Details of the unaudited condensed consolidated interim results
As a consequence of the transfer of our Jyseleca® business to Alfasigma, the revenues and costs related to Jyseleca® for the first half-year of 2024 are presented separately from the results of our continuing operations in the line ‘Net profit from discontinued operations, net of tax’ in our consolidated income statement. The comparative first half-year of 2023 has been restated accordingly for the presentation of the results related to the Jyseleca® business.
Results from continuing operations
Total net revenues for the six months ended 30 June 2024 amounted to €140.3 million, compared to €118.6 million for the six months ended 30 June 2023.
Supply revenues
These revenues amounted to €19.1 million and are fully related to the supply of Jyseleca® to Alfasigma under the transition agreement. The related cost of sales are reported on the cost of sales line.
Collaboration revenues
The following table summarizes our collaboration revenues for the six months ended 30 June 2024 and 2023:
|
|
|
Six months ended 30 June |
|||
|---|---|---|---|---|---|---|
(thousands of €) |
Over |
Point |
2024 |
2023(*) |
||
Recognition of non-refundable upfront payments and license fees |
|
|
115,120 |
115,151 |
||
Gilead collaboration agreement for drug discovery platform |
|
|
115,120 |
115,151 |
||
|
|
|
|
|
||
Royalties |
|
|
6,080 |
3,476 |
||
Gilead royalties on Jyseleca® |
|
|
6,080 |
3,476 |
||
|
|
|
|
|
||
Total collaboration revenues |
|
|
121,200 |
118,627 |
||
|
||||||
The rollforward of the outstanding balance of the current and non-current deferred income between 1 January 2024 and 30 June 2024 can be summarized as follows:
(thousands of €) |
Gilead collaboration agreement for filgotinib |
Gilead collaboration agreement for drug discovery platform(1) |
Other deferred income |
Total |
||||
|---|---|---|---|---|---|---|---|---|
On 1 January 2024 |
26,268 |
1,299,163 |
2,034 |
1,327,463 |
||||
Of which current portion: |
25,054 |
230,070 |
1,146 |
256,270 |
||||
|
|
|
|
|
||||
Significant financing component(2) |
(227) |
|
|
(227) |
||||
Revenue recognition of upfront |
(21,952) |
(115,120) |
|
(137,072) |
||||
Revenue recognition of milestones |
(4,089) |
|
|
(4,089) |
||||
|
|
|
|
|
||||
Other movements |
|
|
747 |
747 |
||||
|
|
|
|
|
||||
On 30 June 2024 |
- |
1,184,043 |
2,780 |
1,186,822 |
||||
Of which current portion: |
- |
230,092 |
2,116 |
232,208 |
||||
|
||||||||
Operating costs and other operating income
Operating costs
Research and development expenditure
The following table summarizes our research and development expenditure for the six months ended 30 June 2024 and 2023:
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
Personnel costs |
(42,040) |
(47,728) |
||
Subcontracting |
(64,587) |
(27,971) |
||
Disposables and lab fees and premises costs |
(8,971) |
(10,175) |
||
Depreciation and amortization |
(13,254) |
(11,677) |
||
Professional fees |
(8,419) |
(4,250) |
||
Other operating expenses |
(7,954) |
(6,938) |
||
Total research and development expenditure |
(145,225) |
(108,739) |
||
|
||||
Subcontracting costs increased mainly related to cell therapy and small molecule programs in oncology. The decrease in personnel expenses was due to lower costs for subscription right plans; professional fees increased.
The table below summarizes our R&D expenditure for the six months ended 30 June 2024 and 2023, broken down by program.
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
SIKi program |
(9,147) |
(12,670) |
||
TYK2 program on GLPG3667 |
(15,837) |
(15,335) |
||
Cell therapy programs in oncology |
(65,295) |
(31,302) |
||
Other discovery programs |
(54,946) |
(49,432) |
||
Total research and development expenditure |
(145,225) |
(108,739) |
||
|
||||
Sales and marketing expenses
The following table summarizes our sales and marketing expenses for the six months ended 30 June 2024 and 2023:
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
Personnel costs |
(3,992) |
(741) |
||
Depreciation |
(147) |
(31) |
||
External outsourcing costs |
(1,130) |
(476) |
||
Professional fees |
(506) |
(30) |
||
Other operating expenses |
(1,317) |
(156) |
||
Total sales and marketing expenses |
(7,092) |
(1,434) |
||
|
||||
The increase in personnel expenses can be explained by an increase in staff related to strategic marketing in oncology.
