| 2
March 2007
Galapagos announces 2006 full
year results
- Revenues more than tripled to €35.2 M
- Year-end cash position of €51.5 M
- R&D spend increased from €8.9 M in 2005 to €15.9
M
- Net loss per share increased from €0.73 in 2005 to €0.84
- Established and progressed turn-key osteoarthritis alliance
with GlaxoSmithKline
- Created biotech leader in bone and joint disease through
acquisition of ProSkelia
- Built top-tier service division with acquisitions of
Inpharmatica and DPI assets
Webcast audio conference presentation 9.30 CET at www.glpg.com
Mechelen, Belgium; 2 March 2007 - Galapagos NV (Euronext & LSE:
GLPG), an integrated drug discovery company, announces its
full year results for 2006 and provides market guidance for
2007.
In 2006, Galapagos succeeded in tripling the revenue base
and accelerating the product pipeline towards the clinic.
An active M&A strategy as well as organic growth contributed
to these results, creating a drug discovery company well
balanced between profitable services and a strong product
pipeline. Galapagos made major progress in the bone and joint
programs and signed a turn-key alliance with GlaxoSmithKline
in osteoarthritis. The acquisition of ProSkelia added a number
of advanced bone disease programs to our portfolio as well
as valuable expertise. To fund the progression of the combined
development programs towards and into the clinical testing
phase, the Company raised €42 million in two private placements
in 2006. The BioFocus DPI service division was expanded through
two acquisitions (the assets of Discovery Partners International
and Inpharmatica), to become a world-leading provider of
drug discovery services.
Key figures 2006
(€ millions, except net loss
per share)
“In 2006, we saw the BioFocus DPI service division deliver
a profitable segment result and strong organic revenue
growth, far outpacing market growth rates. The acquisitions
made in 2006 will solidify the division’s top tier position
and the combined entity should secure continued growth,”
stated Onno van de Stolpe, CEO of Galapagos. “In our internal
drug discovery, we made great progress in all of our therapeutic
programs. The alliance with GSK in osteoarthritis has enabled
us to gear up this program for the delivery of clinical
candidates. By acquiring ProSkelia, we obtained a number
of bone programs based on clinically validated targets,
derisking our portfolio and increasing the chances of having
multiple programs in the clinic in 2008. This year we intend
to fully capitalize on the combined synergies of the acquisitions
completed in 2006, placing us in prime position to become
one of Europe’s leading biotechs.”
“The major steps taken in 2006 have transformed the Company
financially for 2007,” said David Smith, Galapagos’ CFO.
“Accordingly, we anticipate that Group revenues in 2007 will
be in the range of €54-58 million. Furthermore, with a significant
step up in R&D investment to support progression of our
clinical and pre-clinical programs in 2007, we expect that
full year cash burn will be €20 million.”
Operational overview
Drug Discovery division
In our rheumatoid arthritis (RA) program, lead compounds
have shown good pharmacokinetic properties and efficacy in
relevant animal models of the disease. These molecules also
show substantial protection against bone loss in the industry
standard RA animal models. The compounds target a proprietary
kinase protein that was identified using the Galapagos’ SilenceSelect
target discovery platform. Based on these encouraging results,
Galapagos anticipates initiation of pre-clinical studies
in 2007, with the potential of a candidate drug entering
clinical Phase I in 2008.
On 7 June 2006, Galapagos and GlaxoSmithKline’s Center of
Excellence for External Drug Discovery announced a turn-key
drug discovery and development alliance in osteoarthritis
(OA) worth €137 million in upfront, milestone, and equity
payments and up to double-digit royalties on commercial products.
Galapagos will build upon its existing OA program to deliver
drug candidates from target through to clinical Phase IIa
proof of concept. This alliance validated the Company’s target
discovery platform as well as our drug discovery capabilities.
In this program, Galapagos reported the achievement of Proof
of Principle with compounds against its proprietary targets,
showing ex vivo protection of bovine cartilage explants.
Galapagos has several series of compounds in hit-to-lead
and lead optimization that have potential to deliver novel
therapeutics for the treatment of OA.
With the acquisition of ProSkelia on 22 December 2006, Galapagos
enhanced its product portfolio with the addition of three
programs in bone diseases (two for osteoporosis and one for
bone metastasis), and one in cachexia (muscle atrophy and
weight loss). The combined drug discovery portfolio will
contribute to Galapagos’ goal of having multiple clinical
programs in bone and joint diseases by the end of 2008. The
transaction with ProSkelia also included an exclusive license
option to oestradiol glucoside (E2G), a product for treatment
of ‘hot flashes’, a menopausal symptom. Galapagos has started
the preparations to initiate a Phase IIb clinical trial for
this compound in Q4 of 2007. In addition to its programs,
the acquisition of ProSkelia contributes capabilities and
facilities that will greatly accelerate the Galapagos programs
in bone and joint diseases.
