7. 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 2019 and 2018.
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2019 |
2018 |
Personnel costs |
(124,260) |
(81,352) |
Subcontracting |
(249,926) |
(197,644) |
Disposables and lab fees and premises costs |
(23,880) |
(25,525) |
Depreciation |
(10,874) |
(5,655) |
Other operating expenses |
(18,380) |
(12,699) |
Total research and development expenditure |
(427,320) |
(322,875) |
The R&D expenditure increase reflects the increase of our investments to advance our R&D programs. This increase was principally due to:
- Increased R&D personnel costs were explained by an enlarged workforce following the growth in our R&D activities as well as an exceptional bonus following the successful closing of the Gilead transaction
- The increase in subcontracting costs is mainly due to increased expenditure in our partnered programs with Gilead, including our increased cost share for filgotinib. Moreover expenditures have further increased as we advance our IPF program, our OA program GLPG1972, our Toledo program and our other programs.
- Premises costs decreased and depreciation expenses increased due to the accounting treatment related to the adoption of IFRS 16 (the effect of IFRS 16 on the depreciation expenses amounted to €5.3 million)
- Other operating expenses increased in line with the increase of the R&D staff.
The table below summarizes our research and development expenditure for the years ended 31 December 2019 and 2018, broken down by program:
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2019 |
2018 |
Filgotinib program |
(100,032) |
(66,138) |
IPF program on GLPG1690 |
(75,951) |
(72,718) |
OA program on GLPG1972 |
(19,958) |
(15,751) |
Toledo program |
(47,204) |
(20,967) |
CF program |
(3,897) |
(30,137) |
AtD program on MOR106 |
(24,051) |
(14,999) |
Other programs |
(156,227) |
(102,165) |
Total research and development expenditure |
(427,320) |
(322,875) |
General and administrative expenses
The following table summarizes the general and administrative expenses for the years ended 31 December 2019 and 2018.
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2019 |
2018 |
Personnel costs and directors fees |
(51,906) |
(25,495) |
Depreciation |
(1,513) |
(513) |
Legal and professional fees |
(11,775) |
(4,284) |
Other operating expenses |
(8,506) |
(5,339) |
Total general and administrative expenses |
(73,701) |
(35,631) |
The increase in our general and administrative expenses in 2019 was mainly due to a planned increase in the staff supporting the growth of the company, as well as an exceptional bonus following the successful closing of the Gilead transaction, costs related to the RSU plans granted in 2019 and additional legal and professional fees.
Sales and marketing expenses
The following table summarizes the sales and marketing expenses for the years ended 31 December 2019 and 2018.
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2019 |
2018 |
Personnel costs |
(7,558) |
(2,282) |
Depreciation |
(61) |
– |
External outsourcing costs |
(15,722) |
(1,284) |
Other operating expenses |
(1,236) |
(580) |
Total sales and marketing expenses |
(24,577) |
(4,146) |
The increase in our sales and marketing expenses in 2019 is mainly explained by an increase in personnel costs due to recruitments, as well as related increase in outsourcing costs. The latter was mainly due to €8.2 million of expenses relating to our 50/50 cost share mechanism with Gilead for expenses incurred in preparation for the co-promotion activities for filgotinib.