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 2018 and 2017.
|
Year ended 31 December |
|
(thousands of €) |
2018 |
2017 |
Personnel costs |
(81,352) |
(59,950) |
Subcontracting |
(197,644) |
(123,054) |
Disposables and lab fees and premises costs |
(25,525) |
(22,277) |
Other operating expenses |
(18,355) |
(13,221) |
Total research and development expenditure |
(322,875) |
(218,502) |
R&D expenditure increased by €104.4 million, or 48%, to €322.9 million for the year ended 31 December 2018, from €218.5 million for the year ended 31 December 2017, reflecting the increase of our investments to advance our partnered and proprietary R&D programs. This increase was principally due to:
- Increased R&D personnel costs of €21.4 million, or 36%, from €59.9 million for the year ended 31 December 2017 to €81.4 million for the year ended 31 December 2018, which was explained by an enlarged workforce and higher warrant costs, mainly as a result of the increase of our share price
- Increase in subcontracting costs by €74.6 million, or 61%, from €123.1 million for the year ended 31 December 2017 to €197.6 million for the year ended 31 December 2018 mainly due to increased spending in our IPF program and in our RA, IBD and other indications program on filgotinib
- Intensified spending of lab consumables was the main driver of the increase in disposables, lab fees and premises costs of €3.2 million, or 15%, from €22.3 million for the year ended 31 December 2017 to €25.5 million for the year ended 31 December 2018
- Other operating expenses increased by €5.2 million, or 39%, from €13.2 million for the year ended 31 December 2017 to €18.4 million for the year ended 31 December 2018, due to an increased headcount.
The table below summarizes our research and development expenditure for the years ended 31 December 2018 and 2017, broken down by research and development expenses under alliance and own funded research and development expenses.
|
Year ended 31 December |
|
(thousands of €) |
2018 |
2017 |
R&D under alliance |
(134,046) |
(122,663) |
Galapagos funded R&D |
(188,829) |
(95,839) |
Total R&D expenditure |
(322,875) |
(218,502) |
We track all research and development expenditures against detailed budgets and allocate them by individual project. The table below summarizes our research and development expenditure for the years ended 31 December 2018 and 2017, broken down by program:
|
Year ended 31 December |
|
(thousands of €) |
2018 |
2017 |
Filgotinib program (partnered) |
(66,138) |
(53,212) |
CF program (partnered) |
(30,137) |
(46,192) |
IPF program on GLPG1690 (proprietary) |
(72,718) |
(16,190) |
OA program on GLPG1972 (partnered) |
(15,751) |
(7,317) |
AtD program on MOR106 (partnered) |
(14,999) |
(8,404) |
Other |
(123,132) |
(87,187) |
Total R&D expenditure |
(322,875) |
(218,502) |
R&D expenditure under alliance increased by €11.4 million, or 9%, to €134.0 million for the year ended 31 December 2018, from €122.7 million for the year ended 31 December 2017, mainly due to increased R&D spending in our RA, IBD and other indications program on filgotinib (partnered with Gilead). We increased our investments in our own funded portfolio by €93.0 million, or 97%, to €188.8 million for the year ended 31 December 2018, from €95.8 million for the year ended 31 December 2017, because of intensified research investments in our proprietary programs primarily on our proprietary IPF program GLPG1690, and also due to increased spending on our inflammation and fibrosis programs.
General and administrative expenses
The following table summarizes the general and administrative expenses for the years ended 31 December 2018 and 2017.
|
Year ended 31 December |
|
(thousands of €) |
2018 |
2017 |
Personnel costs and directors fees |
(25,495) |
(17,756) |
Other operating expenses |
(10,136) |
(6,659) |
Total general and administrative expenses |
(35,631) |
(24,415) |
General and administrative expenses amounted to €24.4 million for the year ended 31 December 2017 and increased by €11.2 million, or 46%, to €35.6 million for the year ended 31 December 2018. This increase was principally due to higher personnel expenses, which increased by €7.7 million, or 44%, from €17.8 million for the year ended 31 December 2017 to €25.5 million for the year ended 31 December 2018, resulting from various effects, such as increased headcount and increased costs of share-based payments plans (our warrant plans), mainly as a result of the increase of our share price.
Sales and marketing expenses
The following table summarizes the sales and marketing expenses for the years ended 31 December 2018 and 2017.
|
Year ended 31 December |
|
(thousands of €) |
2018 |
2017 |
Personnel costs |
(2,282) |
(2,156) |
Other operating expenses |
(1,864) |
(646) |
Total sales and marketing expenses |
(4,146) |
(2,803) |
Sales and marketing expenses increased by €1.3 million, or 48%, from €2.8 million for the year ended 31 December 2017 to €4.1 million for the year ended 31 December 2018. This increase was mainly due to the fact that we started to build our commercial organization in preparation for the co-promotion activities with Gilead for filgotinib in the co-promotion territories.