Financial Performance for the year ending 31 December 2023

As a consequence of the recent sale of our Jyseleca® business to Alfasigma, the revenues and costs related to Jyseleca® for the year 2023 are presented separately from the results of our continuing operations on the line “Net profit/loss (–) from discontinued operations” in our consolidated income statement. The comparative year 2022 has been restated accordingly for the presentation of the results related to the Jyseleca® business.

Continuing Operations

Collaboration revenues from our continuing operations amounted to €239.7 million in 2023, compared to €241.2 million last year.

The revenue recognition related to the exclusive access rights granted to Gilead for our drug discovery platform amounted to €230.2 million in 2023 (compared to €230.4 million in 2022). We also recognized royalty income from Gilead for Jyseleca® for €9.5 million in 2023 (compared to €10.7 million in 2022).

Our deferred income balance at 31 December 2023 includes €1.3 billion allocated to our drug discovery platform that is recognized linearly over the remaining period of our 10-year collaboration.

Our R&D expenditure in 2023 amounted to €241.3 million, compared to €269.8 million in 2022. Depreciation and impairment costs in 2023 amounted to €22.3 million (compared to €51.5 million in 2022). This decrease was primarily due to an impairment of €26.7 million of previously capitalized upfront fees related to our collaboration with Molecure and impairments of €8.9 million of intangible assets related to other discontinued projects, both recorded in 2022. Personnel costs decreased from €115.5 million in 2022 to €95.8 million in 2023 primarily related to lower accelerated non-cash cost recognition for subscription right plans related to good leavers. This was partly offset by an increase in costs from €61.2 million in 2022 to €83.0 million in 2023 following the evolution of our CAR-T programs.

Our S&M expenses amounted to €5.7 million in 2023, compared to €3.5 million in 2022.

Our G&A expenses amounted to €128.3 million in 2023, compared to €135.2 million in 2022. The cost decrease was explained by a decrease in personnel costs to €66.1 million in 2023 compared €76.5 million to 2022, due to lower accelerated non-cash cost recognition for subscription right plans related to good leavers. Depreciation and impairment expenses increased from €8.5 million in 2022 to €16.0 million in 2023 due to an impairment of €7.6 million on a construction project in Mechelen, Belgium.

Other operating income (€47.3 million in 2023 compared to €36.1 million in 2022) increased due to higher grant income (grant from the National Institute for Health and Disability Insurance in 2023 of €6.1 million), higher other operating income (rent income) and higher R&D incentives income.

We reported an operating loss amounting to €88.3 million in 2023, compared to an operating loss of €131.1 million in 2022.

Net financial income in 2023 amounted to €93.9 million, compared to net financial income of €60.2 million in 2022. Net financial income in 2023 was primarily attributable to €38.3 million of net fair value gains of our current financial investments, partly offset by €20.4 million of unrealized currency exchange losses on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars. Net interest income amounted to €77.5 million in 2023 as compared to €11.2 million of net interest income in 2022.

We had €9.6 million of tax expenses in 2023 (as compared to €0.6 million in 2022). This increase was primarily due to the re-assessment of net deferred tax liabilities and corporate income tax payables as a result of a one-off intercompany transaction. 

We reported a net loss from continuing operations in 2023 of €4.0 million, compared to a net loss from continuing operations of €71.4 million in 2022.

Discontinued operations

Net profit of discontinued operations attributable to the Jyseleca® business amounted to €215.7 million in 2023, compared to €146.6 million net loss of discontinued operations in 2022.

Jyseleca® product net sales in Europe amounted to €112.3 million in 2023, compared to €87.6 million in 2022.

Cost of sales related to Jyseleca® net sales in Europe amounted to €18.0 million in 2023, compared to €12.1 million for the year 2022.

Collaboration revenues in discontinued operations related to revenue recognition of the collaboration agreement with Gilead for the filgotinib development amounted to €429.4 million in 2023 compared to €174.4 million in 2022. This increase was explained by a substantial decrease in our assessment of the remaining costs to complete the filgotinib development following the recent sale of our Jyseleca® business to Alfasigma, including the transfer of the remaining development performance obligation after closing of the transaction. As a consequence, we saw a substantial increase of the percentage of completion of our performance obligation, and a positive catch-up released to revenues.

