Galapagos announces half year results 2011
(Thomson Reuters ONE) -
On track for building sizeable pipeline while maintaining strong cash position
· Initiated four clinical trials to deliver efficacy or Proof-of-
Mechanism data by year end
· Full year guidance ?146 M in revenues, positive operating result and
cash flow, and net profitability: achievable but conditional upon reaching
certain R&D revenues
· Stronger cash position of ?49.8 M on 30 June 2011 compared to ?27.2 M
on 30 June 2010
· Service division organic revenues growth 10%, external revenues growth
15%
· Service division profit ?2.9 M
· Group revenues from continuing operations ?39.7 M compared to ?45.4 M
last year
· Group net loss from continuing operations ?27.7 M compared to ?12.2 M
loss last year
Click here to access the live audio webcast presentation at 10.00 CET today,
call number+32.2290.1791
Mechelen, Belgium; 5 August 2011 - Galapagos NV (Euronext: GLPG) announces its
half year results and maintains guidance for the full year 2011.
"Revenues in the first half were lower than last year, caused by timing of
alliance milestones. The service division had a good first half, attaining 15%
external growth," said Galapagos CEO, Onno van de Stolpe. "In addition to
moving our 50 plus R&D programs forward in the first half, Galapagos' portfolio
now has four clinical trials which are expected to deliver efficacy or Proof-of-
Mechanism data by year end. Galapagos is in a cycle where many of our business
objectives are achieved in the last months of the year. With a potential new
alliance in the pipeline and a number of achievable discovery milestones
scheduled for the last quarter, we see opportunities to reach our full year
2011 guidance, but with the intrinsic challenges of R&D."
Key figures half year 2011
(? millions, except net loss per share)
+---------------------------------+-------------+-------------+--------+-------+
| | | | Group| Group|
| | Continuing| Continuing| Total| Total|
| | Operations| Operations| 30 June|30 June|
| | 30 June 2011| 30 June 2010| 2011| 2010|
+---------------------------------+-------------+-------------+--------+-------+
|Revenues | 39.7| 45.4| 42.1| 49.9|
+---------------------------------+-------------+-------------+--------+-------+
|Services cost of sales | -18.0| -14.7| -19.8| -16.6|
+---------------------------------+-------------+-------------+--------+-------+
|Gross profit | 21.7| 30.7| 22.3| 33.3|
+---------------------------------+-------------+-------------+--------+-------+
|R&D expenditure | -42.4| -33.1| -42.4| -33.1|
+---------------------------------+-------------+-------------+--------+-------+
|General & administrative | -11.0| -9.6| -11.6| -10.3|
+---------------------------------+-------------+-------------+--------+-------+
|Sales & marketing | -1.1| -1.2| -1.1| -1.4|
+---------------------------------+-------------+-------------+--------+-------+
|Restructuring & integration costs| -| -0.4| -| -0.4|
+---------------------------------+-------------+-------------+--------+-------+
|Result on | 5.9| -| 2.9| -|
|divestment | | | | |
+---------------------------------+-------------+-------------+--------+-------+
|Operating loss | -26.8| -13.5| -29.9| -11.9|
+---------------------------------+-------------+-------------+--------+-------+
|Net loss for the period | -27.7| -12.2| -30.8| -10.5|
+---------------------------------+-------------+-------------+--------+-------+
|Basic loss per share (?) | -1.05| -0.51| -1.17| -0.45|
+---------------------------------+-------------+-------------+--------+-------+
|Cash and cash equivalents | NA| NA| 49.8| 27.2|
+---------------------------------+-------------+-------------+--------+-------+
Note: In the above table, continuing operations exclude the compound management
business of BioFocus (Compound Focus Inc., based in South San Francisco, CA,
USA) which was sold on 31 May 2011.
Details of the financial results
Revenues
Galapagos' revenues from continuing operations for the first half of 2011 amount
to ?39.7 M compared to ?45.4 M in the same period of 2010. The R&D division
reported revenues of ?19.3 M (including ?3.6 M intersegment revenues), compared
to ?27.4 M in the same period last year (-39% on external revenue). This is a
consequence of most alliance milestones for 2011 being scheduled to be reached
in the last months of the year. The service division revenues showed 10%
organic growth and 15% external revenues growth for the period, allowing for 5
months revenues from Argenta in 2010. Services revenues from continuing
operations amount to ?30.0 M (including ?6.0 M in intersegment revenues) in the
first half of 2011, compared to ?25.9 M (including ?6.0 M in intersegment
revenues) for continuing operations in the same period last year.
Results
The group net loss from continuing operations for the first half-year of 2011
was ?27.7 M, compared to the loss of ?12.2 M for the first six months of 2010.
The operating profit for the continuing service operations over the first six
months of the year was ?2.9 M. Gross margins of the continuing service
operations were 33%, compared to 28% in the first half of last year.
The R&D division reported an operating loss of ?27.0 M, compared to ?11.5 M the
first six months of 2010. R&D expenses for the Group in the first half-year of
2011 were ?42.4 M compared to ?33.1 M in the same period of 2010. This planned
increase can be explained by the acquisition of GlaxoSmithKline's research
centre in Zagreb, Croatia in September 2010 and by increasing development costs
for Galapagos' maturing pipeline. 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 2011.
