2024 Financial Highlights

Financial Performance for the Year Ending December 31, 2024

The planned strategic reorganization and separation into two publicly traded companies announced on January 8, 2025, was assessed to be a non-adjusting subsequent event for the financial statements for the year ended December 31, 2024.

As a consequence of the sale of our Jyseleca® (filgotinib) business to Alfasigma, the revenues and costs related to Jyseleca® for the years 2024 and 2023 are presented separately from our results of the continuing operations on the line “Net profit from discontinued operations, net of tax” in our consolidated income statement.

Continuing Operations

Total net revenues from our continuing operations amounted to €275.6 million in 2024, compared to €239.7 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 2024 (compared to €230.2 million in 2023). We also recognized royalty income from Gilead for Jyseleca® for €10.6 million in 2024 (compared to €9.5 million in 2023). Our deferred income balance at December 31, 2024 includes €1.1 billion allocated to our drug discovery platform.

Cost of sales amounted to €34.9 million in 2024, compared to nil in 2023, and related to the supply of Jyseleca® to Alfasigma under the transition agreement. The related revenues are reported in total net revenues, as supply revenues.

R&D expenses in 2024 amounted to €335.5 million, compared to €241.3 million in 2023.

Subcontracting costs increased by €77.1 million from €83.0 million in 2023 to €160.1 million in 2024 primarily driven by the cell therapy programs in oncology. Depreciation and impairment costs in 2024 amounted to €35.4 million, compared to €22.3 million in 2023, and increased due to the depreciation on the upfront exclusivity consideration paid to Adaptimmune. Personnel costs decreased from €95.8 million in 2023 to €87.7 million in 2024 primarily due to lower accelerated non-cash cost recognition for subscription right plans and reduced severance costs.

S&M expenses amounted to €17.2 million in 2024, compared to €5.7 million in 2023, and increased due to higher personnel costs related to strategic marketing in oncology. We also recorded in 2024 a bad debt provision of €4.0 million for a disputed invoice.

G&A expenses amounted to €117.2 million in 2024, compared to €128.3 million in 2023. This cost decrease was explained by a decrease in personnel costs to €52.6 million in 2024 compared €66.1 million in 2023, due to lower accelerated non-cash cost recognition for subscription right plans and reduced severance costs. Depreciation and impairment expenses decreased from €16.0 million in 2023 to €8.7 million in 2024 due to an impairment in 2023 of €7.6 million on a construction project in Mechelen, Belgium. The increase in legal and professional fees from €23.3 million in 2023 to €34.0 million in 2024 mainly related to business development activities and corporate projects.

Other operating income (€40.8 million in 2024 compared to €47.3 million in 2023) decreased due to high grant income in 2023 (including grant from the National Institute of Health and Disability Insurance in 2023 of €6.1 million), and lower R&D incentives income, partly offset by higher other operating income (rent income).

We reported an operating loss amounting to €188.3 million in 2024, compared to an operating loss of €88.3 million in 2023.

Net financial income in 2024 amounted to €185.3 million, compared to net financial income of €93.9 million in 2023. Net financial income in 2024 was primarily attributable to €73.7 million of net fair value gains of our current financial investments, and to €22.2 million of unrealized currency exchange gains on our cash and cash equivalents and current financial investments at amortized cost in U.S. dollars. Net interest income amounted to €88.5 million in 2024 as compared to €77.5 million of net interest income in 2023.

We had €1.8 million of tax income in 2024 (as compared to €9.6 million tax expenses in 2023). This decrease was primarily due to the re-assessment in 2023 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 2024 of €1.3 million, compared to a net loss from continuing operations of €4.0 million in 2023.

Discontinued Operations

Jyseleca® product net sales in Europe amounted to €11.5 million in 2024 consisting of sales to customers in January 2024. Product net sales amounted to €112.3 million in 2023. Beginning February 1, 2024, all economics linked to the sales of Jyseleca® in Europe are for the account of Alfasigma.

Collaboration revenues in discontinued operations related to revenue recognition of the collaboration agreement with Gilead for the filgotinib development amounted to €26.0 million in 2024 compared to €429.4 million in 2023. The sale of the Jyseleca® business to Alfasigma on January 31, 2024 led to the full recognition in revenue of the remaining deferred income related to filgotinib.

Cost of sales related to Jyseleca® net sales were €1.7 million in 2024, compared to €18.0 million in 2023.

Total operating profit from discontinued operations amounted to €71.2 million in 2024, compared to an operating profit of €217.3 million in 2023.