Total operating profit from discontinued operations amounted to €217.3 million in 2023, compared to an operating loss of €136.5 million in 2022.

The decrease in R&D expenditures for the development of filgotinib was mainly due to the discontinuation in early 2023 of the DIVERSITY clinical trials in CD. Personnel expenses decreased by €15.0 million, from €74.6 million in 2022 to €59.6 million in 2023, subcontracting costs decreased as well by €39.0 million, from €153.7 million in 2022 to €114.7 million in 2023.

The decrease in S&M expenses from €144.1 million in 2022 to €113.4 million in 2023 is reflected in a decrease in personnel costs by €10.8 million, from €70.2 million in 2022 to €59.3 million in 2023 due to lower bonus costs and costs of our subscription right plans, while external outsourcing costs decreased by €17.0 million, from €52.8 million in 2022 to €35.8 million in 2023 primarily explained by lower costs for marketing campaigns and promotional expenses. 

G&A expenses attributable to the Jyseleca® business increased from €9.8 million in 2022 to €18.0 million in 2023 primarily due to an increase in costs of our subscription right plans; we experienced unusually low costs in 2022 due to a reversal of costs related to voluntary leavers and saw an increase in salaries in 2023. The G&A expenses for the year 2023 also include one-off legal fees related to the transaction with Alfasigma for €3.5 million.

Other operating income attributable to the Jyseleca® business increased, mainly due to higher R&D incentives income.

The movement in other financial income/expenses is primarily explained by a lower discounting effect of long-term deferred revenue for the development of filgotinib, because we expect to recognize the remaining revenues in 2024. The financing component related to our filgotinib performance obligation was re-assessed on 31 December 2023, considering the reduced duration and the expected end of the performance obligation for the development of filgotinib.

We reported a net profit in 2023 of €211.7 million, compared to a net loss of €218.0 million in 2022.

Cash, cash equivalents and current financial investments

Current financial investments and cash and cash equivalents totaled €3,684.5 million on 31 December 2023 (including €20.0 million of accrued interest income) as compared to €4,094.1 million on 31 December 2022 (excluding €9.9 million of net accrued interest income).

Total net decrease in cash and cash equivalents and current financial investments amounted to €409.6 million in 2023, compared to a net decrease of €609.1 million in 2022. This net decrease was composed of (i) €414.8 million of operational cash burn, (ii) €20.4 million of negative exchange rate differences, (iii) €7.0 million cash-out related to the acquisition of CellPoint B.V., (iv) €14.0 million acquisition of financial assets held at fair value through profit or loss, offset by (v) €24.3 million positive changes in fair value of current financial investments, (vi) €1.8 million of cash proceeds from capital and share premium increase from exercise of subscription rights in 2023, and (vii) €12.9 million of accrued interest income on term deposits and €7.6 million accrued interest income on treasury bills.

Operational cash burn (or operational cash flow if this liquidity measure is positive) is a financial measure that is not calculated in accordance with IFRS. Operational cash burn/cash flow is defined as the decrease or increase in our cash and cash equivalents (excluding the effect of exchange rate differences on cash and cash equivalents), minus:

1. the net proceeds, if any, from share capital and share premium increases included in the net cash flow generated from/used in (–) financing activities
2. the net proceeds or cash used, if any, in acquisitions or disposals of businesses and financial assets held at fair value through profit or loss; the movement in restricted cash and movement in current financial investments, if any, the loans and advances given to third parties, if any, included in the net cash flow generated from/used in (–) investing activities
3. the cash used for other liabilities related to the acquisition of businesses, if any, the accrued interest on cash and cash equivalents, if any, included in the net cash flow generated from/used in (–) operating activities.

This alternative liquidity measure is, in our view, an important metric for a biotech company in the development stage.

The following table presents a reconciliation of operational cash burn, to the closest IFRS measures, for each of the periods indicated: