Effective tax rate below 5%
Mechelen, Belgium; 12 November 2012 – Galapagos NV (Euronext: GLPG) announced today that it has received a positive ruling from the Belgian tax authorities, enabling Galapagos to benefit from the Belgian patent income deduction on patent related income arising from its global collaboration with Abbott on GLPG0634.
As a result of this ruling, 80% of Galapagos’ qualifying income from the collaboration agreement with Abbott, based on the Galapagos patents covering JAK1 inhibitor GLPG0634 currently in Phase 2A clinical trials in RA, is exempt from Belgian corporate income tax. This will result in an effective income tax rate of under 5% for Galapagos for this income. This ruling is valid for 5 years and may be renewed thereafter. Galapagos received an $150 million initial upfront fee from Abbott for rights related to the global collaboration. Upon successful completion of the RA Phase II studies, Abbott will license the program for a one-time fee of $200 million if the studies meet certain pre-agreed criteria. Abbott will assume sole responsibility for Phase III clinical development and global manufacturing. Pending achievement of certain developmental, regulatory, commercial and sales-based milestones, Galapagos would be eligible to receive additional patent-based milestone payments from Abbott, potentially amounting to $1.0 billion, in addition to tiered double-digit royalties on net sales upon commercialization.
“The tax ruling announced today is very important for Galapagos and its shareholders,” said Guillaume Jetten, Chief Financial Officer of Galapagos. “In this way, Galapagos may have more funds available to invest in its R&D programs coming up behind GLPG0634, thereby increasing our chances of developing valuable intellectual property in those programs as well. This is a clear benefit of our Mechelen headquarters and the supportive nature of the Belgian government towards biotech.”
Galapagos (Euronext: GLPG; OTC: GLPYY) is a mid-size clinical stage biotechnology company specialized in the discovery and development of small molecule and antibody therapies with novel modes-of-action. The Company is progressing its JAK1 inhibitor GLPG0634, as well as one of the largest pipelines in biotech, with four programs in development and over 30 discovery programs. The Galapagos Group has over 800 employees and operates facilities in six countries, with global headquarters in Mechelen, Belgium. More info at: www.glpg.com
Elizabeth Goodwin, Director Investor Relations
Tel: +31 6 2291 6240
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