• Revenues increased
87% to €65.9 million, exceeding guidance
• Year-end cash position of €49.3 million
• BioFocus DPI reported segment loss of €3.9
million
• Net loss per share increased to €1.06 from
€0.84 in 2006
• Guidance for 2008 revenues €75-80 million,
year end cash position of approximately €25 million
Webcast audio conference
presentation today on www.glpg.com
14.00 CET/8:00 AM EST, call number +32 2290 1608
Mechelen, Belgium;
7 March 2008 – Galapagos NV (Euronext: GLPG) announces
its 2007 full year results and provides market guidance
for 2008.
In 2007 Galapagos grew revenues
by 87% and made sound progress toward entering the clinic
with its bone and joint programs. In a year of restructuring
and consolidation following the acquisitions made in 2006,
the BioFocus DPI service division reported year-on-year
growth in segment revenues of 39% to €48.4 M. The Drug
Discovery division showed outstanding results across all
therapeutic areas, attracting big pharma partners for alliances
in the rheumatoid arthritis and osteoporosis programs as
well as for anti-infectives, the first alliance outside
the Company’s bone & joint diseases core area.
By executing this partnering strategy, Galapagos can expand
its internal drug discovery, while reducing the impact to
cash burn in the years to come.
“In our third year
as a public company we have made major steps towards building
a European leader in drug discovery. We have delivered on
our discovery research, secured long-term alliance partners
for our therapeutic programs, and established BioFocus DPI
as a leader in discovery services. We are proud of the results
reached in 2007, showing a substantial growth in revenues
and maintaining a healthy cash balance. Galapagos will continue
to build on this momentum in 2008, with the anticipated
entry into the clinic of our bone metastasis program and
IND submission for rheumatoid arthritis,” said Onno
van de Stolpe, Chief Executive Officer of Galapagos.
“Galapagos has demonstrated
that it can deliver its R&D milestones, with €22.9
million in external revenues in its Drug Discovery division.
Through its alliance strategy, Galapagos has established
a model for financing expansion of R&D activities without
incurring a corresponding impact to cash burn. Despite BioFocus
DPI’s segment loss, we believe the restructuring in
2007 will strengthen its leading position and bring the
division back to profitability,” said Leo Steenbergen,
Chief Financial Officer of Galapagos.
Key figures 2007
(consolidated)
(€ millions, except net loss
per share)
Financial
Highlights
Operational overview
Drug Discovery
division
The Drug Discovery division delivered exciting results across
all core programs. The Company announced that its rheumatoid
arthritis candidate drug demonstrates significant bone protection
and reduced inflammation in the industry standard mouse
model. The effect of this oral compound was at least equivalent
to Enbrel® (etanercept), the injectable anti-TNF treatment
for rheumatoid arthritis. In bone metastasis, Galapagos’
candidate drug has shown reduction of bone metastasis and
bone degeneration comparable to Zometa® (zolendronate),
and superior prevention of metastases to other organs. Based
on these encouraging results, Galapagos announced the initiation
of pre-clinical development of both compounds, with the
aim to file Investigational New Drug (IND) applications
for each and begin with dosing the bone metastasis compound
in humans in a Phase I clinical trial before the end of
2008. Galapagos aims to initiate a clinical Phase I trial
in rheumatoid arthritis shortly thereafter.
Galapagos announced achievement
of Proof of Concept (reduction of targeted symptoms) in
pre-clinical models in its osteoarthritis program. Galapagos’
osteoarthritis program has progressed from validated targets
to a Proof of Concept in 18 months. The data generated thus
far encourage the Company to aim for delivery of a pre-clinical
candidate in osteoarthritis by end 2008.
In June 2007, Galapagos
announced the expansion of the scope of the osteoarthritis
alliance with GlaxoSmithKline (GSK) to include up to two
drug discovery programs on selected GSK targets. Additionally,
GSK made a €4.4 million equity investment in Galapagos
by way of a share issue. Galapagos also attracted world-leading
partners for its remaining core programs, in addition to
signing a first major alliance outside its core areas. In
October 2007, Galapagos entered a major alliance with Janssen
Pharmaceutica (a Johnson & Johnson company) to develop
novel oral therapeutics in rheumatoid arthritis. In December
2007, Galapagos announced major alliances in osteoporosis
with Eli Lilly and in infectious diseases with GSK.
