Letter to our shareholders
As we are writing the next chapter for our company, we embarked on a thorough strategic exercise to assess our current portfolio and combine internal and external innovation with the aim to accelerate transformational medicines to patients.
This quarter, we took a first key step in our strategic transformation by entering the field of oncology with the acquisitions of CellPoint and AboundBio. The combined transactions provide us with end-to-end capabilities in CAR-T1 therapy and offer the potential for a paradigm shift in the space through CellPoint’s breakthrough, decentralized point-of-care supply model, developed in a global strategic collaboration with Lonza, and AboundBio’s cutting-edge fully human antibody-based capabilities to design next-generation CAR-Ts.
We warmly welcome the CellPoint and AboundBio teams to Galapagos, and we look forward to combining our unique capabilities to push the boundaries in oncology. Despite continued progress with current CAR-T cancer therapies, long lead times, costly central manufacturing and complex logistics continue to be limiting factors for large-scale capacity and broad patient access. The CellPoint novel point-of-care supply model, in or near the hospital, is designed to allow for efficient, 7-day delivery of CAR-T therapies with fresh cells, thereby offering the potential to significantly shorten time to treatment as compared to industry standards. It combines CellPoint’s proprietary end-to-end xCellit workflow management and monitoring software with Lonza’s Cocoon® system, a closed, automated manufacturing platform for cell and gene therapies. The regulatory authorities in Belgium, the Netherlands and Spain have approved the start of clinical studies with this novel supply model.
Two Phase 1/2a studies in rrNHL and rrCLL2 with a clinically validated CD19 CAR-T target are ongoing and provide the opportunity for a rapid validation of the CellPoint CAR-T point-of-care supply model. Topline results are expected in the first half of 2023, and if positive, they would allow us to start pivotal studies in rrNHL and rrCLL shortly afterwards.
In a next step, our aim is to leverage CellPoint’s platform with AboundBio’s next-generation fully human multi-specific and multi-paratopic CAR-Ts that have the potential for deeper, more durable responses to treatment as well as retreatment of patients who relapsed following earlier CAR-T treatment. Our near-term goal is to bring three additional differentiated, next-generation CAR-T candidates in the clinic over the next three years.
In light of the ongoing scientific and strategic review and capital allocation prioritization, we decided to discontinue 4 early-stage programs: GLPG3121, a local release formulation JAK1/TYK2 inhibitor with potential in inflammatory diseases; GLPG0555, a JAK1 inhibitor evaluated in osteoarthritis; GLPG4586, a compound with undisclosed mode of action directed toward fibrosis; and GLPG4716, a chitinase inhibitor directed toward idiopathic pulmonary fibrosis. We continue to explore additional business development opportunities to further leverage our internal capabilities and renew our portfolio, and plan to provide a detailed update on our corporate strategy and portfolio later this year.
Our Jyseleca franchise is performing very well with robust sales momentum, supported by the regulatory approvals in ulcerative colitis (UC) in Great Britain and Japan earlier this year. Despite being the 4th JAK inhibitor to market, the adoption of Jyseleca is strong across Europe. As of 30 June 2022, Jyseleca is reimbursed in 15 countries for rheumatoid arthritis (RA) and 6 countries for UC, and we realized €35.4 million in net sales in the first half year of 2022.
We ended the first six months of the year with a strong balance sheet of €4.4 billion in cash and current financial investments, which provides us with the necessary means to execute for additional external innovation and accelerate our R&D pipeline. Following the acquisitions of CellPoint and AboundBio, we expect that second half operating expenses will increase by approximately €30 million. Therefore, we revised our cash burn3 guidance of €450-€490 million for the full year 2022 to €480-€520 million. As a result of the strong Jyseleca performance, we increase our full-year net sales guidance from €65-€75 million to €75-€85 million.
