Details of the unaudited condensed consolidated interim results
Product net sales
We reported net sales of Jyseleca for the first nine months of 2022 amounting to €60.5 million (€6.1 million in the first nine months of 2021).
Related costs of sales in the first nine months of 2022 amounted to €7.9 million.
Collaboration revenues
The following table summarizes our collaboration revenues for the nine months ended 30 September 2022 and 2021:
|
|
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|---|---|
(thousands of €) |
Over time |
Point in time |
2022 |
2021 |
2022 |
2021 |
Recognition of non-refundable upfront payments and license fees |
|
|
101,325 |
58,928 |
305,626 |
291,370 |
Gilead collaboration agreement for filgotinib |
|
43,633 |
1,277 |
133,018 |
118,021 |
|
Gilead collaboration agreement for drug discovery platform |
|
57,692 |
57,651 |
172,608 |
173,348 |
|
Milestone payments |
|
|
7,821 |
(978) |
35,759 |
18,391 |
Gilead collaboration agreement for filgotinib |
|
7,821 |
(978) |
33,759 |
18,391 |
|
Sobi distribution agreement for Jyseleca |
|
- |
- |
2,000 |
- |
|
Royalties |
|
|
1,923 |
553 |
8,285 |
1,950 |
Gilead royalties on Jyseleca |
|
1,923 |
557 |
8,240 |
1,907 |
|
Other royalties |
|
- |
(4) |
44 |
43 |
|
Total collaboration revenues |
|
|
111,068 |
58,503 |
349,669 |
311,711 |
The rollforward of the outstanding balance of the current and non-current deferred income between 1 January 2022 and 30 September 2022 can be summarized as follows:
(thousands of €) |
Total |
Gilead collaboration agreement for filgotinib |
Gilead collaboration agreement for drug discovery platform (1) |
Other deferred income |
||||
---|---|---|---|---|---|---|---|---|
On 1 January 2022 |
2,364,701 |
604,875 |
1,759,828 |
- |
||||
|
|
|
|
|
||||
Milestones achieved |
18,238 |
18,238 |
|
|
||||
Significant financing component (2) |
5,673 |
5,673 |
|
|
||||
|
|
|
|
|
||||
Revenue recognition of upfront |
(305,626) |
(133,018) |
(172,608) |
|
||||
Revenue recognition of milestones |
(33,759) |
(33,759) |
|
|
||||
|
|
|
|
|
||||
Other movements |
3,457 |
|
|
3,457 |
||||
|
|
|
|
|
||||
On 30 September 2022 |
2,052,686 |
462,009 |
1,587,220 |
3,457 |
||||
|
Operating costs and other operating income
Operating costs
Research and development expenditure
The following table summarizes our research and development expenditure for the nine months ended 30 September 2022 and 2021:
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Personnel costs |
(44,044) |
(40,102) |
(130,001) |
(134,256) |
Subcontracting |
(54,412) |
(49,907) |
(158,472) |
(189,100) |
Disposables and lab fees and premises costs |
(5,286) |
(5,401) |
(15,596) |
(17,688) |
Depreciation and impairment |
(3,091) |
(5,998) |
(35,646) |
(14,097) |
Professional fees |
(3,317) |
(3,747) |
(10,719) |
(10,788) |
Other operating expenses |
(4,399) |
(4,040) |
(13,633) |
(12,092) |
Total research and development expenditure |
(114,549) |
(109,196) |
(364,067) |
(378,022) |
The increase in depreciation and impairment for the first nine months of 2022 is primarily due to an impairment of €26.7 million of previously capitalized upfront fees related to our collaboration with Molecure on the dual chitinase inhibitor OATD-01.
The table below summarizes our R&D expenditure for the nine months ended 30 September 2022 and 2021, broken down by program.
