6. Operating costs
Operating result has been calculated after charging (–) / crediting:
Research and development expenditure
The following table summarizes research and development expenditure for the years ended 31 December 2016 and 2015.
|
Year ended 31 December |
|
(thousands of €) |
2016 |
2015 |
Personnel costs |
(42,315) |
(35,875) |
Subcontracting |
(65,649) |
(65,883) |
Disposables and lab fees and premises costs |
(20,414) |
(18,696) |
Other operating expenses |
(11,196) |
(9,260) |
Total research and development expenditure |
(139,573) |
(129,714) |
R&D expenditure increased by €9.9 million, or 8%, to €139.6 million for the year ended 31 December 2016, from €129.7 million for the year ended 31 December 2015. This increase was principally due to:
- Increased R&D personnel costs of €6.4 million, or 18%, from €35.9 million for the year ended 31 December 2015 to €42.3 million for the year ended 31 December 2016, which was explained by an enlarged workforce, higher warrant costs and a higher payable for short term and long term management bonus, mainly as a result of the increase of our share price change relative to the Next Biotech Index on Euronext
- Intensified use of lab consumables was the main driver of the increase in disposables, lab fees and premises costs of €1.7 million, or 9%, from €18.7 million for the year ended 31 December 2015 to €20.4 million for the year ended 31 December 2016
- Other operating expenses increased by €1.9 million, or 21%, from €9.3 million for the year ended 31 December 2015 to €11.2 million for the year ended 31 December 2016, primarily due to an increase in depreciation of €1.0 million.
Subcontracting costs were relatively stable and decreased slightly by €0.2 million, or 0.4%, from €65.9 million for the year ended 31 December 2015 to €65.6 million for the year ended 31 December 2016.
The table below summarizes our research and development expenditure for the years ended 31 December 2016 and 2015, broken down by research and development expenses under alliance1All filgotinib costs (both costs incurred in the period under alliance (with AbbVie) and costs incurred after AbbVie’s opt-out decision in September 2015) are presented as “R&D under alliance” or as “partnered” in the tables in this section for the year ended 31 December 2015, as a new alliance was signed in December 2015 with Gilead for this program.
|
Year ended 31 December |
|
(thousands of €) |
2016 |
2015 |
R&D under alliance |
(71,980) |
(80,832) |
Galapagos funded R&D |
(67,593) |
(48,882) |
Total R&D expenditure |
(139,573) |
(129,714) |
We tracked all research and development expenditures against detailed budgets and allocated them by individual project. The table below summarizes our research and development expenditure for the years ended 31 December 2016 and 2015, broken down by program:
|
Year ended 31 December |
|
(thousands of €) |
2016 |
2015 |
Filgotinib program (partnered) |
(22,376) |
(35,404) |
CF program (partnered) |
(31,203) |
(25,634) |
IPF program on GLPG1690 (proprietary) |
(7,129) |
(4,612) |
OA program on GLPG1972 (partnered) |
(6,538) |
(5,832) |
AtD program on MOR106 (partnered) |
(3,491) |
(4,651) |
Other |
(68,836) |
(53,582) |
Total R&D expenditure |
(139,573) |
(129,714) |
R&D expenditure under alliance decreased by €8.9 million, or 11%, from €80.8 million for the year ended 31 December 2015 to €72.0 million for the year ended 31 December 2016, mainly due to decreased R&D spending in our RA and IBD program on filgotinib (partnered with AbbVie in 2015 and partnered with Gilead in 2016), which has been partially offset by increased R&D spending on our CF program in collaboration with AbbVie. We increased our investments in our own funded portfolio by €18.7 million, or 38%, from €48.9 million for the year ended 31 December 2015 to €67.6 million for the year ended 31 December 2016, primarily because of intensified research investments in our proprietary programs on inflammation, HBV and fibrosis, as well as increased spending on our proprietary IPF program GLPG1690.
General and administrative expenses
The following table summarizes the general and administrative expenses for the years ended 31 December 2016 and 2015.
|
Year ended 31 December |
|
(thousands of €) |
2016 |
2015 |
Personnel costs and directors fees |
(15,160) |
(12,739) |
Other operating expenses |
(6,584) |
(6,388) |
Total general and administrative expenses |
(21,744) |
(19,127) |
General and administrative expenses amounted to €19.1 million for the year ended 31 December 2015 and increased by €2.6 million, or 14%, to €21.7 million for the year ended 31 December 2016. This increase was principally due to directors fees, which increased by €2.7 million, or 116%, from €2.4 million for the year ended 31 December 2015 to €5.1 million for the year ended 31 December 2016, resulting from various effects, such as increased costs of share-based payments plans (our warrant plans) and increased payables for short and long term management bonus, mainly as a result of the increase of our share price change relative to the Next Biotech Index on Euronext.
Sales and marketing expenses
The following table summarizes the sales and marketing expenses for the years ended 31 December 2016 and 2015.
|
Year ended 31 December |
|
(thousands of €) |
2016 |
2015 |
Personnel costs |
(1,167) |
(785) |
Other operating expenses |
(618) |
(397) |
Total sales and marketing expenses |
(1,785) |
(1,182) |
Sales and marketing expenses increased by €0.6 million, or 51%, from €1.2 million for the year ended 31 December 2015 to €1.8 million for the year ended 31 December 2016.