BioFocus DPI division
Galapagos acquired Inpharmatica and the operational activities
of Discovery Partners International as part of its strategy
to make BioFocus DPI a worldwide leader in drug discovery
services. The appeal of this synergistic offering has been
validated through a number of recent deals in which a combination
of services were included, like the recently announced collaboration
with the University of Bristol that combines Inpharmatica’s
Admensa and BioFocus DPI’s medicinal chemistry expertise.
BioFocus DPI continues to be successful in securing multi-year
contracts such as the three-year target discovery alliance
with Arthrogen, the three-year exclusive library contract
with Roche and the extension of its long term collaboration
with Amgen into 2008.
BioFocus DPI also expanded its solid relationship with non-profit
organizations by initiating a multi-year drug discovery collaboration
with OneWorld Health, entering a new €2.4 million target
discovery alliance with the ALS Association, and extending
the collaboration with the Cystic Fibrosis Foundation.
In addition to these previously announced service deals,
Galapagos also announces today that BioFocus DPI has extended
its drug discovery agreement with Eli Lilly and Company (NYSE:LLY)
until the end of 2007. Total contract extension value is
expected to exceed €1 million.
Details of the financial results
Revenue
Galapagos' revenues for the full year 2006 more than tripled
to €35.2 million (2005: €11.2 million). Of these revenues,
€31.0 million were generated by BioFocus DPI. The Drug Discovery
division contributed €4.2 million to Group revenues.
Results
BioFocus DPI contributed approximately €3.4 million to the
result of the Group on a segment basis in 2006. The Group
net loss for the full year 2006 was €11.3 million, or €0.84
per share, compared to €6.5 million, or €0.73 per share for
2005. The main contributing factor to the planned increase
of the net loss was an increase in research and development
costs from €8.9 million to €15.9 million. The method of measuring
R&D expenditure has been changed in order to better reflect
the true nature of the costs involved, following the ProSkelia
acquisition and increased importance of our R&D spend
within the group. Galapagos now includes indirect costs such
as premises costs, support staff and other site related costs;
these costs would previously have been shown in G&A.
Therefore, the comparatives for 2005 and 2004 have been updated
to reflect these changes. Before implementing the change,
the investment in R&D would have been €12.1 million in
2006, in line with guidance.
Cash flow and cash position
Galapagos’ cash and cash equivalents amounted to €51.5 million
on 31 December 2006 up from €23.6 million at the end of 2005.
Through private placements on 19 September 2006 (€11 million)
and 22 December 2006 (€31 million), Galapagos raised €40.3
million net of costs. After making an estimate for the cash
acquired with Inpharmatica, for which shares are to be issued,
and removing the purchase price of the acquisition of the
DPI assets of €4.3 million, the full year cash burn was €11.9
million.
Outlook 2007
Galapagos anticipates 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 between
€54 – 58 million in 2007. R&D expenditure will increase
to approximately €33 million as a result of initiating clinical
Phase IIb trials of the E2G compound in Q4 2007, progressing
its RA and OP drug candidates into preclinical studies, and
advancing its other R&D programs in bone and joint diseases.
The R&D expenditure will be partly offset by anticipated
milestones from its alliance partners. We believe this investment
in R&D will create the shareholder value expected from
entering the clinic with multiple programs in 2008. Through
continued cost control, full year cash burn in 2007 should
be limited to €20 million.
Consolidated Financial Statements
2006
The electronic version of Galapagos’ Consolidated Financial
Statements 2006 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 09.30 Central European Time (CET), which will also
be webcast. To participate in the conference call, please
call +32 2290 1608 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.
Addendum to Board Change Announcement
made on 12 January 2007
Rudi Pauwels has no other mandates at this time. Dr Pauwels’
previous mandates in the past five years included: Founder,
CEO, and CSO of Tibotec NV (Mechelen, Belgium), Founder and
Chairman of VIRCO NV (Mechelen, Belgium), Chairman of Galapagos
Genomics NV (Mechelen, Belgium).
About Galapagos
Galapagos (Euronext Brussels, GLPG; Euronext Amsterdam,
GLPGA; London AiM: GLPG) is a drug discovery company with
clinical and pre-clinical programs in bone and joint diseases,
cachexia, and menopausal hot flashes. 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 ADMET1 database
products to select targets and compounds. Galapagos currently
employs 450 people and operates facilities in eight countries,
with global headquarters in Mechelen, Belgium. More information
about Galapagos and BioFocus DPI can be found at www.glpg.com |