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Filgotinib program |
(62,255) |
(40,656) |
(178,402) |
(128,496) |
SIKi program |
(9,692) |
(19,625) |
(35,789) |
(71,860) |
TYK2 program on GLPG3667 |
(5,931) |
(5,482) |
(15,009) |
(19,456) |
Ziritaxestat program |
(114) |
(4,001) |
(752) |
(23,420) |
Other programs |
(36,557) |
(39,432) |
(134,115) |
(134,790) |
Total research and development expenditure |
(114,549) |
(109,196) |
(364,067) |
(378,022) |
Sales and marketing expenses
The following table summarizes our sales and marketing expenses for the nine months ended 30 September 2022 and 2021:
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Personnel costs |
(17,726) |
(16,403) |
(53,449) |
(43,274) |
Depreciation |
(660) |
(153) |
(1,782) |
(321) |
External outsourcing costs |
(12,226) |
(15,190) |
(37,897) |
(40,149) |
Sales and marketing expenses recharged to Gilead |
- |
15,680 |
31 |
41,207 |
Professional fees |
(744) |
(143) |
(2,278) |
(323) |
Other operating expenses |
(2,949) |
(1,445) |
(9,938) |
(3,755) |
Total sales and marketing expenses |
(34,305) |
(17,655) |
(105,313) |
(46,616) |
The termination of our 50/50 filgotinib co-commercialization cost sharing agreement with Gilead explains a significant part of the increase in sales & marketing expenses.
General and administrative expenses
The following table summarizes our general and administrative expenses for the nine months ended 30 September 2022 and 2021:
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Personnel costs |
(18,875) |
(14,851) |
(54,504) |
(52,419) |
Depreciation and impairment |
(2,129) |
(1,901) |
(6,426) |
(14,631) |
Legal and professional fees |
(5,935) |
(4,161) |
(16,752) |
(17,629) |
Other operating expenses |
(7,434) |
(6,881) |
(19,692) |
(19,972) |
Total general and administrative expenses |
(34,372) |
(27,793) |
(97,373) |
(104,651) |
Other operating income
The following table summarizes our other operating income for the nine months ended 30 September 2022 and 2021:
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Grant income |
486 |
1,878 |
1,495 |
5,665 |
R&D incentives |
7,216 |
10,152 |
23,119 |
29,653 |
Other |
4,135 |
752 |
4,860 |
1,027 |
Total other operating income |
11,837 |
12,781 |
29,474 |
36,345 |
Financial income/expenses
The following table summarizes our financial income/expenses (–) for the nine months ended 30 September 2022 and 2021:
|
Third quarter of |
Nine months ended |
||
---|---|---|---|---|
(thousands of €) |
2022 |
2021 |
2022 |
2021 |
Fair value adjustments and net currency |
|
|
|
|
Net currency exchange gain |
44,647 |
21,149 |
104,815 |
54,762 |
Fair value re-measurement of warrants |
129 |
198 |
80 |
3,025 |
Fair value loss on financial assets held at fair value through profit or loss |
- |
- |
- |
(2,913) |
Fair value gain/loss (-) on current financial investments |
14,195 |
(1,373) |
26,005 |
(7,206) |
Total fair value adjustments and net currency |
58,971 |
19,974 |
130,900 |
47,669 |
|
|
|
|
|
Other financial income: |
|
|
|
|
Interest income |
5,622 |
714 |
9,240 |
2,156 |
Discounting effect of non-current R&D incentives receivables |
23 |
23 |
69 |
69 |
Other finance income |
15 |
10 |
366 |
90 |
Total other financial income |
5,660 |
747 |
9,675 |
2,315 |
|
|
|
|
|
Other financial expenses: |
|
|
|
|
Interest expenses |
(1,721) |
(4,049) |
(5,927) |
(8,474) |
Discounting effect of non-current deferred income |
(1,874) |
(2,400) |
(5,673) |
(7,170) |
Discounting effect of other non-current liabilities |
(812) |
- |
(812) |
- |
Other finance charges |
(398) |
(529) |
(662) |
(681) |
Total other financial expenses |
(4,806) |
(6,978) |
(13,074) |
(16,325) |
|
|
|
|
|
Total net financial result |
59,825 |
13,743 |
127,501 |
33,659 |
Cash position
Cash and cash equivalents and current financial investments totaled €4,362.1 million on 30 September 2022 (€4,703.2 million on 31 December 2021).
Cash and cash equivalents and current financial investments comprised cash at banks, term deposits, treasury bills and money market funds. Our cash management strategy monitors and optimizes our liquidity position. Our cash management strategy allows short-term deposits with an original maturity exceeding three months while monitoring all liquidity aspects.
