Galapagos half year results in line with full year guidance
(Thomson Reuters ONE) -
* Confirmation of full year guidance of more than ?135 M in revenues, a
positive operating income and cash flow, and a positive net result
* Group revenues increased to ?49.9 M (+27%)
* Service operations external revenues growth of 24%
* Service operations profit of ?3.2 M excluding exceptional costs
* Group net loss of ?10.5 M
* Cash used in operations reduced to ?4.2 M, (H109: ?5.4 M)
* Cash position of ?27.2 M on 30 June 2010
* New strategic alliances with Roche and Servier
* Advancement of two additional programs to the clinic, bringing total to five
Click here to access the live audio webcast presentation at 10.00 CET,
call number+32.2290.1791
Mechelen, Belgium; 6 August 2010 - Galapagos NV (Euronext: GLPG) announces its
half year results and reiterates guidance for the full year.
"We have made considerable progress toward our 2010 objectives," said Galapagos
CEO, Onno van de Stolpe. "However, timing of certain expected milestones
impacted our interim financial results, and we expect to see revenues from these
and additional milestones in the second half improve the full year results.
Historically, also for our service division, the second half of the year is much
stronger financially. Galapagos now has seven candidate drugs and more than 50
discovery programs, most of which bear milestones. We signed two new strategic
alliances, with Roche for COPD, and with Servier for osteoarthritis.
Furthermore, the Argenta acquisition has proven to be an excellent addition to
our service operations. We are on track to achieve the goals we set for 2010,
which will reinforce our top five position in European biotech."
Guillaume Jetten, Galapagos' CFO added "Galapagos reported a solid financial
performance in the first half, and with our controlled and flexible cost base,
Galapagos is managing its financial risks well. Based on the order book for the
service division and anticipated milestone payments in our pharma alliances in
the second half year, both divisions are on track to deliver on their financial
goals in 2010. Therefore, Galapagos confirms full year guidance for revenues of
?135 M with positive operating income and cash flow, and a positive net result
in 2010."
Key figures half year 2010
(? millions, except net loss per share)
+---------------------------------+------------+------------+------------+
| | | Pro forma| As reported|
| |30 June 2010|30 June 2009|30 June 2009|
+---------------------------------+------------+------------+------------+
|Revenues | 49.9| 39.4| 37.7|
+---------------------------------+------------+------------+------------+
|Services cost of sales | -16.6| -10.3| -10.3|
+---------------------------------+------------+------------+------------+
|Gross profit | 33.3| 29.1| 27.3|
+---------------------------------+------------+------------+------------+
|Other income | -| -| 0.5|
+---------------------------------+------------+------------+------------+
|R&D expenditure | -33.1| -25.8| -25.8|
+---------------------------------+------------+------------+------------+
|General & administrative | -10.3| -9.9| -9.9|
+---------------------------------+------------+------------+------------+
|Sales & marketing | -1.4| -1.1| -1.1|
+---------------------------------+------------+------------+------------+
|Restructuring & integration costs| -0.4| -| -|
+---------------------------------+------------+------------+------------+
|Operating loss | -11.9| -7.7| -8.9|
+---------------------------------+------------+------------+------------+
|Net loss for the period | -10.5| -7.3| -7.3|
+---------------------------------+------------+------------+------------+
|Basic loss per share (?) | -0.45| -0.34| -0.34|
+---------------------------------+------------+------------+------------+
|Cash and cash equivalents | 27.2| 18.7| 18.7|
+---------------------------------+------------+------------+------------+
Notes:
· Galapagos receives R&D incentive payments in various jurisdictions and
from various government institutions, which are presented as "other income"
since December 2009. For better comparison, pro forma figures for 30 June 2009
have been presented, reflecting this change.
· On 2 February 2010 Galapagos completed the acquisition of Argenta
Discovery 2009 Ltd. ('Argenta'), and the results of that company have been
integrated into the half year 2010 financial reporting.
Operational overview
R&D division
Five programs in clinical development
Galapagos completed the Phase I clinical trials for GLPG0259, its first-in-class
rheumatoid arthritis (RA) candidate drug. GLPG0259 showed good safety and
tolerability as well as the desired drug profile to support once-daily oral
dosing. We remain on track to start a Phase IIa study in the third quarter of
2010 to assess the efficacy of this novel candidate drug for RA patients. An
interim readout of this Phase IIa study is expected in the second quarter of
2011. This is the first candidate drug based on Galapagos' technology to have
completed a Phase I study. The candidate is based on the Galapagos target
protein kinase MAPKAPK5, which had not been previously associated with RA;
Galapagos discovered that MAPKAPK5 plays a key role in inflammation and in the
breakdown of collagen in human joints. The candidate drug GLPG0259 demonstrated
bone protection and reduced inflammation in a standard RA animal model.
