flow and cash position
A net decrease of €21.9 M in cash and cash equivalents
was recorded during the first half of 2008. The cash used
in operations was €20.9 M, as compared to €19.3
M during the same period in 2007; this is a result of the
planned increase in R&D costs. Galapagos’ cash
and cash equivalents amounted to €27.4 M on 30 June
2008.
Significant
post-closing events
On 23 July 2008, Galapagos announced the transfer of BioFocus
DPI’s predictive drug discovery databases to EMBL’s
European Bioinformatics Institute. The databases concerned
had been acquired with Inpharmatica in December 2006. The
StarDrop™ software platform was not transferred and
is still a product offering of BioFocus DPI. Galapagos received
€1.8 M in cash for this transaction.
Outlook
2008
Management reiterates full-year 2008 revenue guidance of
€75 to €80 M, a 14-21% increase in annual consolidated
sales of 2007. The Company maintains guidance for R&D
expenditures of €50 M and a maximum full-year cash
burn of €25 M. Based on the anticipated cash needs
and revenue streams in 2009 and 2010, Galapagos sees no
need to raise additional capital for its current operations
in the coming 18 months.
The
Company continues to move forward on the strategic objectives
for 2008:
• IND filing for Nanocort to initiate a 240 patient
Phase II clinical trial in H1 2009
• Preparation for IND filings and initiation of Phase
I trials for rheumatoid arthritis and bone metastasis early
2009
• Nomination of a pre-clinical candidate in osteoarthritis
• Profitability of the BioFocus DPI service division
• Increased revenues from milestone payments to offset
R&D costs
Interim
Report 2008
The electronic version of Galapagos’ Interim Report
for half year 2008 is now available online at www.glpg.com/investor/financial_reports.htm.
Printed versions of the report can be requested by e-mailing
ir@glpg.com.
Conference
call and webcast presentation
Galapagos will conduct a conference call open to the public
today at 14.00 Central European Time (CET)/8:00 AM US Eastern
Standard Time (EST), which will also be webcast. To participate
in the conference call, please call +32.2.404.03.34, or
toll free in the US 1.866.931.1567, ten minutes prior to
commencement. A question and answer session will follow
the presentation of the results. Click
here to access the live audio webcast. The
archived webcast also will be available for replay shortly
after the close of the call.
Financial
calendar 2008
3Q08 interim update 14 November 2008
Annual results 2008 6 March 2009
Annual shareholders meeting 2 June 2009
About
Galapagos
Galapagos (Euronext Brussels: GLPG; Euronext Amsterdam:
GLPGA; OTC: GLPYY) is a drug discovery company with pre-clinical
programs in bone and joint diseases and bone metastasis.
Its division BioFocus DPI offers a full suite of target-to-drug
discovery products and services to pharmaceutical and biotech
companies, encompassing target discovery and validation,
screening and drug discovery through to delivery of pre-clinical
candidates. BioFocus DPI also provides adenoviral reagents
for rapid identification and validation of novel drug targets,
compound libraries for drug screening as well as ADMET products
to select compounds. Galapagos currently employs 490 people
and operates facilities in six countries, with global headquarters
in Mechelen, Belgium. More information about Galapagos and
BioFocus DPI can be found at www.glpg.com
and www.biofocusdpi.com.
CONTACTS
Galapagos NV
Onno van de Stolpe, CEO
Tel: +31 6 2909 8028
ir@glpg.com
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“expects,” “intends,” “plans,”
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