Cash and cash equivalents comprised €235.3 million of term deposits which all had an original maturity longer than three months. All cash and cash equivalents are available upon maximum three months notice period and without significant penalty. Cash at banks were mainly composed of notice accounts and current accounts. Our credit risk is mitigated by selecting a panel of highly rated financial institutions for our deposits.
Current financial investments comprised €1,625.7 million of term deposits which all had an original maturity longer than three months and which are not available on demand within three months. Our current financial investments also comprised money market funds and treasury bills. Our portfolio of treasury bills contains only AAA rated paper, issued by Germany. Our money market funds portfolio consists of AAA short-term money market funds with a diversified and highly rated underlying portfolio managed by established fund management companies with a proven track record.
|
30 September |
31 December |
---|---|---|
(thousands of €) |
2022 |
2021 |
Money market funds |
1,310,203 |
1,317,460 |
Treasury bills |
750,696 |
877,349 |
Term deposits |
1,625,657 |
275,000 |
Total current financial investments |
3,686,557 |
2,469,809 |
|
|
|
Cash at banks |
440,261 |
1,225,860 |
Term deposits |
235,259 |
1,007,508 |
Total cash and cash equivalents |
675,519 |
2,233,368 |
|
|
|
Total current financial investments and cash and cash equivalents |
4,362,076 |
4,703,177 |
On 30 September 2022, our cash and cash equivalents and current financial investments included $951.6 million held in U.S. dollars ($942.5 million on 31 December 2021) which could generate foreign exchange gains or losses in our financial results in accordance with the fluctuation of the EUR/U.S. dollar exchange rate as our functional currency is EUR. The foreign exchange loss (–)/gain in case of a 10% change in the EUR/U.S. dollar exchange rate amounts to €97.1 million.
Capital increase
On 30 September 2022, Galapagos NV’s share capital was represented by 65,835,511 shares. All shares were issued, fully paid up and of the same class. The below table summarizes our capital increases for the period ended 30 September 2022.
(thousands of €, except share data) |
Number of |
Share capital |
Share premium |
Share capital and |
Average exercise price subscription rights |
Closing share price on date of capital increase |
---|---|---|---|---|---|---|
On 1 January 2022 |
65,552,721 |
292,075 |
2,730,391 |
3,022,467 |
|
|
|
|
|
|
|
|
|
18 March 2022: exercise of subscription rights |
95,500 |
517 |
1,643 |
2,160 |
22.61 |
57.38 |
|
|
|
|
|
|
|
20 June 2022: exercise of subscription rights |
80,290 |
434 |
1,025 |
1,460 |
18.18 |
53.52 |
|
|
|
|
|
|
|
27 September 2022: exercise of subscription rights |
107,000 |
579 |
2,497 |
3,076 |
28.75 |
44.49 |
|
|
|
|
|
|
|
On 30 September 2022 |
65,835,511 |
293,605 |
2,735,557 |
3,029,162 |
|
|
Note to the cash flow statement
|
Nine months ended 30 September |
|
---|---|---|
(thousands of €) |
2022 |
2021 |
Adjustment for non-cash transactions |
|
|
Depreciation and impairment |
43,854 |
29,050 |
Share-based compensation expenses |
51,085 |
62,971 |
Increase in retirement benefit obligations and provisions |
405 |
285 |
Unrealized exchange gains and non-cash other financial result |
(102,163) |
(47,975) |
Discounting effect of non-current deferred income |
5,673 |
7,170 |
Discounting effect of other non-current liabilities |
812 |
- |
Fair value re-measurement of warrants |
(80) |
(3,025) |
Net change in (fair) value of current financial investments |
(26,004) |
7,206 |
Fair value adjustment financial assets held at fair value through profit or loss |
- |
2,913 |
Other non-cash expenses |
712 |
455 |
Total adjustment for non-cash transactions |
(25,707) |
59,050 |
|
|
|
Adjustment for items to disclose separately under operating |
|
|
Interest expense |
5,927 |
8,474 |
Interest income |
(7,557) |
(2,146) |
Tax expense |
3,229 |
(316) |
Total adjustment for items to disclose separately under operating |
1,599 |
6,013 |
Adjustment for items to disclose under investing and financing |
|
|
Gain on sale of subsidiaries |
- |
(22,191) |
Gain (-)/loss on sale of fixed assets |
(17) |
1 |
Realized exchange gain on sale of current financial investments |