GLPG0259 is part of the option agreement with Janssen Pharmaceutica. Upon
successful completion of a dose finding Phase II clinical trial for GLPG0259,
Janssen has the exclusive option to license the program for ?60 M, with further
potential milestones to Galapagos of ?776 M and double-digit royalties on global
sales.
Galapagos also concluded a first-in-human study with metastasis candidate drug
GLPG0187, showing good safety and a relevant biomarker response. This candidate
drug could offer a new therapeutic approach for cancer patients. It has a
highly competitive therapeutic profile compared to currently available agents to
treat metastasis. GLPG0187 blocks five integrin receptors known to be present
in many metastatic cancers. In animal studies, oral administration of GLPG0187
inhibits multiple processes involved in the spread and growth of tumors. The
Company is on track to initiate a Phase Ib clinical study, including cancer
patients, later this year.
Nanocort(®) is undergoing a Phase II study for flares in multiple sclerosis; an
interim readout is expected by the end of 2010. The first novel-mode-of action
candidate drug from the arthritis alliance with GlaxoSmithKline, GLPG0555,
completed a Phase I study and preparations are underway to begin Phase I trials
for one more candidate drug in the alliance. Furthermore, cachexia candidate
drug GLPG0492 entered Phase I studies, marking the Company's fifth clinical
development program.
Moving discovery programs forward, new alliances signed
In addition to its programs in development, Galapagos has research ongoing in
over 50 discovery programs across its eight alliances and proprietary programs
in orphan and other disease areas.
To date, Galapagos has announced more than ?120 M in payments from these pharma
alliance partners, demonstrating Galapagos' ability to offset the costs of its
own discovery and development programs.
In the first half of the year, Galapagos announced an alliance with Roche for
small molecule and antibody therapies based on novel modes of action in COPD; in
May this alliance was expanded to include four additional antibody targets.
Galapagos also signed an alliance with Servier in osteoarthritis, with Galapagos
retaining US commercial rights. Through its eight risk/reward sharing alliances
with pharma companies, Galapagos is eligible to receive in excess of ?3.3
billion in success-dependent milestone payments plus royalties on the worldwide
sales of medicines that may result from these programs.
Strategy to deliver breakthrough medicines to patients with orphan diseases
The lack of novel drugs for orphan diseases presents significant opportunities
for a company capable of delivering new mode-of-action therapies. Over the past
years, Galapagos has established a strong franchise in orphan diseases.
Galapagos has made a strategic decision to pursue cystic fibrosis (CF) as the
first orphan disease in which the Company will discover, develop and register
its own medicines. This decision is based on the successful collaboration with
the CF Foundation, through which Galapagos identified the first ever
disease-modifying targets for CF. With this strategy, Galapagos expects to
benefit from the accelerated approval procedures and exclusive commercial rights
granted to developers of orphan drugs through US and European regulatory
agencies, to ultimately provide real medical benefit to this sizeable population
of patients.
Service operations
Through the acquisition of Argenta Discovery's service operations in February,
Galapagos grew its service operations substantially in 2010. Combined, BioFocus
and Argenta showed total revenues of ?30.3 M and an external growth of 24%.
BioFocus signed new deals with CHDI, the TB Alliance and the University of
Bristol, extended its compound management agreement with the U.S. National
Institute of Health, and announced achievement of a milestone in its
collaboration with Ortho Biotech. Argenta delivered according to expectations
following the smooth integration into the Company. With both Argenta and
BioFocus in its service division, Galapagos will capitalize on the capability
for long-term, integrated service agreements.
Corporate developments
On the corporate level, Crucell CEO Ronald Brus joined the Board of Directors at
the AGM in April 2010, thereby replacing Rudi Pauwels, who resigned earlier in
the year. In June, Garth Rapeport resigned from the Supervisory Board after the
acquisition of his company Respivert by Johnson and Johnson. The Company
created two new warrant plans in April - under which, after acceptances, a total
of 506,500 warrants were issued for the benefit of employees and 195,040 for the
members of the Board. As a result of warrant exercises in April and June, a
total of 279,218 new shares were issued and the Company's share capital
increased by ?2,407,297 (including issuance premium), bringing the total number
of shares outstanding per 30 June 2010 to 23,890,038. Galapagos also announced
the successful private placement of 1.3 M shares held by Apax Partners France, a
venture capital investor since 2003, with European institutional investors in
June.
Details of the financial results
Note:
· Galapagos receives R&D incentive payments in various jurisdictions and
from various government institutions, which are presented as other income since
December 2009. For better comparison, pro forma figures for 30 June 2009 have
been presented, reflecting this change.
