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Galapagos NV (EBR:GLPG) * Revenues increased to €33.6 M (from €25.9 M, +30%) * Net loss reduced to €9.4 M (from €16.7 M, - 44%) * BioFocus DPI revenues of €23.7 M, on track to profitability in '08 * Cash position of €27.4 M on 30 June 2008 * Completed Nanocort® clinical Phase I/II for flares in rheumatoid arthritis * Solid progress in bone & joint development programs * No need to raise additional capital in the coming 18 months
Click here to access the live audio webcast presentation at 14.00 CET/8:00 AM EST, call number +32.2.404.03.34
Mechelen, Belgium; 8 August 2008 - Galapagos NV (Euronext: GLPG) announces its half year results and reiterates guidance for the second half of 2008.
"In the first half of 2008, we delivered on the promises of our R&D programs, announcing milestone achievements in all three of our bone and joint alliances with big pharma and advancing the pre-clinical development of our rheumatoid arthritis and bone metastasis programs," said Galapagos CEO, Onno van de Stolpe. "This progress puts us in a prime position to have these programs in the clinic early next year. In addition, based on the data analysis from the Nanocort clinical trial, we have decided to move forward and start a large Phase II study for flares in rheumatoid arthritis in 2009. Our pharma partnering strategy allows us to largely offset our increased R&D investments with milestones; as a result, we see no need to seek further funding in 2008 and 2009."
"The Galapagos Group delivered a solid first half in 2008, by growing revenues and improving our cost base while delivering on our strategic objectives. The recovery of BioFocus DPI is well on track to full-year profitability, with a strong pipeline and margin improvement in new contracts," noted Leo Steenbergen, Chief Financial Officer. "With our R&D division ready to deliver a strong second half performance, Galapagos retains full year guidance for revenues of €75 - 80 M and a year end cash position of €25 M."
Key figures half year 2008 (€ millions, except net loss per share)
+-------------------------------------------------------------------+ | | June 30, 2008 | June 30, 2007 | |-----------------------------------+---------------+---------------| | Revenues | 33.6 | 25.9 | |-----------------------------------+---------------+---------------| | Cost of sales | -14.2 | -14.8 | |-----------------------------------+---------------+---------------| | Gross profit | 19.4 | 11.1 | |-----------------------------------+---------------+---------------| | Other income | 0.3 | 0.4 | |-----------------------------------+---------------+---------------| | R&D expenditure | -18.0 | -15.7 | |-----------------------------------+---------------+---------------| | General & administrative | -10.0 | -11.7 | |-----------------------------------+---------------+---------------| | Sales & marketing | -1.4 | -1.1 | |-----------------------------------+---------------+---------------| | Integration costs | -0.1 | -0.2 | |-----------------------------------+---------------+---------------| | Operating results | -9.8 | -17.2 | |-----------------------------------+---------------+---------------| | Finance costs/income | - | - | |-----------------------------------+---------------+---------------| | Taxes and other | 0.4 | 0.5 | |-----------------------------------+---------------+---------------| | Net loss for the period | -9.4 | -16.7 | |-----------------------------------+---------------+---------------| | Basic and diluted loss per share | -0.44 | -0.72 | | (€) | | | |-----------------------------------+---------------+---------------| | Cash and cash equivalents | 27.4 | 37.1 | +-------------------------------------------------------------------+
Operational overview Product pipeline
In April 2008, Galapagos in-licensed Nanocort, a product for the treatment of acute flares in rheumatoid arthritis, with possible further indications in irritable bowel disease and multiple sclerosis. A 22-patient Phase I/II investigator-led trial of Nanocort has been completed, and full analysis of the trial data will be presented at a rheumatoid arthritis conference later this year. Based on the data, Galapagos will file an IND application later this year, with commencement of a 240-patient Phase II trial in the first half of 2009.
Galapagos' R&D division announced satisfactory progress in its research programs, with plans to enter the clinic with its bone metastasis and rheumatoid arthritis candidates in early 2009. Both the GT418 and bone metastasis programs are currently in preclinical safety studies, and the outcome of these will determine the further development route.
In its osteoarthritis program, Galapagos showed Proof of Principle (reduction of disease markers) and Proof of Concept (reduction of targeted symptoms) in pre-clinical models. The Company expects to nominate a pre-clinical candidate in its osteoarthritis program in 2008.
To oversee the development of its maturing pipeline, Galapagos appointed Piet Wigerinck, formerly VP discovery and Development at Tibotec (a J&J company), as Senior Vice President of Development.
Through its alliance strategy, Galapagos is eligible to receive in excess of €1.7 billion in success-dependent milestone payments plus double-digit royalties on the worldwide sales of medicines that result from these programs. In the first half of 2008, Galapagos achieved €5.2 M in financial milestones in its bone & joint disease alliances, for a total of €18.3 M to date. Galapagos also was awarded a €4.4 M grant through IWT from the Flemish Government for its rheumatoid arthritis development program and it signed a collaborative research agreement in eye diseases with Bausch & Lomb.
BioFocus DPI service division The BioFocus DPI service division announced new agreements this year with existing partners such as Janssen Pharmaceutica, Lilly, the U.S. National Institutes of Health and Allergan as well as collaborations with new partners such as the University College London and Sepracor. Furthermore, the service unit earned a milestone payment in its autoimmune collaboration with Boehringer Ingelheim.
