Overview statutory results of Galapagos NV

This overview only concerns the non-consolidated statutory results of Galapagos NV. These results are part of the consolidated results as discussed in the Letter from the management.

Galapagos NV’s operating income in 2021 amounted to €916.0 million compared to €1,037.0 million in 2020. This decrease is due to a lower turnover for €55.4 million, primarily due to decreased milestone revenues, upfront payments and royalties related to the collaboration agreement with Gilead. There was also a decrease due to internally generated intangible assets – being capitalized R&D expenses – which contributed by €68.1 million less to operating income than previous year. Other operating income amounted to €18.5 million, including €7.3 million of grants recognized for R&D projects and €9.0 million recuperation of withholding taxes for scientists.

The operating costs of 2021 amounted to €1,107.7 million compared to €1,146.0 million in 2020. Services and other goods decreased substantially to €500.0 million compared to €543.0 million in 2020, primarily due to decreased internal and external subcontracting for our preclinical studies and clinical trials as well as decreased fees for insourced personnel.

Material purchases increased slightly from €10.3 million in 2020 to €13.1 million in 2021.

Personnel costs in 2021 amounted to €70.4 million compared to €59.9 million in 2020. The number of employees at Galapagos NV at the end of 2021 amounted to 460 as compared to 508 at the end of 2020, excluding insourced personnel. The average number of FTE in 2021 however increased to 487, compared to 436 in 2020.

Depreciation decreased to €401.8 million in 2021, compared to €467.8 million in 2020, and related primarily to amortization of R&D expenses.

Galapagos NV’s 2021 financial income increased to €85.8 million compared to €25.8 million in 2020, while financial costs decreased to €28.1 million compared to €139.9 million in 2020. This can mainly be explained by higher currency exchange gains on U.S. dollar in 2021. Non-recurring finance income in 2021 consisted of €33.5 million of gain on sale of subsidiaries. Non-recurring finance cost in 2021 consisted of impairment on financial assets.

Tax income recorded in 2021 of €20.2 million as compared to €21.6 million tax income in 2020, related to tax incentives for investments in intangible fixed assets.

Galapagos NV capitalizes its incurred R&D expenses to the extent that the costs capitalized do not exceed a prudent estimate of their value in use or their future economic benefits for the entity. The ability to recover the capitalized amounts takes into account assumptions (e.g. future peak sales, market share, sale prices, attrition rates regarding the successful completion of the different R&D phases) which have a highly judgmental nature and depend on the outcome of uncertain factors which are beyond the control of the entity (e.g. test results). The achievement of these assumptions is critical and may impact the recoverability of the amounts capitalized. R&D expenses capitalized are fully amortized in the year in which they are capitalized.

Investments in fixed assets in 2021 amounted to €10.5 million, excluding the internally generated assets. They consisted mainly of investments in intangible assets, being a license payment and software, as well of costs for building improvements, new laboratory and IT equipment.

Non-current and current other receivables amounted to respectively €92.5 million and €116.6 million and included the receivable for tax incentives amounting to respectively €92.5 million and €6.6 million in 2021, compared to other receivables for tax incentives of €78.3 million and €5.5 million in 2020.

Galapagos NV’s cash position at the end of 2021 amounted to €4,681.3 million.

The non-consolidated annual accounts of Galapagos NV which we submit for your approval were prepared in accordance with Belgian accounting rules as well as with the legal and regulatory requirements. They show a negative result. The financial year 2021 closed with a loss of €92.7 million compared to a loss of €196.0 million in 2020. The non-consolidated annual accounts of Galapagos NV show accumulated losses of €369.2 million as at 31 December 2021; we refer to the Going concern statement for justification for the application of the valuation rules under the going concern assumption.

In 2021, Galapagos NV did not make use of financial instruments.