Galapagos announces 2006 full year results
March 02 2007 - 2:01AM
UK Regulatory
* 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)
Note: The drug discovery operations of Discovery Partners
International Inc were acquired 6 July 2006. Inpharmatica Ltd was
acquired on 6 December 2006, and ProSkelia SASU on 22 December 2006.
+-----------------------------------------------------------------+
| | Dec 31, 2006 | Dec 31, 2005 |
|---------------------------+--------------+----------------------|
| Revenues | 35,2 | 11,2 |
|---------------------------+--------------+----------------------|
| Cost of sales | -19,5 | -4,8 |
|---------------------------+--------------+----------------------|
| Gross profit | 15,6 | 6,4 |
|---------------------------+--------------+----------------------|
| Other income | 3,0 | 0,1 |
|---------------------------+--------------+----------------------|
| R&D expenditure | -15,9 | -8,9 |
|---------------------------+--------------+----------------------|
| General & administrative | -12,0 | -3,5 |
|---------------------------+--------------+----------------------|
| Sales & Marketing | -1,9 | -0,4 |
|---------------------------+--------------+----------------------|
| Integration costs | -0,6 | -0,3 |
|---------------------------+--------------+----------------------|
| Other | 0,4 | 0,2 |
|---------------------------+--------------+----------------------|
| Net loss for the period | -11,3 | -6,5 |
|---------------------------+--------------+----------------------|
| Basic loss per share (�) | -0.84 | -0.73 |
|---------------------------+--------------+----------------------|
| | | |
|---------------------------+--------------+----------------------|
| Cash and cash equivalents | 51,5 | 23,6 |
+-----------------------------------------------------------------+
"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 ADMET[1]
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.
CONTACT
Galapagos NV
Onno van de Stolpe, CEO
Tel: +31 6 290 980 28
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.
Silence Select� is a registered trademark of Galapagos NV
[1] ADMET is the acronym for Absorption, Distribution, Metabolism,
Excretion, and Toxicity: Meeting parameters against these five
criteria is critical to the success of a pharmaceutical compound as a
drug.
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