- |
(6,645) |
Interest income on current financial assets |
(1,683) |
(10) |
Total adjustment for items to disclose separately under investing and financing |
(1,700) |
(28,845) |
|
|
|
Change in working capital other than deferred income |
|
|
Increase in inventories |
(5,667) |
(2,060) |
Decrease in receivables |
63,502 |
82,008 |
Decrease in liabilities |
(363) |
(33,306) |
Total change in working capital other than deferred income |
57,472 |
46,642 |
Business combinations
On 21 June 2022 we acquired, in an all-cash transaction, 100% of the shares and voting interests of CellPoint for a total agreed payment at completion of €125 million, including consideration for other liabilities associated with the transaction amounting to €10.3 million. Additional contingent consideration up to €100.0 million is due when certain development (€20.0 million), regulatory (€30.0 million) and sales-based (€50.0 million) milestones would be achieved. Total fair value at acquisition date of these milestones amounted to €22.9 million. This fair value is measured with most significant inputs being the probability of success of reaching these milestones, expected timing and the discount rate. During the third quarter of 2022 no changes were made to the assumptions used in the valuation. The discounting impact, amounting to €0.8 million, is recognized in financial results.
On the same date we acquired all of the outstanding capital of AboundBio, for a total agreed price of $14 million, including consideration for other liabilities associated with the transaction.
The main reason for these acquisitions is to position ourselves in next-generation cancer therapy market and to significantly broaden our portfolio and capabilities. As a result of these acquisitions, we gain access to an innovative, scalable, decentralized and automated point-of-care cell therapy supply model as well as a next-generation fully human antibody-based therapeutics platform. Combined and supported by us as a fully integrated biopharma, they have the potential to disrupt the CAR-T treatment paradigm. The goal is to expand the current market for CAR-T therapies and have an important impact on patients in need of additional and improved treatment options.
Details of the preliminary fair value of identifiable assets and liabilities acquired in both transactions, the preliminary purchase consideration and provisional goodwill at the acquisition date are as follows:
|
21 June 2022 |
|
|
---|---|---|---|
(thousands of €) |
CellPoint |
AboundBio |
Total |
Property, plant and equipment |
1,289 |
965 |
|
Other non-current assets |
81 |
4 |
|
Trade and other receivables |
162 |
- |
|
Cash and cash equivalents |
3,179 |
4,279 |
|
Other current assets |
1,254 |
536 |
|
Trade and other liabilities |
(32,789) |
(587) |
|
Current deferred income |
- |
(474) |
|
Net assets acquired |
(26,824) |
4,723 |
|
|
|
|
|
Consideration paid in cash |
107,750 |
14,976 |
|
Fair value re-measurement of previously held equity investment |
- |
342 |
|
Deferred consideration |
6,088 |
- |
|
Fair value of contingent consideration |
22,865 |
- |
|
Fair value of total consideration |
136,703 |
15,318 |
|
|
|
|
|
Goodwill |
163,526 |
10,595 |
|
Exchange differences on goodwill |
- |
872 |
|
Goodwill in the balance sheet |
163,526 |
11,467 |
174,994 |
(thousands of €) |
CellPoint |
AboundBio |
Total |
---|---|---|---|
Consideration paid in cash |
107,750 |
14,976 |
|
Less: cash and cash equivalents balances acquired |
(3,179) |
(4,279) |
|
Cash out from acquisition of subsidiaries, net of cash acquired |
104,571 |
10,698 |
115,270 |
|
|
|
|
Cash used in operating activities for other liabilities related to the acquisition of subsidiaries |
11,080 |
|
11,080 |
The preliminary fair value of the identifiable assets and liabilities are included in our condensed consolidated interim financial statements as per 30 September 2022. To date we have performed a preliminary fair value analysis of the business combinations, with corresponding adjustments to the trade and other liabilities. We expect the provisional amount of goodwill to change significantly upon the completion of the purchase price allocation, resulting from the valuation of the different assets and liabilities acquired, including the valuation of in-process R&D.