Corporate developments In June, Galapagos announced the appointment of Dr. William Garth Rapeport to the Board of Directors. Galapagos cancelled its listing on the Alternative Investment Market (AiM) of the London Stock Exchange and launched a Level-1 American Depositary Receipt (ADR) facility (ticker: GLPYY) for over-the-counter trading in the United States.
ProStrakan Group plc held 1,396,648 ordinary Galapagos shares from the all-share offer for ProSkelia SASU in December 2006. ProStrakan notified Galapagos that it has completed a successful private placement of its holdings with institutional investors via Fortis in July 2008 and no longer owns any Galapagos shares.
Details of the financial results Revenues Galapagos' revenues for the first half of 2008 amounted to €33.6 M compared to €25.9 M recorded in the same period of 2007. The R&D division is well on track with revenues of €14.2 M compared to €5.8 M in the same period last year (+ 145%). With revenues of €23.7 M, BioFocus DPI showed a 10% year-on-year growth in the first half of 2008, excluding currency effects of 7.5%.
Results The net loss for the first half-year of 2008 was €9.4 M, compared to the loss of €16.7 M for the first six months of 2007. The R&D division reported a segment loss of €3.9 M, a decrease of 62% compared to the first six months of 2007, and in line with expectations. The segment loss for BioFocus DPI over the first six months of the year was €1.8 M, compared to €2.6 M in the same period last year. This segment result is a 30% improvement over the first half of 2007, in line with management expectations and consistent with previous years, in which second half performance historically has been stronger. Visibility in the pipeline and the improved margins on newly closed contracts give management confidence that BioFocus DPI will continue this progress toward profitability in 2008, delivering a positive result for the full year, in line with guidance given to the markets.
R&D expenses for the group in the first half-year of 2008 were €18.0 M compared to €15.7 M in the same period of 2007.
General and administrative expenses for the group were €10.0 M in the first half of 2008, a 14% reduction compared to the €11.7 M in the first six months of 2007. On a like-for-like basis (excluding exceptional costs and some reporting changes) the general and administrative expenses grew by 4% and reduced as a percentage of revenues from 33% in 2007 to 28% in 2008.
Cash flow and cash position A net decrease of €21.9 M in cash and cash equivalents was recorded during the first half of 2008. The cash used in operations was €20.9 M, as compared to €19.3 M during the same period in 2007; this is a result of the planned increase in R&D costs. Galapagos' cash and cash equivalents amounted to €27.4 M on 30 June 2008.
Significant post-closing events On 23 July 2008, Galapagos announced the transfer of BioFocus DPI's predictive drug discovery databases to EMBL's European Bioinformatics Institute. The databases concerned had been acquired with Inpharmatica in December 2006. The StarDrop(TM) software platform was not transferred and is still a product offering of BioFocus DPI. Galapagos received €1.8 M in cash for this transaction.
Outlook 2008 Management reiterates full-year 2008 revenue guidance of €75 to €80 M, a 14-21% increase in annual consolidated sales of 2007. The Company maintains guidance for R&D expenditures of €50 M and a maximum full-year cash burn of €25 M. Based on the anticipated cash needs and revenue streams in 2009 and 2010, Galapagos sees no need to raise additional capital for its current operations in the coming 18 months.
The Company continues to move forward on the strategic objectives for 2008:
* IND filing for Nanocort to initiate a 240 patient Phase II clinical trial in H1 2009 * Preparation for IND filings and initiation of Phase I trials for rheumatoid arthritis and bone metastasis early 2009 * Nomination of a pre-clinical candidate in osteoarthritis * Profitability of the BioFocus DPI service division * Increased revenues from milestone payments to offset R&D costs
Interim Report 2008 The electronic version of Galapagos' Interim Report for half year 2008 is now available online at www.glpg.com/investor/financial_reports.htm. Printed versions of the report can be requested by e-mailing ir@glpg.com.
Conference call and webcast presentation Galapagos will conduct a conference call open to the public today at 14.00 Central European Time (CET)/8:00 AM US Eastern Standard Time (EST), which will also be webcast. To participate in the conference call, please call +32.2.404.03.34, or toll free in the US 1.866.931.1567, 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 2008 3Q08 interim update 14 November 2008 Annual results 2008 6 March 2009 Annual shareholders meeting 2 June 2009
About Galapagos Galapagos (Euronext Brussels: GLPG; Euronext Amsterdam: GLPGA; OTC: GLPYY) is a drug discovery company with pre-clinical programs in bone and joint diseases and bone metastasis. Its division BioFocus DPI offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies, encompassing target discovery and validation, screening and drug discovery through to delivery of pre-clinical candidates. BioFocus DPI also provides adenoviral reagents for rapid identification and validation of novel drug targets, compound libraries for drug screening as well as ADMET products to select compounds. Galapagos currently employs 490 people and operates facilities in six countries, with global headquarters in Mechelen, Belgium. More information about Galapagos and BioFocus DPI can be found at www.glpg.com and www.biofocusdpi.com.
CONTACTS
Galapagos NV Onno van de Stolpe, CEO Tel: +31 6 2909 8028 ir@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.