General and administrative (G&A) expenses of the Group's continuing operations
were ?11.0 M in the first half of 2011, compared to ?9.6 M in the first six
months of 2010. This increase in G&A expenses (from 21% to 28% of revenues) is
due to increased costs for intellectual property, G&A for the acquired
operations Argenta and Zagreb, and the reclassification of a number of R&D
employees into G&A costs.
Cash flow and cash position
A net increase of ?9.4 M in cash and cash equivalents was recorded during the
first half of 2011, compared to a decrease of ?20.2 M in the same period last
year. This increase is mainly due to the collection of ?25 M in milestones
which were achieved at the end of 2010. A portion of the net cash increase can
be attributed to the disposal of Compound Focus for which Galapagos received
?9.4 M in cash after deduction of costs associated to the sale. Galapagos' cash
and cash equivalents amount to ?49.8 M on 30 June 2011.
Disposal of subsidiary
On 1 June 2011 Galapagos sold its facility in South San Francisco (Compound
Focus Inc.), the compound management business of BioFocus, to a subsidiary of
Evotec AG. This facility has been part of BioFocus, together with Argenta the
service division of the Galapagos Group, since the acquisition of the Discovery
Partners International assets by Galapagos in July 2006. For the sale of all
shares in Compound Focus, Galapagos received a cash upfront of ?10.25 M with an
additional ?2.25 M in potential earn out payments. These earn out payments are
considered to be contingent assets and have consequently not yet been recognized
in accordance with IAS 37. The realized gain on the sale of Compound Focus
amounts to ?2.9 M.
Operational overview
R&D division
* Initiated Phase Ib trial for GLPG0187 in cancer patients
* dose escalation trial on track
* Terminated Phase II trial for GLPG0259 due to limited efficacy
* focus resources on 11 other rheumatoid arthritis programs
* Initiated a Phase II Proof-of-Concept trial for GLPG0634, a selective JAK1
inhibitor
* >60% of patients recruited
* Progressed second Phase I Proof-of-Mechanism study in immuno-inflammation
alliance with GlaxoSmithKline on track to deliver results in Q4 2011
* Initiated Phase I Proof-of-Mechanism study for cachexia candidate drug
GLPG0492
* Received a two-year grant from the Flemish government agency IWT to progress
Galapagos' proprietary anti-viral programs
* Advanced around 50 discovery programs, including five antibody programs with
MorphoSys, and Alzheimer's and cystic fibrosis drug discovery programs
* US patent granted for GLPG0492, European patent granted for GLPG0187
Service division
· Streamlined the offering by selling BioFocus' compound management business to
Evotec for ?12.5 M
· Signed an agreement between Argenta and Dr Reddy's Laboratories of
India for drug discovery services
· Signed a target discovery agreement between BioFocus and Ono Pharma in the
field of autoimmune disease
· Delivered a panel of validated oncology targets in BioFocus' collaboration
with Janssen Research & Development
· Signed a target discovery agreement between BioFocus and Astellas Pharma
· Extended BioFocus' collaboration with Usher III Initiative, a non-profit
organization focused on developing treatments for Usher syndrome type III, a
rare genetic disorder that causes the loss of hearing and vision
· Entered into a collaboration between BioFocus and The Michael J. Fox
Foundation for Parkinson's Research, a not-for-profit organization focused on
developing therapies for Parkinson's disease
· Signed a two-year, integrated services agreement between Argenta and Pulmagen
Therapeutics in respiratory diseases
· Extended Argenta's alliance with PRECOS to offer world-class oncology services
Corporate
* Harvard professor Vicki Sato joined Galapagos' Board of Directors, while
Ronald Brus resigned from the Board due to policies of his new employer
* Raised ?0.5 M through warrant exercises, resulting in the issuance of
60,882 new shares
Outlook 2011
Galapagos has shown a consistent past performance of delivering the majority of
its full-year revenues in the second half of the year. Management considers the
full-year 2011 guidance figures achievable yet conditional upon reaching certain
R&D revenues: Group revenues of ?146 M, a positive operational result and cash
flow and a positive net result.
The Company continues to advance toward achievement of its strategic objectives
for 2011:
· Progress six programs in development and around 50 discovery programs:
o Phase II efficacy data from GLPG0634, Phase I Proof-of-Mechanism data from
GLPG0778, and Phase I Proof-of-Mechanism data from GLPG0492
o deliver new pre-clinical candidates
· Sign a new R&D alliance
· Outlicense one internal program
· Increase cash and profit contribution of service division
Interim Report 2011
The electronic version of Galapagos' Interim Report for half year 2011 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 2011
3Q11 interim update 11 November 2011
Full year results 2011 2 March 2012
Annual shareholders meeting 24 April 2012
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 six programs in development and over 50
discovery programs. Through risk/reward-sharing alliances with GlaxoSmithKline,
Lilly, Janssen Pharmaceutica, Roche and Servier, Galapagos is eligible to
receive up to ?2.5 billion in downstream milestones, plus royalties. The
Galapagos Group has about 800 employees and operates facilities in six
countries, with global headquarters in Mechelen, Belgium. More info at:
www.glpg.com
CONTACT
Elizabeth Goodwin, Director Investor Relations
Tel: +31 6 2291 6240
ir(at)glpg.com
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Source: Galapagos NV via Thomson Reuters ONE
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Datum: 05.08.2011 - 07:26 Uhr
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