R&D expenses for the development of filgotinib amounted to €8.2 million in 2024, compared to €190.2 million in 2023. Beginning February 1, 2024, all filgotinib development expenses still incurred during the transition period are recharged to Alfasigma.

S&M expenses decreased from €113.4 million in 2023 to €11.5 million in 2024, while G&A expenses attributable to the Jyseleca® business decreased from €18.0 million in 2023 to €1.1 million in 2024. Beginning February 1, 2024, all remaining G&A and S&M expenses relating to Jyseleca® are recharged to Alfasigma. The G&A expenses for the year 2023 also included one-off legal fees related to the transaction with Alfasigma for €3.5 million.

Other operating income in 2024 amounted to €56.2 million (€13.0 million in 2023) and comprised €52.5 million related to the gain on the sale of the Jyseleca® business to Alfasigma. This result of the transaction was considering the following elements:

• €50.0 million of upfront payment received at closing of the transaction of which €40.0 million was paid into an escrow account. This amount was kept in escrow for a period of one year after the closing date of January 31, 2024, and was partially released in February 2025 (the remaining part being under discussion). We gave customary representations and warranties which are capped and limited in time (at December 31, 2024, this €40.0 million is presented as “Escrow account” in the statement of financial position).
• €9.8 million of cash received from Alfasigma related to the closing of the transaction as well as €0.75 million of accrued negative adjustment for the settlement of net cash and working capital.
• €47.0 million of fair value on January 31, 2024 of the future earn-outs payable by Alfasigma to us (the fair value of these future earn-outs at December 31, 2024 is presented on the lines “Non-current contingent consideration receivable” and “Trade and other receivables”). As from February 1, 2024, we are entitled to receive earn-outs on net sales of Jyseleca® in Europe from Alfasigma.
• €40.0 million of liability towards Alfasigma on January 31, 2024 for R&D cost contributions of which €15.0 million was paid in 2024 (at December 31, 2024, €25.0 million of liabilities for R&D cost contribution is presented in the statement of financial position on the line “Trade and other liabilities”).

The net financial results contained a positive effect of discounting the contingent consideration receivable from Alfasigma for €4.0 million and a positive effect of discounting our long term deferred income of €0.2 million (€0.6 million discounting expenses of our long term deferred income in 2023).

Net profit of discontinued operations attributable to the Jyseleca® business amounted to €75.4 million in 2024, compared to €215.7 million net profit of discontinued operations in 2023.

We reported a net profit in 2024 of €74.1 million, compared to a net profit of €211.7 million in 2023.

Cash, Cash Equivalents and Financial Investments

Financial investments and cash and cash equivalents totaled €3,317.8 million on December 31, 2024 as compared to €3,684.5 million on December 31, 2023.

Total net decrease in cash and cash equivalents and financial investments amounted to €366.7 million in 2024, compared to a net decrease of €409.6 million in 2023. This net decrease was composed of (i) €374.0 million of operational cash burn including €80.4 million cash impact of business development activities, (ii) €36.9 million acquisition of financial assets held at fair value through other comprehensive income, (iii) €27.5 million of net cash in related to the sale of the Jyseleca® business to Alfasigma of which €40.0 million has been transferred to an escrow account, offset by (iv) €56.7 million positive changes in fair value of current financial investments, positive exchange rate differences and variation in accrued interest income.

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, the acquisition of financial assets held at fair value; the movement in restricted cash and the net purchase/sale of 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 or disposal of businesses, 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:

Going Concern Statement

To date, we have incurred significant operating losses, which are reflected in the consolidated balance sheet showing €134.3 million accumulated losses as at December 31, 2024. We realized a consolidated net profit of €74.1 million for the year ended December 31, 2024. Financial investments and cash and cash equivalents amounted to €3,317.8 million at December 31, 2024.

We intend to separate into two publicly traded companies and to establish SpinCo with approximately €2.45 billion in current cash. Following this planned transaction, we expect our normalized annual cash burn to be between €175 million and €225 million, excluding restructuring costs. Upon separation, we expect to have approximately €500 million in cash to accelerate our pipeline and fund our operations to 2028.  We will thus be able to fund our operating expenses and capital expenditure requirements at least for the next 12 months. The Board of Directors is also of the opinion that additional financing could be obtained, if required. Taking this into account, as well as the potential developments of the drug discovery and development activities, the Board of Directors is of the opinion that it can submit the financial statements on a going concern basis. Whilst the financial investments and cash and cash equivalents are sufficient at least for the next 12 months, the Board of Directors points out that if the R&D activities go well, we may seek additional funding to support the continuing development of our products or to be able to execute other business opportunities.