General and administrative expenses
The following table summarizes our general and administrative expenses for the six months ended 30 June 2024 and 2023:
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
Personnel costs |
(25,436) |
(31,631) |
||
Depreciation |
(4,161) |
(4,146) |
||
Legal and professional fees |
(15,551) |
(8,973) |
||
Other operating expenses |
(11,685) |
(11,757) |
||
Total general and administrative expenses |
(56,833) |
(56,507) |
||
|
||||
The decrease in personnel costs due to lower costs for subscription right plans was offset by an increase in legal and professional fees related to business development activities and corporate projects.
Other operating income
The following table summarizes our other operating income for the six months ended 30 June 2024 and 2023:
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
Grant income |
1,324 |
3,260 |
||
R&D incentives income |
10,620 |
13,134 |
||
Other |
4,694 |
3,954 |
||
Total other operating income |
16,638 |
20,348 |
||
|
||||
Lower grants and lower R&D tax credit incentives due to the transfer of our R&D activities in France to NovAliX in July 2023 explain the decrease in other operating income.
Financial income/expenses
The following table summarizes our financial income/expenses (–) for the six months ended 30 June 2024 and 2023:
|
Six months ended 30 June |
|||
|---|---|---|---|---|
(thousands of €) |
2024 |
2023(*) |
||
Fair value adjustments and net currency exchange differences: |
|
|
||
Net unrealized currency exchange gain/loss (–) |
18,352 |
(11,443) |
||
Net realized currency exchange loss |
(49) |
(1,123) |
||
Fair value re-measurement of warrants |
(12) |
18 |
||
Fair value gain on current financial investments |
31,164 |
12,731 |
||
Total fair value adjustments and net currency exchange differences |
49,455 |
183 |
||
|
|
|
||
Other financial income: |
|
|
||
Interest income |
49,421 |
33,407 |
||
Discounting effect of non-current R&D incentives receivables |
558 |
309 |
||
Other finance income |
36 |
7 |
||
Total other financial income |
50,015 |
33,723 |
||
|
|
|
||
Other financial expenses: |
|
|
||
Interest expenses |
(119) |
(630) |
||
Discounting effect of other non-current liabilities |
(484) |
153 |
||
Other finance charges |
(530) |
(316) |
||
Total other financial expenses |
(1,133) |
(793) |
||
|
|
|
||
Total net financial result |
98,337 |
33,113 |
||
|
||||
The increase in the financial results is mainly explained by the positive evolution of the USD exchange rate, the increase in fair value gain on current financial investments and the increase of the interest rates for the first six months of 2024 compared to the same period last year.
Discontinued operations
The following disclosure illustrates the result from our discontinued operations, related to the transfer of the Jyseleca® business to Alfasigma on 31 January 2024.
Disposal of the Jyseleca® business (discontinued operations)
1.1 Consideration received
|
Six months ended 30 June |
|---|---|
(thousands of €) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Total consideration received |
59,835 |
1.2 Analysis of assets and liabilities over which control was lost
|
31 January |
|---|---|
(thousands of €) |
2024 |
Property, plant and equipment |
4,186 |
Deferred tax assets |
292 |
Other non-current assets |
613 |
Inventories |
505 |
Trade and other receivables |
18,439 |
Cash and cash equivalents |
19,523 |
Other current assets |
1,161 |
Total assets |
44,719 |
|
|
Other reserves |
(74) |
Retirement benefit liabilities |
1,003 |
Non-current lease liabilities |
2,328 |
Other non-current liabilities |
90 |
Current lease liabilities |
1,308 |
Trade and other liabilities |
28,927 |
Current tax payable |
1,170 |
Current deferred income |
430 |
Total liabilities |
35,182 |
|
|
Net assets disposed of |
9,537 |
1.3 Gain on disposal of the Jyseleca® business (included in other operating income in the income statement)
|
Six months ended 30 June |
|---|---|
(thousands of €) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Additional adjustment working capital to be settled |
(900) |
Net assets disposed of |
(9,537) |
Effect of cumulative translation adjustments reclassified from equity on loss of control |
(4,095) |
Fair value of the future earn-outs payable by Alfasigma to us |
47,035 |
