Galapagos receives positive ruling on Patent Income Deduction
(Thomson Reuters ONE) -
Effective tax rate below 5%
Mechelen, Belgium; 12 November 2012 - Galapagos NV (Euronext: GLPG) announced
today that it has received a positive ruling from the Belgian tax authorities,
enabling Galapagos to benefit from the Belgian patent income deduction on patent
related income arising from its global collaboration with Abbott on GLPG0634.
As a result of this ruling, 80% of Galapagos' qualifying income from the
collaboration agreement with Abbott, based on the Galapagos patents covering
JAK1 inhibitor GLPG0634 currently in Phase 2A clinical trials in RA, is exempt
from Belgian corporate income tax. This will result in an effective income tax
rate of under 5% for Galapagos for this income. This ruling is valid for 5
years and may be renewed thereafter. Galapagos received an $150 million initial
upfront fee from Abbott for rights related to the global collaboration. Upon
successful completion of the RA Phase II studies, Abbott will license the
program for a one-time fee of $200 million if the studies meet certain pre-
agreed criteria. Abbott will assume sole responsibility for Phase III clinical
development and global manufacturing. Pending achievement of certain
developmental, regulatory, commercial and sales-based milestones, Galapagos
would be eligible to receive additional patent-based milestone payments from
Abbott, potentially amounting to $1.0 billion, in addition to tiered double-
digit royalties on net sales upon commercialization.
"The tax ruling announced today is very important for Galapagos and its
shareholders," said Guillaume Jetten, Chief Financial Officer of Galapagos. "In
this way, Galapagos may have more funds available to invest in its R&D programs
coming up behind GLPG0634, thereby increasing our chances of developing valuable
intellectual property in those programs as well. This is a clear benefit of our
Mechelen headquarters and the supportive nature of the Belgian government
towards biotech."
About Galapagos
Galapagos (Euronext: GLPG; OTC: GLPYY) is a mid-size clinical stage
biotechnology company specialized in the discovery and development of small
molecule and antibody therapies with novel modes-of-action. The Company is
progressing its JAK1 inhibitor GLPG0634, as well as one of the largest pipelines
in biotech, with four programs in development and over 30 discovery programs.
The Galapagos Group has over 800 employees and operates facilities in six
countries, with global headquarters in Mechelen, Belgium. More info at:
www.glpg.com
CONTACT
Galapagos NV
Elizabeth Goodwin, Director Investor Relations
Tel: +31 6 2291 6240
ir(at)glpg.com
This release may contain forward-looking statements, including, without
limitation, statements containing the words "believes," "anticipates,"
"expects," "intends," "plans," "seeks," "estimates," "may," "will," "could,"
"stands to," and "continues," as well as similar expressions. Such forward-
looking statements may involve known and unknown risks, uncertainties and other
factors which might cause the actual results, financial condition, performance
or achievements of Galapagos, or industry results, to be materially different
from any historic or future results, financial conditions, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, the reader is advised not to place any undue reliance on
such forward-looking statements. These forward-looking statements speak only as
of the date of publication of this document. Galapagos expressly disclaims any
obligation to update any such forward-looking statements in this document to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based, unless
required by law or regulation.
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Source: Galapagos NV via Thomson Reuters ONE
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