31. Related parties
Relationship and transactions with entities with control of, or significant influence over, Galapagos
Gilead
Gilead is exercising significant influence over Galapagos as from the equity subscription on 23 August 2019. As a result of the equity subscription we received a transparency notification from Gilead on 28 August 2019 confirming they held 22.04% of the then issued and outstanding shares of Galapagos.
By exercising warrant A on 6 November 2019, Gilead increased its ownership in Galapagos to 25.10% of the then outstanding shares. Gilead further increased its ownership to 25.84% at 31 December 2019. Gilead’s ownership then diluted to 25.54% at 31 December 2020 and to 25.49% at 31 December 2021, due to four capital increases resulting from the exercise of subscription rights under employee subscription right plans in the course of respectively 2020 and 2021.
The presumption of significant influence is also confirmed by the fact that Gilead has the right, for as long as it holds more than 20% of Galapagos’ share capital, to appoint two investor board designees to Galapagos’ supervisory board, out of a total of eight.
The following balances are outstanding at the end of the reporting period in relation to Gilead:
|
31 December |
|
|---|---|---|
(thousands of €) |
2021 |
2020 |
Relations with Gilead |
|
|
Non-current trade receivables |
- |
50,000 |
Trade and other receivables |
88,246 |
132,825 |
Trade and other payables |
11,580 |
27,074 |
The trade and other receivables on 31 December 2021 contain €50 million of receivables related to the in 2020 modified collaboration for filgotinib, for which we already received €110.0 million in the course of 2021. They also contain €12.6 million related to the transfer of the sponsorship and operational and financial responsibility of the ongoing DIVERSITY clinical trial from Gilead to us, €23.8 million of profit and cost sharing receivables relating to our collaboration for filgotinib and €1.9 million receivables relating to royalties. The outstanding liabilities mainly relate to the cross charges from Gilead for the development costs sharing of filgotinib in the fourth quarter of 2021 (€5.7 million) and €1.6 million to purchases of finished goods.
During 2021 we recognized in revenue €230.6 million (€229.6 million for the year ended 31 December 2020) relating to the performance obligation for the drug discovery platform and a total of €235.7 million (€228.1 million for the year ended 31 December 2020) representing the total impact on our revenues coming from the filgotinib performance obligation. The latter consists of upfront payments and milestone payments that were recognized in accordance with the percentage of completion of the underlying performance obligation.
Additionally, we recognized in 2021 royalty income for an amount of €3.8 million in relation to the commercialization of filgotinib (€16.2 million for the year ended 31 December 2020).
Furthermore, we recognized €18.1 million (€34.1 million for the year ended 31 December 2020) of cost reimbursements from Gilead related to the development of GLPG1690 as a decrease of the related expenses (on the line research and development expenditure). An amount of €81.3 million (€101.0 million for the year ended 31 December 2020) relating to cross charges from Gilead relating to filgotinib was recognized as expense on the line research and development expenditure.
Finally, we recognized in 2021 €59.7 million as a deduction of sales and marketing expenses and €7.0 million as a deduction of research and development expenditure (compared to a deduction of €4.7 million of sales & marketing expenses and a deduction of €3.1 million of research & development expenditure for the year ended 31 December 2020) mainly relating to our 50/50 profit/(cost) share mechanism with Gilead for direct sales of filgotinib in the shared territory and expenses incurred for the co-promotion activities for filgotinib.
We purchased raw materials, semi-finished products and finished products of Jyseleca from Gilead for an amount of €24.9 million for the year ended 31 December 2021 (€0.2 million for the year ended 31 December 2020).
As at 31 December 2021 we have two outstanding performance obligations under IFRS 15 towards Gilead, being the performance obligation related to our drug discovery platform and the performance obligation relating to filgotinib. This results in an outstanding deferred income balance of €1.8 billion for the drug discovery platform (including the warrant issuance liability relating to subsequent warrant B) and €605 million for the performance obligation relating to filgotinib.
A detailed explanation of our transactions with Gilead in 2020 and 2021 can be found in the section titled Agreements with major Galapagos NV shareholders. There are no other shareholders or other entities who, solely or jointly, control Galapagos or exercise significant influence over Galapagos.
Relationship and transactions with subsidiaries
Please see note 32 for an overview of the consolidated companies of the group, which are all wholly-owned subsidiaries of Galapagos NV.
Relationship and transactions with key management personnel
Our key management personnel consists of the members of the management board and members of the supervisory board. All amounts mentioned in this section are based on expenses recognized in the financial statements for the relevant financial year.
