Financial highlights

H1 2024 financial results

As a consequence of the transfer of our Jyseleca® business to Alfasigma, the results 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 operating loss from continuing operations for the six months ended 30 June 2024 was €71.3 million, compared to an operating loss of €27.7 million for the six months ended 30 June 2023.

• 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. The revenue recognition related to the exclusive access rights granted to Gilead for our drug discovery platform amounted to €115.1 million for the first six months of both 2024 and 2023. Our deferred income balance at 30 June 2024 includes €1.2 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration. We have recognized royalty income from Gilead for Jyseleca® for €6.1 million in the first six months of 2024 (compared to €3.5 million in the same period last year).
• Cost of sales for the six months ended 30 June 2024 amounted to €19.1 million and related to the supply of Jyseleca® to Alfasigma under the transition agreement. The related revenues are reported in total net revenues.
• R&D expenses in the first six months of 2024 amounted to €145.2 million, compared to €108.7 million for the first six months of 2023. This increase was primarily explained by an increase in subcontracting cost from €28.0 million in the first half-year of 2023 to €64.6 million in the first half-year of 2024 due to increased costs for cell therapy and small molecule programs in oncology. Personnel costs decreased from €47.7 million in the first half of 2023 to €42.0 million for the same period this year.
• S&M expenses amounted to €7.1 million in the first six months of 2024, compared to €1.4 million in the first six months of 2023. The cost increase was mainly explained by higher personnel costs (€4.0 million for the first six months of 2024 compared to €0.7 million for the same period last year) due to investments in strategic marketing for oncology.
• G&A expenses amounted to €56.8 million in the first six months of 2024, compared to €56.5 million in the first six months of 2023. An increase in legal and professional fees, from €9.0 million in the first six months of 2023 to €15.6 million in the first six months of 2024 mainly related to business development activities and corporate projects, was offset by a decrease in personnel expenses of €6.2 million (from €31.6 million in the first six months of 2023 to €25.4 million in the same period this year).
• Other operating income amounted to €16.6 million in the first six months of 2024, compared to €20.3 million for the same period last year. This decrease is mainly driven by lower grants and R&D incentives.

Net financial income in the first six months of 2024 amounted to €98.3 million (as compared to net financial income of €33.1 million in the same period last year) and consisted mainly of €49.4 million interest income (as compared to €33.4 million interest income in the same period last year) due to the increased interest rates. Net financial income in the first six months of 2024 also included €18.2 million of unrealized currency exchange gains on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollar (as compared to €11.4 million unrealized currency exchange loss on cash and cash equivalents and current financial investments in the first six months of 2023), as a result of the fluctuation of the U.S. dollar, and €31.2 million positive changes in fair value of current financial investments (€12.7 million positive changes in the same period last year).

We had €1.1 million of tax income for the first six months of 2024 (as compared to €12.7 million tax expenses for the same period last year). This decrease was primarily due to the re-assessment in 2023 of net deferred tax liabilities and corporate income tax payables as a result of a one-off intercompany transaction.

Net profit from continuing operations for the first six months of 2024 was €28.2 million, compared to a net loss from continuing operations of €7.3 million for the same period last year.

Results from discontinued operations

Total operating profit from discontinued operations amounted to €68.3 million in the first six months of 2024, compared to an operating profit of €39.0 million in the same period last year.