Contribution for R&D costs payable by us to Alfasigma |
(40,000) |
Gain on disposal of subsidiaries |
52,338 |
1.4 Net cash inflow/outflow (-) on disposal of the Jyseleca® business
|
Six months ended 30 June |
|---|---|
(thousands of €) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Transfer to escrow account |
(40,000) |
Contribution for R&D costs paid by us to Alfasigma |
(10,000) |
Earn-outs paid by Alfasigma |
794 |
Less: cash and cash equivalents balances disposed of |
(19,523) |
Less: settlement of pre-existing relationships |
3,685 |
Cash out from the disposal of subsidiaries, net of cash disposed of |
(5,209) |
|
|
Costs associated to the sale taken into result in 2023 |
(3,072) |
Costs associated to the sale taken into result in 2024 |
(526) |
Cash used for other liabilities related to the disposal of subsidiaries |
(3,598) |
(I) Result from discontinued operations
|
Six months ended 30 June |
|
|---|---|---|
(thousands of €, except per share data) |
2024 |
2023 |
Product net sales |
11,264 |
54,275 |
Collaboration revenues |
26,041 |
155,919 |
Total net revenues |
37,305 |
210,194 |
|
|
|
Cost of sales |
(2,012) |
(7,840) |
Research and development expenses |
(11,279) |
(103,136) |
Sales and marketing expenses |
(9,271) |
(56,827) |
General and administrative expenses |
(1,049) |
(6,829) |
Other operating income |
54,601 |
3,422 |
Operating profit |
68,295 |
38,984 |
|
|
|
Other financial income |
2,856 |
3 |
Other financial expenses |
(12) |
(2,477) |
Profit before tax |
71,139 |
36,510 |
|
|
|
Income taxes |
(98) |
(878) |
Net profit |
71,041 |
35,632 |
|
|
|
Basic and diluted earnings per share from discontinued operations |
1.08 |
0.54 |
Weighted average number of shares – Basic (in thousands of shares) |
65,897 |
65,870 |
Weighted average number of shares – Diluted (in thousands of shares) |
66,046 |
65,965 |
The sale of the Jyseleca® business to Alfasigma on 31 January 2024 led to the full recognition in revenue of the remaining deferred income related to filgotinib (€26.0 million reported on line 'Collaboration revenues' for the first half of 2024).
As from 1 February 2024, all economics linked to the sales of Jyseleca® in Europe are for the benefit of Alfasigma. All filgotinib development expenses and all remaining G&A and S&M expenses relating to Jyseleca® are recharged to Alfasigma.
Other operating income includes €52.3 million related to the gain on the sale of the Jyseleca® business to Alfasigma on 30 June 2024.
(II) Cash flow from discontinued operations
|
Six months ended 30 June |
|
|---|---|---|
(thousands of €) |
2024 |
2023 |
Net cash flow used in operating activities |
(24,400) |
(99,110) |
Net cash flow used in investing activities |
(5,209) |
- |
Net cash flow used in financing activities |
- |
(937) |
Net cash flow used in discontinued operations |
(29,609) |
(100,046) |
Cash position
Cash and cash equivalents and current financial investments totaled €3,430.4 million on 30 June 2024 (€3,684.5 million on 31 December 2023).
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.
All cash and cash equivalents are available upon maximum three months’ notice period and without significant penalty. Cash at banks were mainly composed of current accounts. Our credit risk is mitigated by selecting a panel of highly rated financial institutions for our deposits.
Current financial investments comprised €1,362.7 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 France, Belgium, Flanders and Europe. 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 June |
31 December |
|---|---|---|
(thousands of €) |
2024 |
2023 |
Money market funds |
1,252,460 |
1,316,805 |
Treasury bills |
742,893 |
742,025 |
Term deposits |
1,362,739 |
1,458,868 |
Total current financial investments |
3,358,092 |
3,517,698 |
|
|
|
|
|
|
Cash at banks |
52,328 |
71,803 |
Term deposits |
20,000 |
95,000 |
Cash and cash equivalents from continuing operations |
72,328 |
166,803 |
Cash and cash equivalents included in assets classified as held for sale |
- |
7 |
Total cash and cash equivalents |
72,328 |
166,810 |
On 30 June 2024, our cash and cash equivalents and current financial investments included $737.7 million held in U.S. dollars ($865.4 million on 31 December 2023) 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 €68.9 million.
