o revenues €100 M, year-end cash €20 M, increased profit BioFocus DPI
o three clinical programs, including first-in-class rheumatoid arthritis drug
Mechelen, Belgium; 6 March 2009 – Galapagos NV (Euronext: GLPG) presented financial results for the full year 2008 and progress in the execution of its strategy.
Galapagos achieved its financial goals in 2008. Group revenues for the full year 2008 reached €77.0 million, in line with guidance, despite a negative currency impact of €3 million. The R&D division delivered record revenues of €31.5 million, associated with a substantial increase in alliance milestone payments. The service division BioFocus DPI made a turnaround, achieving a positive operating result on a recurring basis of €3.4 million. Group net loss decreased 33% to €14.6 million. The Company expanded its R&D portfolio and advanced a number of programs toward the clinic, while ending the year with €27.3 million in cash, better than guidance. R&D progress and service division income will propel the Group to the top tier in European biotech in 2009. Group revenues of €100 million combined with continued strict cost management are expected to limit the cash burn to €7 million.
Galapagos’ goal is to create breakthrough medicines based on completely new starting points discovered using its versatile target discovery engine. This core technology uses human cells to identify and confirm the roles of proteins (‘targets’) responsible for diseases. The Company aims to discover new medicines which act on these targets. If successful, these medicines can be potential blockbusters, given the current lack of disease-modifying drugs in major therapeutic areas. Galapagos finances its R&D programs mainly through the revenues from its strategic pharma alliances and profits from its BioFocus DPI service division.
In 2008, Galapagos capitalized further on the value of its target discovery engine. It signed a risk sharing alliance with Merck, focused on finding novel targets and developing first in class molecules in metabolic disease. Also, in early 2009 Galapagos demonstrated again the quality of its novel targets with a breakthrough publication on Alzheimer’s disease in Science. Furthermore, in its rheumatoid arthritis program, Galapagos is ready to start clinical studies in man with its first-in-class candidate drug based on its proprietary target GT418.
Onno van de Stolpe, CEO of Galapagos, commented: “Galapagos delivered satisfying results in 2008, setting the stage for vigorous growth in 2009. Galapagos has proven that it has the best target discovery platform in the pharmaceutical world. The novelty coming out of our drug discovery programs clearly puts Galapagos in the right place at a time when novel, breakthrough medicines are sorely needed.”
Key figures 2008 (consolidated)
(€ millions, except net loss per share)
|
|
Dec 31, 2008
|
Dec 31, 2007
|
Dec 31, 2006
|
|
Revenues
|
77.0
|
65.9
|
35.2
|
|
Cost of sales
|
-27.8
|
-30.1
|
-19.6
|
|
Gross profit
|
49.2
|
35.8
|
15,6
|
|
Other income
|
0.8
|
1.5
|
3.0
|
|
R&D expenditure
|
-38.7
|
-30.6
|
-15.9
|
|
General & administrative
|
-21.1
|
-19.4
|
-12.0
|
|
Sales & marketing
|
-2.3
|
-2.5
|
-1.9
|
|
Restructuring & impairment
|
-3.1
|
-6.6
|
-0.6
|
|
Operating result
|
-15.2
|
-21.8
|
-11.8
|
|
Net loss for the period
|
-14.6
|
-21.9
|
-11.3
|
|
Basic loss per share
|
-0.69
|
-1.06
|
-0.84
|
|
|
|
|
|
|
Cash and cash equivalents
|
27.3
|
49.3
|
51.5
|
For more information, see “Financial tables” link at the bottom of this message
Financial information
Revenues
Galapagos’ revenues for the full year 2008 grew 17% to €77.0 million (2007: €65.9 million). Despite a negative currency impact of about €3 million and divestitures of the London and San Diego operations, BioFocus DPI generated €56.4 million in revenues (+16%), including €10,9 million inter-company revenues eliminated in the consolidation. External revenues grew 15%, excluding the negative currency impact and excluding the impact of discontinued business. The R&D division increased its revenues by 38% to €31.5 million, largely due to milestones achieved in the alliance programs.
Result
The Group net loss for the full year 2008 was €14.6 million, or €0.69 per share, an improvement of 33% compared to €21.9 million, or €1.06 per share for 2007. Research and development costs increased from €30.6 million to €38.7 million. Before the elimination of inter-company margins, R&D spending was €42.3 million; this was lower than guidance of €50 million due to reduced needs for personnel and outsourcing, without affecting milestone achievements. Finance costs of €5.1 million included an amount of €2 million as a full write-off of an investment in a CDO, and €2.4 million in unrealized foreign exchange translation losses. BioFocus DPI reported a positive recurring segment result of €3.4 million, compared to a segment loss of €3.9 million in 2007. The service division’s substantially improved recurring result was mainly attributable to improved gross margins and the divesture of loss-making operations. All service division business lines are now profitable. A non-recurring cost of €2.6 million was booked as a result of the divesture of the service division’s San Diego operation. General and administrative costs amounted to €21.1 million, or 27% of revenues (2007: 29%). The Group net result also benefited from a €4.1 million tax credit associated with its operations in Paris.
Cash position
Galapagos’ cash and cash equivalents amounted to €27.3 million on 31 December 2008, compared to €49.3 million at the end of 2007. Strong cash flow in the second half of the year was related to payments received from Galapagos’ alliance partners Janssen Pharmaceutica, GSK, Lilly, and Merck.
Operational highlights
R&D division
BioFocus DPI division
Corporate
Outlook 2009
Galapagos’ alliances and visibility into the BioFocus DPI order book encourage management to give guidance for 2009 of Group revenues of €100 million and a year-end cash balance of €20 million. BioFocus DPI is expected to make an improved contribution to the Group result in 2009. The Company anticipates initiating three clinical trials in 2009, including its first-in-class candidate medicine directed toward target GT418 in rheumatoid arthritis.
Annual Financial Report 2008
Galapagos is currently finalizing its financial statements for the year ended 31 December 2008. The auditor has confirmed that his audit procedures, which are substantially completed, have not revealed any material corrections that are required to be made to the financial information included in this press release. Should any material changes arise during the audit finalization, an additional press release will be issued. Galapagos expects to be able to publish its fully audited Annual Financial Report for the year 2008 before the end of April 2009.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public today at 10.00 Central European Time (CET), which will also be webcast. To participate in the conference call, please call +32 2290 1791 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
15 May 2009 First quarter 2009 business update
2 June 2009 Annual general meeting of shareholders
7 August 2009 First half 2009 results
13 November 2009 Third quarter 2009 business update
5 March 2010 Full year 2009 results
About Galapagos
Galapagos (Euronext: GLPG; OTC: GLPYY) is a drug discovery and development company with small molecule programs in bone and joint diseases, bone metastasis, cachexia, anti-infectives and metabolic diseases. It has established risk sharing alliances with GSK, Janssen Pharmaceutica, Eli Lilly and Merck. Through an alliance with MorphoSys, Galapagos is also developing new antibody therapies in bone and joint diseases. Its division BioFocus DPI offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies and to patient foundations, encompassing target discovery and validation, screening and drug discovery through to delivery of pre-clinical candidates. Galapagos currently employs 480 people and operates facilities in six countries, with global headquarters in Mechelen, Belgium. More info at: www.glpg.com.
CONTACTS
Galapagos NV
Onno van de Stolpe, CEO
Tel: +31 6 2909 8028
ir@glpg.com
This release may contain forward-looking statements, including, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “could,” “stands to,” and “continues,” as well as similar expressions. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, financial condition, performance or achievements of Galapagos, or industry results, to be materially different from any historic or future results, financial conditions, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. Galapagos expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.