Revenues
Galapagos' revenues for the first half of 2010 amounted to ?49.9 M compared to
?39.4 M on a pro forma basis in the same period of 2009. The R&D division is on
track to full year guidance with revenues of ?27.4 M (including ?1.2 M
intersegment sales), compared to ?20.4 M in the same period last year (+28% on
external revenues). The service division reported total revenues of ?30.3 M,
including ?6.0 M in intersegment revenues. External revenues for the service
division grew by 24% as compared to the same period last year.
Results
The net loss for the first half-year of 2010 was ?10.5 M, compared to the loss
of ?7.3 M on a pro forma basis for the first six months of 2009.
The R&D division reported a segment loss of ?11.5 M, compared to ?8.7 M the
first six months of 2009, on a pro forma basis. R&D expenses for the Group in
the first half-year of 2010 were ?33.1 M compared to ?25.8 M in the same period
of 2009. This planned expansion was due to the broader portfolio of research
programs across a larger number of alliances, as well as increased costs of
later stage clinical programs. The increased R&D expenses also reflect
expenditures incurred for a number of potential success-based payments which are
anticipated in the second half of 2010.
The segment profit for the services division over the first six months of the
year was ?1.6 M, or ?3.2 M excluding exceptional integration and restructuring
costs (?0.4 M) plus ongoing intangible fixed asset depreciation costs of Argenta
(?1.2 M for the period to 30 June 2010). Gross margins of the running business
of the service operations were 38%, compared to 41% in the first half of last
year.
General and administrative expenses for the Group were ?10.3 M in the first half
of 2010, compared to ?9.9 M in the first six months of 2009. The general and
administrative expenses decreased to 21% of first half 2010 revenues (from
25% in 2009), reflecting continued focus on cost control within the Group.
Cash flow and cash position
A net decrease of ?20.2 M in cash and cash equivalents was recorded during the
first half of 2010, compared to a decrease of ?8.6 M in the same period last
year. This difference is mainly due to the acquisition of Argenta for which
Galapagos paid ?16.8 M. The net cash flow used in operations was limited to
?4.2 M, as compared to ?5.4 M during the same period in 2009, despite the
planned increase spending in R&D relative to last year. Galapagos' cash and
cash equivalents amounted to ?27.2 M on 30 June 2010.
Outlook 2010
In previous years, Galapagos has shown a consistent performance of delivering
about one-third of revenues in the first half of the year and about two-thirds
in the remainder. The Company reiterates full-year 2010 guidance figures:
revenues of more than ?135 M, a 27% increase compared to consolidated revenues
of 2009; a positive operational result and cash flow and a positive net result.
The Company continues to advance toward achievement of its strategic objectives
for 2010:
· Six programs in clinical trials before year end, including GLPG0259 in
Phase II
· Deliver four pre-clinical candidates
· Advance alliances according to plan
· Capitalize on the Argenta acquisition
· Further leverage the target discovery platform
· Achieve the financial guidance given for full year 2010
Interim Report 2010
The electronic version of Galapagos' Interim Report for half year 2010 is now
available online atwww.glpg.com/investor/financial_reports.htm. Printed
versions of the report can be requested by e-mailing ir(at)glpg.com.
Conference call and webcast presentation
Galapagos will conduct a conference call open to the public today at 10.00
Central European Time (CET), which will also be webcast. To participate in the
conference call, please call
+32 2290 1791, ten minutes prior to commencement. A question and answer session
will follow the presentation of the results. Click here to access the live audio
webcast. The archived webcast also will be available for replay shortly after
the close of the call.
Financial calendar 2010
3Q10 interim update 12 November 2010
Full year results 2010 4 March 2011
Annual shareholders meeting 26 April 2011
About Galapagos
Galapagos (Euronext: GLPG; OTC: GLPYY) is a mid-size biotechnology company
specialized in the discovery and development of small molecule and antibody
therapies with novel modes-of-action. The Company is progressing one of the
largest pipelines in biotech, with four clinical and over 50 small molecule
discovery/pre-clinical programs. Through risk/reward-sharing alliances with
GlaxoSmithKline, Eli Lilly, Janssen Pharmaceutica, Merck & Co., Roche and
Servier, Galapagos is eligible to receive ?3.3 billion in downstream milestones,
plus royalties. Together with its BioFocus and Argenta service operations,
Galapagos has over 680 employees and operates facilities in six countries, with
global headquarters in Mechelen, Belgium. More info at: www.glpg.com
CONTACT
Galapagos NV
Onno van de Stolpe, CEO
Elizabeth Goodwin, Director Investor Relations
Tel: +31 6 2291 6240
ir(at)glpg.com
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Datum: 06.08.2010 - 07:24 Uhr
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