Through its alliance strategy,
Galapagos is eligible to receive in excess of €1.7
billion in success-dependent downstream milestone revenues
plus up to double-digit royalties on commercial products.
Galapagos will be progressing over 40 target-based programs
in R&D, the majority of which are partnered with leading
pharmaceutical companies.
BioFocus DPI
service division
BioFocus DPI has long-standing relationships with more than
35 partners, including most of the large pharma and biotech
companies. BioFocus DPI continued to win new business from
existing partners and developed several new relationships
in 2007 in a highly competitive market. To establish a cost
structure for future profitability, the division consolidated
operations in 2007 by integrating sites in Cambridge, moving
the Heidelberg operations into the Basel site and moving
into new facilities in Leiden.
Details of the financial
results
Revenue
Galapagos' revenues for the full year 2007 grew 87% to €65.9
million (2006: €35.2 million). Of these revenues, €48.4
million were generated by BioFocus DPI, including €5.4
million inter-company revenues that were eliminated in the
consolidation. The Drug Discovery division contributed €22.9
million to Group external revenues.
Results
The Group net loss for the full year 2007 was €21.9
million, or €1.06 per share, compared to €11.3
million, or €0.84 per share for 2006. The main contributing
factor to the increase of the net loss was an increase in
research and development costs from €15.9 million to
€30.6 million. The BioFocus DPI segment result, before
restructuring and one-off costs, was a loss of €3.9
million, mainly due to lower than expected sales in biology
services and compound libraries as well as to the effect
of site consolidations. Medicinal chemistry services exceeded
expectations. The order book for biology services has since
shown improvement, with the recent €7.6 million collaboration
with Janssen Pharmaceutica as an illustration. General and
administrative costs amounted to €19.4 million, including
€1.4 million for stock-based compensation and other
IFRS adjustments. As a percentage of revenue, general and
administrative costs were reduced from 34% in 2006 to 29%
in 2007. Restructuring costs and impairment amounted to
€6.6 million, including costs related to the restructuring
and consolidation of operations in Romainville and Chesterford
Park, the consolidation of Heidelberg into Basel, and a
€1.6 million write-off of intangible assets related
to ProSkelia.
Cash flow and
cash position
Galapagos’ cash and cash equivalents amounted to €49.3
million on 31 December 2007, compared to €51.5 million
at the end of 2006. In 2007, €4.8 million in cash was
received through capital increases. Strong cash flow in
the second half of the year was related to upfront and milestone
payments received from Galapagos’ alliance partners
Janssen Pharmaceutica, GSK and Eli Lilly.
Outlook 2008
Galapagos anticipates continued growth in revenues from
milestones in its Drug Discovery division and an increase
in sales from BioFocus DPI, resulting in a full-year revenue
guidance of between €75–80 million in 2008. Management
is confident that the restructuring and consolidation efforts
in BioFocus DPI will start to pay off in 2008 and will contribute
to bringing the division back into profitability. R&D
expenditure is expected to increase to approximately €50
million as a result of progressing its drug candidates towards
the clinic, delivering a pre-clinical candidate in osteoarthritis
and advancing its other R&D programs. The R&D expenditure
is expected to be substantially offset by anticipated milestones
from its alliance partners. Full year cash burn in 2008
should be limited to around €25 million, leading to
a year end cash position of approximately €25 million.
Annual Financial
Report 2007
Galapagos is currently finalizing its financial statements
for the year ended 31 December 2007. The auditor has confirmed
that his audit procedures, which are substantially completed,
have not revealed any material corrections that are required
to be made to the financial information included in this
press release. Should any material changes arise during
the audit finalization, an additional press release will
be issued. We expect to be able to publish our fully audited
Annual Financial Report for the year 2007 before the end
of April 2008.
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 2290 1608, or toll
free in the US +1 866 225 8754, ten minutes prior to commencement.
A question and answer session will follow the presentation
of the results. The live audio webcast can be accessed via
Galapagos’ website at www.glpg.com.
The archived webcast also will be available for replay shortly
after the close of the call.
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 chemogenomics
and ADMET database products to select targets and compounds.
Galapagos currently employs 450 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.
Nothing in this disclaimer is intended to nor does it affect
the obligations and responsibilities of Galapagos pursuant
to the rules of the exchanges on which Galapagos' shares
are admitted for trading, including the AIM Rules for Companies.
