Mechelen, Belgium; 27 February 2008 – Galapagos NV (Euronext & LSE: GLPG) will announce 2007 results in which full year consolidated Group revenues exceed the high end of the guidance (€64 million). Galapagos’ service division BioFocus DPI will report segment revenues of about €48.5 million, an increase of 39% over 2006, and a segment loss of €4.9 million, before exceptional costs. Due to strong cash flow in the second half of 2007, year-end cash balance was €49 million, a limited decrease of €2 million compared to year end 2006.
In 2007, €4.4 million in cash was received through capital increases. Strong cash flow in the second half of the year was related to upfront payments received from Galapagos’ alliance partners Janssen Pharmaceutica, GSK, and Eli Lilly, contributing to the €49 million cash balance at year end. Under IFRS accounting rules, only part of these payments may be recognized as revenues in 2007, resulting in an increase to the Company’s deferred revenues for recognition in future years. The BioFocus DPI division reported a segment loss before exceptional costs mainly due to lower than expected sales in biology services and compound libraries as well as to the effect of site consolidations. To reduce the cost base and improve efficiencies, BioFocus DPI integrated sites in Cambridge, moved the Heidelberg operations into the Basel site and relocated the Leiden activities. While medicinal chemistry services exceeded expectations, the biology revenues were below budget, partly as a result of the site reorganizations. The order book for biology services has since shown improvement, with the recent €7.6 million collaboration with Janssen Pharmaceutica as an illustration. Management is confident that the restructuring and consolidation efforts affecting the service division will start to pay off in 2008 and will contribute to bring the division back into profitability.
Onno van de Stolpe, Chief Executive Officer, said “Overall, 2007 was a great year for Galapagos, with excellent progress in our research programs and a substantial increase in revenues. We signed three additional turnkey alliances in rheumatoid arthritis, osteoporosis and anti-infectives, while also expanding our alliance with GSK in osteoarthritis. Our potential downstream milestones have now passed the €1.7 billion mark, which bodes well for future revenues generated by these programs. In addition, the royalty rates that we have been able to secure in these alliances will provide a valuable revenue stream to the Company when products reach the market. While cost structure improvement programs have been executed on track, BioFocus DPI revenues came in below budget and caused the service division to report a loss. Despite this, we believe the restructuring implemented in 2007 will strengthen the leading position of BioFocus DPI in drug discovery services and show an improved performance in 2008. For Galapagos as a whole, the coming year promises to be pivotal, with the anticipated entry into the clinic in 2008.”
These preliminary financial results have not been audited and could deviate from actual results. Galapagos will update the markets on its R&D achievements and clinical plans on 28 February 2008 and will release detailed full year 2007 results on 7 March 2008 as planned.
Galapagos (Euronext Brussels, GLPG; Euronext Amsterdam, GLPGA; London AiM: GLPG) is a drug discovery company with pre-clinical programs in bone and joint diseases and cachexia. 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 chemogenomics and ADMET database products to select targets and compounds. Galapagos currently employs 460 people and operates facilities in seven 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.
Onno van de Stolpe, CEO
Tel: +31 6 2909 8028
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. Nothing in this disclaimer is intended to nor does it affect the obligations and responsibilities of Galapagos pursuant to the rules of the exchanges on which Galapagos’ shares are admitted for trading, including the AIM Rules for Companies.