• Product net sales of Jyseleca® in Europe were €11.3 million for the first six months of 2024 consisting of sales to customers in January 2024. Product net sales to customers for the first six months of 2023 amounted to €54.3 million. As from 1 February 2024, all economics linked to the sales of Jyseleca® in Europe are for the account of Alfasigma.
• Collaboration revenues for the development of filgotinib with Gilead amounted to €26.0 million for the first six months of 2024, compared to €155.9 million for the same period last year. The sale of the Jyseleca® business to Alfasigma on 31 January 2024 led to the full recognition by us in revenue of the remaining deferred income related to filgotinib.
• Cost of sales related to Jyseleca® net sales were €2.0 million for the first six months of 2024. Cost of sales related to Jyseleca® net sales for the first six months of 2023 amounted to €7.8 million.
• R&D expenses for the development of filgotinib for the first six months of 2024 amounted to €11.3 million, compared to €103.1 million in the first six months of 2023. As from 1 February 2024, all filgotinib development expenses still incurred during the transition period are recharged to Alfasigma.
• G&A and S&M expenses related to the Jyseleca® business amounted to €10.3 million in the first six months of 2024, compared to €63.7 million in the first six months of 2023. As from 1 February 2024, all remaining G&A and S&M expenses relating to Jyseleca® are recharged to Alfasigma.
• Other operating income for the first six months of 2024 amounted to €54.6 million (€3.4 million for the same period last year) and comprised €52.3 million related to the gain on the sale of the Jyseleca® business to Alfasigma. This result as of 30 June 2024 of the transaction is considering the following elements:
  • €50.0 million of upfront payment received at closing of the transaction of which €40.0 million was paid into an escrow account. This amount will be kept in escrow for a period of one year after the closing date of 31 January 2024. We gave customary representations and warranties which are capped and limited in time (at 30 June 2024, this €40.0 million is presented as “Escrow account” in our statement of financial position).
  • €9.8 million of cash received from Alfasigma related to the closing of the transaction as well as €0.9 million of accrued negative adjustment for the settlement of net cash and working capital.
  • €47.0 million of fair value on 31 January 2024 of the future earn-outs payable by Alfasigma to us (the fair value of these future earn-outs at 30 June 2024 is presented on the lines “Non-current contingent consideration receivable” and “Trade and other receivables”). As from 1 February 2024, we are entitled to receive royalties on net sales of Jyseleca® in Europe from Alfasigma.
  • €40.0 million of liability towards Alfasigma on 31 January 2024 for R&D cost contributions of which €10.0 million was paid in the first half-year of 2024 (at 30 June 2024, €30.0 million of liabilities for R&D cost contribution is presented in our statement of financial position on the line “Trade and other liabilities”).

The other financial results contained a positive effect of discounting the contingent consideration receivable from Alfasigma for €2.6 million and a positive effect of discounting our long term deferred income of €0.2 million (€2.4 million discounting expenses of our long term deferred income in the same period last year).

Net profit from discontinued operations related to Jyseleca® amounted to €71.0 million for the first six months of 2024, compared to a net profit amounting to €35.6 million for the first six months of 2023.

Cash, cash equivalents and current financial investments

Cash and cash equivalents and current financial investments totaled €3,430.4 million as of 30 June 2024 (€3,684.5 million as of 31 December 2023).

A net decrease of €254.1 million in cash and cash equivalents and current financial investments was recorded during the first six months of 2024, compared to a net decrease of €192.5 million during the first six months of 2023. This net decrease was composed of

(i) €250.0 million of operational cash burn including €78.6 million cash impact of business development activities, (ii) €36.9 million for the acquisition of financial assets held at fair value through other comprehensive income, (iii) €31.2 million of net cash in related to the sale of the Jyseleca® business to Alfasigma of which €40.0 million has been transferred to an escrow account, offset by (iv) €41.6 million of positive exchange rate differences, positive changes in fair value of current financial investments and variation in accrued interest income.

The operational cash burn (or operational cash flow if this liquidity measure is positive) is a financial measure that is not calculated in accordance with IFRS. Operational cash burn/cash flow is defined as the increase or decrease in our cash and cash equivalents (excluding the effect of exchange rate differences on our cash and cash equivalents), minus:

1. the net proceeds, if any, from share capital and share premium increases included in the net cash flows generated from/used in (–) financing activities
2. the net proceeds or cash used, if any, in acquisitions or disposals of businesses; the acquisition of financial assets held at fair value through other comprehensive income; the movement in restricted cash and movement in current financial investments, if any, the loans and advances given to third parties, if any, included in the net cash flows generated from/used in (–) investing activities
3. the cash used for other liabilities related to the acquisition or disposal of businesses, if any, included in the net cash flows generated from/used in (–) operating activities.

This alternative liquidity measure is in our view an important metric for a biotech company in the development stage.

The following table provides a reconciliation of the operational cash burn: