5. Discontinued Operations and Assets Held for Sale
On October 30, 2023 we announced that we had signed a letter of intent contemplating a transfer of the Jyseleca® business to Alfasigma, including the European and UK Marketing Authorizations, the commercial, medical and development activities for Jyseleca® and approximately 400 positions in 14 European countries. On December 30, 2023 we signed a final share and asset purchase agreement with Alfasigma.
On December 31, 2023, the transaction was still subject to certain closing conditions such as the finalization of the consultation process with the workers councils and FDI clearance in Italy, France and Denmark. The transaction was closed on January 31, 2024, upon obtaining all necessary approvals. We received a €50.0 million upfront payment in 2024, and are entitled to potential sales-based milestone payments totalling €120.0 million and mid-single to mid-double-digit earn-outs on European sales. We contributed €15.0 million in 2024 and will contribute an additional €25.0 million to Alfasigma by June 2025 for Jyseleca® related development activities.
On January 31, 2024, we also signed a transition agreement with Alfasigma enacting the responsibilities and services provided by the parties during a transition period for the transfer of the business.
The transfer of our Jyseleca® business has been determined to meet the criteria to be classified as held for sale and discontinued operations in our financial statements for the years ended December 31, 2023 and December 31, 2024.
The disposal group mainly contained all assets and liabilities of our subsidiaries that were fully dedicated to the Jyseleca® business and that were transferred to Alfasigma in the transaction. The divestiture included 100% of the shares of the following subsidiaries, including most of the employees: Galapagos Biotech Limited (UK), Galapagos Biopharma Belgium BV, Galapagos Biopharma GmbH, Galapagos Biopharma Italy S.r.l., Galapagos Biopharma Netherlands B.V., Galapagos Biopharma Spain S.L.U., Galapagos Biopharma Denmark ApS, Galapagos Biopharma Sweden AB, Galapagos Biopharma Finland Oy, Galapagos Biopharma Ireland Ltd., Galapagos Biopharma Norway AS, Galapagos Biopharma Austria GmbH. In addition, and as part of the same transaction, we transferred all assets, liabilities and employees directly related to the Jyseleca® business but belonging to Galapagos NV or other Galapagos subsidiaries, of which the main asset was the worldwide IP relating to Jyseleca®. Our inventories were not considered as part of the disposal group as these did not transfer to Alfasigma on closing of the transaction on January 31, 2024 but these will gradually transfer to Alfasigma during the coming years and we will bear the risks associated with it as long as it is not transferred.
Held for sale assets were stated at their carrying amount, which is lower than the fair value less costs to sell. We concluded that the expected present value of the purchase price to be obtained from Alfasigma for the sale of the Jyseleca® business approximated the fair value less costs to sell of the disposal group.
The following disclosure illustrates the result from our discontinued operations:
I Disposal of the Jyseleca® business
1.1. Consideration received
|
Year ended December 31 |
|---|---|
(thousands of €) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Total consideration received |
59,835 |
1.2. Analysis of assets and liabilities over which control was lost
|
January 31 |
|---|---|
(thousands of €, except per share data) |
2024 |
Property, plant and equipment |
4,186 |
Deferred tax assets |
292 |
Other non-current assets |
613 |
Inventories |
505 |
Trade and other receivables |
18,439 |
Cash and cash equivalents |
19,523 |
Other current assets |
1,161 |
Total assets |
44,719 |
|
|
Other reserves |
(74) |
Retirement benefit liabilities |
1,003 |
Non-current lease liabilities |
2,328 |
Other non-current liabilities |
90 |
Current lease liabilities |
1,308 |
Trade and other liabilities |
28,927 |
Current tax payable |
1,170 |
Current deferred income |
430 |
Total liabilities |
35,182 |
|
|
Net assets disposed of |
9,537 |
1.3. Gain on disposal of the Jyseleca® business (included in other operating income in the income statement)
|
Year ended December 31 |
|---|---|
(thousands of €) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Additional adjustment working capital to be settled |
(750) |
Net assets disposed of |
(9,537) |
Effect of cumulative translation adjustments reclassified from equity on loss of control |
(4,095) |
Fair value of the future earn-outs payable by Alfasigma to us |
47,035 |
Contribution for R&D costs payable by us to Alfasigma |
(40,000) |
Gain on disposal of subsidiaries |
52,488 |
The fair value of the future earn-outs at December 31, 2024 is presented on the lines “Non-current contingent consideration receivable” and “Trade and other receivables” in our statement of financial position.
1.4. Net cash outflow on disposal of the Jyseleca® business
|
Year ended December 31 |
|---|---|
(thousands of €, except per share data) |
2024 |
Upfront payment received |
50,000 |
Settlement for net cash and working capital |
9,835 |
Transfer to escrow account |
(40,000) |
Contribution for R&D costs paid by us to Alfasigma |
(15,000) |
Earn-outs paid by Alfasigma |
2,053 |
Less: cash and cash equivalents balances disposed of |
(19,523) |
Less: settlement of pre-existing relationships |
3,686 |
Cash out from the disposal of subsidiaries, net of cash disposed of |
(8,949) |
|
|
Costs associated to the sale taken into result in 2023 |
(3,072) |
Costs associated to the sale taken into result in 2024 |
(526) |
Cash used for other liabilities related to the disposal of subsidiaries |
(3,598) |
Of the €50.0 million of upfront payment received at closing of the transaction €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, together with the interests on this escrow account.
II Result from discontinued operations
|
Year ended December 31 |
|
|---|---|---|
(thousands of €, except per share data) |
2024 |
2023 |
Product net sales |
11,475 |
112,339 |
Collaboration revenues |
26,041 |
431,465 |
Total net revenues |
37,516 |
543,804 |
|
|
|
Cost of sales |
(1,693) |
(18,022) |
Research and development expenses |
(8,152) |
(190,177) |
Sales and marketing expenses |
(11,520) |
(113,356) |
General and administrative expenses |
(1,087) |
(17,989) |
Other operating income |
56,180 |
13,003 |
|
|
|
Operating profit |
71,244 |
217,262 |
|
|
|
Fair value adjustments and net currency exchange differences |
- |
(13) |
Other financial income |
4,230 |
679 |
Other financial expenses |
(12) |
(167) |
|
|
|
Profit before tax |
75,462 |
217,761 |
|
|
|
Income taxes |
(98) |
(2,076) |
|
|
|
Net profit |
75,364 |
215,685 |
|
|
|
Basic and diluted earnings per share from discontinued operations |
1.14 |
3.27 |
Weighted average number of shares - Basic (in thousands of shares) |
65,897 |
65,884 |
Weighted average number of shares - Diluted (in thousands of shares) |
65,942 |
65,933 |
Jyseleca® product net sales in Europe amounted to €11.5 million in 2024, compared to €112.3 million in 2023, of which €0.7 million realized in Belgium (€8.1 million in 2023). Beginning February 1, 2024, all economics linked to the sales of Jyseleca® in Europe are for the benefit 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 last year. The sale of the Jyseleca® business to Alfasigma on January 31, 2024 led to the full recognition in revenue in 2024 of the remaining deferred income related to filgotinib.
We refer to note 2 for a general description of our collaboration with Gilead.
All filgotinib development expenses and all remaining G&A and S&M expenses relating to Jyseleca® are recharged to Alfasigma, which explains the decrease in those expenses.
Other operating income includes €52.5 million related to the gain on the sale of the Jyseleca® business to Alfasigma in 2024.
III Cash flow used in discontinued operations
|
Year ended December 31 |
|
|---|---|---|
(thousands of €) |
2024 |
2023 |
Net cash flow used in operating activities |
(36,367) |
(175,627) |
Net cash flow used in investing activities |
(8,949) |
(105) |
Net cash flow used in financing activities |
- |
(1,928) |
Net cash flow used in discontinued operations |
(45,316) |
(177,660) |