Note to the cash flow statement
|
30 June |
|
|---|---|---|
(thousands of €) |
2024 |
2023 |
Adjustment for non-cash transactions |
|
|
Depreciation and amortization |
18,152 |
18,566 |
Share-based compensation expenses |
10,217 |
27,590 |
Increase/decrease (–) in retirement benefit obligations and provisions |
8 |
(112) |
Unrealized exchange losses/gains (–) and non-cash other financial result |
(18,910) |
11,135 |
Discounting effect of non-current deferred income |
(227) |
2,400 |
Discounting effect of other non-current liabilities |
484 |
(153) |
Fair value re-measurement of warrants |
12 |
(18) |
Net change in fair value of current financial investments |
(21,391) |
(12,732) |
Fair value adjustment earn-out royalties |
(2,628) |
- |
Other non-cash expenses |
99 |
926 |
Total adjustment for non-cash transactions |
(14,184) |
47,603 |
|
|
|
Adjustment for items to disclose separately under operating cash flow |
|
|
Interest expense |
121 |
674 |
Interest income |
(49,421) |
(27,439) |
Tax expense |
(1,041) |
13,610 |
Correction for cash used for other liabilities related to the disposal of subsidiaries |
527 |
- |
Total adjustment for items to disclose separately under operating cash flow |
(49,814) |
(13,155) |
|
|
|
Adjustment for items to disclose under investing and financing cash flows |
|
|
Gain on sale of subsidiaries |
(52,339) |
- |
Gain (–)/loss on sale of fixed assets |
37 |
(1,155) |
Investment income on current financial investments |
(9,773) |
(5,968) |
Total adjustment for items to disclose separately under investing and financing cash flow |
(62,075) |
(7,123) |
|
|
|
Change in working capital other than deferred income |
|
|
Decrease in inventories |
10,756 |
3,140 |
Increase in receivables |
(42,283) |
(14,548) |
Decrease in liabilities |
(32,969) |
(7,137) |
Total change in working capital other than deferred income |
(64,496) |
(18,545) |
Financial risk management
The following table summarizes the categories of financial assets and liabilities held at fair value:
|
30 June |
31 December |
|---|---|---|
(thousands of €) |
2024 |
2023 |
Financial assets held at fair value through other comprehensive income |
|
|
Equity instruments |
51,378 |
- |
|
|
|
Financial assets held at fair value through profit or loss |
|
|
Equity instruments |
- |
13,575 |
Contingent consideration receivable |
47,611 |
- |
Current financial investments |
1,252,460 |
1,316,805 |
|
|
|
Financial liabilities held at fair value through profit or loss |
|
|
Contingent consideration related to milestones CellPoint |
21,455 |
20,972 |
We consider that the carrying amount of all other financial assets and liabilities approximate their fair value, except for the treasury bills for which the fair value amounts to €743.2 million (carrying value of €742.9 million).
We refer to the section about our material accounting policies, explaining the change in presentation of our equity investments compared to 31 December 2023. The valuation of all our equity investments is based on Level 3 assumptions as it are investments in non-quoted companies. These investments are valued initially at fair value through the established purchase price between a willing buyer and seller. Subsequent valuation is based on internal and external evidence such as information from recent financing rounds, scientific updates and other valuation techniques.
Current financial investments measured at fair value through profit or loss included money market funds in EUR and USD, which all classify for Level 1 fair value measurement.
The contingent consideration receivable relates to the fair value of the future earn-outs (consisting of sales milestones and royalties) to be obtained from Alfasigma for the sale of Jyseleca®. €4.1 million is presented on the line "Trade and other receivables" and €43.5 million is presented on the line "non-current contingent consideration receivable". The total potential amount consists of sales-based milestone payments totaling €120.0 million and mid-single to mid-double-digit royalties on European sales. The valuation is based on Level 3 assumptions with the key assumptions being the probability of reaching the sales milestones and the expected European sales. A change in expected sales by 15% would result in a change of €12.9 million in the total contingent consideration receivable at 30 June 2024.
The contingent consideration arrangement relating to the acquisition of CellPoint requires us to pay the former owners of CellPoint additional considerations up to €100.0 million. This amount is due when certain sequential development (€20.0 million), regulatory (€30.0 million) and sales-based (€50.0 million) milestones would be achieved. Total fair value at 30 June 2024 of these milestones amounted to €21.5 million.
The fair value measurement is based on significant inputs that are not observable in the market, which are classified as Level 3 inputs. The key assumption in the valuation at 30 June 2024 is the appropriate probability of success of reaching these milestones. A change in probabilities of success of each milestone by 5 percentage points would result in a change of €3.0 million in the total contingent consideration liability on 30 June 2024.
As per 30 June 2024 the only change made to the key assumptions as compared to 31 December 2023 was the expected timing of the milestones. This impact, together with the discounting effect, was recognized in the financial results.