Remuneration of key management personnel
On 31 December 2021, our management board had five members: Mr. Onno van de Stolpe, Mr. Bart Filius, Dr. Andre Hoekema, Dr. Walid Abi-Saab and Mr. Michele Manto. They provide their services to us on a full-time basis. On 31 December 2021, our supervisory board consisted of eight members: Dr. Raj Parekh, Mr. Howard Rowe, Ms. Katrine Bosley, Dr. Mary Kerr, Mr. Peter Guenter, Mr. Daniel O’Day, Dr. Linda Higgins and Dr. Elisabeth Svanberg.
Effective from 1 January 2020, Galapagos no longer grants any subscription rights to supervisory board members, taking into account the stricter rules of the Belgian Companies Code. Prior to 2020, supervisory board members were granted subscription rights.
Dr. Wigerinck left Galapagos and was our CSO and a management board member until 30 November 2021 and hence the table below for financial year 2021 contains disclosures on his remuneration until the aforementioned date, including his severance package.
Reference is made to the Remuneration Report, which discloses the remuneration awarded to each supervisory board and management board member individually during 2021.
The remuneration package of the members of key management personnel comprises:
|
Year ended 31 December |
|||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Thousands of € (except for the number of subscription rights and RSUs) |
2021 |
2020 |
||||||||||||||||||||
Remuneration of key management personnel: |
|
|
||||||||||||||||||||
Short-term benefits |
4,264 |
3,102 |
||||||||||||||||||||
Management board members as a group(1) |
|
|
||||||||||||||||||||
Gross salary |
2,621 |
2,531 |
||||||||||||||||||||
Cash bonus(2) |
1,172 |
433 |
||||||||||||||||||||
Other short-term benefits |
471 |
138 |
||||||||||||||||||||
Long-term benefits for management board members as a group(3) |
- |
- |
||||||||||||||||||||
Board fees and other short-term benefits for supervisory board members |
|
|
||||||||||||||||||||
Raj Parekh |
220 |
220 |
||||||||||||||||||||
Howard Rowe |
120 |
125 |
||||||||||||||||||||
Katrine Bosley(4) |
65 |
115 |
||||||||||||||||||||
Mary Kerr |
115 |
115 |
||||||||||||||||||||
Peter Guenter |
115 |
115 |
||||||||||||||||||||
Daniel O'Day(5) |
- |
- |
||||||||||||||||||||
Linda Higgins(5) |
- |
- |
||||||||||||||||||||
Elizabeth Svanberg(6) |
115 |
78 |
||||||||||||||||||||
Post-employment benefits(7) |
399 |
392 |
||||||||||||||||||||
Total benefits excluding subscription rights and RSUs |
5,413 |
4,262 |
||||||||||||||||||||
Severance payments(8) |
802 |
- |
||||||||||||||||||||
Number of subscription rights granted in the year |
|
|
||||||||||||||||||||
Management board members as a group(1) |
275,000 |
275,000 |
||||||||||||||||||||
Onno van de Stolpe |
85,000 |
85,000 |
||||||||||||||||||||
Bart Filius |
50,000 |
50,000 |
||||||||||||||||||||
Andre Hoekema |
30,000 |
30,000 |
||||||||||||||||||||
Piet Wigerinck(9) |
40,000 |
40,000 |
||||||||||||||||||||
Walid Abi-Saab |
40,000 |
40,000 |
||||||||||||||||||||
Michele Manto |
30,000 |
30,000 |
||||||||||||||||||||
Total number of subscription rights granted in the year |
275,000 |
275,000 |
||||||||||||||||||||
Total cost of subscription rights granted in the year under IFRS 2 |
5,629 |
22,921 |
||||||||||||||||||||
Number of RSUs granted in the year(10) |
|
|
||||||||||||||||||||
Onno van de Stolpe |
63,830 |
18,317 |
||||||||||||||||||||
Bart Filius |
62,730 |
12,600 |
||||||||||||||||||||
Andre Hoekema |
51,433 |
832 |
||||||||||||||||||||
Piet Wigerinck(9) |
835 |
12,080 |
||||||||||||||||||||
Walid Abi-Saab |
44,038 |
12,080 |
||||||||||||||||||||
Michele Manto |
31,694 |
5,920 |
||||||||||||||||||||
Total number of RSUs granted in the year |
254,560 |
61,829 |
||||||||||||||||||||
|
||||||||||||||||||||||
Other
No loans, quasi-loans or other guarantees were given by Galapagos NV or any of its subsidiaries to members of the supervisory board and of the management board. We have not entered into transactions with our key management personnel, other than as described above with respect to remuneration arrangements relating to the exercise or termination of their mandates as members of the management board and the supervisory board.