Year-to-date operational review
Commercial & regulatory progress
- Strong adoption across Europe with reimbursement for RA in 15 countries and for UC in 6 countries
- 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 and Portugal, resulting in €2 million milestone payments to Galapagos in H1
- Filed a type II variation for label update for Jyseleca based on data from the MANTA and MANTA-RAy studies
- At the EULAR4 2022 European Congress of Rheumatology, Galapagos hosted several expert sessions and presented 11 abstracts, further establishing us as a key European player in RA
- Article 20 pharmacovigilance procedure ongoing by the European Medicines Agency's (EMA) Pharmacovigilance Risk Assessment Committee (PRAC), investigating the safety data of all JAK inhibitors for the treatment of certain chronic inflammatory disorders
- Decided to move forward with GLPG3667 (TYK2 inhibitor) in dermatomyositis with the aim to start a Phase 2 study before year-end
- Discontinued development of 4 early-stage programs as part of ongoing scientific and strategic exercise: GLPG3121, a local release formulation JAK1/TYK2 inhibitor with potential in inflammatory diseases; GLPG0555, a JAK1 inhibitor evaluated in osteoarthritis; GLPG4586, a compound with undisclosed mode of action directed toward fibrosis; and GLPG4716, a chitinase inhibitor directed toward idiopathic pulmonary fibrosis
- Entered the field of oncology through the combined acquisitions of CellPoint and AboundBio in all-cash transactions
- Received a transparency notification from FMR LLC in Q2 indicating that its shareholding in Galapagos increased and crossed the 5% threshold, to 5.04% of the current outstanding Galapagos shares
- Raised €3.6 million through the exercise of subscription rights
- Created new subscription right plans, offering all Galapagos employees the opportunity to participate
- All proposed resolutions regarding the extraordinary and annual shareholders’ meetings were adopted by Galapagos’ shareholders on 26 April 2022
H1 2022 financial result
- Jyseleca net sales amount to €35.4 million
- Collaboration revenues of €238.6 million
- R&D expenditures of €249.5 million
- S&M and G&A expenses amounting to €134.0 million
- Net loss of €32.3 million
- Operational cash burn of €217.1 million
- Cash position at end of June 2022 of €4,429.0 million
We anticipate a Committee for Medicinal Products for Human Use (CHMP) opinion on the type II variation for the Jyseleca label, based on the data from the MANTA and MANTA-RAy studies around year-end. We also expect reimbursement decisions in most key European markets in UC and anticipate that Sobi will further progress with reimbursement discussions in RA and UC in Eastern and Central Europe, Greece, and the Baltic countries. As part of the ongoing article 20 pharmacovigilance procedure on all JAK inhibitors approved in Europe, we expect a CHMP opinion by the end of the year, followed by an adoption by the European Commission shortly afterwards.
Patient enrolment in the Phase 1/2a trials in rrNHL and rrCLL is progressing well and we anticipate that additional clinical sites will be active by year-end. We are on track to report topline results of both trials in the first half of next year.
We plan to progress TYK2 inhibitor GLPG3667 into a Phase 2 program in dermatomyositis with first patients potentially recruited around year-end.
Following the acquisitions of CellPoint and AboundBio, we revised our cash burn guidance for full year 2022 from €450-€490 million to €480-€520 million. Additionally, we increased our anticipated net sales guidance for Jyseleca between €75 and €85 million.
We want to thank you for your continued support of our exciting journey to make a true impact on human lives through cutting-edge science and exceptional people. We strongly believe that we are taking the right steps in our transformation to accelerate value creation and look forward to presenting an in-depth update on our strategy later this year.
Dr. Paul Stoffels5
CEO and chairman of the board of directors
President, COO & CFO
1 1Chimeric antigen receptor T-cell
2 2Relapsed/Refractory NHL: non-Hodgkin Lymphoma, CLL: Chronic Lymphocytic Leukemia
3 3We refer to the financial highlights for an explanation and reconciliation of this alternative liquidity measure
4 4European Alliance of Associations for Rheumatology
5 5Acting via Stoffels IMC BV